Let's Talk Disney: Industry Structure, Firm Conduct, and Performance


 Before we begin, I think we should discuss The Walt Disney Company's top three competitors. I think The Walt Disney Company's top three competitors are Comcast (CMCSA), Time Warner (TWX), and Fox (FOX). Comcast, in my opinion, is The Walt Disney Company's number one competitor. Both companies operate with various sources of revenue, and both compete in the cable network, broadcast, and theme park industries. Comcast also introduces itself to the digital world of streaming with Peacock and Disney entered the world of streaming with Disney+. 

The Walt Disney Company operates in a less competitive industry enabling the company to obtain competitive advantage. The Walt Disney Company falls under the oligopoly umbrella due to a small number of large competing firms in the industry, helping the firms earn significant economic profits. Costly entry and exit restrict smaller firms, potential entrants, from being able to compete and exist amongst incumbent firms in that industry. Without barriers to entry, new entrants would quickly compete away any competitive advantage that may have been sustained by incumbent firms. The Walt Disney Company is a price maker because of its ability to influence market pricing and display market power. 

It is reported that social welfare is relatively low in an oligopoly but The Walt Disney Company shows otherwise. Since 2012, the company has hired over 10,000 veterans, cultivated an inclusive and diverse culture for all Disney employees worldwide, millions of dollars of support to veteran and military organizations, is a leader in LGBTQ workplace equality, announced a global commitment of $100 million to help reimagine the patient journey in children's hospitals, supported over 750 hospitals worldwide, fulfilled 145,000 wishes with Make-A-Wish since 1980, and much much more. 

Not only does the cost of entry act as a barrier to entry for potential entrants but The Walt Disney Company's product differentiation acts as a barrier to entry for potential entrants. Potential entrants do not possess the status of brand identification and customer loyalty that The Walt Disney Company has, and the cost of overcoming these advantages is too high for potential entrants; so entry does not occur. The significant barriers to entry that The Walt Disney Company and its main competitors have in place will deter any potential entrant from entering into an industry even though incumbent firms are earning significant profits. 

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