Disney

Henry NoyesAbie SilversDarya MurashkaMaryia MaksimenkaTahnee RadcliffeAdaptive Consulting

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Walt Disney10/16/1923 Disney Brothers Studio was started07/17/1954 Disneyland opened in Anaheim, Ca.1964 Began work on the Orlando Project

Innovator in Technicolor, Multi-plane camera, and silly symphoniesFirst to Full-length Animated productions1937-Snow White and the Seven Dwarfs. First Oscar for Animated FilmWalts Nine Old Men

Starting with the Founder and first CEO Walter Elias Disney, The Disney Company enjoyed much success in its early years. This is attributed to the innovation and risk-taking that Walt Disney had himself.Walt Disney made innovations into Technicolor, multi-plane camera, and silly symphonies. In 1934, against advice of his peers and critics, Disney started work on the first full-length animated movie, know as Snow White and the Seven Dwarfs which debut on December 21, 1937, which won the first Oscar for an animated filmWalts Nine old Men was Walts way to assign cartoons and production to one leader and that he could follow up with during production. This way of producing multiple cartoons at one time that all had the same Disney Quality. On July 17, 1954 he opened the first Disney Land in Anaheim, California and ten years later began work on the Orlando Project. Walt Disney really wanted a place where children and their families were able to have fun while interacting with the characters he has developed over the years.

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The lost decadesLack of leadership and focus.Fending off hostile takeover bidsLack of innovation and vision.Epcot took 16 years to complete and construct without Walts focus and vision

After Walt Disneys death the company became very stagnant. There seem to have been a lack of innovation, lack of leadership, and focus on fending off hostile take over bids. Projects such as EPCOT were delayed for about 16 years before its construction and completion.

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Disney Decade and Save Disney CampaignIn 2003, Roy E. Disney stepped down as Disney vice chairman and chairman of Walt Disney Feature Animation,

turning the Walt Disney Company into a "rapacious, soul-less" company

In pursuit of saving the Disney Company, Walts nephew appointed Michael Eisner as CEO and Chairman of the Walt Disney Company. Michael Eisner had great leadership qualities but lacked focus. Throughout his rein he was able to accomplish Disney opened up Euro Disney, Disney MGM Studios, Disneys California Adventure Park, and Disney-MGM Studios Paris. There was also commercial success at the box office including Roger Rabbit, The little Mermaid, and The Lion King. However in 1994, things were not looking to good for the company once again. There was tension between Michael Eisner and the Board of Directors, they felt that Eisner aggressiveness has robbed the company of its magic and turned it into a soul-less company. Due to complications between the leadership team, Eisner was forced to retire in 2005, which was a year before his scheduled time.

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Disney NowRobert Iger named CEO in 2005AcquisitionMarvel EntertainmentPixarLucas FilmsFocused Strategy on Family-Friendly Entertainment.

The Walt Disney Company is currently under the supervision of its new CEO, Bob Iger. We believe that Bob Iger possesses some of the same leadership and focus that Walt Disney had. He was appointed in 2005 and his first order of business was to make a mends with the shareholders. He then continued on to bring the Disney Company much success with the acquisition of both Pixar Animation Studios and Marvel Entertainment, along with many other things. However, Iger is set to retire in about three years and our concern is that his successful momentum will be able carry on. We hope to see the Disney Company remain as one of the top leading contenders in the different segments of the entertainment industry.

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MissionThe Walt Disney Company's objective is 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.The company's primary financial goals are to maximize earnings and cash flow, and to allocate capital toward growth initiatives that will drive long-term shareholder value.

Investor Relations - Thewaltdisneycompany.com/investors

The Walt Disney Company is fulfilling its objective and goals by being one of the worlds leading providers of entertainment and being among the most admired companies in the world. The company has a reputation of delivering a "magical" experience to its guests in all of its operations that includes its theme parks, hotels, restaurants, retail stores. Disney combines research, client values and preferences, and expertise to make sure that the company fulfills its mission and achieve its goals.6

Secondary Goals

Disney Citizenship is our continuing commitment to be among the most admired companies in the world a recognition of both the integrity of our people and the quality of our entertainment experiences. This guides our actions as a company and our efforts to promote the happiness and well-being of kids and families by inspiring them to join us in creating a brighter tomorrow.

Citizenship @ thewaltdisneycompany.com

Disneys Commitment to its community, guests, and employees helps to reinforce its Brand Image, which helps to reinforce its Customer loyalty. The Disney Citizenship commitment helps Disneys guest give reason to visiting its parks, watching Disney films, and buying Disney merchandise.7

SWOT

A SWOT anaylsis allows us to provide an in-depth look into a companys strengths, weaknesses, opportunities, and threats. Disney has many strengths and is a leader in majority of the industries it operates in. Disney does have weaknesses and opportunities to capitalize on weaknesses and turn them into strengths. Major threats face Disney today. 8

Disney Strengths

Brand Loyalty

Consumer LoyaltyVacation Club200000 members$25000 to joinClub 33waitlist 10 years$27000 to join$11000 annually

The Walt Disney Company is fulfilling its objective and goals by being one of the worlds leading providers of entertainment and being among the most admired companies in the world. The company has a reputation of delivering a "magical" experience to its guests in all of its operations that includes its theme parks, hotels, restaurants, retail stores. Disney combines research, client values and preferences, and expertise to make sure that the company fulfills its mission and achieve its goals.

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Disney Strengths

Diversified operating portfolio5 Business SegmentsIntellectual propertyBrand Value : $19 billion

As a media and entertainment Giant, Disney operates in five segments: media (involving movie production, ESPN Network, Disney Channel, ABC Family, and others), parks and resorts (including theme parks and the Disney cruise line), studio entertainment (such as live performances), consumer products (including licensing), and interactive (involving all gaming). Of Disney's $45.05 billion global revenue in 2013, only half came from the company's most well-known segment, media. This revenue gives D a huge advantage while the profits from one segment could be offset by losses from anotherThe Walt Disney Company and its subsidiaries own the intellectual property rights to the characters, brands, titles and properties and by licensing translates in into compelling products and experiences. According to Forbes Magazine the Brand Value is 19 Billion USD

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Disney Strengths

Strategic acquisitions Purchases of Pixar (2006)Marvel (2009)Lucas Film the owner of Star Wars Franchise (2012)Maker Studios (2014)

Most of Disneys recent acquisitions have been about amassing intellectual property to fuel its television, theme park, consumer products and movie divisions buying Lucasfilm, home to the Star Wars franchise, and Marvel Entertainment. The Walt Disney Company said it had completed a deal to pay $500 million to acquire Maker Studios, a YouTube-based video supplier in 2014

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Disney Strengths

Source: IBIS World

Disneys strong market position in both Television Production Industry and Cable Network Industry respectively12

Disney StrengthsExpertise in entertainment ESPN 50% overall company profitHolds rights forNFL, NBA, MLB, NASCAR, US Open and more Targeting full spectrum of audiences

Disney provides high quality family entertainment via its Cable Networks Group, which includes the Disney Channels Worldwide portfolio of kids channels, ABC Family and SOAP net, as well as the Companys equity stake in A&E Television. It provides a strong foundation for franchise building across the company as well as unique opportunities for exploiting international expansion. Disney bought ESPN as part of its purchase of Capital Cities/ABC in 1996. ESPN represents roughly 50% of Disney overall profits. ESPN holds rights for various professional and college sports programming, including the National Football League (the NFL), the National Basketball Association (the NBA), Major League Baseball (the MLB), college football and basketball conferences, the National Association of Stock Car Auto Racing (NASCAR), the Wimbledon Championships, U.S. Open Tennis, and the Masters golf tournament. The networks coverage of live sports, entertainment, expert commentary, news, and stats attracts TV providers and therefore brings higher ad rates. It has a large and established subscriber base and a clear competitive advantage over other sports channels.Attracting a multitude of demographics, Walt Disney produces popular television series that attract older audiences, such as Grey's Anatomy, Scandal and The View, while also targeting the 14 to 34 year old demographic through its ABC Family network. Late night shows, such as Jimmy Kimmel Live, have also fared well due to high audience viewership and ratings

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Disney Strengths Amusement Park IndustryStrong Market Position -48.1%Geographic locationDisney College ProgramStaying true to Walts commitment

Strong Market Position in Amusement Park Industry-48.1% Geographic location -Florida, California parks with favorable weather conditionsDisney College Program:gives access to a large pool of seasonal casual workers.Disney stays true to its commitment and thus carries out all necessary maintenance to keep facilities in good condition.

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WeaknessesLack of innovationUniversalHarry Potter Worldannounced 2007 > opened 2010 DisneyAvatarland announced 2011 > construction began November 2014 > delayed opening until 2017

Disney is not innovating at the same pace as it does its main competitor Universal. Thus, Universal announced its Harry Potter Theme Park construction to begin in 2007, and in 2010 it opens its doors accordingly which draw the major attention and caused the drastic increase in attendance.On the other side Disney announces the construction of Avatarland in Animal Kingdom park to start in 2011 and it has been delayed till Nov 2014.

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WeaknessesOvercrowdingCollege ProgramLong work hoursUnderpay High rent

Long queues lines in the humid hot weather, people suffering from dehydrations sun poisoning all together lead to poor guests experience.Interns work on average 50-60 hours a week, making min wage an hour with no benefits , they are also not being protected by union.

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WeaknessesInability to integrate forwardDisney Interactive Segment$1.6 Billion operating loss during 2007-2013Being offset $0.116 Billion Profit for 2014

Source: Thomsonone

Unlike Warner brothers and NBC who have vertically integrated forward to be cable providers with Time Warner and Comcast respectively, Disney is not able to do the sameWith As numbers show Video games is not Disneys core competence and is not its expertise obvious a drain on the company at the moment, we believe this is not going to change in the nearest future.

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Park and Resorts Revenue GenerationThe Parks are where we make the closest emotional connection with consumers as millions of them experience first hand the magic of Disney every yearDecrease at Disneyland Paris and high pre-op cost at Shanghai offset by domestic sales 9% to $14.1B and O.I. 17% to $2.2B

Disney stated in one of its annual report The parks are where we make the closest emotional connection with consumers as millions of them experience first-hand the magic of Disney every year. In 2013, Parks and Resorts revenues increased 9%, to $14.1 billion, and segment-operating income increased 17%, to $2.2 billion. The growth reflected increases at the companys domestic parks and resorts, Disney Vacation Club, and Hong Kong Disneyland Resort, partially offset by a decrease at Disneyland Paris and higher pre-opening costs at Shanghai Disney Parks and resorts revenues are generated by: the businesses in the Parks and Resorts segment generate revenues predominately from the sale of admissions to theme parks, sales of food, beverage, and merchandise, charges for room nights at hotels, sales of cruise vacation packages, and sales and rentals of vacation club properties. Significant costs include labor, depreciation, costs of merchandise, food and beverage sold, marketing and sales expenses, repairs and maintenance, utilities, information technology, and cost of vacation club units.

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Media Revenue GenerationJohn Carter and The Loan Ranger have dragged down revenues 5% revenues to $20/4B and O.I. 3% to $6.8BLaunch of Watch ESPN app in 2011

The media networks business includes television production operations, television distribution, domestic television stations, and radio networks and stations. For 2013, revenues from Media Networks increased 5%, to $20.4 billion, and segment operating income increased 3%, to $6.8 billion. The media division includes ESPN, which represents about 50% of Disneys overall profits. Disney launched a WatchESPN app in 2011 that allows fans to watch ESPN online, on the go, from their tablets and mobile devices, and through Xbox. Disney has carriage deals with most major pay-TV operators for distributing this app, and it expects to generate ad revenue from its mobile apps such as Watch ESPN and Watch Disney in the near future. Although Disney isnt completely dependent on the success of its films, losses from expensive movies such as John Carter and The Lone Ranger have been a drag on its overall revenue.

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Peer 2013 Average CompetitorsCBSDiscoveryViacomFoxTime WarnerComcast

Disney operates in eight different industries, due to this fact its hard to compare them to an industry average. Adaptive Consulting Group used an average of six other competitors, who have the strength and resources to compete with Disney in the primary industries that Disney operates in.20

Profitability RatiosSource: Bloomberg Professional

The media networks business includes television production operations, television distribution, domestic television stations, and radio networks and stations. For 2013, revenues from Media Networks increased 5%, to $20.4 billion, and segment operating income increased 3%, to $6.8 billion. The media division includes ESPN, which represents about 50% of Disneys overall profits. Disney launched a WatchESPN app in 2011 that allows fans to watch ESPN online, on the go, from their tablets and mobile devices, and through Xbox. Disney has carriage deals with most major pay-TV operators for distributing this app, and it expects to generate ad revenue from its mobile apps such as Watch ESPN and Watch Disney in the near future. Although Disney isnt completely dependent on the success of its films, losses from expensive movies such as John Carter and The Lone Ranger have been a drag on its overall revenue.

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Profitability RatiosSource: Bloomberg Professional

ROA- ROA gives an idea as to how efficient management is at using its assets to generate earnings. It also shows management's most important job - to make smart choices in allocating its resources. Disney is doing well as they increase incrementally over the year but we should be doing better than our competition. ROE- The ROE tells common shareholders how effectively their invested money is being used. The Return on Equity in the 15-20% range considered to represent attractive levels of investment22

Liquidity RatiosSource: Bloomberg Professional

The higher the value of liquidity ratios, the higher the ability of particular firm to repay its short term obligations. These ratios are vital for company financial development because company ability to turn short-term assets into cash to cover its debt is the most important factor that creditors would look at when they provide loans to the company. Current ratio- is the ability of a company to pay back its short-term liabilities with its short-term assets. It shows the efficiency of its operating cycles and its ability to convert its products into cash. Disneys Current Ratio was pretty stable, which shows that Disney is relatively efficient. Quick ratio- they meet its short-term obligations with its most liquid assets. Disneys Current Ratio was pretty stable, which shows that Disney is relatively efficient. However if we look at the most liquid assets closer we would be able to see that company doesnt perform that well. This indicates that Disney needs to improve its current assets operations in order to meet expectations of the lenders in the future.

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Efficiency RatiosDaysSource: Bloomberg Professional

Receivable TO- This ratio is used to quantify a firm's effectiveness in extending credit as well as collection of the buyers debts. By maintaining accounts receivable, firms are indirectly extending interest-free loans to their clients. Disney's high ratio implies either that a company operates on a cash basis or that its extension of credit and collection of accounts receivable is efficient. Time interest- A ratio used to determine how much money a company is making against the interest expense

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OpportunitiesReduce bureaucratic infightingMagic Bands, Interactive QueuesCollege Program

Staying true to its promises, VPs of the theme parks need to innovate the parks in a more efficient manner in order to compete with Universal and maintain its dominance of Market Share.You guys are on the right track with magic bands and interactive queues and should stay on this strategyIncrease your awareness campaign to bring attention to consuming more water, take breaksWorkers who come to the park under the influence of drugs and alcohol increasing the employees interaction with guests improving the experience of the guests in the parks 25

Princess Problems

Social media has allowed for any person to have a voice in our present generation. These two videos, that were spliced together to create our presentation video, were created by two independent groups. The two groups both promote feminist rights and both used the Disney Princess look as an attack on womens rights. 26

ThreatsThe Feminist MovementHigh cost for rights to live sporting eventsNBA rights up in 2 yearsNFL/MLB up in 7 years

As we saw from two diff videos, the first one came 4 weeks ago 1M hits and the second one came out Feb. 2014 it has 68 M hitsWhile the first one doesnt necessary name the Disney Characters and only using the princess concept for shock value, it is still a current Threat for the companys imageThe Second one is a direct attack on Disney. Although altogether the two videos only have 69 M views, they caused the huge controversy and discussing in different media outlets as well as another 6 videos adding to the ideaIncrease cost to ESPN in 2/7 for the rights of National Basketball Association and National Football League/Major League Baseball respectively which according to Deloitte we believe the sporting rights will continue to increase roughly up to 15 % a year

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ThreatsUniversal:Faster Innovation, better rides, attractions, themesInvestments within last 5 years: Universal:$1.2 Billion Disney :$2.4 Billion $3.3 Billion Investment in Beijing

NBC/Universal has been innovating faster than the Disney company. With the acquisition of NBC/Universal by Comcast Corporation, this allows for greater capital and cash access for investment by Universal Studios and Island of Adventure to innovate and revamp their parks to better compete with Walt Disney World in Florida. Universal Studios also announced a $3.3 Billion park to be built in Beijing to counter Disney Shanghai. 28

Source: Statista

This percent change in attendance helps to reinforce the fact that NBC/Universal enjoyed higher returns on their investment as far as park attendance with their investments in Harry Potter World. Although Disney improved Disney California Adventure with Carsland and Magic Kingdom-Orlando with the expansion of Fantasyland, these investments didnt attract as many new guests into their parks as Harry Potter World did with Island of Adventure. 29

Porter Analysis

Source: Adapted and reprinted by permission of Harvard Business Review. An exhibit from How Competitive Forces Shape Strategy by Michael E.. Porter (March-April 1979), Copyright 1979 by the President and Fellows of Harvard College: all rights reserved.

Michael Porters Porter Analysis allows companies to look closely into the industry that the company operates in and to gauge the attractiveness of other industries that the company may plan to expand into to further their interest. A Porter Analysis is a powerful tool to help gauge where a company is struggling in their respective industry. A company, like Disney, that operates in multiple industry may find out that they just dont the strengths needed to operate in a certain industry. 30

IndustriesTheme Parks and ResortsTelevision ProductionTelevision BroadcastingVideo Game Software PublishingMovies and EntertainmentConsumer Goods

The (Walt) Disney Company operates in multiple industries. Eight industries in total, however the cruise line segment of their company is included in theme parks and resorts. The company also operates independent hotels, like Aulani in Hawaii, this would put them in the Travel & Lodging industry, however most databases and professional services, like Bloomberg Professional and IbisWorld, will say that Disney operates in only five industries. Those five would be: Theme Parks and Resorts, Television Production, Television Broadcasting, Video Game Software Publishing, and Movies and Entertainment. Adaptive Consulting Group also mentioned Consumer goods, Disney Store, as an noteworthy industry that Disney operates in. Adaptive Consulting Group will only focus on the first four industries in this list. Theme parks and resorts, television production, and television broadcasting is the main revenue for the Disney company. Video Game Software Publishing is Disneys biggest weakness right now. 31

Theme Parks and ResortsCompetitionHighConcentrationHighLife Cycle StageMatureCapital IntensityHighTechnology ChangeHighRegulation & PolicyMediumIndustry AssistanceNone

Bargaining power of suppliers is lowBargaining power of buyers is high.High and Intense Rivalry

The (Walt) Disney company is a leader in the US-Amusement Park Industry with 48.1% market share (IbisWorld). The US-domestic amusement park industry is a very unattractive industry to enter. The barriers to entry is very high, with high capital requirements, geographic locations, low-ticket pricing, and investment turn-around of roughly three years. The best geographic locations, that allow for operation year-round, are dominated by the three major players in the industry. The Competitive nature of the industry is high, with one company announcing a new ride or innovation to compete with another parks new ride or innovation. There is no industry assistance in this industry and regulation is low. Critics of the industry say that regulation needs to be higher for extreme roller-coasters and thrill rides to ensure safety. The Bargaining power of suppliers is low. Suppliers include: the employees that work at the parks, the food supply companies, construction companies, and landscaping services. The bargaining power of buyers is high. Buyers are the guest that come to the parks to spend money, rides the attractions, purchase merchandise, and buy food and drinks. The power is high due to the competitive landscape of the industry and the high concentration of amusement parks located close to each other.

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Television ProductionCompetitionHighConcentrationHighLife Cycle StageGrowthCapital IntensityMediumTechnology ChangeHighRegulation & PolicyLightIndustry AssistanceMedium

Bargaining power of suppliers is low to mediumBargaining power of buyers is lowRivalry is Intense

Television Production in the United States, much like Television Broadcasting, is an unattractive industry to enter, but a lucrative industry to operate in. Television Production is the creation of new television series or movies to be broadcasted by other companies. However, the major players in the industry integrated forward to also cover television distribution, which allows for higher revenue generation through advertisement. Competition is high as each producer competes for top talent, writers, and directors for prime-time production. The industry is growing due to the increase of internet-streaming through Netflix, Hulu, and distribution-operated sites (i.e. ABC.com, Fox.com, CBS.com) are in-demand for high-quality, but cheap productions to boost travel to their sites or monthly subscriptions. Although competition among producers gives select talent, writers, and directors high bargaining power, this is off-set by the huge supply of want-to-be actors and directors who settle for any work to get their name out in the public eye. The bargaining power of buyers is low. Customers or viewers of television production watch from a very narrow selection of productions. Rivalry is intense, as many producers produce the same type of show, but try to produce better than the competition. 33

Television BroadcastingCompetitionHighConcentrationMediumLife Cycle StageDeclineCapital IntensityHighTechnology ChangeHighRegulation & PolicyHeavyIndustry AssistanceNone

Bargaining power of suppliers is lowBargaining power of buyers is lowRivalry is High and Intense

Television Distribution are the networks that broadcast productions made by television studios. Most of the big networks have integrated backwards and also produce the productions that they will distribute to the viewer. There is currently no entry into this industry due to government regulation. FCC regulations are prohibitive to entry into the Television Broadcasting industry. The Media Bureau announced that the initiation of nationwide first-come, first-serve, digital-only licensing for low power television and TV translator stations, which was previously scheduled to begin in July 2010, has been postponed indefinitely. Also, no new stations are allowed to form because of The National Broadband Plan, which was created to free up spectrum for the establishment of a mobile broadband service. IBISWorld does not anticipate that many new television-broadcasting stations will be permitted to form in over the five years to 2019.(IBISWorld)Rivalry is high and intense due to competition for primetime viewing slots. The Sunday night at 8pm, Monday at 8pm, Thursday at 8pm, are all highly-coveted spots for advertisers willing to pay top-dollar to the distributor with the highest ratings on these nights. 34

Video Game Software PublishingCompetitionHighConcentrationMediumLife Cycle StageGrowthCapital IntensityLowTechnology ChangeHighRegulation & PolicyLightIndustry AssistanceLow

Bargaining power of suppliers is highBargaining power of buyers is highCompetition is high and increasing

The Video Game Software Publishing industry in the United States is a slightly-attractive industry. This industry is the development of gaming software for all platforms, ranging for Personal Computers to Nintendo Wii, Xbox One, PlayStation 4, and mobile gaming platforms. The industry is in a huge growth phase, with the female-gamer market still relatively untapped. People, who played video games when they were young, will be more inclined to allow their children to play video games, and to purchase platforms and software and higher quantity then their parents did before. The Bargaining power of suppliers is high as software developers are in high demand. Students graduating from Fine Art schools with technical degrees in software development will enjoy many career opportunities. Bargaining power of buyers or the consumers who purchase the games is Very High. This is probably the highest bargaining power of any buying group in any industry. Video games are now sold in physical locations and online at digital stores. Consumers can choose from thousands of different titles, genres, and gameplay types which allows has led to distribution companies, like Steam, GameStop, BestBuy, and Wal-Mart to offer discounts in order to move games. 35

Substitute productsThreat of substitute productAnything else that leisure time can be spent on besides watching televisionOther destinations, major cities, museums, sporting events

The (Walt) Disney Company is an entertainment company. Consumers enjoy entertainment in their leisure time. Substitute products for the Disney company is everything else that leisure time is spent on. Outdoor activities, including sports and recreational activities, is the major substitute products to the industries of Television production/distribution and Video Game Software Publishing. Vacation destinations are vast and the options are there for consumers to choose to spend their vacation time at other places than a Disney Resort. Many US cities rely on tourist dollars to help fund their government. Adult-only resorts, like Sandals, incentivize young couples to put off having children and to spend their summers by themselves. 36

Macro environmentAmusement ParksGeopolitical, Terrorism, Oil prices, EpidemicsBuilding permits in foreign countries for park expansionsAging populationFewer children age 10-19Delaying parenthoodLess children per family

The Amusement Park industry has to deal with many external factors to operate efficiently. Geopolitical crisis, like that of Russia and the western nations, can defer international tourism. Currency fluctuation due to the change in nations economy can also cause international tourism to decline. Terrorism is a huge threat to Disney. Disney World is a shining example of global unity, cultural acceptance, and religious tolerance. Terrorist, who disagree with these values, target Walt Disney World in order to invoke chaos and terror.The fall in global oil prices helps to fuel domestic travel and international travel. Lower prices for gasoline allow for more families to have discretionary income to spend on vacations. The fall in oil prices also decrease airline costs which directly results in lower fares for consumers.Disney also has to deal with government agency and government regulation on an international level in operating their theme parks. The permits required to start construction on Shanghai Disney are costly and time-consuming. The added risk of dealing with foreign government is their ability to stop construction or operation at anytime. The government could also seize the property.On a socioeconomic level, Disney is dealing with smaller families and parents putting off having children until later in life.37

These two graphs help to reinforce how currency fluctuation is changing economies can have a positive or negative effect for the Disney company. With the Yen and Euro both decreasing in value to the USD, there is reason to believe that there will be fewer imports of international tourism. However, domestic US citizen will be motivated to travel abroad as they will get more value for their dollar right now in foreign countries. 38

Television and Video GamesRapid increases in technology, engineering3-D televisionFCC oversight in television broadcasting and contentNet NeutralitySocial movement for more active children

Television and Video game software publishing both have the same macro-environment effects. This includes rapid changes in technology. Higher resolution for televisions, 3-d technology, higher graphic requirements for games. Consumers want to be immerse in video games and television productions. They want their attention-captured in an era where its hard to hold peoples attention. Social movement for more active lifestyles, especially aimed at children, is a huge social effect that Disney will have to adapt to.39

CORPORATE LEVEL STRATEGYDiversificationJoint VentureAcquisitions

In order to reach set goals and to be successful in this highly competitive world any company must have a strategy to know where to go and how to.Disney is an international company, and its Corporate, Business; Functional and Global level strategies are highly correlated and connected.CORPORATE LEVEL STRATEGYWhen talking about corporate level strategies Adaptive Consulting Group will focus on Diversification, integrations, joint ventures and acquisitions.

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CORPORATE LEVEL STRATEGYDIVERSIFICATION

When dealing with corporate-level strategy, The Walt Disney Company had to decide whether to remain within their present domains or venture into new ones. In Disneys case, the firm has expanded from its original business (films) and into television, theme parks, and several others.Today the company's operations include five segments: media (involving movie production, ESPN Network, Disney Channel, ABC Family, and others), parks and resorts (including theme parks and the Disney cruise line), studio entertainment (such as live performances), consumer products (including licensing), and interactive (involving all gaming).By creating highly diversified operating segments, the company has set itself up for growth and opportunities for years to come while facing less risk from a single segment declining.

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SynergyExamples: The Pirates of TheCaribbean(Disney ride -> movie -> merchandise)Frozen (movie -> video game -> Frozen merchandise -> Frozen ride)

Disney is one of the first ones to really incorporatesynergy strategy of promoting its product through Disneys owned segments. Examples: The Pirates of TheCaribbeanmovies are actually based on a Disney ride! Disney makes a movie from a Disney ride, and thenadvertisesit by using a Disney ownedcompany! Synergy Frozen was released for digital download Tunes and Amazon. Then it was also be released by Walt Disney Studios Home Entertainment on Blu-ray Disc and DVD. A video game was released later. There is a lot of Frozen merchandise available in the Disney store.

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Intellectual Property

Walt Disney ImagineeringDesign and development lab, responsible for the creation and construction of WD theme parks.

INTELLECTUAL PROPERTY investment is one of the key strategies for a company like Disney. No other company has such a stockpile of well known, cute, family friendly and highly marketable characters. Intellectual Property goes hand in hand with DISNEY IMAGINEERING the design and development arm of The Walt Disney Company, responsible for the creation and construction of Disney theme parks worldwide. It is a strategy of creating magic.

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CORPORATE LEVEL STRATEGYJoint Ventures:Tokyo Disney (owned by Oriental Land Company)Euro Disney (Euro Disney)Shanghai Disney (in progress)

There are Disney parks in Tokyo, Paris and one is coming in Shanghai. They were opened as joint ventures.Tokyo Disney: was owned and operated by the Oriental Land Company, which was licensed to use Disneys characters. Tokyo Disneyland was considered to be a tremendous success from the time of its opening. Two major reasons that explained the success of Tokyo Disneyland is a strong Japanese appetite for the splendid American popular entertainment and an increasing trend in Japan toward leisure. As a result, what visitors see in Tokyo Disneyland is pure Americana. Euro Disney: The Park was a joint venture between The Walt Disney Company and a separate company called Euro Disney S.C.A., which owned the majority of the Euro Disney. It was not as successful as Tokyo Disney, because of problems such as inconsistent service standards, high cost levels and employee turnover. Shanghai Disney (in progress): Is planned to be open by the end of 2015- beginning 2016.

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CORPORATE LEVEL STRATEGYAcquisitions:Capital Cities/ABC (including ESPN) 1996Fox Family Network (now ABC Family) 2001Pixar 2006Marvel Entertainment 2009Lucas film 2012, etc.Miramax Films 1993 (sold 2010)

Acquiring great properties and plugging them into the Disney system is simply something that Disney does and this is how it grows.

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BUSINESS LEVEL STRATEGYDifferentiation through:Brand and Image RecognitionBrand Loyalty building life-long relationship with the clients.

Disney shows a successful practice of differentiation through:Brand and Image Recognition: Who does not know the most powerful mouse in the world? Brand Loyalty: Brand loyalty is a life-long relationship with the brand. The guests often cite Disney's superior customer experience as their reason for returning. Through consistent and successful delivery on the brand promise, guests become more engaged and build a relationship with the company an emotional connection, if you will. They also become advocates for the brand, bringing friends and family into the fold. With every new interaction, there is a new opportunity to build trust and strengthen the relationship. Walt advocated that visitors would be treated not as just another paying customer, but as 'guests in our own home'. He knew that if customers believed that everyone in the organization cared about them, they would be loyal to Disney. That philosophy continues to this day.

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FUNCTIONAL LEVEL STRATEGIESMarketing (continuous advertising using synergy; innovation connect with kids via storytelling using technologies)R&D (My Magic+ )HR (Leadership Excellence - Hire the best and let them do their best!)

Marketing (continuous advertising through synergy; innovation): Imagine a day when you didnt see a Disney character once a day?? Especially if you live in NYC its impossible.Disney never stops advertising; through the most various means, making consumers keep the company in mind all the time. Especially when you have such a powerful tool such as synergy.As part of its marketing strategy, Disney believes in innovation to stay ahead of the competition. Disney's strategy is to connect with kids directly via storytelling utilizing multiple technologies. WD does intensive research to stay current with technologies children use, with shows they are watching, and how they incorporate technology in their lives.

R&D We cant emphasize enough how important it is to do research and development. Thats the magic of the MyMagic+, Walt Disneys $2 billion experiment in crowd control, data collection, and wearable technology that could change the way people playand spendat the Most Magical Place on Earth. HR - for a company such as Disney, which builds happiness for the clients, HR is vitally important resource. That is why corporate culture is one of the keystones of Disneys success. It is based on so called Disney Chain of Excellence. Most important link here is Leadership excellence: because leaders are responsible for the work environment, so success here leads to employee satisfaction. If employees are happy, they are willing to provide better service, and as a result - customer satisfaction. Companys HR philosophy: Hire the best and let them do their best.

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GLOBAL STRATEGIESForeign outsourcing (China)LicensingDirect investment ( theme parks)Enter emerging markets (Latin America, Russia, India, China)

Foreign outsourcing: Due to the higher wages in the United States when compared to developing countries, Disney adopted the strategy of Foreign Outsourcing to reduce the cost of production. The main factories are located in Asian countries, especially in China, and then have their products distributed to all the stores.

Licensing: Disney authorizes other businesses to resell their products. This approach is very beneficial for the company, because of the low need of investment or no investment sometimes.Direct investment: Disney has theme parks and stores in other countries, which is a high cost strategy, but it gives Disney control over their business.Enter emerging markets: the main focus here is to establish themselves in countries with developing markets, such as Latin America, Russia, India, China.

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Disney corporate structure is based on Walts nine old men, which is a hierarchal structure that assigns key segments of the industry to chairman and vice presidents in order to ensure high quality and assign responsibility to them. Disney allows their recent acquisitions of Marvel, Pixar, and LucasFilm to operate independently of the company. This was due to Steve Jobs, who was Apples CEO and had a controlling interest in Pixar, not willing to sell Pixar to Disney, unless Pixar remained independent of Disney in their animation process. This proved to be successful for Disney and they continued to allow other acquisition to remain independent. 49

Disney has successfully hit their target price for their stock. This is due to the stock buy-back program that Bob Iger initiated. Its also due to strong box-office successes and huge success in television production and distribution. The only two times they didnt meet their target price was due to the acquisition of LucasFilms, which cost $4.05billion, half of which was paid in cash and the other half paid in stock issuance.50

In the past three years, Disney has met their Bloomberg Estimated Earning per Share. This is attributed to strong success in the Media Segment and the Motion Picture segment of the business. These successes coupled with the buy-back program has led to higher and higher EPS each quarter. Quarter two of 2011 is due to a poor showing at the box office for Disney. The summer blockbuster John Carter was a huge flop, not bringing in half the revenue of cost of production. 51

AwardsDisney Cruise Line 5 stars in 2013 JD Power Ranking for cruise linesRanked 13th for Best Global Brand. Valued at $32,300 Million2014 ThemeparkInsider Awards-Tokyo DisneySea Best Theme parkJourney to the Center of the Earth Best Theme RideFantasmic! At Disneyland Best Show

Disney has a high quality strategy to their company. This is shown in the awards they have received. Disney Cruise Line is the cruise line in the world to receive 5 stars in every category for JD Power Ranking in 2013. The Disney brand is valued at $32,300million. Disney is the number one brand in Media, the next media brand is MTV, which is worth only $8,000million and is ranked 80th overall.Disney has won numerous awards for both their theme parks domestic and international. Tokyo DisneySea has won many awards for Best Theme park including ThemeparkInsider award in 2014 for best theme park.

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Box office and RatingsTvguide.com 11 of the top 50 TV shows for 2013-2014 season.Box office rankings All time International3.Avengers-1.5 Billion5.Frozen 1.2 Billion6.Iron Man 3 1.2Billion20 of the top 100 all time

ABC, Disney Channel, ESPN, and A&E network has multiple productions that are highly rated. Disney has 11 of the top 50 TV shows according to Tvguide.comDisney has 20 of the top 100 all time movies for inflation-adjusted revenue. In the past three years, they have gained three of the top six spots with Avengers, Frozen, and Iron Man 3, which are examples of Marvels success, while operating independent of Disney.53

RecommendationDivest Interactive MediaDivest Interest in A&E Television Networks. Continue divesting slowly out of ESPN networksIncrease investments in Hollywood studios and Animal Kingdom

Adaptive Consulting Groups recommendations to the Board of Directors of The (Walt) Disney Company are as follows:Divest out of Interactive Media. Interactive Media is the business segment of the Disney company that deals with software development. Since it was started, it has not posted any profits and has been a drain on company resources. It finally posted profits this past year, but Adaptive Consulting does not believe that will continue.Divest out the remaining 50% interest in A&E Television Networks. A&E does not represent the Disney brand, image, or culture. It does not target the audience that Disney targets. In recent years, A&E has made questionable moves by dropping hit TV series like Duck Dynasty and Longmire.Continue divesting slowly out of ESPN networks. This was already started by divesting out of ESPN limited, which was the United Kingdoms affiliation of ESPN. Increase investment in Hollywood Studios Orlando and Animal Kingdom Orlando theme parks. 54

Divesting out of interactive media will be a smart move for Disney for their future operations. Disneys only product in interactive media is Disney Infinity, a Roleplaying game where players take control of Disney characters and adventure out into worlds. This video games came under scrutiny when it was released due to its pricing and the idea that it was completely based off of Skylanders, a successful video game with the same storyline and idea as Infinity. The pricing of Disney Infinity was too high, due to its additional hardware needed. It also required parents to buy power-up chips and action figures in order to unlock these characters as playable in the game. This pricing strategy, along with bad graphics and poor reviews, leads one to expect that Interactive media segment will not be able to rely on Disney Infinity as a strong cash-source to help finance future video games.Disney would be better to scrap interactive media or to transform the segment into a business who is in charge of licensing Disneys intellectual property to outside software publishers.55

Divesting out of ESPNESPNs major sporting rightsMasters Tournament 1 yearNBA 2 yearsBIG 10 college football 3 yearsMLB 7 yearsNFL 7 years

Disneys ESPN is set to lose many of its rights to broadcast major sporting events. TiVo, DVR, On-demand, and internet streaming has hurt advertisement and following has hurt revenue generation through selling advertisement. Live Sporting Events is the only production on television that draws high-ratings and people dont fast-forward or skip the commercials. This fact has led to organizations like MLB, NFL, and NBA to set higher and higher contract price for their broadcasting rights. ESPN will not be able to afford to re-purchase all of their existing rights and generate the revenue needed to cover the cost. ESPN must pick-and-choose which rights to keep and which to let go. Adaptive Consulting Group suggests to divest out the rights to MLB and NFL. 56

Avatar land and Star Wars landAvatar - $750 million domestic, $2,000 million InternationalStar Wars Franchise- $4,600 million inflation adjusted domesticDate set for 7th movie. No date announced for Star Wars plan.

Disney needs to innovate faster in their current projects. Disney currently has two projects on hold, the first being Avatarland at Animal Kingdom. Avatarland was a joint project with James Cameron to design a land based off of Pandora in the movie Avatar. The project was picked up by Disney on promise by James Cameron that he was going to write and direct two more Avatar Movies. Nobody is certain if James Cameron plans to write and direct these movies, however Disney should still complete Avatarland in Animal Kingdom, as this movie did $2,000 million international and would be a huge foreign tourist draw.The second land is an expansion of the small Star Wars showing at Hollywood Studios in Orlando. Disney acquiring LucasFilms has allowed them to start production of episode 7 of the mega-franchise. The Star Wars franchise is already reported to have grossed over $4.6 billion inflation adjusted and that is just domestic. An expansion of Star Wars in Hollywood Studios will provide a huge domestic tourist draw.57

College Program and Princess ProblemsNot fueling the flamesInternal fixes and better controls for the housing for the College ProgramKeep the course on the direction started with Brave and continued with Frozen.

The Disney college program does allow Disney to have a fluctuating amount of low-pay workers to send to their parks during peak times. However, poor living conditions, law-suits, and union problems have had negative impact, especially with the media in Orlando. College students, who intern down at Disney World, are often forced to work long-hours, up to six days a week, and well into overtime. This combined with the heat of Orlando, the stress of the workplace, and confusion of working one area in the park to another, causes many of the workers to quit, not show up, or to show up and not perform their respective duties. Disney can help to alleviate this problem with better work schedules. Providing college students with information about the weather and temperature of Orlando and how that can affect a persons body. The feminist movement and attacks on Disney for being anti-feminists are a serious problem for the company. The company has already taken the best solution by not responding to these outcries. The company needs to stay its current path and keep continuing to create shows and movies that have strong female leads. 58

See Ya Real Soon!

Thank you for your time in reading this presentation on The (Walt) Disney Company. Adaptive Consulting Group hopes our recommendations were helpful and insightful.Please let us know if you have any questions or comments.-Henry Noyes-Abie Silvers-Darya Murashka-Maryia Maksimenka-Tahnee Radcliffe59