THE WALT DISNEY COMPANY

Organizational Case Study

Callie Unruh
MGT6145
December 14, 2012
WALT DISNEY COMPANY
 It’s not just Disneyland!
OUTLINE
 Introduction and Overview
 Internal Assessment

 External Assessment

 Strategy

 Implementation and Financing

 Conclusion
MISSION AND VISION

"The mission of The Walt Disney Company is to be one of the

world's leading producers and providers of entertainment and
information. Using our portfolio of brands to differentiate our
content, services and consumer products, we seek to develop
the most creative, innovative and profitable entertainment
experiences and related products in the world."
INTERNAL ASSESSMENT
FINANCES

Ratio 2008 2007

Current Ratio 1.0 0.99
Gross Profit Margin 0.20 0.19
Return on Stockholder Equity 1.36 1.52
Sales 7% 5%
ORGANIZATIONAL STRUCTURE
Walt Disney
Company

Disney Consumer Studio Entertainment Parks and Resorts Media Networks

Products • Walt Disney Pictures Broadcasting
• Miramax Films • Walt Disney World
• Buena Vista Home • •
• Disney Hard Lines Disneyland Disney-ABC
Entertainment
• Disney Soft Lines • Tokyo Disney Television
• Buena Vista
• Disney Toys Theatrical
• Disneyland Paris • ESPN Inc.
• Disney Publishing Productions • Hong Kong • Walt Disney
• Disney Press • Walt Disney Disneyland Internet Group
• Disney Editions Records • Disney Cruise Line • ABC-Owned
• Buena Vista • Disney Vacation Television Stations
Records Club • ABC Radio
• Hollywood Records
• Lyric Street Studios
• Pixar Studios

Source: David, F (2011). Strategic Management.

 Chair/Pres:

ORGANIZATIONAL STRUCTURE Theme

Parks and
Resorts

LEADERSHIP Co-
President:
Chairman: Disney
Interactive
 and this isn’t all of them! Walt Disney
Int’l
Co-Chair
and Pres.
ABC
Chair: Walt Television
Disney Group
Studios

CEO Co-President:
Disney
Interactive
EVP and and Playdom
Chief Human
Resources
Officer
EVP Motion
Picture
Distribution
EVP
Communicati
ons
EVP Strategy
and Business
Development
President:
Consumer
Products
President:
ESPN and
President ABC Sports
Source: www.theofficialboard.com ESPN and
Co-Chair
Media
Networks
ORGANIZATIONAL STRUCTURE
LEADERSHIP
 Recommendation…

Chief Executive

President and Board of Directors

SBU 1 SBU 2 SBU 3 SBU 4 SBU n

Geographical

Functional
MARKET POSITION: THE COMPETITORS
 Disney

MARKET POSITION Time Warner

CBS Corp.
High Market Capitalization
Media Networks/Broadcasting
and Studio Entertainment

Low Revenues High Revenues

Low Market Capitalization

 Disney

MARKET POSITION Six Flags

Ocean Park
Locations
(high)
Parks and Resorts

Visitors Visitors
(low) (high)

Locations
(low)
 Disney

MARKET POSITION Warner Bros.

Quantity Fox
(high)
Consumer Products

Sales Sales
(low) (high)

Quantity
(low)
SWOT: STRENGTHS AND WEAKNESSES
 Strengths
 Strong diversification
 Responsiveness to markets
 Brand recognition
 Creative process

 Weaknesses
 Large R&D costs
 High Risk factor
 Constant up gradation
 High sunk costs
INTERNAL FACTORS MATRIX

Key Internal Factors

Strengths Weight Rating Weighted Score
1. Strong diversification 0.15 4 0.60
2. Responsiveness to markets 0.12 4 0.48
3. Brand name 0.12 3 0.36
4. Creative process 0.12 3 0.36

Weaknesses Weight Rating Weighted Score

1. Large R&D costs 0.15 1 0.15
2. High risk factor 0.12 2 0.24
3. Constant up gradation 0.12 1 0.12
4. High sunk costs 0.10 2 0.20

TOTAL 1.00 2.51

MARKETING STRATEGIES
 Top Strategies
 Create a customized/targeted media advertising plan for all
segments
 Expand Hong Kong Disney and research one new market
 R&D into storytelling to kids through technology
 Target 3 new markets and develop expansion plan around
consumer products
 Consumer research around the use of technology and need
 Digitize content to utilize technology and lower costs
 Create and bank marketing strategies and promotions to use
during adverse conditions or slow periods
EXTERNAL ASSESSMENT
COMPETITORS
Disney CBS Time Warner Industry
Market Cap 39.00B 4.31B 26.28B 499.59M
# of employees 150,000 25,920 87,000 7.51K
Qtrly Rev Growth -8.2% -6.20% -2.70% 5.10%
Revenue $36.99B 13.95B 46.98B 930.87M
Gross Margin 17.81% 37.99% 41.92% 41.92%
EBITDA $8.18B 2.69B 13.34B 166.44M
Oper Margins 17.81% 15.48% 18.62% 10.39%
Net Income $4.02B -11.67B -13.40B NA
EPS $2.100 -17.428 -11.224 NA
COMPETITIVE PROFILE MATRIX

Disney CBS Time Warner

Critical Success
Factors Weight Rating Score Rating Score Rating Score
Advertising 0.20 3 0.6 2 0.40 3 0.6
Product Quality 0.15 4 0.6 2 0.30 2 0.3
Price Competiveness 0.12 2 0.24 1 0.12 2 0.24
Management 0.10 2 0.2 3 0.30 3 0.3
Financial Position 0.10 2 0.2 3 0.30 4 0.4
Customer Loyalty 0.10 3 0.3 2 0.20 2 0.2
Global Expansion 0.11 4 0.44 1 0.11 1 0.11
Market Share 0.12 3 0.36 1 0.12 3 0.36
TOTAL 1.00 2.94 1.85 2.51
INDUSTRY TRENDS
Social Technology Economic Cultural Political
Media HD, Mobile,
Broadcasting Multi-platform
content, Video
on demand
Studio 3-D Rise in ticket
prices;
Home video
spending
Parks Traveling with kids; Group Combining
Older adults business work and
family time
Products Consumer-centricity Retail Growth of Product safety,
collaboration private label tighter
regulations
SWOT: OPPORTUNITIES AND THREATS

 Opportunities
 Growth through further diversification
 Increase Media Networks/Broadcasting market share
 International growth/New markets
 Changes in technology and consumer consumption

 Threats
 Economic recession
 Changes in technology and consumer consumption
 Intellectual property (protection of)
 Uncontrollable changes in travel and tourism
EXTERNAL FACTOR EVALUATION
Weighted
Key External Factors Weight Rating Score
Opportunities
1. Growth through further diversification 0.12 4 0.48
2. Increase Media Networks/Broadcasting market share 0.15 3 0.45
3. International growth/New Markets 0.12 4 0.48
4. Changes in technology and consumer consumption 0.15 3 0.45
Threats
1. Economic recession 0.12 4 0.48
2. Changes in technology and consumer consumption 0.15 3 0.45
3. Intelectual property (protection of) 0.1 2 0.2
4. Uncontrolable changes in travel and tourism 0.09 2 0.18
TOTAL 1.00 3.17
STRATEGY
SWOT ANALYSIS
Walt Disney SWOT Strengths Weaknesses
1. Strong diversification 1. Large R&D costs
2. Responsiveness to markets 2. High risk factor
3. Brand recognition 3. Constant up gradation
4. Creative process 4. High sunk costs

Opportunities SO Strategies WO Strategies

1. Develop and research plan around emerging markets
1. Growth through further diversification with low R&D costs (W1)
2. Increase Media Networks/Broadcasting market 2. Create a customize/targeted media advertising
share plan for all segments (S2)
3. Expand Hong Kong Disney and research one new 3.Target 3 new markets and develop expansion plan
3. International growth/New Markets market (S3) around consumer products (W4)
4. R&D into storytelling to kids through technology 4. Consumer research around the use of technology and
4. Changes in technology and consumer consumption (S4) need (W2)

Threats ST Strategies WT Strategies

1. Economic recession
2. Changes in technology and consumer consumption
3. Intelectual property (protection of)
4. Uncontrolable changes in travel and tourism
1. Digitize content to utalize technology and lower 1. Digitize content to utalize technology and lower costs
costs (S2,4) (W4)
2. Focus on one high tech segment and focus content and
R&D there (W1, 3)
3. Document and Create TM and IP Protection Plan
(S2)
4. Create and bank marketing strategies and
promotions to use during adverse conditions or slow
periods for parks and resorts (S2)
SPACE MATRIX
INTERNAL-EXTERNAL MATRIX

IFE Total Weighted Scores

4.0 3.0 2.0 1.0

EFE Total Weighted Scores

I II III

3.0

IV V VI

2.0

VII VIII IX

1.0

EFM 3.17
IFM 2.51
GRAND STRATEGY MATRIX
Rapid Growth Market

Quad II Quad 1

Weak Strong
Competitive Competitive
Position Position

Quad III
Quad IV

Slow Growth Market

QUANTITATIVE STRATEGIC PLANNING MATRIX
Strategy 2: Target 3 new Strategy 3: Digitize
Strategy 1: R&D into
Walt markets and develop content to utilize
storytelling to kids
Disney expansion plan around technology and lower
through technology (S4)
consumer products (W4) costs (W4)
Key Factors Weight AS TAS AS TAS AS TAS
Opportunities
1. Growth through further diversification 0.11 4 0.44 1 0.11 4 0.44
2. Increase Media Networks/Broadcasting market
share 0.09 1 0.09 4 0.36 1 0.09
3. International growth/New Markets 0.15 3 0.45 4 0.60 1 0.15
4. Changes in technology and consumer consumption 0.15 4 0.60 1 0.15 4 0.60
Threats 0.00
1. Economic recession 0.15 2 0.30 2 0.30 4 0.60
2. Changes in technology and consumer consumption 0.12 4 0.48 1 0.12 4 0.48
3. Intelectual property (protection of) 0.08 3 0.24 1 0.08 2 0.16
4. Uncontrolable changes in travel and tourism 0.15 1 0.15 1 0.15 1 0.15

Total 1.00
Strengths
1. Strong diversification 0.15 4 0.60 1 0.15 3 0.45
2. Responsiveness to markets 0.15 4 0.60 4 0.60 2 0.30
3. Brand recognition 0.10 3 0.30 3 0.30 1 0.10
4. Creative process 0.10 4 0.40 1 0.10 2 0.20
Weaknesses 0.00
1. Large R&D costs 0.15 2 0.30 4 0.60 4 0.60
2. High risk factor 0.10 2 0.20 2 0.20 2 0.20
3. Constant up gradation 0.10 1 0.10 4 0.40 2 0.20
4. High sunk costs 0.15 2 0.30 4 0.60 4 0.60

Total 1.00 5.55 4.82 5.32

RECOMMENDATIONS

Strategy 3: Digitize
Strategy 1: R&D into
content to utilize
storytelling to kids through
technology and lower
technology (S4)
costs (W4)
IMPLEMENTATION AND FINANCING
EPS/EBIT ANALYSIS
Common Stock Debt Financing 50-50 Financing
Recession Normal Boom Recession Normal Boom Recession Normal Boom
EBIT $30.000 $35.00 $40.00 $30.000 $35.00 $40.00 $30.000 $35.00 $40.00
Interest $0.00 $0.00 $0.00 $1.50 $1.75 $2.00 $0.75 $0.88 $1.00
EBT $30.00 $35.00 $40.00 $28.50 $33.25 $38.00 $29.25 $34.13 $39.00
Taxes $11.40 $13.30 $15.20 $10.83 $12.64 $14.44 $11.12 $12.97 $14.82
EAT $11.40 $13.30 $15.20 $10.83 $12.64 $14.44 $11.12 $12.97 $14.82
#Shares 1 1 1 1 1 1 1 1 1
EPS $11.40 $13.30 $15.20 $10.83 $12.64 $14.44 $11.12 $12.97 $14.82

Amount Needed $5 million

EBIT Range $30-40 billion
Interest Rate 7.00%
Tax Rate 38.00%
Stock Price $65.00
Stock Outstanding 1 billion
Annual Divident per share $0.65
EPS/EBIT ANALYSIS

12

10

50/50
6
DF
CSF
4

0
30 35 40
CONCLUSION
 Strategic Planning Needed
 Implement strategies that help lower costs, and maintain
competitive advantage
 Balanced approach to innovation and cost-savings