Cost Benefit Analysis Essay Samples
Founded in 1923, the Walt Disney Company is one of the leading entertainment and media conglomerate. The company aims at maximizing its product value, a fact that has resulted in its restructure in the way it distributes its products such as the video-on-demand online. The company generates income from services such as advertising, film and DVD syndication and merchandising and fees payment from satellite and cable companies.
The Disney Company operates in five business segments that face varying challenges. One of the enterprise segments involve the media network where it owns a number of radio stations across the world, but the cost of its operation goes beyond its benefit, for example, during disappointing sports season. The company’s parks and resorts segment operates the Disney theme parks and resorts. Studio entertainment is another part involved in the production of movies, but the cost may outweigh the benefits since the demand for home videos has dropped. The company also has consumer products segment that licenses its brands, but issues such a piracy reduce its maximum benefits. Disney online is the other section that operates various website such as the Babyzone.com. However, the stiff competition in the market reduces its earnings. In order to raise the benefits above costs, the company should carry out market research regularly and make the necessary adjustments.
The company has monopoly power in the studio entertainment segment due to its ability to give its consumers hit movies in televisions, theaters, and home video. This gives the company power to control prices of the products in the industry. The company exhausts its market demand through production of quality content and continuous improvement of its products considering the advancement of technology and changes in customer tastes. The revenue from cable networks and affiliate fees helps the company in absorbing its high production costs since it’s a bit steady. The company’s parks and resort segment represents a short-run non-shut down practice while the media network segment is a short-run shutdown practice. The Disney online and studio entertainment segments are long-run entry practice, while the consumer products represent the long-run exit practice.
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