Strategic Management

Case 20: The Walt Disney Company

MOHD ZAIRE B OMAR815951

AZIZAN BIN MAT RASHIB 815938
MOHAMAD ASROFI BIN MUSLIM 815943

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 Background
• Founded on October 16, 1923, by Walt and
Roy Disney as the Disney Brothers Cartoon
Studio and based in Burbank, California
• Starting with animation studio

1923 1928
* Retain all right
1937 1940 1941

1950 1953
 Questions for Case 20: The Walt Disney
Company
1. What is Walt Disney Company’s corporate strategy?
2. What is your assessment of the long-term
attractiveness of the industries represented in Walt
Disney Company’s business portfolio?
3. What is your assessment of the competitive strength
of Walt Disney Company’s different business units?
4. What does a 9-cell industry attractiveness/business
strength matrix displaying Walt Disney Company’s
business units look like?
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 Questions for Case 20: The Walt Disney
Company
5. Does Walt Disney’s portfolio exhibit good strategic fit? What
value chain match-ups do you see? What opportunities for skills
transfer, cost sharing, or brand sharing do you see?
6. What is your assessment of Walt Disney Company’s financial
and operating performance in fiscal years 2010-2011? What is
your assessment of the relative contribution of the Disney SBUs
to the financial strength of Disney, based on the 2011 fiscal year
financial data?
7. What actions do you recommend that Walt Disney Company’s
management take to improve the company and increase
shareholder value? Your recommended actions must be
supported with a convincing, analysis-based argument 5
Question 1:
What is Walt Disney Company’s corporate
strategy?

1. Creating high family content

2. Exploiting technology innovation to
make entertainment experiences more
memorable
3. Internal expansion

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Disney’s acquisition strategy is aimed to enhance the resources and capabilities of its core
animation business with the addition of new animation skills and characters such as acquisition
of Marvel and Pixar. This strategy also aimed to reach consumers in new places or in new ways.
Disney’s corporate strategy also called for sufficient capital to be
allocated to its core theme parks and resorts business to sustain its
advantage in the industry. Disney had also made much of its content
available digitally; including its WatchESPN services for Internet,
smartphone, and table computers users.
Disney’s international expansion efforts were largely directed at exploiting
opportunities in emerging markets. The Disney Channel reached 75% of
viewers in China and Russia and was available in more than 100
countries.
2009
2006

2011
Question 2:
What is your assessment of the long-term
attractiveness of the industries represented in
Walt Disney Company’s business portfolio?

As table below

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 Industry Attractiveness Assessments

Media Networks Parks and Resorts Studio Entertainment Consumer Products Interactive Media
Industry Importance Attractiveness Weighted Attractiveness Weighted Attractiveness Weighted Attractiveness Weighted Attractiveness Weighted
Attractiveness Weight Rating Score Rating Score Rating Score Rating Score Rating Score
Measures
Market size
and projected
growth rate 0.10 9.0 0.90 8.0 0.80 6.0 0.60 7.0 0.70 2.0 0.20

Intensity of
Competition 0.20 9.0 1.80 8.0 1.60 6.5 1.30 5.0 1.00 2.0 0.40
Emerging
opportunity 0.15 9.0 1.35 6.0 0.90 6.0 0.90 4.0 0.60 2.5 0.375
and threats
Cross-
industry 0.20 9.0 1.80 8.0 1.60 6.0 1.20 8.0 1.60 7.0 1.40
strategic fit
Resource
requirements 0.10 9.0 0.90 8.0 0.80 6.0 0.60 8.0 0.80 5.0 0.50

Seasonal and
cyclical 0.05 9.0 0.45 8.0 0.40 8.0 0.40 8.0 0.40 2.0 0.10
influences
Social,
political,
regulatory,
and 0.05 9.0 0.45 8.0 0.40 8.0 0.40 7.0 0.35 2.0 0.10
environmental
factors
Industry
profitability 0.10 9.0 0.90 8.0 0.80 7.0 0.70 8.0 0.80 2.0 0.10
Industry
uncertainty
and business 0.05 7.0 0.35 7.5 0.375 6.0 0.30 8.0 0.40 2.0 0.10
risk
Sum of
importance 1.00
weights
Weighted
overall
industry 8.90 7.68 6.40 6.65 3.275
attractiveness
score
 Long Term Attractiveness
1. Media Network: 8.90
2. Parks and Resorts: 7.68
3. Consumer Products: 6.65
4. Studio Entertainment: 6.40
5. Interactive Media: 3.28

Based on assessment, media network ,park and resort,

consumer products and studio entertainment can be
consider have long term attractiveness
*score <5 consider unattractiveness
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Question 3:
What is your assessment of the
competitive strength of Walt
Disney Company’s different
business units?

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 Competitive Strength Assessments

Media Networks Parks and Studio Consumer Interactive

Resorts Entertainment Products Media
Competitive Importan Strengt Weighte Strengt Weighte Strengt Weighte Strengt Weighte Strengt Weighte
Strength Measures ce h Rating d Score h d Score h Rating d Score h Rating d Score h d Score
Weight Rating Rating

Relative market
share 0.10 9.0 0.90 7.0 0.70 6.0 0.60 7.0 0.70 3.0 0.30
Costs relative to
competitor’s costs 0.15 8.0 1.20 7.5 1.125 6.5 0.975 5.0 0.75 2.0 0.30
Ability to match or
beat rivals on key 0.15 9.0 1.35 7.0 1.05 8.0 1.20 4.0 0.60 3.0 0.45
product attributes

Ability to benefit
from strategic fit
with sister business 0.15 8.5 1.275 7.0 1.05 6.0 0.90 7.5 1.125 3.0 0.45

Bargaining leverage
with suppliers /
customers 0.05 8.0 0.40 7.0 0.35 6.0 0.30 7.5 0.375 3.0 0.15

Brand image and

reputation 0.15 9.0 1.35 8.0 1.20 8.0 1.20 7.5 1.125 5.0 0.75
Competitively
valuable capabilities 0.15 8.0 1.20 7.0 1.05 8.0 1.20 7.0 1.05 3.0 0.45

Profitability relative
to competitors 0.10 9.0 0.90 8.0 0.80 7.0 0.70 7.5 0.75 1.0 0.10
Sum of importance
weights 1.00
Weighted overall
competitive
strength score 8.58 7.33 7.08 6.475 2.95
 Competitive Strength
1. Media Network 8.58
2. Parks and Resorts 7.33
3. Studio Entertainment 7.08
4. Consumer Products 6.47
5. Interactive Media 2.95

Based on asessment, media network ,park and

resort, and studio entertainment can be consider
have strong market competitiveness
*score >6.7 consider have strong market
competitive
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Question 4 :
What does a 9-cell industry
attractiveness/business strength matrix
displaying Walt Disney Company’s
business units look like?

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9-Cell Industry Attractiveness/Business
Strength Matrix
8.58 7.33 7.08 2.95
Media 6.475
Networks 8.6
Parks and Resorts
High

7.68
Industry Attractiveness

6.7 Consumer
Products 6.65
6.4
Studio
Entertainment

3.3
3.2
Interactive
Low

Media

Strong 6.7 Average 3.3 Weak

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Business Strength/Competitive Position
9-Cell Industry Attractiveness/Business Strength
Matrix
Based on analysis :
1. Media Networks, Parks and Resorts and
Studio Entertainment are high attractiveness-
strength industries.
2. Consumer Products is medium
attractiveness-strength industry
3. Interactive Media have low attractiveness-
strength industry

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Question 5 :
Does Walt Disney’s portfolio exhibit
good strategic fit? What value chain
match-ups do you see? What
opportunities for skills transfer, cost
sharing, or brand sharing do you see?

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 Value Chain: Primary and Support Activities in Media Network Business Unit

Value Chain: Primary and Support Activities in Parks and Resorts Business Unit
Value Chain: Primary and Support Activities in Studio Entertainment Business Unit

Value Chain: Primary and Support Activities in Consumer Products Business Unit
Value Chain: Primary and Support Activities in Interactive Media Business Unit
Identifying the Competitive Advantage Potential of Cross-Business Strategic Fit
for Walt Disney Company
Question 6 :
What is your assessment of Walt Disney
Company’s financial and operating
performance in fiscal years 2010-2011?
What is your assessment of the relative
contribution of the Disney SBUs to the
financial strength of Disney, based on the
2011 fiscal year financial data?

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Walt Disney Company’s, the financial and operating performances assessment in
fiscal years 2010-2011

Key financial
2011 2010 Explanation
ratios
Operating Show the percentage of the revenue available to cover
19.03% 17.67% operating expenses and yield a profit. Higher is better
profit margin and the trend should be upward
The cash available for a firms day to day operation.
Larger amount means the company has more internal
Working funds to 91) pay it current liability on a timely basis, (2)
1,669 mil 1,225 mil finance inventory expansion, additional account
capital receivable , and a larger based of operations without
resorting to borrowing or rising more equity capital

The total debt ratio is calculated by dividing total debt

by total assets. It is to measure the extent to which
borrowed funds (includes both short-term loans and
long-term debts) have been used to finance the firm’s
Total debt to operation. A low fraction or ratio is better, while a
higher fraction or ratio indicates overuse of debt and
asset ratio 45% 43% greater risk of bankruptcy. The ideal debt ratio is
between 40%-60%, indicating that Walt Disney has a
good amount of debt ratio and has a plenty of potential
to grow as a company. As with the current ratio, the
total debt ratio is important to everyone who holds a
stake in Walt Disney.

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Relative contribution of each Walt Disney Company’s business units
base on 2011 fiscal year

Business Unit Revenue ( $ in million )

2011 ($) %
Media Network 18,714 45.76

Parks and Resorts 11,797 28.85

Studio Entertainment 6,351 15.53

Consumer Products 3,049 7.46

Interactive Media 982 2.40

Total 40,893 100

Question 7 :
What actions do you recommend that
Walt Disney Company’s management take
to improve the company and increase
shareholder value? Your recommended
actions must be supported with a
convincing, analysis-based argument
Internal Strengths and Weaknesses of Walt Disney Company

External Opportunities and Threats to Walt Disney Company

Walt Disney Company’s SWOT Analysis and Strategies to be considered
 Recommended Strategies

Because Walt Disney Company has a strong competitive position, in a currently slow growth
market, two strategies were recommended to be implemented in order to improve the
company and increase shareholder value:

 Strategy (S4O4): R&D into storytelling to kids through technology will utilize their
strong competitive advantage. This strategy highlights the company’s strength of the
creative process. Walt Disney Company was based in storytelling and has expanded.
Walt Disney Company’s competitors have less of a history in the area of children’s
stories which gives Walt Disney Company the edge. Additionally, it will help keep
them on the forefront of technology.

 Strategy (S2T1): Digitize content to utilize technology and lower costs will help on a
number of fronts, and can complement the first strategy. This strategy touches the
high sunk cost weakness, high risk factor, as well as the opportunities and threats that
the technology brings. By digitizing content including advertising, media etc. Walt
Disney Company can save money on print, get things out quicker and utilize other
segments to do it. By digitizing content they can lower costs during a lingering
recession, keep up with technology, and streamline costs. This again is an advantage
Walt Disney Company has over its competitors because its primary competitors the
vast diversification that Walt Disney Company has.
Thank You For Your Attention

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