Get help now

Company Background The Walt Disney

dovnload

Download

  • Pages 26
  • Words 6332
  • Views 119
  • Can’t find relevant credible information

    Let our experts help you

    Get help now

    The Walt Disney Company represents a truly immense organization composed of four strategic business units (SBUs) which are Disney Consumer Products, Studio Entertainment, Parks and Resorts, and Media Networks Broadcasting, and these can be further subdivided into 28 categories and are composed of a plethora of brands. The only two fundamental commonalities that can be deduced upon inspection of the entirety of the Walt Disney Company’s holdings are entertainment and information.

    Every business activity the organization is engaged in is related in some manner to providing its consumer base entertainment and information. Despite the two commonalities of the Walt Disney Company’s activities, there exists a tremendous spectrum of variety in its operations. One of the growth strategies that have helped the conglomeration reach its current level of success is the fact that the organization has expanded, both vertically and horizontally, into new markets by targeted segmentation. In most cases, it reaches these market segments with an acquired brand, such as ESPN, ABC, and Miramax Films.

    Furthermore, it is only through the diversification in branding that Disney has grown simply because the children’s brand is comparatively limited in terms of the target demographic. It is also the same diversity that minimizes the systemic risk involved with operating in too narrow of a portfolio. Vision Statement “To Make People Happy” – The Disney Company Mission statement “The Walt Disney Company’s objective is to be one of the world’s leading producers and providers of entertainment and information (3), using its portfolio of brands (7) to differentiate its content, services and consumer products (2).

    The company’s primary financial goals are to maximize earnings and cash flow, and to allocate capital toward growth initiatives (5) that will drive long-term shareholder value. ” EXTERNAL ASSESSMENT External Opportunities External Threats External Factor Evaluation (EFE) Matrix Competitive Profile Matrix Positioning Map External Assessment A. External Opportunities Growth through further diversification Throughout its long history, Disney has managed to diversify more than perhaps any other entertainment company in history.

    From film to theme parks to consumer products to TV, Disney has broken into nearly every entertainment segment and the company continues to look for new opportunities. This constant desire for diversification and growth is what has allowed Disney to enjoy so much success in the past, and it is what will allow it to continue this success in the future. Increase media networks/broadcasting market share Cable television remains a growing and highly lucrative sector within the entertainment landscape and Disney owns the perennially most-watched network in ESPN.

    In addition to the healthy advertising revenues this attracts, Disney has the leverage to boost affiliate contract rates significantly. As a result, operating income has increased nicely at ESPN, as well as Disney’s other wholly-owned networks, Disney Channel and ABC Family. International growth/ New Market Disney has an opportunity to expand its movie production to such countries as India or China, where movie production industries have developed good quality infrastructure. This would result in lower movie production costs and more localized movies for India and China’s markets.

    Changes in technology and consumer consumption The company that stays on abreast of the rapid pace of technology change achieves higher advantage. With new media platforms such as Facebook and Twitter, it seems that the company that best takes advantage of these forums is at the forefront of pop culture–right where an entertainment corporation would hope to be. B. External Threats Economic recession A major threat to Disney’s success is the current market stagnation, as consumers do not have money to spend on Disney’s products and vacations.

    Changes in technology and consumer consumption The rate at which media and technology has changed in the last in the last 15 years is unprecedented. Since widespread availability of the Internet occurred in the late 1990s, media and technological advances have bred more media and technological advances. While that is wonderful news for the consumer, it leaves companies struggling to stay on top of changes occurring at an almost daily rate–so much so that often time technological departments have been bolstered just to keep organizations competitive on the online.

    Intellectual properties The advancements in technology allow copying, transmitting and distributing copyrighted material much easier. With an increasing number of internet users and the speed of internet, this poses a great risk to Disney’s income, as fewer people would go to watch movies in a cinema or buy its DVD, when it’s freely available online. C. External Factor Evaluation (EFE) Matrix Key External Factors Weight Rating Weighted Score Opportunities Growth through further diversification 0. 12 4 0. 48 Increase media networks/broadcasting market share

    0. 15 3 0. 45 International growth/New markets 0. 12 4 0. 48 Changes in technology and consumer consumption 0. 15 3 0. 45 Threats Economic recession 0. 12 4 0. 48 Changes in technology and consumer consumption 0. 15 3 0. 45 Intellectual properties 0. 10 2 0. 20 Uncontrollable changes in travel and tourism 0. 09 2 0. 18 Total 1 3. 17 From the EFE matrix analysis, the biggest opportunity for Disney Company is growth through further diversification. Disney has managed to diversify more than perhaps any other entertainment company.

    Disney has broken into nearly every entertainment segment, which covers media networks, parks and resorts, studio environment, consumer products and interactive media, and the company continues to look for new opportunities. This constant desire for diversification and growth is what has allowed Disney to enjoy so much success in the past, and it is what will allow it to continue this success in the future. Another significant opportunity for Disney is the international growth which more and more new markets arise.

    Recently, Disney has expanded its movie production to such countries as India or China, where movie production industries have developed good quality infrastructure. Besides, Disney has also expanded its theme parks to Tokyo, Shanghai and also Hong Kong. Apart from that, there are some external threats that Disney has faced. The biggest threat is the economic recession. During the economic downturn that happened at year 2008, the purchase power form the consumer become weaker and they are less likely to spend their money on Disney’s products and vacations.

    On the other hand, the changes in technology and also the consumer consumption is also one of the biggest threats Disney faced. With the rapid change in technology, it becomes one of the biggest challenges for almost all the companies to struggle in order to stay on top of changes occurring at an almost daily rate–so much so that often time technological departments have been bolstered just to keep organizations competitive on the online. D. Competitive Profile Matrix (CPM) Critical Success Factors Weight Walt Disney Weighted Time Warner Weighted Advertising 0. 20 4 0. 80 3 0. 60 Product Quality 0. 10 2 0. 20 3

    0. 30 Price Competition 0. 10 2 0. 20 2 0. 20 Management 0. 10 4 0. 40 3 0. 30 Financial Position 0. 15 4 0. 60 4 0. 60 Customer Loyalty 0. 10 4 0. 40 3 0. 30 Global Expansion 0. 20 3 0. 60 3 0. 60 Market Share 0. 05 3 0. 15 4 0. 20 Total 1 3. 35 3. 10 Time Warner is one of the biggest competitors for Disney. Time Warner is one of the global leaders in media and entertainment with businesses in television networks, film and TV entertainment and publishing. In middle year of 2010, Time Warner was the world’s second largest media and entertainment conglomerate in terms of revenue, which is just behind Walt Disney.

    Based on the CPM analysis, the overall competitiveness of the Disney is 3. 35, which is higher than Time Warner, who scored 3. 10. In comparison, the advertising strategy of the Disney is much better than Time Warner. Disney’s ownership of media networks such as “ABC,” “Disney Channel,” and “ESPN” is a strategy the company is using to market its brand to consumers. This includes a systematic approach to television advertising, as well as radio commercials, print, outdoor advertising, and mobile initiatives, promoting discounts on resorts, and family packages.

    To reach teenagers, Disney launched “advergaming,” which puts ad messages in online and video games. The goal is to reach kids directly and encourage them to urge their parents to visit a Disney park for a family experience. While in comparison of product quality, Time Warner scored slightly higher than Disney. Time Warner’s operating divisions, Home Box Office, Time Inc. , Turner Broadcasting System and Warner Bros. Entertainment maintain unrivaled reputations for creativity and excellence as they keep people informed, entertained and connected.

    They use their industry-leading operating scale and brands to create, package and deliver high-quality content worldwide through multiple distribution outlets. E. Positioning Map From the positioning map above, it can be seen that Time Warner is positioned better than Disney in term of market share and product quality. However, The Walt Disney Company recently sent ripples across the industry with its $4 billion purchase of LucasFilm. The acquisition offered Disney a chance to boost its position in the high-tech fantasy film area, which is already pretty strong after the billion dollar purchases of Marvel Entertainment and Pixar Animation.

    The entertainment sector is becoming increasingly competitive and resource-intensive. With big bucks involved, the sector is also likely to become the investors’ choice for a high growth portfolio. Disney also offered more than 35 percent growth in its stock price in the last 12 months, giving substantial return to its investors. Time Warner, on the other hand, lagged slightly, with 32% growth. Time Warner islooking to intensify its competition with Disney after forming its own animation unit. The company plans to release at least one movie each year.

    While it is too early to predict the financial results of this move, it looks like a step in the right direction. INTERNAL ASSESSMENT Internal Strengths Internal Weaknesses Internal Factor Evaluation (IFE) Matrix Financial Statement Financial Ratio Analysis Internal Assessment A. Internal Strength Strong diversification The business operates five different business segments: media networks, parks and resorts, studio environment, consumer products and interactive media. These company’s segments are operated online and offline, in many different economies and are generating their income using different business models.

    Due to such diverse operations, Disney is less affected by changes in external environment than its competitors are. Responsiveness to markets One of the strongest sides the company has is its responsiveness to markets and competency in acquisitions. The Walt Disney Company has acquired Pixar Animation Studios for $7. 4 billion in 2006, Marvel Entertainment for $4. 2 billion in 2009 and Lucasfilm in 2012. The former 2 acquisitions have already proved to be very successful in terms of revenue and profit growth.

    The third acquisition is expected to be just as successful because Disney has acquired rights to all of the Lucasfilm previous works including Star Wars. Few other Disney competitors have had such record of successful acquisitions. Brand name Walt Disney brand has been known for more than 90 years in US and has been widely recognized worldwide, especially due to its Disney Channel, Disney Park resorts and movies from Walt Disney studios. The company is perceived as the primary family entertainment provider and was the 13th most valuable brand (valued at $27. 4 billion) in the world in 2012. Creative Process

    Creative and innovative ideas are required to bring and retain customers. Walt Disney is always play around its creativity and produces new character in their Disney’s World. New attractions should continue to keep the theme parks’ visitation increasing. New themes in the theme parks with story line should have built in order to retain the customers. Creativity is quite important strength though. B. Internal Weaknesses High risk factor The markets they operate in have no guarantee of success, there is no guarantee that the movies are going to be blockbusters or that a new line of characters will prosper.

    For example, Disney has had its share of movie flops lately, such as The Lone Ranger and last year’s big-budget John Carter. (The latter prompted a huge write-down, and the former Johnny Depp-led Western may eventually require one as well. ) These misfires, should they persist, will likely keep future growth in check, though the film operations account for less than 15% of total revenues, and the company has sought to reduce risk by releasing fewer titles and making more sequels of proven franchises, like the Iron Man and Pirates of the Caribbean series. Large R&D costs

    Disney Research is an informal collaboration of the Walt Disney Company with various labs including Pittsburgh’s Carnegie Mellon University (CMU) and the Swiss Federal Institute of Technology Zurich (ETH Zurich), under a five year commitment. These labs conduct research and development for Walt Disney Parks & Resorts division, Disney Media Networks, ESPN, Walt Disney Animation Studios, Walt Disney Motion Pictures Group, Disney Interactive Media Group and Pixar Animation Studios. The labs will include computer animation, computational cinematography, autonomous interactive characters, robotics and user interfaces and others in its R&D efforts.

    Walt Disney have to pay a lot of money in this R&D. High sunk costs Walt Disney Company holds exceptionally high sunk costs which could hinder Disney’s future financial abilities. In addition to sunk costs, there is the continual cost of updating all the parks, resorts and hotels. High sunk costs make it difficult for a competitor to enter a new market, because they have to commit money up front with no guarantee of returns in the end. High sunk costs positively affect Disney but used a lot of money at the same time. C. Internal Factor Evaluation Key Internal Factors Weight Rating Weighted Score Strengths Strong diversification

    0. 15 4 0. 60 Responsiveness to markets 0. 12 4 0. 48 Brand name 0. 12 3 0. 36 Creative process 0. 12 3 0. 36 Weakness Large R&D costs 0. 15 1 0. 15 High risk factor 0. 12 2 0. 24 Constant up gradation 0. 12 1 0. 12 High sunk costs 0. 10 2 0. 20 Total 1. 00 2. 51 From Internal Factor Evaluation (IFE) table, the strong diversification is the strongest strength because it had the highest weighted score of 0. 60 with the weight of 0. 15 and rating of 4. Strong diversification as in five different business segments: media networks, parks and resorts, studio environment, consumer products and interactive media.

    Disney generates incomes with different business model. By the way, the other strength of Walt Disney also quite important and have a same weight that is 0. 12. All their strengths also important on helping their business in the future. On the other hand, among the Walt Disney’s weaknesses, high risk factor had the highest weighted scores that is 0. 24 with a weight of 0. 12 and a rating of 2. This showed that high risk factor affected Walt Disney the most among all other weaknesses. Disney took the risk on its share of movie flops lately, such as The Lone Ranger and last year’s big-budget John Carter.

    These misfires, should they persist, will likely keep future growth in check, though the film operations account for less than 15% of total revenues, and the company has sought to reduce risk by releasing fewer titles and making more sequels of proven franchises, like the Iron Man and Pirates of the Caribbean series. Other weaknesses like large R&D cost also have a high weight of 0. 15, it also counted as a high weight. Therefore, Walt Disney is improving their future works and business by reducing the risk and overcome their weakness with several ways. D. Financial Statement BALANCE SHEET September 2013 (in millions)

    September 2012 (in millions) ASSETS Current assets Cash and cash equivalents $ 3,931 $ 3,387 Receivables 6,967 6,540 Inventories 1,487 1,537 Television costs and advances 634 676 Deferred income taxes 485 765 Other current assets 605 804 Total current assets 14,109 13,709 Film and television costs 4,783 4,541 Investments 2,849 2,723 Parks, resorts and other property Attractions, buildings, and equipment 41,192 38,582 Accumulated depreciation (22,459) (20,687) 18,733 17,895 Project in progress 2,476 2,453 Land 1,171 1,164 22,380 21,512 Intangible assets, net 7,370 5,015 Goodwill 27,324 25,110 Other assets 2,426 2,288

    Total assets $ 81,241 $ 74,898 LIABILITIES AND EQUITY Current liabilities Accounts payable and other accrued liabilities $ 6,803 $ 6,393 Current portion of borrowings 1,512 3,614 Unearned royalties and other advances 3,389 2,806 Total current liabilities 11,704 12,813 Borrowings 12,776 10,697 Deferred income taxes 4,050 2,251 Other long-term liabilities 4,561 7,179 Commitments and contingencies Equity Preferred stock, $. 01 par value Authorized – 100 million shares, Issued-none – – Common stock, $0. 1 par value Authorized- 4. 6billion shares, Issued-2. 8 billion shares 33,440 31,731 Retained earnings 47,758 42,965

    Accumulated other comprehensive loss (1,187) (3,266) 80,011 71,430 Treasury stock, at cost, 1. 0billion shares (34,582) (31,671) Total Disney Shareholders equity 45,429 39,759 Non-controlling interests 2,721 2,199 Total equity 48,150 41,958 Total liabilities and equity $ 81,241 $ 74,898 INCOME STATEMENT September 2013 (in millions) September 2012 (in millions) Revenues $ 45,041 $ 42,278 Costs and expenses (35,591) (33,415) Restructuring and impairment charges (214) (100) Other income/(expense),net (69) 239 Net interest expense (235) (369) Equity in the income of investees 688 627 Income before income taxes 9620 9260

    Income taxes (2984) (3087) Net Income $ 6636 $ 6137 Less : Net income attributable to non-controlling interests (500) (491) Net income attributable to The Walt Disney Company (Disney) 6136 5,682 Earnings per share attributable to Disney: Diluted $ 3. 38 $ 3. 13 Basic $ 3. 42 $ 3. 17 Weighted average number of common and common equivalent shares outstanding: Diluted 1,813 1,818 Basic 1,792 1,794 E. Financial Ratio Analysis Activity Ratio Sep, 2013 Sep, 2012 Inventory turnover 30. 29 27. 51 Receivables turnover 6. 46 6. 46 Payables turnover 9. 19 9. 15 Working capital turnover 18. 73 47. 19 Net fixed asset turnover 2. 01 1. 97

    Total asset turnover 0. 55 0. 56 Equity turnover 0. 99 1. 06 Source: Based on data from Walt Disney Co. Annual Reports The inventory turnover illustrates how often a firm’s inventory is sold and replaced over a period. Since inventory is typically the least liquid form of an asset, a high ratio implies strong sales and effective buying. The Walt Disney Company dominates in terms of inventory turnover with a higher turnover than the industry average. On the other hand, the receivable turnover ratio and the average collection period are used to calculate a company’s effectiveness in extending credit as well as collecting debts.

    The receivables turnover ratio measures how efficiently a firm uses its assets. The average collection period is stated in terms of the number of days that credit sales remain in the accounts receivable before they are collected. Disney has both a better receivable turnover and average collection period, implying that Disney is working efficiently at collecting their accounts receivables as well as effectively using their assets. Meanwhile, the total asset turnover is the amount of sales generated for every dollar’s worth of assets, the higher the number the better.

    The total asset turnover ratio of Disney is slightly under the industry average, this implies that Disney can do more to enhance Disney’s ability to efficiently use its assets to produce sales or revenue. Liquidity Ratio Sep, 2013 Sep, 2012 Debt to equity 0. 32 0. 37 Debt to capital 0. 24 0. 27 Interest coverage 28. 56 20. 62 Source: Based on data from Walt Disney Co. Annual Reports The debt to equity ratio indicates what proportion of equity and debt the company is using to finance its assets. In 2013, The Walt Disney Company has a low total debt to equity with only 32% of their assets are financed with their liabilities.

    Disney’s total debt to equity is lower than the industry average. This implies, relative to the industry, the Walt Disney Company takes a less aggressive method to finance its growth with its debt, reducing its risk as a company. Leverage Ratio Sep, 2013 Sep, 2012 Current ratio 1. 21 1. 07 Quick ratio 0. 93 0. 77 Cash ratio 0. 34 0. 26 Source: Based on data from Walt Disney Co. Annual Reports The current ratio measures the company’s ability to pay its short-term obligations. The ratio is mostly used to give an idea of how well a company can pay back its short-term liabilities with its short-term assets.

    In 2013, the Walt Disney Company current ratio of 1. 21 is greater than 1, which means their assets can cover their liabilities. Meanwhile, the quick ratio measures a company’s ability to meet its short-term obligations with its most liquid assets. The quick ratio is a more conservation method to measure liquidity over the current ratio because it excludes the inventory from the current assets. If a firm needed had to pay off its short-term obligations immediately, there are occurrences where the current ratio would overestimate a company’s short-term financial strength. The Walt Disney Company quick ratio in year 2013 is 1.

    01, which is less than the industry average. Profitability Ratio Sep 28, 2013 Sep 29, 2012 Return on Sales Operating profit margin 20. 51% 20. 73% Net profit margin 13. 62% 13. 44% Return on Investment Return on equity (ROE) 13. 51% 14. 29% Return on assets (ROA) 7. 55% 7. 59% Source: Based on data from Walt Disney Co. Annual Reports The Walt Disney Company has average to below average profitability ratios. The return on assets (ROA) indicates how profitable a firm is relative to its total assets. The ROA aids in determining how efficient management is at using the assets it has to generate additional earnings.

    The return on equity (ROE) measures a company’s profitability by showing how much profit a firm makes with the money the actual shareholders have invested. Disney’s ROA and ROE is slightly below the industry average’s ROA and ROE. STRATEGIC ANALYSIS SWOT Matrix Strategic Position and Action Evaluation (SPACE) Matrix Grand Strategy Matrix Internal External (IE) Matrix Quantitative Strategy Planning Matrix (QSPM) Strategic Analysis A. SWOT Matrix Strength 1. Strong diversification 2. Responsiveness to markets 3. Brand recognition 4. Creative process Weakness 1. Large R&D costs

    2. High risk factor 3. Constant up graduation 4. High sunk costs Opportunities 1. Growth through further diversification 2. Increase media networks/broadcasting market share 3. International growth/New market 4. Changes in technology and consumer consumption SO strategies 1. Create a customized/ targeted media advertising plan for all segments (S2,O2) 2. Expand Hong Kong Disney and research one new market (S3,O3) 3. R&D into storytelling to kids through technology (S4,O4) WO strategies 1. Develop and research plan around merging market with low R&D costs (W1,O1) 2.

    Target 3 new markets and develop expansion plan around consumer products (W4,O3) 3. Consumer research around the use of technology and need (W2,O4) Threats 1. Economic recession 2. Changes in technology and consumer consumption 3. Intellectual properties 4. Uncontrollable changes in travel and tourism ST strategies 1. Digitize content to utilize technology and lower costs (S2, S4, T1) 2. Document and create intellectual properties protection plan (S2,T3) 3. Create and bank marketing strategies and promotions to use during adverse conditions or slow periods for parks and resorts (S2,T4) WT strategies 1.

    Digitize content to utilize technology and lower costs (W4,T1) 2. Focus on one high technology segment and focus content and R&D there (W1,W3,T2) Based on the SWOT Matrix, for the SO strategies, Disney can focus R&D into storytelling to kids through technology. The company is committed to continued innovation and technology, just as it was when Disney’s Mickey Mouse was one of the first cartoon presentations to have sound. The Disney Company continues a tradition of timeless storytelling that delights and inspires, and finally, the company is dedicated to honor and respect decency in order to inspire trust in the company.

    Disney digital copy is now also available, which is easily transferred to computer, video iPod, iPhone and other portable media players, so consumers can enjoy the Disney File Digital Copy on the go. Another SO strategy is to expand Hong Kong Disney and research one new market. The park has a daily capacity of 34,000 visitors which is the least of all Disneyland parks in the year 2007. It was reported that the park would introduce three themed lands, namely Glacier Bay, Grizzly Trail and Mystic Point by the Hong Kong Economic Times in early 2009.

    On middle year of 2012, Grizzly Gulch was opened as a counterpart to Frontierland and Mystic Point opened on May 2013. For further expansion of Disney, research has to be made to penetrate the market. On the other hand, controlling intellectual properties is one of the concerns Disney faced. One of the ST strategies Disney can used to cope with this issue is document and create intellectual properties protection plan. Disney takes the enforcement of the copyrights very seriously to protect these rights so that they can continue to provide quality entertainment that measure up to the standards

    that their audience has come to love and expect. Disney also welcomes reports of suspected infringement of any of these rights in its main page via email [email protected] com. Besides, another ST strategy is digitize content to utilize technology and lower costs Disney has fully utilized the internet to promote its theme park. It modified its pages on internet for every season and also holidays. Meanwhile, one of the biggest weaknesses Disney has is the high operating cost. Therefore, one of the WO strategies is to develop and research plan around merging market with low R&D costs.

    The only way to lower R&D costs is through diversification. Previous experience on certain field can help reducing the cost spent in market development and also expansion of current properties. Although diversification may first costs a lot, but it will later help a lot in further development and research plan. Other than that, Disney also needs to focus in expanding global market and develop expansion plan around consumer products in order to retain its competitiveness in the entertainment industry.

    One of the WT strategies is to focus on one high technology segment and focus content and R&D there. Disney has proven over and over again that it is able to make profitable and smart investments to boost growth, as its Marvel brand has already produced Iron Man, Thor, Captain America, and the Avengers, and Pixar consistently produces blockbuster hits. As movies are quite popular among people and it is now suit the increasing trend of people who go for theater for movie, Disney may focus on it to further expanse its brand name. B. Grand Strategy Matrix

    As Disney has rapid market growth due to its financial position, and also strong competitive position via doing the money-making business to make people happy, so it is being positioned at the Quadrant 1 in Grand Strategy Matrix. Therefore, it is also encouraged to do market development. As the global market is growing at a rapid pace, Disney must figure out strategies in order to take advantage of the market growth and retain its strong competitive position in the market. It can be seen that Disney had developed theme parks around the globe to capture the market, adapting them to local cultures.

    They include Disneyland Paris, Tokyo Disney, and Hong Kong Disneyland. With worldwide expansion, Disney aims to increase its marketplace and expand its brand. Besides, product development to excite the customers to keep an eye on Disney as new theatrical productions are released, with later new product lines based off the feature’s characters to be made and sold in strategically. As part of marketing strategy, Disney has focused in innovation to stay ahead of the competition and build business.

    With rapid advances in technology, the traditional passive television audience is in transition, no longer captive to prime-time scheduling on major networks. Disney has tried to figure out how to connect with kids directly via storytelling utilizing multiple technologies. One of the examples is that Disney had acquired the online social gaming leader “Playdom Inc. ” to make itself more appeal to teens and their parents is through staying current with digital gaming and social media opportunities. C. Strategic Position and Action Evaluation (SPACE) Matrix

    From the SPACE Matrix above, Disney is positioned at the aggressive site. This result is due to analysis of the financial position, the industry position, stability position and lastly competitive position. To be located at the aggressive site, the company must have high strength in all the position stated above. Financial position and competitive position are the internal dimensions, while the industry position and stability position are external dimensions of the company. One of the recommended strategies is market expansion.

    Disney has an opportunity to expand its movie production to such countries as India or China, where movie production industries have developed good quality infrastructure. This would result in lower movie production costs and more localized movies for India and China’s markets. Besides, Disney can focus in expanding its theme park around the globe to capture the market, adapting them to local cultures. They include Disneyland Paris, Tokyo Disney, and Hong Kong Disneyland. With worldwide expansion, Disney aims to increase its marketplace and expand its brand.

    Besides, Disney is also recommended to have product development which is R&D into storytelling to kids through technology. As the current ways to reach customers is now moved towards internet and also kids are future adults. D. Internal External (IE) Matrix The IE Matrix is based on two key dimensions: the IFE total weighted scores on the x-axis and the EFE total weighted scores on the y-axis. Based on the Internal Factor Evaluation and the External Factor Evaluation, the IFE total weighted score is 2. 51 whereas for the EFE total weighted score is 3. 17.

    Therefore, Walt Disney being places at Quadrant II which is in the regions of grow and builds. There are 3 regions for the IE Matrix shown above, which includes grows and builds, hold and maintain, harvest or divest. For Quadrant Grow and build, the strategies include backward, forward or horizontal integration, market penetration, market development and product development. Walt Disney has a strong brand which known for more than 90 years in US, thus Walt Disney should focuses on market development and product development instead of market penetration as their product already well-known in market.

    E. Quantitative Strategy Planning Matrix (QSPM) Strategy 1: R&D into storytelling to kids through technology Strategy 2: Target 3 new markets and develop expansion plan around consumer products Strategy 3: Digitize content to utilize technology and lower costs Key Factor Weight AS TAS AS TAS AS TAS Opportunities Growth through further diversification 0. 12 4 0. 48 1 0. 12 4 0. 48 Increase media networks/broadcasting market share 0. 15 1 0. 15 4 0. 60 1 0. 15 International growth/New markets 0. 12 3 0. 36 4 0. 48 1 0. 12 Changes in technology and consumer consumption 0. 15 4 0. 60 1 0.

    15 4 0. 60 Threats Economic recession 0. 12 2 0. 24 2 0. 24 4 0. 48 Changes in technology and consumer consumption 0. 15 4 0. 60 1 0. 15 4 0. 60 Intellectual properties 0. 10 3 0. 30 1 0. 10 2 0. 20 Uncontrollable changes in travel and tourism 0. 09 1 0. 09 1 0. 09 1 0. 09 Total 1. 00 Strengths Strong diversification 0. 15 4 0. 60 1 0. 15 3 0. 45 Responsiveness to markets 0. 12 4 0. 48 4 0. 48 2 0. 24 Brand name 0. 12 3 0. 36 3 0. 36 1 0. 12 Creative process 0. 12 4 0. 48 1 0. 12 2 0. 24 Weakness Large R&D costs 0. 15 2 0. 30 4 0. 60 4 0. 60 High risk factor 0. 12 2 0. 30 2 0. 20 2 0.

    20 Constant up gradation 0. 12 1 0. 12 4 0. 40 2 0. 20 High sunk costs 0. 10 2 0. 20 4 0. 60 4 0. 60 Total 1. 00 5. 66 4. 84 5. 37 There are 3 alternative strategies recommended for Walt Disney such as first strategy- emphasize on Research and Development (R&D) storytelling to kids through technology, second- target 3 new markets and develop expansion plan around consumer products, last strategy- digitize content to utilize technology and lower costs. Based on their Total Attractiveness Scores (TAS), the first strategy scores the highest (5. 66) followed by third strategy which score 5.

    37 while second strategy score the lowest TAS which is 4. 84 only. Strategy 1 is a strength-opportunity strategy where it is based on product development strategy. For this strategy, Walt Disney can invest more on R&D department to develop storytelling to kids using the latest advanced technology. For example, the dimension of television in the past century only consists of black and white dimension, and Walt Disney develops their film using this technique as well. However, as time passed, technology has been improved drastically where now color dimension or even 3D dimension has been developed.

    Thus, Walt Disney need to follow the technology trend and develop more advanced technique film such as 3D cartoon movie. For second strategy, Walt Disney can target 3 new markets such as India, China or Korea to develop expansion plan around consumer products. This strategy is based on market development strategy where Disney exploits more opportunity in new potential markets to expand its movie production or other product production. Meanwhile, third strategic suggest that Walt Disney digitize their content to utilize technology and achieve lower costs.

    For example, Disney digitizes all old-film into data movie and produces more high quality and resolution with the use of DVD or blue-ray DVD. RECOMMENDATIONS & CONCLUSION RECOMMENDATIONS The biggest external opportunity for Disney is growth through further diversification. To further exploit the opportunity in order to stand on the competitive edge, Disney must focus on innovation strategy by utilizing the current technology. As part of marketing strategy, Disney needs to pay attention in innovation to stay ahead of the competition and build business.

    With rapid advances in technology, the traditional passive television audience is in transition, no longer captive to prime-time scheduling on major networks. Disney needs to figure out how to connect with kids directly via storytelling utilizing multiple technologies. One of the examples is that Disney had acquired the online social gaming leader “Playdom Inc. ” to make itself more appeal to teens and their parents is through staying current with digital gaming and social media opportunities. One of the significant weaknesses Disney has is the high sunk cost.

    Walt Disney Company holds exceptionally high sunk costs which could hinder Disney’s future financial abilities. In addition to sunk costs, there is the continual cost of updating all the parks, resorts and hotels. Therefore, Disney must formulate a strategy to develop its products at expense as low as possible to help itself to retain competitiveness in the global. One of the recommended strategies that Disney can implement is boosting customer service in the parks as a way of besting competition without increasing expenses. The great thing about exceptional service is that it is no more expensive than adequate service.

    Already in place is a series of managers that supervise Disney employees who have direct contact with guests. This goal is as simple as developing a new standard for customer service and ensure that managers implement them to perfection. If an employee, then, has a negative attitude toward a guest, either the employee needs reprimanding because they know the customer service standards and are not living up to them or they are his/her direct supervisor needs reprimanding because the new standards were not properly explained. This new goal is a sure way to increase vacationing experiences with all of the Company’s guests.

    In addition to the advertising strategies that Disney has launched, it is also recommended for Disney to place increasing focus on radio channels and programming as another advertising focus. Disney’s ownership of media networks such as “ABC,” “Disney Channel,” and “ESPN” is a strategy the company is using to market its brand to consumers. This includes a systematic approach to television advertising, as well as radio commercials, print, outdoor advertising, and mobile initiatives, promoting discounts on resorts, and family packages.

    Therefore, The Walt Disney Company should look for what is the better ways to manage that than to own radio channels and control the programming on those channels. Apart from that, one of the biggest threats that Disney faced is economy recession. In order to better cope with this threat, Disney was suggested to plant cheaper entertainment options in smaller markets and emerging economies, as this is also one of the strategies to exploring new global market to expand its brand.

    The Walt Disney Company is done a fantastic job of placing their parks and resorts where the masses are California, Florida, Tokyo, Paris, Hong Kong, and Shanghai are all points on the global with higher than normal populations. This long-term goal suggests that the Company look at smaller markets in which to place cheaper entertainment options such a solitary water park, one amusement park, or a single resort. A Disney-quality water park in Indianapolis would surely draw considerable more people than if the consumers living in that area had to fly to Anaheim for their summer vacation.

    Cheaper entertainment options in emerging markets too, such as Brazil, India and South Korea, should be examined too, especially as The Walt Disney Company currently has no footing whatsoever in South America. Conclusion One of the biggest strengths of the Disney is strong diversification. Disney operates five different business segments: media networks, parks and resorts, studio environment, consumer products and interactive media. These company’s segments are operated online and offline, in many different economies and are generating their income using different business models.

    Due to such diverse operations, Disney is less affected by changes in external environment than its competitors are. Apart from that, the other strength of the Disney is strong brand name. Walt Disney brand has been known for more than 90 years in US and has been widely recognized worldwide, especially due to its Disney Channel, Disney Park resorts and movies from Walt Disney studios. The company is perceived as the primary family entertainment provider and was valued as the 13th most valuable brand in the world in 2012.

    To further take advantage of its strengths, Disney needs to pay attention in innovation to stay ahead of the competition and build business. With rapid advances in technology, the traditional passive television audience is in transition, no longer captive to prime-time scheduling on major networks. On the other hand, there are two significant weaknesses of the Disney. One of the weaknesses is the high risk factor. The markets they operate in have no guarantee of success, there is no guarantee that the movies are going to be blockbusters or that a new line of characters will prosper.

    For example, Disney has had its share of movie flops lately, such as The Lone Ranger and last year’s big-budget John Carter. These misfires, should they persist, will likely keep future growth in check, though the film operations account for less than 15% of total revenues, and the company has sought to reduce risk by releasing fewer titles and making more sequels of proven franchises, like the Iron Man and Pirates of the Caribbean series. Another weakness of the Disney is the high sunk cost. Walt Disney Company holds exceptionally high sunk costs which could hinder Disney’s future financial abilities.

    In addition to sunk costs, there is the continual cost of updating all the parks, resorts and hotels. Therefore, Disney may need to implement a new strategy to boost customer service in the parks as a way of besting competition without increasing expenses. Meanwhile, the greatest opportunity for Disney is growth through further diversification. Throughout its long history, Disney has managed to diversify more than perhaps any other entertainment company in history. From film to theme parks to consumer products to TV, Disney has broken into nearly every entertainment segment and the company continues to look for new opportunities.

    This constant desire for diversification and growth is what has allowed Disney to enjoy so much success in the past, and it is what will allow it to continue this success in the future. Therefore, Disney needs to figure out how to connect with kids directly via storytelling utilizing multiple technologies. Besides, Disney may also need to expand new global market. Actually, Disney had already developed theme parks around the globe to capture the market, adapting them to local cultures. They include Disneyland Paris, Tokyo Disney, and Hong Kong Disneyland. With worldwide expansion, Disney aims to increase its marketplace and expand its brand.

    A major threat to Disney’s success is the current market stagnation, as consumers do not have money to spend on Disney’s products and vacations. Disney can plant cheaper entertainment options in smaller markets and emerging economies, This long-term goal suggests that the Company look at smaller markets in which to place cheaper entertainment options such a solitary water park, one amusement park, or a single resort. Cheaper entertainment options in emerging markets should be examined too, especially as The Walt Disney Company currently has no footing whatsoever in South America.

    Company Background The Walt Disney. (2016, Jul 03). Retrieved from https://graduateway.com/company-background-the-walt-disney/

    Related Topics

    Hi, my name is Amy 👋

    In case you can't find a relevant example, our professional writers are ready to help you write a unique paper. Just talk to our smart assistant Amy and she'll connect you with the best match.

    Get help with your paper