Walt Disney Case Analysis PDF

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Final Assessment The Walt Disney Company: Its Diversification Strategy in 2013

Vision The Walt Disney Company’s corporate vision is to make people happy

Mission The mission of The Walt Disney Company is to entertain, inform and inspire people around the globe through the power of unparalleled storytelling, reflecting the iconic brands, creative minds and innovative technologies that make ours the world’s premier entertainment company.

Objectives 



to be one of the world's leading producers and providers of entertainment and information, using its portfolio of brands to differentiate its content, services and consumer products. to maximize earnings and cash flow, and to allocate capital toward growth initiatives that will drive long-term shareholder value.

Strategies The company’s generic strategy focuses on developing competitive advantages based on innovation in product development. Disney’s intensive strategies are implemented with strategic objectives for maximizing the growth benefits of such innovation. The Walt Disney Company’s Intensive Strategies for Growth 1. Differentiation: Product development is The Walt Disney Company’s primary intensive growth strategy. This strategy involves offering new products in the company’s current or existing markets. This intensive strategy links to the differentiation generic competitive strategy in emphasizing uniqueness in product development. A related strategic objective is to achieve business growth by effectively persuading customers to purchase Disney’s products on the basis of their unique attributes, such as in entertainment experience. 2. Market Penetration: The Walt Disney Company achieves growth partly through market penetration. As a secondary intensive strategy, market penetration enables growth by increasing sales of existing products in the company’s current markets.

3. Market Development. Market development is an intensive growth strategy that is less frequently used in The Walt Disney Company’s business. In growing the business, this intensive strategy requires the company to introduce its existing products to new markets or market segments. 4. Diversification. The Walt Disney Company uses diversification as a supporting intensive strategy for business growth. Developing or acquiring new businesses is the typical approach in this intensive growth strategy.

Walt Disney Mission statement Disney’s mission statement is “to entertain, inform and inspire people around the globe through the power of unparalleled storytelling, reflecting the iconic brands, creative minds and innovative technologies that make ours the world’s premier entertainment company.” While the mission statement talks about the entertainment and impact it purposes to give its customers, the primary focus of the company is on leading in developing the entire industry into one of the most dynamic and progressive ones. The company is, therefore, all about stimulating positive changes. The mission statement by Disney has the following characteristics: 1. Improvement of communities 2. Improving lives 3. Entertain 4. Exceeding expectations Walt Disney Vision statement Disney vision statement is “to be one of the world’s leading producers and providers of entertainment and information.” By coveting to be the world’s unchallenged providers of the services it deals within all dimensions, including quality and coverage, Disney underscores its leadership qualities. Such a company is one that can go out of its way to support industrybased developmental initiatives to benefit all players without worrying of competition. This is exactly what Disney does as show by the following features contained in its vision statements: 1. World’s leader 2. Producer and provider of entertainment and information 3. Walt Disney external opportunities

In Disney’s industry environment, these opportunities are external strategic factors that lead to higher revenues in the company’s global entertainment, mass media, and amusement park operations. For example, expansion opportunities can improve the revenues of Disneyland operations. The following opportunities are among the main managerial concerns in growing The Walt Disney Company: 1. There has been a 5.8% increase in amusement park attendance worldwide. 2. Online movie rentals are up 41% in 2012. 3. Recent issues with Carnival Cruise ships mechanical malfunctions are leaving many customers looking for a new cruise line. 4. People are increasingly spending more time at home watching larger screen TVs. 5. 3D Box Office films are up 40% from 4 years ago. Walt Disney external threats In Disney’s case, these factors are the threats that come with trends related to entertainment firms and other players in the international industry environment. The Walt Disney Company’s management efforts must tackle the following threats to the business: 1. Disney competes directly with NBC Universal, Paramount Pictures, and CBS for TV entertainment and sports. 2. There are many competing theme parks across the USA and world with most having lower prices than Disney. 3. Piracy in the Film and Music Industry. 4. Unemployment and gas prices both remain high around the world. 5. People in the developed world are having fewer children and waiting later in life to have kids. Disney Critical Success Factors Weight

Differentiation

Rating Score

CBS Rating Score

Carnival Rating Score

4

0.40

3

0.30

2

0.20

4

0.32

3

0.24

1

0.08

4

0.32

1

0.08

2

0.16

4

0.40

2

0.20

1

0.10

4

0.32

2

0.16

1

0.08

2

0.16

1

0.08

4

0.32

2

0.16

4

0.32

1

0.08

0.10

Market Penetration 0.08

Revenues 0.08

Income 0.10

Movie Titles 0.08

Cruise ships Market Share 0.08

Reliance on Disposable Income 0.08

Product Quality

4

0.24

2

0.12

3

0.18

4

0.48

3

0.36

1

0.12

4

0.28

3

0.21

2

0.12

1

0.05

2

0.10

3

0.15

4

0.40

3

0.30

2

0.20

0.06

TV Market Share 0.12

Brand Awareness 0.07

Goodwill Impairment 0.05

Net worth 0.10

Totals

3.53

2.47

1.81

1.00

Walt Disney Competitive Profile Matrix (CPM) Disney is considerably better than either CBS or Carnival, being more various and having significantly more revenues. Walt Disney External Factor Evaluation (EFE) Matrix

Opportunities 1. There has been a 5.8% increase in amusement park attendance worldwide. 2. Online movie rentals are up 41% in 2012. 3. Recent issues with Carnival Cruise ships mechanical malfunctions are leaving many customers looking for a new cruise line. 4. People are increasingly spending more time at home watching larger screen TVs. 5. 3D Box Office films are up 40% from 4 years ago.

Threats 1. Disney competes directly with NBC Universal, Paramount Pictures, and CBS for TV entertainment and sports. 2. There are many competing theme parks across the USA and world with

Weigh t

Ratin g

Weighted Score

0.04

3

0.12

0.05

3

0.15

0.04

1

0.04

0.03

3

0.09

0.05

2

0.10

Weigh t

Ratin g

Weighted Score

0.11

3

0.33

0.07

2

0.14

most having lower prices than Disney. 3. Piracy in the Film and Music Industry. 4. Unemployment and gas prices both remain high around the world. 5. People in the developed world are having fewer children and waiting later in life to have kids. Total

0.08

3

0.24

0.03

4

0.12

0.06

2

0.12

0.56

1.45

Disney has an above External Factor Evaluation score of 1.45.

Walt Disney Internal strengths In this aspect refers to the internal factors that strengthen business growth. In this company analysis case of Disney, such factors support management strategies to grow the business amid aggressive competition in the global entertainment and mass media industries. 1. 2. 3. 4. 5. 6. 7.

Best entertainment place in the world. Target niche market Strong diversification Good image Acquire popular teams of different leagues Innovation Get easy feedback through social network

Walt Disney Internal Weaknesses 1. 2. 3. 4. 5.

Huge investment with high risk factor Specific target market Costly to visit Negative impact on child’s mind More costly R&D

Walt Disney Internal Factor Evaluation (IFE)

Strengths 1. Best entertainment place in the world. 2. Target niche market 3. Strong diversification

Weight

Ratin g

Weighted Score

0.08

4

0.32

0.05 0.15

3 3

0.15 0.45

4. Good image 5. Acquire popular teams of different leagues 6. Innovation 7. Get easy feedback through social network

Weaknesses 1. Huge investment with high risk factor 2. Specific target market

0.09 0.05

4 3

0.36 0.15

0.15 0.08

4 3

0.60 0.24

Weigh t

Ratin g

Weighted Score

0.10

2

0.20

0.05

2

0.10

0.05

1

0.05

0.10

1

0.10

0.05

1

0.05

3. Costly to visit 4. Negative impact on child’s mind 5. More costly R&D Total

1.00

2.77

Walt Disney Swot Matrix Strengths 1. Best entertainment place in the world. 2. Target niche market 3. Strong diversification 4. Good image 5. Acquire popular teams of different leagues 6. Innovation 7. Get easy feedback through social network

Opportunities 1. There has been a 5.8% increase in amusement park attendance worldwide. 2. Online movie rentals are up 41% in 2012.

Weaknesses 1. Huge investment with high risk factor 2. Specific target market 3. Costly to visit 4. Negative impact on child’s mind 5. More costly R&D

Threats 1. Disney competes directly with NBC Universal, Paramount Pictures, and CBS for TV entertainment and sports.

2. There are many competing theme parks across the USA and world with most having lower prices than Disney. 3. Piracy in the Film and Music Industry. 4. Unemployment and gas prices both remain high around the world. 5. People in the developed world are having fewer children and waiting later in life to have kids.

3. Recent issues with Carnival Cruise ships mechanical malfunctions are leaving many customers looking for a new cruise line. 4. People are increasingly spending more time at home watching larger screen TVs. 5. 3D Box Office films are up 40% from 4 years ago.

SO Strategies

ST Strategies

S1, S3 +O1, O2= Market Development

S2, S4 + T1, T2, T3= Batter Management through cover the cost

WO Strategies

WT Strategies

W1 + O2, O6 = Product Development

W3, W4 + T1, T5= Focus on R&D

Walt Disney Space Matrix

FS Aggressive

+2.75, +0.2

CS

IS

Defensive

ES

Disney is well positioned in the Aggressive Quadrant.

External Position Financial Strength Rating Technological change Security threat Economic recession Competitive pressure Change in demand Total Industrial Stability Financial stability Utilization of resources Increase media network Market growth Total

Internal Position Financial strength Rating -5 Liquidity -3 Working capital -2 Earnings per share -5 Return on investment -6 Cashflow -21 Total Rating Competitive advantage 6 Product quality 5 Customer loyalty 3 Market share 5 Diversification 19 Total

Walt Disney BCG Matrix

High

Industry Growth Rate

6 3 5 4 4 22 Rating -2 -3 -1 -2 -8

Media Network

Disney Channel Worldwide

Studio Entertainment Parks and Resorts

Interactive Media Consumer Products

High Low

Relative Market The company’s operations are divided amongst four segments, namely: Media Networks, Parks and Resorts and Studio Entertainment, Disney channel worldwide and Consumer Products and Interactive Media. It shows that the biggest earning segment is Media Networks, followed by Parks and Resort and Studio Entertainment. Both Media Networks, Parks and Resorts & Studio entertainment show a high growth prospective and a relatively high market share because of that they are in Stars quadrant. Next the second largest company earning segment is Studio entertainment and Park & Resorts which appear to be in the Cash Cows category for having a significant share in the market while having relatively low growth. This can be accountable the fact that this market is diversification may be necessary in order to sustain the company’s market share. Lastly, the lowest earning segment is Consumer Products and Interactive Media which appear to be in Dogs category for having low growth and low market share.

Walt Disney IE Matrix

The total IFE weighted score

Strong (3.0-4.0)

Medium (2.0-2.99

Average (2.02.99)

Weak (1.0-1.99)

Media Networks

Low (1.0-1.99)

High (3.0-3.99)

Interactive Media

Advantages of Alternative Strategies

1. Low cost/Investment 2. Reduced processes 3. Improved quality

Disadvantages of Alternative Strategies 1.

Spread negative buzz

2.

Selective attention

3.

Competitor imitate

Recommendation specific strategies Walt Disney Company’s generic competitive strategy pushes for productfocused strategic objectives. Such business focus is necessary for

supporting product development efforts to differentiate the company from competitors. I think Walt Disney is focusing on product development because it involves offering new products in the company’s current or existing markets. So, as a fan of Walt Disney’s creation because once I had been to Disneyland, I would say that it is really a “happiest place on earth” I recommend to the company to use Global strategy because it may have entered a number of different markets, even though Disney is very much popular it is fine that the creation of Disney is still spreading in every part of the world. Walt Disney Timetable Recommendations 2024

Walt Disney will run the parks more efficiently, increase staffing, and do more effective and regular maintenance. 2026 Walt Disney will improve advertising to promote entertainment which target a more mature audience. 2027 Remodel and build a new attraction in every Park and Resorts to stay appealing to customers. 2029 Walt Disney builds a Park and Resorts in Philippines Recommend procedures for strategy review and evaluation  

Use product development to renovate and build new attractions in order to attract an older target market. Use market development to build a new theme park which will be more accessible to the North East area....