Experiential Exercise 6A

18
Experiential Exercise 6A SWOT matrix: Walt Disney COMPANY Strengths Weaknesses 1. Revenue from parks and resorts is growing at an average of 11% annually 2. International segments operating income generated resulted to 22.46% margin of the total operating income of the company 3. Growth on Disney Xtreme Digital, a networking site, with 82% of world’s internet population prefers networking 4. Walt Disney has 4 differentiated segments 5. Popular brand name for over 88 years 6. Disney has 11 theme parks several cable channels 7. Services and product innovation capacity 8. One of the largest media entertainment in the world 9. Acquisition of Pixar animation 1. High operating cost, average of 84.73% of total revenues 2. Limited range of target audience mainly children 3. Large workforce 4. Lagging consumer products revenues 5. Creation of successful and new creative products and services is constantly needed Opportunities SO Strategies WO Strategies 1. HDTV SUBSCRIBERS ROSE TO AT LEAST 69% 1. Add Disneyland theme parks as well as 1. Produce music albums just like

Transcript of Experiential Exercise 6A

Page 1: Experiential Exercise 6A

Experiential Exercise 6ASWOT matrix: Walt Disney COMPANY

Strengths Weaknesses1. Revenue from parks and resorts

is growing at an average of 11% annually

2. International segments operating income generated resulted to 22.46% margin of the total operating income of the company

3. Growth on Disney Xtreme Digital, a networking site, with 82% of world’s internet population prefers networking

4. Walt Disney has 4 differentiated segments

5. Popular brand name for over 88 years

6. Disney has 11 theme parks several cable channels

7. Services and product innovation capacity

8. One of the largest media entertainment in the world

9. Acquisition of Pixar animation

1. High operating cost, average of 84.73% of total revenues

2. Limited range of target audience mainly children

3. Large workforce4. Lagging consumer products

revenues5. Creation of successful and

new creative products and services is constantly needed

Opportunities SO Strategies WO Strategies1. HDTV SUBSCRIBERS ROSE TO

AT LEAST 69% OF ALL THE HOUSEHOLDS IN UNITED STATES.

2. VIDEO-ON-DEMAND IS A MAJOR INDUSTRY AND GROWING AND GROWING RAPIDLY, OVERALL SUBSCRIPTION ON DEMAND OFFERINGS SAW A 10% INCREASE IN TOTAL TRANSACTIONS.

3. Increasing impact in music industry

4. EXPANSION IN UNTAPPED GEOGRAPHICAL AREAS

1. Add Disneyland theme parks as well as new attractions on its parks on geographical areas like on countries surveyed to have the happiest people on earth. (S1, S6, S2, O4)

2. Make new animation movies through Pixar animation studios in partnership with Disney with combined portfolio of new and old Disney characters with content related to past Pixar hit releases. (S8, S9, O6)

3. Add new cable channels and internet subscription channels with program filled contents and touch of networking. In addition, a Disney website that will handle

1. Produce music albums just like what Sony and Time Warner to expand its market and audience share. (W2, O3)

2. Build parks on newly emerging geographical areas rather than on older and expensive areas. (W1, O4)

3. Recreate the past Disney characters by offering consumer products like rereleasing Disney films on Blu Ray Discs with added features and interactive. (W4, W5, O6)

4. Retrench some labor and

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5. INTERNET ADVERTISING GROWS IN 2007 AND CONTINUES CURRENTLY.

6. Reuse of past portfolio of Disney characters

7. Much cheaper labor cost on other countries like India and Philippines.

the Internet channel viewings together with advertisements and announcements of upcoming events of Disney. (S6, S3, O1, O2, O5)

4. Launch Disney Recording Studio to compete with the music industries. (S4, S7, O3)

hire workforce based on other countries that require much cheaper cost but with the same level of competence. (W3, O7)

Threats ST Strategies WT Strategies1. Estimated 8.7%

unemployment rate worldwide

2. Changing customer preferences

3. Global piracy rate from 40% in 2001 and constantly rising currently; copyright and intellectual property rights infringements

4. Tight competition locally and internationally

5. Slower/struggling economic growth

6. Availability of other internet entertainment

7. Fast pace of technological and media changes

1. Introduce and push new and cheaper entertainment and product options instead of high priced options. (S7, S8, T5)

2. Introduce different interactive entertainment on the internet. (S8, W6)

1. Research on having lower cost entertainment rather than having the costly choices. (W1, T5)

2. Continue on innovating unique products that will conform on the consumers’ tastes and preferences. (W5, T2)

SO StrategiesSO strategies are strategies that utilize an organization’s internal strengths to take advantage of

external opportunities. By doing the SWOT matrix, 4 strategies have been developed.

1. Add Disneyland theme parks as well as new attractions on its parks on geographical areas like on countries surveyed to have the happiest people on earth

Since the revenue on Disney’s theme parks and resorts is growing and the operating income on international segments shows significant portion in relation to company’s total operating income, the strategy of adding theme parks on geographical areas like on countries which were surveyed to be the top happiest countries in the world is desirable. This is also in line with the company’s vision of making everyone happy. The magical theme park of Disney will add happiness to those countries that will enable Disney to generate more revenues.

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2. Make new animation movies through Pixar animation studios in partnership with Disney with combined portfolio of new and old Disney characters with content related to past Pixar hit releases

This SO strategy will be able to maximize its acquisition of Pixar Animations by producing animated films through the use of Pixar itself. It can also come up with the idea of producing films using its vast portfolio of old and famous characters in related contents to Pixar’s hit movie releases.

3. Add new cable channels and internet subscription channels with program filled contents and touch of networking. In addition, a Disney website that will handle the Internet channel viewings together with advertisements and announcements of upcoming events of Disney

Since the cable tv subscribers and internet users worldwide are growing in numbers, Disney can add new cable channels that will add new attractions to subscribers. Also, the Disney can maximize the use of its website by showing their a live streaming of what was showed simultaneously on the television. It can also offer video downloads for the subscribers for the movies they prefer to watch. In the website, there can be also a bulk of advertising. Members of this website will be requested to refer the website to at least two friends so that it can grow and be known.

4. Launch Disney Recording Studio to compete with the music industriesJust like the Sony and Time Warner recording studios, Disney can expand its services on producing musical albums of superstars and upcoming musical artists. This will enable the company to expand its audience shares and compete with the music industry.

WO StrategiesWO strategies are strategies that take the external opportunities to improve its internal

weaknesses. By doing SWOT matrix, 4 strategies were developed.

1. Produce music albums just like what Sony and Time Warner to expand its market and audience shareThe match of having limited market share mainly children and the increasing impact on music industry came up with the strategy of producing music albums from famous artists and upcoming ones. This will enable to increase its market share and expand it to teenagers and adults. This is due to the music’s universality and flexibility.

2. Build parks on newly emerging geographical areas rather than on older and expensive areasWhen looking to expand, The Walt Disney Company should look to new, emerging economies in which to plant and foster new parks and initiatives. Disney should consider emerging markets such as India, Brazil, and South Korea to cut costs and “beat the crowds”, in a sense. Where emerging markets develop so does the population. If Disney can plant parks in these areas before the growth stabilizes, then they have made a sound financial decision.

3. Recreate the past Disney characters by offering consumer products like rereleasing Disney films on Blu Ray Discs with added features and interactive.

In order to improve the weakness of lagging consumer products and the constant need of making successful product, Disney can recreate and rerelease their portfolio of old characters by offering Blu

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Ray Discs movies of previously showed films with added extra features and interactives. This is a cheaper way of boosting revenues of the company.

4. Retrench some labor and hire workforce based on other countries that require much cheaper cost but with the same level of competence.

In order to minimize the cost of labor, the company can use the opportunity of having much cheaper labor on countries such as India and Philippines provided they possess the competence and skills as the retrenched labor had.

ST StrategiesST strategies are strategies that utilize the company’s internal strengths to reduce the impact of

external threats.

1. Introduce and push new and cheaper entertainment and product options instead of high priced options

Seeing as consumers are experiencing the poor economy just like members of the business communities, offering cheaper-priced entertainment options would be a sure way to include the struggling consumer in the consumption of entertainment products.

2. Introduce different interactive entertainment on the internetThe company can use its status as one of the largest media entertainment in the world to provide different entertainment attractions on the internet. Interactive entertainment, gaming, networking can be introduced primarily not just for kids, but also for adults.

WT StrategiesWT strategies were defensive strategies that reduce internal weaknesses and avoids external

threats.

1. Research on having lower cost entertainment rather than having the costly choicesBecause of increasing costs of operation, Disney needs to consider less expensive options. Disney is known for their excellence, not their sheer size. That being said, the Company should consider building a water park in Chicago or a small amusement park in Kansas City. The savings would be great for the company and it would open its doors to areas of the country that could access the parks without travelling, causing currently economically-struggling citizens to visit the parks in greater numbers than if the parks stayed hundreds of miles away in their sunny Floridian and Californian homes.

2. Continue on innovating unique products that will conform on the consumers’ tastes and preferencesBecause the company needs constant creation of successful products and services, the products they are going to make should conform to what the consumers prefer. Through this, the company will be able to meet the consumers tastes as well as making the products and services they are going to offer to be successful.

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Experiential Exercise 6BSPACE matrix: Walt Disney COMPANYFinancial Strengths RatingsGross Profit Margin Increased from 15.98% in 2006 to 19.10% in 2007 4

Low Leverage 4Return on Assets increase to 7.69 % 5Current ratio is close to 1 (2006-2007) with just a marginal increase I the year 5

Earnings per share (2007) is 2.34 higher than industry 3

Total 21Average 4.2

Competitive Advantage Ratings

Global expansion -2

Disney is the world’s largest amusement park company -1

Quality products -1Decades of experience in the technological aspects of entertainment/film -3

Products life cycle of Disney characters been popular -2

Total -9Average -1.8

Environmental Stability Ratings

Competitive Pressure -2

Technological changes -1Barriers to entry in film and entertainment industries -1

Recession phase in economy affects the operations -4

Price range of competitive products -4Total -12Average -2.4

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Industry Strength RatingsThere is no “ease of entry” into the film/entertainment industry 5

Profit potential 4Financial Stability 3Growth potential 5Total 17Average 4.25

Conclusion:ES Average -12/5 = -2.4 IS Average 17/4 = 4.25CA Average -9/5 = -1.8 FS Average 21/5 = 4.2

Directional Vector Coordinates: x-axis: -1.8 + (4.25) = 2.45y-axis: -2.4 + (4.20) = 1.8

This graph shows that the Walt Disney Company falls with first quadrant of the SPACE Matrix Graph. This means that the company should pursue AGGRESSIVE strategies.

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Experiential Exercise 6Cbcg matrix: Walt Disney COMPANY

Division Revenues Percent Revenues

Profits Percent Profits

Percent Market Share

Industry Growth

RateStudio

Entertainment7491 21% 1210 15% 68% -.5%

Parks and Resorts 10626 30% 1710 22% 35% 7.06%Media Network 15046 42% 4285 55% 86% 2.79%

Consumer Products 2347 7% 631 8% 18% 7.02%Total 35510 100% 7836 100%

QUESTION MARKS

RELATIVE MARKET SHARE POSITION IN THE INDUSTRY

INDUSTRY SALES GROWTH RATE (Percentage)

High

High

Medium

Medium

Low

Low0.0.501.0

+20

0

-20

55%

22%

15%

8%

STARS II

CASH COWS III DOGS IV

QUESTION MARKS I

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Parks and Resorts have a low relative market share but it competes in growing industry that’s why they fall in this category. As a proof Disney land Parks and Resorts have direct competitors such as Six Flags Discovery Kingdom with 32 parks and have revenue of 1 billion in 2005. Due to Demographic changes in increases in aging population, Viacom Inc. has also started opening adult play grounds offering virtual reality game.

But not all Parks are doing well Hong Kong’s oldest amusement park has been doing much better than Hong Kong Disneyland. Based on the report of USA Today(June 5, 2007 p.9A) Hong Kong Disneyland has been refinance the debt which shows that cash needs of this segment are high than its cash generation.

STRATEGIES:

PRODUCT DEVELOPMENT-Revitalize the Disney California Adventure in Anaheim, California by spending $1.1 billion in 2008-2011.

MARKET DEVELOPMENT-Build vacation homes in places like Caribbean.

Consumer Products has a low relative market position and operates in a high growth industry. This segment has produced the lowest revenue for 2007 which is only 7% of the total revenue of Walt Disney. The leading competitors of Walt Disney in this segment are warner Brothers, Fox, Sony, Marvel and Nickelodeon. Consumer Products are complements to the rest of Disney’s asset. The clothing, toy and other accessories accompany Disney movies and theme parks. Operating Results for licensing and retail distribution business are influenced by seasonal consumer purchasing behavior and by the timing and performance of animated theatrical releases.

STRATEGY:

Retrenchment- , Disney currently sold 365 of its stores to the Children’s Place under a franchising agreement.

STARS

MEDIA NETWORKS AND BROADCASTING. Disney has control of several television networks: ABC, ABC Family, A&E, and The Disney Channel and ESPN. Global media is a high growth industry and Walt Disney’s media network has a large market share therefore it is considered a “star”. This segment has the highest share in the company’s total revenue and also with its total profit with 42 % and 55 % respectively. Walt Disney competes primarily with other television networks, independent television stations, and other video media such as cables and satellite television programming services. Advertising is also a major source of income for Walt Disney, also competes with other advertising media such as newspapers, magazines, billboards and internet.

STRATEGY:

Horizontal integration- Merged with ABC. ABC added distribution network with more TV and radio network.

Horizontal integration- acquisition of club penguin one of the fastest growing virtual online for kids. The addition of club penguin to Disney’s existing online asset will further

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strengthen the company’s objective of establishing clear leadership in online virtual for kids and family.

Product Development-Also Disney unveiled Disney Xtreme Digital, a networking site that competes against MySpace, owned by News Corp.

Horizontal Integration-Acquisition of KHJ (Los Angeles) television station.

CASH COWS

Studio Entertainment Disney’s studios are as good as their competitors in the film industry it has a low growth industry and a high relative market share making it a “cash cow “. Whether or not Disney films generate large revenue depends on the number of people who attend, which varies by film. If moviegoers do not like a film then the production company will lose money as a result. Piracy has also become a factor why there is a decline in profit of studio entertainment although , this segment is still generating a lot of revenues from the increase in worldwide theatrical motion picture distribution due to strong box-office performance of selected movie

STRATEGY:

Retrenchment- lower it’s cost and share it’s production cost for film by financing with investors. This will lessen the risk of Walt Disney with producing and distributing films.

Experiential Exercise 6D

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QSPM matrix: Walt Disney COMPANY

Introduce and push new and

cheaper entertainment

and product options instead of

high priced options

Launch Disney Recording Studio to

compete with the music industries

Make new animation movies through Pixar animation studios in

partnership with Disney with combined portfolio of new and old Disney

characters with content related to past Pixar hit

releasesKey Factors Weight AS TAS AS TAS AS TASOpportunities1. HDTV SUBSCRIBERS

ROSE TO AT LEAST 69% OF ALL THE HOUSEHOLDS IN UNITED STATES.

2. VIDEO-ON-DEMAND IS A MAJOR INDUSTRY AND GROWING AND GROWING RAPIDLY, OVERALL SUBSCRIPTION ON DEMAND OFFERINGS SAW A 10% INCREASE IN TOTAL TRANSACTIONS.

3. Increasing impact in music industry

4. EXPANSION IN UNTAPPED GEOGRAPHICAL AREAS

5. INTERNET ADVERTISING GROWS IN 2007 AND CONTINUES CURRENTLY.

6. Reuse of past portfolio of Disney characters

7. Much cheaper labor cost on other countries like India and Philippines.

.11

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.03

2

4

3

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Threats1. Estimated 8.7% .08 - - -

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unemployment rate worldwide

2. Changing customer preferences

3. Global piracy rate from 40% in 2001 and constantly rising currently; copyright and intellectual property rights infringements

4. Tight competition locally and internationally

5. Slower/struggling economic growth

6. Availability of other internet entertainment

7. Fast pace of technological and media changes

.10

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1.00Strengths1. Revenue from

parks and resorts is growing at an average of 11% annually

2. International segments operating income generated resulted to 22.46% margin of the total operating income of the company

3. Growth on Disney Xtreme Digital, a networking site, with 82% of world’s internet population prefers networking

4. Walt Disney has 4 differentiated segments

5. Popular brand name for over 88 years

.14

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3

3

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4

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6. Disney has 11 theme parks several cable channels

7. Services and product innovation capacity

8. One of the largest media entertainment in the world

9. Acquisition of Pixar animation

.06

.07

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Weaknesses1. High operating cost,

average of 84.73% of total revenues

2. Limited range of target audience mainly children

3. Large workforce4. Lagging consumer

products revenues5. Creation of

successful and new creative products and services is constantly needed

.10

.06

.05

.07

.04

3

3

-4

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1.00 4.9 3.43 4.18

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Holy Angel UniversityAngeles City

College of Business and Accountancy

Walt Disney

COHESION CASE:EXPERIENTIAL EXERCISES 6A, 6B,

6C AND 6D

Group name:Gamemaster

Members:Henson, anne freya

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Hipolito, rubyPoy Lorenzo, Kaceelyn

Pineda, Joanna marieTan, john Joshua

Instructor:Mrs. Carmelita lao

Date:21 FEbruary 2012