Organizational Strategy

Rising Prices and an Outbreak of Measles in Disney

DisneyOver the past several weeks, the happiest place on Earth has hit some speed bumps. Walt Disney World’s California parks have recently seen a significant outbreak of the measles infecting at least 70 people, most of them California customers. Parents of infants and young children who have not been vaccinated have been warned to steer clear of the parks in the meantime, as the virus is highly contagious and potentially deadly. State epidemiologist Dr. Gil Chavez noted that unless people take precautionary measures to get vaccinated, Disney should expect to see at hundreds of cases more. In the face of rising credible health warnings, it should appear that Disney might take a temporary hit to California park sales. However, in the beginning of February, CEO Robert Iger noted that Disney was not facing any real loss in park attendance.

Amongst these external challenges, Walt Disney World is currently implementing some internal changes that have increased the company’s profitability. This February, ticket prices increased at both the Walt Disney World Orlando, FL and Disneyland Anaheim, CA locations. Originally $96 for anyone 10 years and older at both the Disneyland and California Adventure in Anaheim, prices have now risen to $99. Single-day passes for the Magic Kingdom park in Florida went from $99 to $105, while prices for other age groups went up by roughly $3 to $6 as well. These price increases across the country are said to parallel the continually added unique experiences, offers and changing customer demands. That being said, Disney’s monopoly in the entertainment industry has them dominating regardless of a bump in the road, even if it is an infectious disease.

The Disney Corporation reports this past fiscal year as the best they’ve ever seen. In the company’s full year earnings report for 2014, Disney’s then-chairman and current CEO Robert A. Iger stated, “our results for Fiscal 2014 were the highest in the Company’s history, marking our fourth consecutive year of record performance.” In the past five years, total equity has increased by nearly $10 billion, according to Mergent online database. This substantial leap in profitability comes as no surprise. Through its brand reputation, strong product portfolio, and diversified business model, it is no wonder Disney sustains its competitive advantage in the Amusement Parks industry.

This past Monday, the Walt Disney Company announced the firm’s current Director of Disney’s Consumer Products Robert Chapek to take on the role of company Chairman of Walt Disney Parks and Resorts. As Director of his previous position for three years, Chapek generated enormous profits for Disney through the beginning stages of integrating Marvel characters into Disney parks. This year, he pulled in $1.36 billion for his segment, a 22% increase from last year. Chapek worked closely with Marvel’s CEO during his time as Director, and in February 2014, Disney acquired Marvel Entertainment for the mere sum of $4 million. Noted as “experienced and versatile” by Iger, Chapek is predicted to bring efficient strategies to the new position to keep up with emerging consumer trends and technologies. In his previous position, Chapek was said to have led a transformation in storytelling by generating creativity, implementing a “consumer-first” attitude, and utilizing key, evolving technologies to drive and sustain Disney’s long-term growth. He also played a key role in the commercialization of Disney’s live-action and animated movies.

These efficiencies and top-level management successes are what keep the Disney Corporation fully functioning in the face of sudden unpredictable challenges. They also allow Disney to increase ticket prices, as their magical uniqueness—in the form of an abundance of crowd-pleasing themes (such as Harry Potter World), intimacy of characters, and variability of performances—continues to give them a competitive edge in the industry. The parks segment of Disney noted a 20% increase in profit this past year and is already working on an Avatar-themed park in Florida as well as a “Star Wars”-themed element to multiple parks across the nation.

Katie Stavros

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