Cohesion Case Analysis On

Walt Disney Company 2007

Submitted To:

Sir Sohail Aslam

Submitted By:

Ruquia Batool Roll # 02

Lubna Mueen Arbi 06

Yasmeen Khan 33

Jamshaid 47

The Walt Disney Company,

together with its subsidiaries,

is a diversified worldwide

entertainment company with

operations in many business

segments.

This report is designed to gain

knowledge and experience in

preparation of “The Strategy-

Formulation Analytical

Framework” of Walt Disney

Company. Report Contain

current vision, mission, values,

strategies matrixes,

suggestion, implementations

and projected financial

statements.

Table of Contents Overview & History ...................................................................................................................................... 3

VISION, MISSION AND VALUES ..................................................................................................................... 3

Walt Disney Company’s Strategies ............................................................................................................... 4

S.W.O.T. Analysis Table ................................................................................................................................ 5

Competitive Profile Matrix ........................................................................................................................... 6

Walt Disney External Factor Evaluation ........................................................................................................ 7

Internal factor matrix ................................................................................................................................... 9

Internal-External (IE) Matrix ....................................................................................................................... 10

SWOT Matrix.............................................................................................................................................. 10

BCG Matrix for Disney ................................................................................................................................ 12

Grand Strategy Matrix ................................................................................................................................ 13

Space matrix Walt Disney ........................................................................................................................... 15

QSPM MATRIX ........................................................................................................................................... 17

RECOMMENDATIONS ................................................................................................................................. 19

IMPLEMENTATION ..................................................................................................................................... 20

EVALUATION AND CONTROL ...................................................................................................................... 21

Projected Financial Statements .................................................................................................................. 22

Overview & History

The Walt Disney Company is founded on October 16, 1923 by Walt Disney and his brother Roy as

a small cartoon animation studio, is a leading American diversified multinational entertainment and

mass media conglomerate, headquartered in Burbank California. After the great struggle and debut

of Mickey Mouse the company turned around. Now headed by Robert A. Iger Disney is one of the

largest entertainment corporations in the world with approximately 166,000 employees and annual

revenues approaching the $45 billion mark.

For eight decades, Walt Disney has entertained people around the world with its different products

theme parks, resorts, cruises, movies, TV shows, radio programming, and memorabilia. In start the

company established itself as a leader in the American animation industry then it diversified itself

into live-action film production, television and travel. The company went public in 1940 and was

Re incorporated under its current name in 1986 and expanded operations and also started divisions

focused on theatre, radio, music, publishing and online media.

VISION, MISSION AND VALUES

VISION

“To make people happy.”

MISSION

The 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.

VALUES

Values make our brand Stand Out:

Innovation

o We follow a strong tradition of innovation.

Quality

o We strive to follow a high standard of excellence.

o We maintain high-quality standards across all product categories.

Community

o We create positive and inclusive ideas about families.

o We provide entertainment experiences for all generations to share.

Storytelling

o Every product tells a story.

o Timeless and engaging stories delight and inspire.

Optimism

o At the Walt Disney Company, entertainment is about hope, aspiration and positive

resolutions.

Decency

o We honor and respect the trust people place in us.

Walt Disney Company’s Strategies Horizontal Integration

Walt Disney Company acquired Marvel Entertainment to strengthen its brand portfolio. Just as the

2006 acquisition of Pixar that brought the incredible talented team of artists and writers behind such

award-winning and commercially successful films as Ratatouille, Wall-E and Up, Marvel can bring

long-lasting value to Disney.

Market Development

Disney open world-class theme park in last November with Chinese In a new joint venture. This

innovative approach extends to retail as well. Last year the company opened 19 newly designed

Disney Stores around the world.

It is also expanding original programming at home and abroad. Disney focused on what kids and

tweens want to see and hear and this becomes a great source of talent and creative ideas for the

Company. It’s also become a very effective global ambassador. Last year, Disney Channel

expanded its market in Japan, Russia and Ukraine and launching a new joint-venture local language

channel in South Korea.

Related Diversification

Disney also focused diversification for years and the company covers a wide array of products and

services. It always tries to practice effective economies of scale in production. Like the latest cruise

ship, The Disney Dream, a beautiful craftsmanship, uses technology in all kinds of interesting ways

to make the passenger experience more enjoyable.

Globalization

Walt Disney Products and Services are found all over the world in different forms and areas.

Disney has focused on growth internationally in the last few years. The company’s recent focus has

been on establishing the foundations for long-term growth in the emerging markets of Latin

America, Russia, India and China. Recently more focus has been placed on Japan, Europe, the

Middle East and Africa, where the company is well established, yet there is substantial room for

growth .

Proposed Vision

Walt Disney strives to be the world’s most famous entertainment provider company by creating

innovative and complete brand portfolio and an amazing experience for individual of all ages.

Proposed Mission

Our Mission is to be one of the world’s leading entertainment and information producer and

provider, from parks to network media, and website for all ages. By remaining committed to

balancing environmental stewardship with its corporate innovative goals and operations by using

advance technology in all unique brands throughout the world for individuals. Which would

produce financial rewards to our shareholders. In everything we do, we try to contribute to our

communities by giving them the best experience.

S.W.O.T. Analysis Table

STRENGTHS

Strong diversification.

Responsiveness to markets.

Brand recognition/ loyalty.

Vast size of operations.

Largest worldwide licensor of character

based merchandise.

Global standardization.

Well established divisions.

Increasing trends in overall revenues

and profits.

Wide and unique portfolio

Innovative entertainment business

Strong customer service

Strong Media Networks and

Broadcasting division

WEAKNESSES

High costs.

o Sunk costs.

o Costs of entertainment

production.

Frequent change in top management

positions.

Parks and Resorts are not easily

accessible leading to a costly trip for

visitors.

Parks and Resorts success

unpredictable.

o Travel trends

o Leisure time

o Seasonal

Large R & D

Large risk factor

Negative impact on children’s mind

OPPORTUNITIES

Growth through further diversification.

International growth and new markets

Recent acquisitions in India (UTV) and

Russia gives more room for

development.

THREATS

Employee retention- retaining and

recruiting innovative people.

Competition on finding and affording

The most creative human resources.

Increased media Networks/ online

presence.

Changes in technology and consumer

consumption.

Increase Music Channel.

Growth from cable and satellite

networks.

Marvel and Lucas film.

International cable.

Increasing salaries and labor costs.

Changing consumption behavior. Switch

from physical to digital and online.

More concern with content over quality.

Piracy/ protection of intellectual property.

Decrease of DVD sales.

Maintaining product differentiation..

Change of how people choose to spend

their ‘entertainment’ money not as willing

to spend on a park or resort.

Uncontrollable changes in travel and

tourism.

Viacom’s upcoming animation studio in

2014.

Lasting economic recession leading to slow

growth rate

High unemployment rate

Competitive Profile Matrix

Walt Disney Time Warner News Corp

Critical Success

Factors

Weight Rating Score Rating Score Rating Score

Advertising 0.20 4 0.80 3 0.60 3 0.60

Product Quality 0.18 3 0.54 4 0.72 3 0.54

Price

Competitiveness 0.10 3 0.30 2 0.20 1 0.1

Management 0.08 3 0.24 2 0.16 4 0.32

Financial

Position 0.10 2 0.20 3 0.30 4 0.4

Customer

Loyalty 0.15 4 0.60 3 0.45 3 0.45

Global

Expansion 0.07 2 0.14 3 0.21 2 0.14

Market Share 0.12 3 0.36 4 0.48 3 0.36

Total 1.00 3.18 3.12 2 2.91

Walt Disney External Factor Evaluation

External Strategic

Factor Weight Rating

Weighted

Score Comments

OPPORTUNITIES

Opportunity to expand

and enhance 0.13 4 0.52

The company has the opportunity to

expand and enhance its services by

moving it into different segments in the

respective markets.

Proper and appropriate

inventory or stock

management

0.07 2 0.14

The operating cost of the company can

be reduced by the proper and

appropriate inventory or stock

management and hence profitability be

improved.

Development of market

in the under

development countries is

the great opportunity.

0.03 3 0.09

The development of the market by the

company in the under development

countries is the great opportunity and

also with the establishment of the online

websites can make the company to

success.

Improving the bench

mark rate according to

the market scenarios.

0.05 1 0.05

The Walt Disney Company can improve

its management practices by improving

the bench mark rate according to the

market scenarios.

Attaining more and more

interest of the people. 0.08 1 0.08

Through the development of the park

with different variations of the themes

that make them more and more

attractive so that they attain the interest

of the people.

Cheaper alternative toys

should be introduced. 0.04 1 0.04

Cheaper alternative toys should be

introduced by the company to grasp the

attention of the consumers and also

involve the characteristics of the

national and regional appeals.

The demand for the

Disney land is increasing 0.14 2 0.28

The demand for the Disney land from

the people is increasing rapidly so

development of the park in the Hong

Kong is the great incentive for the

company.

THREATS

Security Issues 0.05 4 0.2

The threats related to the security are the

major issue that occurred during the

terrorism.

High level of 0.05 4 0.2 There is the high competition for the

competition company in the media industry and also

in the domestic markets as well as the

international markets so there is the

tough job for the employees to maintain

its position.

Social and Ethnic

Groups 0.1 3 0.3

The social and ethnic groups are again

the threat for the company as they are

acting as the hurdle and barriers in the

success of the company.

High demand of

innovation and company

has to pace up with that

0.1 2 0.2

The high demand from the market in

case of the innovations in the product is

difficult to maintain as regulating with

the inventions.

Increasing cost of labor 0.06 2 0.12

The increase in the wages and the cost

of the labor declines the growth of the

company and also the factor of the

employee’s retention is the issue in front

of the success.

People preferences are

changing 0.08 1 0.08

The aspects and preferences that are

changing in the younger people are the

issue for the company so for that search

for the new young people and retain

them to their jobs.

Brand consistency,

unprofitability and

acquisitions

0.02 2 0.04

The case of brand consistency,

unprofitability and acquisitions is the

issue for the declining the company

from its growth.

Total Weighted Score 1

2.34

Internal factor matrix

Key Internal Factors Weight Rating Weighted Score

Strength

Best entertainment place in

the world 0.08 4 0.32

Strong diversification 0.15 3 0.45

Global standardization 0.09 4 0.36

Innovation (puppets to

digital media) 0.15 4 0.60

Strong customer service

0.08 3 0.24

Acquire popular teams of

different leagues. 0.05 3 0.15

Largest worldwide licensor 0.05 3 0.15

Weakness

Costly to visit 0.05 1 0.05

Huge investment with high

risk factor 0.10 2 0.20

Specific target market 0.05 2 0.10

More costly R & D 0.05 1 0.05

Negative impact on

children’s mind 0.10 1 0.10

TOTAL 1.00

2.77

Internal-External (IE) Matrix IFE STRONG AVERAGE WEAK

3.0 to 4.0 2.0 to 2.99 1.0 to 1.9

E

F 4

E

T

O

T

A

L 3

W

E

I

G

H 2

T

E

D

S

C 1

O

R

E

SWOT Matrix

Strength – S

1. Innovative entertainment

business.

2. Strong diversification.

3. Brand recognition/ loyalty

4. Wide and unique portfolio

5. Strong media networks and

broadcasting divisions

Weakness – W

1. Frequent change in top

management position

2. Costly to visit Disney Parks

and Resorts.

3. Huge investment with high

risk factor. (forecasting

based)

4. More costly Research and

I. II. III.

IV.

V.

VI.

VII. VIII. IX.

6. Global standardization

7. Vast Size of Operation

Development.

5. Negative impact on

children’s mind.

Opportunities – O

1. Growth through

further

diversification.

2. International

growth and new

markets.

3. Change in

technology and

consumption.

4. Increase media

network.

SO Strategies

(S2,O2) (S3,O3)

WO Strategies

(W3,O3)

Threats – T

1. Swift change in

technology.

2. Unaffordable for

middle and

lower class.

3. Economic

recession

4. Stop physical

growth of

children.

ST Strategies

(S1,T5)

WT Strategies

(T1,W1)

5. Piracy/

protection of

patent.

The Walt Disney Company founded by Walt and Roy Disney in 1923 is today a highly diversified

company with namely: theme parks and resorts, studio entertainment, consumer products, media

network and internet and media marketing.

BCG Matrix for Disney

Low

Growth

High

High Low

Market share

Cash cow

Theme parks

Dogs

Consumer products

Stars

Studio Media

Question mark

Internet

Theme parks: Disney’s theme parks are considered to be cash cows with a large market

share but low market growth rate. The maximum revenue of the company comes from the

park. The company earned 6803 million but its market growth is low.

Studio: Disney’s studio can be placed both in cash cow and stars, however shall be more in

the stars. With a high market share and high growth, Studio still generates good revenue,

despite being Disney’s first company due to its feature animation and motion picture, home

video, television and cable production, and stage plays. But market growth is slowly moving

towards the lower end.

Media: media network will also be a star for the company as its growth in income increased

with the acquisition of ABC television, TV and radio stations and in cable network such as

ESPN, Disney channels. It had a high market share with a growth of 21% from 7970 million

9651 million in revenue.

Consumer products: these mainly come under the category of dogs as the business growth

and the market share are low.

Internet: Internet can be described as question mark for the company. Internet has a high

market growth. Disney has just entered in the market and does not cover a large market

share. Thus, adding up to this division in the grid. Also, Disney can any time exit the market

as there are almost nil capital expenditures.

Grand Strategy Matrix

The Grand Strategy Matrix is another Matching Stage (Stage #2) strategic management tool

designed to assist analysts in developing alternative strategies. The Grand Strategy Matrix is

position on a four- quadrant graph and is very simply illustrated. The y-axis of the graph represents

market growth, with positive y -figures representing rapid market growth and negative y- figures

representing slow market growth. Conversely, the x-axis represents competitive position, with

positive x- figures representing strong competitive position and negative x- figures representing

weak competitive position.

All companies will fall somewhere on the graph and, once placed, can make decisions based on the

recommended strategies for the company.

The Walt Disney Company falls within Quadrant I for simple reasons. The company is strong

within their markets and growing stronger. Too, the competitive position of The Walt Disney

Company is nothing short of stellar, as stated in the paragraphs detailing the SPACE Matrix.

Because of Disney’s past success, current positions, and expectantly spectacular future, the

Organization falls easily within the first quadrant on the Grand Strategy Matrix.

The Grand Strategy Matrix for The Walt Disney Company is included below.

Space matrix Walt Disney

Internal Position

External Position

Financial Position Rating Stability Position Rating

Market Capitalization of

Walt Disney is $39 B which

is much higher than the

industry average.

5 Technological Change -4

Working Capital 3 Change in demand -6

Earnings Per Share [EPS

(2008) is 2.28 much higher

than industry requirements

and increment from 2007]

5 Economic Recession -2

Return On Investment 4 Competitive Pressure -5

Gross revenues increased by

12% since 2006 4

Incomplete or inefficient training of

employees in understanding the culture -2

Total 22 Total -19

Average rating 4.4 Average rating -3.8

Competitive Position Rating Industry Position Rating

Market Share -1 Financial Stability 3

Product Quality -2 Market Growth 4

Customer Loyalty -3 Utilization of Resources 5

World’s largest amusement

park company

-2 Increase media network 3

Brand Image and

Reputation

-1 Huge barriers to entry

5

Total -9 Total 20

Average rating -1.8 Average rating 4.0

Y-axis = 4.4+ (-3.8) = 0.6

X-axis= 4.0+ (-1.8) = 2.2

Conclusion

The space matrix describes that Walt

Disney should adopt an aggressive

strategy. It needs to use its internal

strengths to develop a market penetration

and market development strategy. Other

possible strategies include product

development and concentric

diversification.

QSPM MATRIX

RECOMMENDATIONS

Disney Company is in strong position in the industry and thus maintains a competitive advantage

towards other companies like Paramount and Six-Flags Theme Park.

Product development

Disney Company should create new and exciting

Characters that children will love will surely strengthen Disney’s core vision. As technology

changes rapidly,

Developing new and exciting adventures on their theme parks

Creating fun-filled the motion pictures and animated cartoons

Increase their market share over their rivals.

International expansion of theme parks was a logical growth

Research and Development

Disney’s global research and development activities should focus on creating the next generation of

sophisticated technologies in storytelling that requires long-term planning collaboration with world-

class innovators.

Market Penetration by greater Marketing

Disney’s product and services are divided into four segments such as consumer Products, theme

parks and resorts, media networks and studio entertainment. Disney is Always in to advertising.

Since most of the people are online 24/7 Disney’s website is great way to endorse their product

offerings. Disney should know how to place the right Advertisements in the site, submit articles that

would entice people’s hunger for Information, run press releases to attract favorable media attention

for their product Offerings, they should also improve their search engine to give easy access to their

Products and services, they could also develop their website in other languages to help Their global

consumers understand their products and services.

Finance/ Accounting recommendations

Properly allocate capital in their different segments to better utilize the firm’s Potential for

investing

Provide sufficient funds for their strategies to be properly implemented

Disney should also continue to provide financial services using its website Disney.com for its

customers such as online purchasing through credit cards and Shipping through common

carriers.

Offer bulk attendees in their parks, cruise line and hotels discounts and freebies to improve

customer relationship

Digitization of content to utilize technology and lower cost

IMPLEMENTATION

Product Development can be implemented by:

Producing entertaining theatrical productions

Family oriented and family friendly environment

Stimulating enough to attract new customers

Interactive and safe vacation spot both

Resorts and parks, and also cruise lines

Market Penetration

Market Penetration can be implemented by greater marketing efforts in their segments Disney has

a long history and an established name, not only in the United States but throughout the world.

Operating globally, Disney should make it a point to update their website and put good

advertisements whether on television or in the airwaves, this will keep consumers updated

regarding their latest product offerings. Disney should focus its attention to customer benefit which

is a family-friendly, safe, fun environment that is open for business all year. Disney should offer

specials for families, such as discounts on flights, car rentals and hotel rooms to attract more people

to their parks. Through these efforts, we believe that Disney will be able to connect more to their

consumers and provide for the continued patronage of their product offerings.

Research and Development

Research and Development can be implemented by using following method:

Engineers and built a section Disney Imagineering.

This is basically the research and development section of Disney which thinks Up, designs, and

implements all aspects of the Walt Disney Company. From Developing rides and attractions of

Disney’s theme parks, water parks, and cruise Ships to their Disney resorts.

Disney Imagineering should strive to be the leaders in technology on a global market scale

through integrated efforts from internal and external resources

EVALUATION AND CONTROL

We learned the importance and value of evaluation and control in the strategic management in its

last part. We also defined it as process of evaluating whether the Chosen strategy is achieving the

organization's objectives.

Information System

The current information system of Disney provided by technological Advancements and highly

trained and skilled staff is still reliable. Disney is able to utilize the information systems resources

to gain its competitive advantage over rivals

Evaluation System

Disney must evaluate those markets in which they are most successful, and what markets they need

to expand their ventures. This will allow the company to focus on the weak areas of the corporation

and build the strategy in the effective and the efficient manners areas that are struggling, while

continuing to maintain those that are thriving.

Decrease film production costs

Disney may want to increase partnerships and collaborations,

Costs, but also promote business relations

Secure Disney’s bottom line.

A competitive advantage over its competitors.

Disney Company as the world’s premiere entertainment company

Rely on the corporate governance values

Projected Financial Statements

Reference:

http://www.4-traders.com/THE-WALT-DISNEY-COMPANY-

4842/financials/

http://www.nasdaq.com/symbol/dis/recommendations

http://en.wikipedia.org/wiki/Amusement_park

http://thewaltdisneycompany.com/investors

http://www.datamonitor.com/store/Product/company_financials_the_walt_

disney_company?productid=DBCM5310

http://perleybrook.umfk.maine.edu/slides/Spring13/BUS411/Assignment%

205%20Walt%20Disney.pdf

http://disney.com/

http://investing.businessweek.com/research/stocks/financials/ratios.asp?tic

ker=DIS

http://thewaltdisneycompany.com/investors/financial-information/annual-

report