walt disney 2012 case study

Strategic Management BPMN6023 Mohamad Asrofi Bin Muslim 815943

Case 20: The Walt Disney Company

Introduction

The Walt Disney Co. is an enigma in these rough economic times

for the sole purpose that they show minimal signs of slowing

down. Mickey Mouse has his hands dipped into everything and

from an investor’s standpoint that’s a good thing because that

equals diversification, and in turn, diversification lowers

risk. The Disney Company operates in several areas of the

media and entertainment industry. They have recently acquired

Pixar, which consistently provides box office record sales

with their animated films. Along media entertainment lines,

Disney also operates dominant media channels ABC and ESPN.

These are two channels that carry with them a strong loyal

following. Sports have always been America’s past time and

it’s unlikely to see them ever declining or the viewership

that goes along with it. People have always poured capital

into sports and will continue to for many centuries to come.

Aside from Disney’s ventures, investors focus and confidence

should be in the trademark of Disney. Characters such as

Mickey Mouse and Buzz Light-year are icons that will never be

lost in the pages of time. Kids and adults alike will always

want to participate in the next big thing the company has to

offer and these kinds of expectations will always lead to

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Disney having a stable stock price and even unstable in the

positive manner because the growth potential is limitless for

this company. You can see that limitless with the many

franchises Disney has under its wing. For example, the

company has a pretty expansive retail line whether it is Pirates

of the Caribbean or High School Musical or any of the other hundreds

of brands they own and they only receive 6% of overall revenue

from their retail lines, but that 6% is the equivalence to $30

billion according to Standard & Poor’s corporate overview of

the company.

Branding is the reason why Disney is so successful. They

really target their audience from a young age and that

awareness from their market does not dissipate. This was best

stated by an article on Bnet: “With brand awareness from such

young consumers, it's no wonder Disney Corp. executives are

singing Hakuna Matata, Means no Worries all the way to the

bank.” The Company is also opening up theme parks and resorts

all over the world. In an economic downturn, you would expect

them to hold back but Disney just keeps on expanding and

people keep on attending. In an article by Wall Street Journal

on July 31st this year, the analysts had stated that the

company beat forecaster’s expectations and the company

maintained strong attendance along with increased park revenue

by 5% to $3.04 billion. So you see, all of these segmented

parts to the company come together as one and provide Disney

with the economic stability it needs to function and prosper

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and in turn it reflects upon their stock price and their

ability to reward their shareholders.

Growth in the theme park industry is a challenge in today's

market. Theme parks will not grow if they don't diversify

their resources. The Walt Disney Corporation is a nationwide

multi-varied entertainment company which is a household name

to millions of people throughout North America. Michael Eisner

who is Disney's chairman and chief executive officer knows

that his company will have to diversify in order to meet his

targeted growth rate of 20%. Eisner wants to follow one of

Walt Disney's famous quotes which is "We cannot hit a homerun

with the bases loaded every time we go to the plate. We also

know the only way we can even get to first base is by

constantly going to bat and continuing to swing" In order for

Disney to meet this 20% target Eisner knows he will need to

look at new industries and overseas expansion to be

successful. Since the Walt Disney Company is reaching a

saturation point in domestic markets the corporation has

recruited several notable executives and officers to fill its

key management positions. Out of these positions only one of

the ten corporate officers and three of the four group

executives are Disney veterans.

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The Walt Disney company is one of the largest media and

entertainment conglomerates (number 2 behind AOL Time Warner),

with operations covering five key businesses: Media Networks,

Studio Entertainment, Parks and Resorts, Consumer Products and

Interactive Media

Media Networks

It has two categories, Broadcasting and Cable Networks.

Broadcasting units includes the ABC Television Network (number

3 behind NBC and CBS). Cable Networks includes the ESPN-

branded cable networks, Disney Channel, Disney Channel

International, stakes in E! Entertainment and Lifetime and the

start-up cable operations, such as Toon Disney and SoapNet.

Studio Entertainment

The Studio Entertainment segment produces a wide variety of

movies, television animation programs, musical recordings and

live stage plays. It also engages in the theatrical, home

video and television distribution of Disney’s film and

television library. It includes banners such as Walt Disney

Pictures, Touchstone, Buena Vista, and Miramax.

Parks and Resorts

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They are the most popular in the world, including the Walt

Disney World resort in Florida (number 1 park in US, 15.4

million visitors per year), the Disneyland Park and two hotels

in California, and the Disney Cruise line operated out of Port

Canaveral, Florida. The segment also generates royalties

and/or management fees on revenues from Tokyo Disneyland (16.5

million people per year) and Disneyland Paris.

Consumer Products

It licenses the company’s characters to consumer

manufacturers, retailers, and publishers throughout the world.

The company also works in direct retail using The Disney

Stores, and produces books and magazines in the US and Europe.

The company also produces audio and computer software

products, film, video and computer software products for the

educational marketplace.

Interactive Media

Disney Interactive delivers high-quality interactive

entertainment experiences for Guests across all current and

emerging digital media platforms. Disney Interactive produces

blockbuster mobile, social and console games, including hit

mobile franchise Where’s My Water?, multiplatform video game

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Disney Infinity and No. 1 virtual world for kids, Club

Penguin. Disney Interactive also produces original programming

and a suite of premium web entertainment destinations that

serve as the online and mobile gateway to everything Disney,

including No. 1 kids entertainment destination Disney.com and

the Moms and Family network of websites, including premier

parenting blogging platform, Babble.

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Question 1

What is Walt Disney company’s corporate strategy?

Walt Disney is one of the most famous brands in every family; it

has a lot of well know cartoons and characters. However, Disney

is not just a brand with animations, it is a broadly diversified

media and entertainment company, which includes media network,

theme parks and resorts, studio entertainment, consumer products,

and interactive media.

In 1928, the first and the feature characters – Mickey Mouse was

created by Disney. The success of Mickey Mouse is the first step

of the success of Disney Company. After Mickey Mouse, there are a

lot of highly successful animations, such as Snow White,

Cinderella, Peter Pan, and Sleeping Beauty. Then in 1954, the

first construction of Theme Park began, and this is the first

other business Disney diversify to. The park was very success

when it open, and then soon Disney decided to open the second

park in Florida.

After the park, Disney also opened the Disney World Resort in

1971, and the acquisitions of ABC, ESPN, Anaheim Angels, and the

Fox Family Channel. Moreover, Disney complete Pixar in 2005, and

Marvel in 2009. Disney has done a very good job on their

entertainment businesses; they not only successfully diversify in


to different entertainment industries but also expend to

internationally market successfully.

Disney builds a strong family brand in the entertainment industry

Disney is not just an animation producing company; it is a

corporate that includes media network, theme parks and resorts,

studio entertainment, consumer products, and interactive media.

It is highly diversify in the entertainment industry. Disney is

not just a brand for children, instant of children, the target

customer is the whole family. The movie Disney release every

year, it is always the popular movie choice for family with

younger children. The Disney Theme Park is always the famous

places for family with their children. What Disney is trying to

deliver to their customer is that Disney is not just a brand for

children it is a brand for every family.

International expansion and highly diversify strategy

Disney is a global brands, Disney Theme Park is not just in

America, but also Europe and Asia. Disney also bought UTV for the

growth in India. The ambition that Disney wants to growth

internationally is clear and it is growing. Disney has built a

lot of different products in different industries, however, those

segments are all somehow connected with each other.

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The Walt Disney Company was broadly diversified into theme

parks, hotels and resorts, cruise ships, cable networks,

broadcast television networks, television production, television

station operations, live action and animated motion picture

production and distribution, music publishing, live theatrical

productions, children’s book publishing, interactive media, and

consumer products retailing.

The Walt Disney Company’s corporate strategy was centered on :

1) Creating high-quality family content;

2) Exploiting technological innovations to make entertainment

experiences more valuables, and

3) International expansion.

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 Watch ESPN

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.

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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. Differentiation is a key for Walt

Disney:

a) Prestige and brand image

b) Brand Loyalty

c) Company culture

Corporate Level Strategy : Diversification

Disney has proven its success and stability through the company's

intense diversification strategy and should continue this

acquisition process in both current and new markets

Related Diversification Through Vertical Integration

a) Animation studios

b) Television (Disney Channel)

c) Consumer Products

d) Unrelated Diversification (Parenting)

e) Television (ESPN)

f) Pixar

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g) Social Gaming

Technological advancements in the media industry, like high-speed

Internet, have spawned the breakdown of industry barriers that

have effectively blurred the lines of corporate strategy and

consumer interactions (Priem, Butler, & Li, 2013). Dynamic

industries like media production require change management

strategies (Thompson, Strickland, & Gamble, 2009) and business

models that are consumer-centric (Priem et al., 2013).

Research shows the importance of integrating both supply and

demand functions in a balanced way that ensures true value

creation while securing economic profit (Stank, Esper, Crook, &

Autry, 2012; Priem et al., 2013), which can be done through the

strategic implementation of both offensive and defensive moves in

the marketplace (Thompson et al., 2009). This investigation takes

a look at the Walt Disney Company and its differentiation

strategies for delivering superior customer value through well-

managed consumer value and supply chain efforts.

Offensive Strategies that Improve Market Position

Organizations need to continually create and enhance value

through strategy (Priem et al., 2013) that can be readily adapted

in leading, anticipating, and reacting to change (Thompson et

al., 2009). The Walt Disney Company has been around since 1923,

and has since become a worldwide phenomenon (Inglesson, Eriksson,

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& Lilja, 2012) gradually improving its market position through

offensive strategies.

One of the strategic priorities of Disney is to internationally

extend its impact by expanding into growth markets (Stank et al.,

2012). This offensive strategic priority can be clearly seen most

recently in the acquisition of Maker Studios, one the most

popular YouTube channels for original online content creation

(Fritz, 2014).

Being the first major studio to acquire an Internet multichannel

network puts Disney in the driver’s seat for leading change in

the media industry, an offensive stance that effectively changes

the rules of the competitive landscape undergoing rapid industry

change (Thompson et al., 2009).

By proactively making strategic purchases that enhance the reach

of its competencies and assets, Disney can continue to enhance

its market position through fresh actions that do not wait until

the industry requires them (Thompson et al., 2009).

Another part of the offensive strategy adopted by Disney includes

the ongoing implementation of pioneering fresh technologies in an

effort to set new standards in the industry (Thompson et al.,

2009). A second strategic priority touted by current CEO, Robert

Iger, is to maximize the reach and quality of its entertainment

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offerings through the adoption of new technology (Stank et al.,

2012).

Disney makes a concerted effort to align itself with the values

of its customers by differentiating itself as a family friendly

experience, and makes sure to adopt these practices in all of its

operational activities (Stank et al., 2012) while continuously

enhancing its market position through decisive offensive

strategies.

Using Defensive Strategies to Protect a Position

Disney has also taken on some defensive strategies in an effort

to continously protect its position in the media landscape. Part

of their continued success in the theme park experience comes

from the rigorous selection and socialization processes the

company fosters to inculcate the values of the organization into

its “Cast Members” (Ingelsson et al., 2012, p. 7).

Disney has implemented a total quality management (TQM) culture

which focuses on continuous improvements that create customer

value and satisfaction driven through its culture, something that

has been difficult for rivals to successfully repeat (Ingelsson

et al., 2012). In terms of staffing, Disney has an eight-step

procedure it goes through to weed out individuals who do not fit

into the value system of the organization (Ingelsson et al.,

2012).

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Those eight steps include:

1. Sourcing - finding where the talent is.

2. Recruiting - requesting active inquiries for employment.

3. Reviewing - checking all resumes for accuracy.

4. Interviewing - making sure there is a good fit with the

firm's value system.

5. Selection - secondary interviewing and final selection,

creating the best person-organization fit.

6. Negotiating - contracting the new hire.

7. On boarding - welcoming the new Cast Member and training her

or him.

8. Retention - showing appreciation with follow-up corporate

values and culture socialization.

Disney has been able to defend its top industry position

throughout the years by insisting on a recruitment methodology

that sometimes begins the hiring process six years in advance, as

in the case of its Animal Kingdom property (Ingelsson et al.,

2012).

A third strategic priority for Disney includes continuing to

develop entertainment experiences that people want to consume

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(Stank et al., 2012). This consumer-focused, differentiation

strategy helps to defend Disney’s position by keeping its focus

on competencies that are intrinsically linked to activities that

offer customers what they desire (Stank et al., 2012).

Disney does this while remaining profitable, showing their knack

for understanding both the voice of the consumer and the voice of

the supply chain, which results in their ability to identify

segments where the firm’s value proposition surpasses the costs

required to produce that value (Stank et al., 2012).

This, in turn, creates a balancing act with their supply and

value chains, which result in economic profits that maintain

industry leadership, and reflect competencies and capabilities

not easily copied (Stank et al., 2012), thus providing a

sustainable competitive advantage for the firm (Thompson et al.,

2009).

Implementing Defensive and Offensive Strategy for Sustainability

The volatile and ever-changing industry landscape of the media

business requires firms to understand and implement both

defensive and offensive strategies appropriate to their given

circumstances (Thompson et al., 2009).

The Walt Disney Company has imposed three strategic priorities

that have fostered activities to both protect its current market

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position while competitively improving it by (1) constantly

inventing new entertainment experiences, (2) using the latest

technology to advance their product offerings, and (3) driving

international expansion to extend the firm’s reach and impact

(Stank et al., 2012).

Arguably, Disney has created a way to generate significant

economic profits by aligning consumer segments with

organizational capabilities (Stank et al., 2012) that foster

strategic differentiation strategies that have the right balance

with offensive and defensive stances (Thompson et al., 2009),

which have sustained the company’s legacy for many years, and

threaten its rivalry to continue doing so for years to come.

What can your media company learn from the business strategies

employed by the Walt Disney Company? Here is a recap:

The choice of a firm's fundamental values and corporate

culture should strategically match that of its chosen core

target customer demographic. Just having "values" for the

sake of having them is not sufficient.

Media firms need to make sure that their overall business

strategy, mission statement, values, and strategic vision

all coincide with being consumer-centric while remembering

not to neglect the importance of efficient supply chain

management. The proper balance can mean the difference

between short and long term success.

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The proper balance of demand and supply integration requires

an astute understanding of not only what your customer base

wants and how to exceed that with added value, but also how

you will successfully deliver it with an efficiently run

operation.

Part of having a total quality management strategy should

include starting with core values, selecting people who can

support, embellish, and lead others with those values, and

providing the proper techniques and tools to make sure your

firm can deliver customer satisfaction while finding ways to

reduce resources required to make that happen.

Find the best mix of both offensive and defensive strategy,

and continuously refine these for your firm to secure long-

term profits, longevity, and sustainable competitive

advantage.

Look for ways to become an industry leader by anticipating

the logical next moves of competitors and where the industry

is headed through astute research and observation, then take

bold moves that put you in the driver's seat for industry

change.

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Question 2

What is your assessment of the long-term attractiveness of the

industries represented in the Walt Disney Company’s business

portfolio?

Disney's long-term attractiveness of its industries in their

business portfolio is for the most part high. Disney has their

hand in a bunch of different industries which include media

networks, parks/resorts, studio entertainment, consumer products,

and interactive media. All of these separate businesses create

revenue, but some more than others. Disney's media network

business is their most profitable business due to the amount

different channels they own. Disney owns networks such as A&E,

Lifetime, History, and all the ESPN channels. Over the past three

years revenues and operating income have increased and show

positive signs of growth. Disney's parks and resort business is

what made Disney the company is it today because of how famous

the parks are. The revenue and operating income for Disney parks

and resorts dropped from the year 2009-2010 but increased from

year year 2010-2011. Disney's parks and resorts hold the best

future for a long-term investment because they have proved that

they will not go away. Disney's studio-entertainment business is

a thriving one and even though it is smaller than the rest of

Disney's businesses it continues to grow at a healthy rate which

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show good signs for long-term success. Disney also has their hand

in consumer products which showed a growing revenue and operating

income over the past three years and shows no signs of slowing

down. The consumer products business rely on the other parts of

Disney to thrive. Lastly, Disney's interactive media business

showed revenue losses in each year from 2009-2011 and could turn

out to be a threat to Disney's long term success plan.

The Walt Disney Company’s business portfolio including media

networks, parks and resorts, studio entertainment, consumer

products and interactive media. The assessment of the long-term

attractiveness of the industries represented in the Walt Disney

Company’s business portfolio is shown in Table 1.

From Table 1, the long-term attractiveness of the industries of

the Walt Disney Company’s business portfolio could be ranked as

follows;

1. Media Network: 8.05

2. Parks and Resorts: 7.03

3. Consumer Products: 6.65

4. Studio Entertainment: 6.40

5. Interactive Media: 3.28

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Based on the assessment, industries with a score much below 5.0

probably did not pass the attractiveness test. As for the Walt

Disney Company, four out of five of its business portfolios has

passed the attractiveness test. Therefore, it could be concluded

that the Walt Disney Company’s business portfolios has long-term

industry attractiveness.

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Table 1: Calculating Weighted Industry Attractiveness Scores: The Walt Disney

Company

Industry Attractiveness Assessments

MediaNetworks

Parks andResorts

StudioEntertainment

ConsumerProducts

InteractiveMedia

IndustryAttractivenessMeasures

ImportanceWeight

AttractivenessRating

WeightedScore


Weighted

Score


WeightedScore


Weighted

Score


WeightedScore

Market size and projected growth rate

0.10 8.0 0.80 7.5 0.75 6.0 0.60 7.0 0.70 2.0 0.20

Intensity of Competition

0.20 8.0 1.60 7.0 1.40 6.5 1.30 5.0 1.00 2.0 0.40

Emerging opportunity and threats

0.15 8.0 1.20 5.0 0.75 6.0 0.90 4.0 0.60 2.5 0.375

Cross- industry strategic fit

0.20 8.0 1.60 7.0 1.40 6.0 1.20 8.0 1.60 7.0 1.40

Resource requirements

0.10 8.0 0.80 8.0 0.80 6.0 0.60 8.0 0.80 5.0 0.50

Seasonal and cyclical influences

0.05 8.0 0.40 7.5 0.375 8.0 0.40 8.0 0.40 2.0 0.10

Social, 0.05 8.0 0.40 7.5 0.375 8.0 0.40 7.0 0.35 2.0 0.10

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Strategic Management BPMN6023 Mohamad Asrofi Bin Muslim 815943 political, regulatory, and 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 risk

0.05 7.0 0.35 7.5 0.375 6.0 0.30 8.0 0.40 2.0 0.10

Sum of importance weights

1.00

Weighted overallindustry attractivenessscore

8.05 7.025 6.40 6.65 3.275

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Question 3

What is your assessment of the competitive strength of Walt

Disney Company’s different business units?

Competitive strengths of Walt Disney’s different business unit is

that they have a strong competitive advantage of other companies

in the same market. Disney’s strengths consist of: strong product

portfolio, brand reputation, Competency in acquisitions, and

diversified business. Disney’s ability to acquire technologically

advanced companies and companies that complement Disney’s

weakness in each individual unit and industry. Also the ability

to integrate the different business units is a key strength for

Disney. The Studio Entertainment unit shares major Motion Picture

characters with the Consumer Products unit to sell products to

fans of those pictures, as well as to the Interactive Media to

promote and sell video games surrounding the plots and themes in

those movies. The Studio Entertainment unit also blends into

the Parks and Resorts unit with the development of themed parks

and lands dedicated to movies and characters from Media

Networks.Disney's competitive strength in their media network is

greater than any other of the company's business. This is mainly

due to the amount of the market Disney holds and the popularity

of these channels to the public. The competitive strength of Walt

Disney Company’s different business units is as shown in Table 2.

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Based on the analysis, the overall competitive strength scores

for the different business units are as the followings;

i. Media Network: 8.47

ii. Parks and Resorts: 7.25

iii. Studio Entertainment: 6.77

iv. Consumer Products: 6.47

v. Interactive Media: 2.95

Business units with competitive strength ratings above 6.7 are

strong market contenders in their industries. Businesses with

ratings in the 3.3 to 6.7 range have a moderate competitive

strength while businesses with ratings below 3.3 are

competitively weak market position.

As for the Walt Disney Company, the business units that are

strong market contenders are Media Network, Parks and Resorts and

Studio Entertainment. The moderate competitive strength market

contender is Consumer Products and the weak market contender is

Interactive Media.

Table 2: Calculating Weighted Competitive Strength Scores: The Walt Disney

Company

Competitive Strength Assessments

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MediaNetworks

Parks andResorts

StudioEntertainment

ConsumerProducts

InteractiveMedia

Competitive StrengthMeasures

ImportanceWeight

Strength

Rating

Weighted

Score

StrengthRating

Weighted

Score

Strength

Rating

WeightedScore

Strength

Rating

WeightedScore

StrengthRatin

g

Weighted

Score

Relativemarket share

0.10 8.0 0.80 7.0 0.70 6.0 0.60 7.0 0.70 3.0 0.30

Costs relativeto 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 matchor beat rivals on key product attributes

0.15 9.0 1.35 7.0 1.05 6.0 0.90 4.0 0.60 3.0 0.45

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 leveragewith 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 7.5 1.125 8.0 1.20 7.5 1.125 5.0 0.75

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Competitively valuablecapabilities

0.15 8.0 1.20 7.0 1.05 8.0 1.20 7.0 1.05 3.0 0.45

Profitability relativeto 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

Weightedoverall competitive strengthscore

8.475 7.25 6.775 6.475 2.95

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Strategic Management BPMN6023Mohamad Asrofi Bin Muslim 815943

Question 4

What does a 9-cell industry attractiveness/business strength

matrix displaying Walt Disney Company’s business units look like?

Below is the nine-cell industry attractiveness-competitive

strength matrix. The x-axis is labeled as competitive

strength/market position and the y-axis represents industry

attractiveness. The way I determined the relative size and

position of each of Disney’s five main business lines mentioned

in the case was by first completing a weighted competitive

strength score for each of the business lines. Additionally,

figures provided in the case showed the revenues of each business

line, which directly contributed to how big each circle was.

The 9-cell industry atrractiveness, business strength matrix

shows at a glance which of disney’s business units should have

priority. The size of the circle shows the current financial

value of each business unit and the blue shaded portion shows

disney’s current market share

As you can see in general, the more market share the larger the

circle and parks and resorts is disney’s leading business

unit.But The interactive media business unit seems promising.

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Disney currently has strong competitive position in the area that

is getting more attractive as technology advances with a great

amount of room for growth. Who knows, maybe in the future,

visits to the parks will just be through interactive media.

The Nine-Cell industry attractiveness / business strength matrix

for the Walt Disney Company’s business units is shown as in

Figure 1.

Figure 1: A Nine-Cell Industry Attractiveness-Competitive Strength Matrix

IndustryAttractiveness

8.475 7.25 6.775 6.4752.95

8.475High7.25

6.775

6.475Medium

2.95Low

Strong Average Weak

Competitive Strength / MarketPosition

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Media NetworksStudio Entertainment

Parks and Resorts Consumer Products

Interactive Media

Biggest circle = media networks (most % of total revenue) also in

the top, highest ranking circle and second largest= parks and

resorts (most competitive and most attractive industry) both fall

in 3 boxes in top left of matrix. These receive most resources,

opportunity to build most shareholder value. “grow and build. The

third largest circle is studio entertainment. This circle would

fall into the middle area of the matrix, and receives medium

allocation of resources. This one scores a little lower on

industry attractiveness due to the decreasing sale of DVD

products and the rise of lower cost alternatives. The unit is

still somewhat competitive however due to strong intellectual

property surrounding the brands. The fourth largest circle is the

consumer products unit. This unit is also near the bottom of the

middle of the matrix, a lower amount of resources are dedicated.

Based on Figure 1, the strong attractiveness-strength industries

for the Walt Disney Company are Media Networks, Parks and Resorts

and Studio Entertainment. The average attractiveness-strength

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industry is Consumer Products and Interactive Media has

comparatively low industry attractiveness and minimal competitive

strength.

Therefore, the Walt Disney Company should consider both industry

attractiveness and business strength in allocating resources and

investment capital to its different business portfolios based on

the result. It should focus on the business units that are in

the strong attractiveness-strength industries followed by the

average one. As for the weaker one, it should have a lowest

priority on resources and often a good candidate for being

divested. However, if the business unit has potential for revenue

and profit growth, it should be retained.

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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?

All of the business units in Walt Disney’s portfolio exhibit good

strategic fit except consumer products. As mentioned above the

“consumer products” side of the business is not an attractive

venture. With Disney’s hand in many “cookie jars” they have the

potential to use many assets and skills in a broad range of ways.

Disney’s Media Networks can advertise their theme parks, their

studios can be used for movies, and technology researched by

Studio Entertainment can certainly be shared across the board.

How Disney leverages its corporate assets to build shareholder

success is highlighted in each of its 5 major business lines. You

will see that while Disney’s historical strengths continue to

thrive, Disney is about to break out into the digital

environment, with its assets fully engaged in converting

customers to Disney interactive games, and a future building on

“personalized, on-demand” entertainment.

• Branding is king – leveraging to the max

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• Costs incurred long ago by the Studios to develop characters

like Mickey Mouse and Cinderella now continue to generate

returns in hotels/cruise ships, gaming/video production,

theme parks

• Gaining Expertise in technology – also to be shared, no

borders, to catch up and potentially overtake competitors

• Assets are deployed across all business lines to drive

shareholder value. Let’s look at three examples.

The relative strengths of these strategic business units –

history and future at Disney. The tremendous growth (from a very

small base – 2%) in Interactive Revenues is a key strategy for

Disney. The company has spent dollars in acquisitions in the

arena to establish itself, and not get left behind. Those

acquisitions appear to be paying off.

The assessment of the competitive value of strategic fit and the

value chain match-ups for the Walt Disney Company’s portfolio is

shown in Figure 2. The resource fit such as skills transfer,

cost sharing, or brand sharing could also be done among the

portfolios based on Figure 2.

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Value Chain Activities

Inboundlogistic

Technology Operations Sales andMarketing

Distribution

Service

MediaNetwork

StudioEntertainment

Parks and Resorts

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ConsumerProducts

InteractiveMedia

Opportunity to combine purchasing activities and gain more leverage with suppliersand realize supply chain economics

Opportunity to share technology, transfer technical skills, combine R&D

Opportunity to combine sales and marketing activities, use common distributionchannels, leverage use of common brand name, and/or combine after sales service

Opportunity to combine sales and marketing activities, use common distributionchannels, leverage use of common brand name, and/or combine after sales service

Collaboration to create new competitive capabilities

Collaboration to create new competitive capabilities

No strategic-fit opportunity

Figure 2: Identifying the Competitive Advantage Potential of Cross-Business Strategic Fit: The Walt Disney Company

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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?

Disney’s mission focuses heavily on financial performance

“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.”

According to the fiscal years 2010-2011 of Walt Disney Company

provided, the following are the financial and operating

performance analysis:

1. Profit Margin Ratio

Year 2011 Year 2010

12.86% 11.33%

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The profit margin shows the percentage of revenue available to

cover operating expenses and the company’s ability to yield a

profit. The higher the ratio is better, and the trend should be

upward. According to the case study and calculation, the ratio

indicates Disney’s made around 12 cent per dollar of revenue in

2011 and 2010. With billions dollars of revenue made by Disney on

that particular year, it can be seen that Disney does in fact a

good profit each year.

2. Return on Assets

Year 2011 Year 2010

7.29% 6.23%

This ratio is to measure of the return on the total investment

made by the company. The higher the number means better and the

trend should be upward. As shown above, the trend is upward and

the number is quite high that and it indicates that the ability

of Disney to generate revenue from the investment made by the

company’s assets.

3. Return on Equity

Year 2011 Year 2010

13.33% 10.96%

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The ratio measures the percentage of profit earned for every

dollar in equity. On the other word, it measures the return

stockholders are earning on their capital investment in the

company. A return in the 12-15% range is average and the trend

should be upwards.

4. Current Ratio

Year 2011 Year 2010

1.13 1.11

The Current Ratio is calculated by dividing total current assets

by current liabilities. It is showing the level of company’s

liquidity as well as the short term health of the company. Since

the ideal current ratio is between 1 and 2, it can be seen that

Walt Disney has a good short term health, indicating that it has

the ability to pay it monthly bills. This ratio is important to

everyone in the stakeholder model (including managers, employers,

suppliers, customers, shareholders, Board of Directors and so

on).

5. Total Debt Ratio

Year 2011 Year 2010

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45% 43%

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 operation. A low fraction or ratio is

better, while a higher fraction or ratio indicates overuse of

debt and 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.

6. Inventory Turnover Ratio

Year 2011 Year 2010

0.36 0.36

The inventory turnover ratio shows the company’s efficiency and

management’s ability to move their inventory / goods by finding

out how many times a year inventory was turned over. Normally the

ratio indicates higher value which means higher is better. In

this case study, Walt Disney’s inventory turnover for the year

2011 and 2010 were both less than 0.5 and the number seem low.

However, it is not as important as other ratio because the nature

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of the company is an entertainment company, not a retail company.

In Walt Disney, the inventory was used to produce goods for the

Disney Store and Marvel, a company owned by Disney. Since the

inventory turnover ratio is relatively low, it is not indicative

of Disney’s health of ability to be a successful company because

retail sales are only small part of the services offer by Disney.

According to the case study, Walt Disney Company was broadly

diversified into several areas which resulting the company

created several strategic business units (SBUs). Those five SBUs

in Walt Disney are media network, park and resorts, studio

entertainment, consumer products, and interactive media business

units.

Interactive Media: Based on the operating results for all of

Disney's business units, except Interactive, reported year-over-

year of profit gains. However, the Interactive Business unit in

Walt Disney, which produced gaming and digital properties, did

see its operating loss increases 24% from the previous year

become total of operating loss $308 million in the year 2011.

Park and Resorts: Disney's theme parks and resorts business unit

was reported the biggest profit growth among five SBUs in Walt

Disney Company. The division recorded a 24 percent increase in

operating profits in the year 2011. The reason is because with

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the tourists staying more nights at its Disney resorts and the

addition of the Disney cruise line. The revenue from the business

units was primarily generated through park admission, hotel room

charges, merchandise sales, food and beverages sales, sales and

rental of vacation club properties and fees charged for cruise

vacation.

Media Network: Meanwhile, the Walt Disney's media networks

business units which include its domestic and international cable

network, the ABC television network, and ESPN — remain its

largest revenue generators. The unit's revenue was up 8 percent

to $1.1 billion, as the revenue was generated from the affiliate

fess and advertising fees in the business units. In all, ABC had

238 affiliates in the United States, while the advertising raised

to 7 percent which equivalent to $570 million. The company also

believes that the effect on the broadcast news had been

significant and the growth of streaming services had the

potential to affect the advertising revenue potential of all

media business units.

Studio Entertainment: The Walt Disney Company’s studio

entertainment division produced live action and animated motion

pictures, pay-per-view and DVD home entertainment, musical

recording, Disney on Ice and Disney Live! Performances. Even though most

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motion pictures typically incurred loses, during the theatrical

distribution due to the production cost and extensive of

advertising cost campaign accompanying the launch of the film.

Profits for many films did not occur until the movie become

available on DVD or Blu-Ray disk for home entertainment (usually

began in 3-6 month after the film’s was release). Moreover,

revenue also generated when a movie moved to pay-per –view (PPV)

or Video On Demand (VOD) that available 2 month after the release

of DVD/Blu-ray disk. For instance, Disney's movie studio business

returned to profitability on the strong performance of recently

released movies Oz the Great and Powerful and Wreck-it Ralph.

Consumer Products: This division includes the company’s Disney

store retail chain and businesses specializing in merchandise

licensing and children book and magazine publishing. In the year

2011 alone, the company managed to owned and operated total of

208 Disney stores in North America, 103 stores in Europe and 46

stores in Japan. The division sales were primarily affected by

the seasonal shopping trends and changes in consumer disposable

income. Therefore, the operating income for consumer products

business unit was reported year-over-year profit which increases

in 17 percent to $139 million in the year 2011.

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a) The assessment of a company’s financial and operating

performances could be done by calculating the key financial

ratios such as operating profit margin, current ratios and debt-

to-equity ratios.

As for the Walt Disney Company’s, the financial and operating

performances assessment in fiscal years 2010-2011 are as the

followings;

Key financial ratios 2011 2010

Operating profitmargin

19.03% 17.67%

Current ratios 1.14 1.11

Debt-to-equityratios

0.87 0.80

The operating profit margin shows that the profitability of

current operations in particular year without regard to interest

charges and income taxes. Based on the fiscal year 2010-2011, the

Walt Disney Company’s profitability increased from 17.67% in 2010

to 19.03% in 2011.

The current ratio shows a company’s ability to pay current

liabilities using assets that can be converted to cash in the

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near term. Ratio should be higher than 1.0; a ratio of 2 or

higher are better. As for the Walt Disney Company, the current

ratios are 1.11 and 1.14 for the year 2010 and 2011 respectively

which showed that the ability of the Walt Disney Company to pay

its current liabilities using the assets it have.

The debt-to-equity ratio shows the balance between debt (funds

borrowed both short term and long term) and the amount that

stockholders have invested in the company. The further the ratio

is below 1.0, the greater the company’s ability to borrow

additional funds. Ratios above 1.0; and definitely above 2.0, put

the creditors at greater risks, signal weaker balance sheet

strength, and often result in lower credit ratings. As for the

Walt Disney, the debt-to-equity ratios are 0.80 and 0.87 for the

year 2010 and 2011 respectively which showed that the company’s

ability to additional funds.

b) The relative contribution of the Disney SBUs to financial

strength of the Disney can be determined by calculating the

percentage of the revenue garnered by each SBUs to the total

revenue of the Walt Disney Company.

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Based on the 2011 fiscal year, the relative contribution of each

SBUs is as the followings;

Amounts In $MM USD 2011

Business Unit MediaParks &

ResortsStudio Consumer

Interacti

ve Media

Revenue 18,714 11,797 6,351 3,049 982

Operating Expense 10,376 7,383 3,136 1,334 732

Selling & General

Expense2,539 1,696 2,465 794 504

Depreciation &

Amortization237 1,165 132 105 54

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Other (584)

OPERATING INCOME 6,146 1,553 618 816 (308)

The Media Networks group drives the majority of the business and

supports the marketing efforts of all the other SBUs. Media is by

far the most important strategic unit of Disney Parks and resorts

are a solid contributor to overall income. Their contribution has

remained essentially flat Studio productions is showing year over

year decline in operating income. This is in spite of a reduction

in expenses for the division. Consumer products contribution

remained flat year over year Interactive Media is the problem

child of the SBUs. Operating losses in the unit have increased

74mm year over year.

Total Operating Income from SBUs 8,825 7586

CONTRIBUTION 2011 2010

MEDIA 70% 68%

PARKS & RESORTS 18% 17%

STUDIO 7% 9%

CONSUMER 9% 9%

INTERACTIVE MEDIA -3% -3%

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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.

Past Strategies

From its inception, the Disney Company has implemented certain

critical strategies that contributed to its success. Its Mission

Statement and Vision Statement set the tone for much of the

Disney success. The expansion of innovative technology and a

global market have affected the business strategies of the Disney

Company; therefore, the company’s strategies have changed with

the times. When Walt Disney first founded the business, a major

strategy was “to bring Disney’s great storytelling to life with

immersive experiences never before imagined” (Iger, R., 2012

Annual Report and Shareholder Letter, p. 1).

Present Strategies

In 2012, CEO and President Robert Iger identified three

particular strategies that have been effective for Disney over

the years. He declared that these three strategies have been

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especially instrumental in the company’s success over the past

seven years. Iger stated that Disney’s three major strategies

have been to “create high-quality content for families, making

that content more engaging and accessible through the innovative

use of technology, and growing our brands and businesses in

markets around the world” (Iger, 2012, p. 1).

Future Strategies: Foreign Markets

The Disney Company’s plans are to continue with the strategies

outlined by CEO Robert Iger and to remain ready to adapt to the

changing consumer wants and needs (Walt Disney Company Annual

Report and Shareholder Letter, 2012). In addition to adapting as

needed to meet the needs and wants of consumers, Disney has plans

to adapt to meet growing consumer interests in foreign countries.

Today, Disney has their worldwide known amusement parks in three

different continents, stores in United States, United Kingdom,

France, Italy, Spain and Portugal.

In addition, they have licensed shops and products all over the

world. They are using the strategy of Foreign Outsourcing to meet

the company’s growing demands and at the same time, keep costs

down. With the company’s foreign markets, they are adapting well

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in other countries because they are adopting many of the local

customs, while maintaining Disney’s American flavor. In addition,

the company will continue to follow the rules and regulations of

the foreign countries where they build businesses. This expense

is one that Disney has included as a necessary one. Finally, a

plan Disney will continue is to build their strategies for

reaching their global markets by following the standards of those

countries and paying the taxes of those countries (The Walt

Disney Company 2012).

Changing Global or Regional Economic Markets

One of the first concerns mentioned is the changing in global or

regional economic markets could affect the profits of some of the

Disney businesses. The company reported that during recent

economic downturns, spending at the parks at decreased, as well

as decreased spending on advertising. The company also noted a

decrease in spending on Disney products. The Disney Company also

noted that decreased attendance at the parks could also result

from continued economic downturns. A change in energy costs could

result in a decrease in spending on Disney products as well as an

increase in costs for the company. Finally, foreign exchange

units fluctuate, and these changes could result in a devalued

U.S. dollar and increases in labor costs in foreign markets as

well as markets at home.

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Entertainment Tastes Subject to Change

Another risk noted by the Disney Company is that its markets are

primarily entertainment, and this industry depends largely on the

tastes of the public. Those preferences can change suddenly and

without warning, causing a change in trends that could take the

company by surprise. Since Disney markets many of its products

outside the United States, the company’s success depends on the

company being able to predict the tastes of consumers in other

countries and adapt to these changing tastes and preferences. The

company often invests heavily in hotels, entertainment, and other

markets before knowing to what extent these investments will

appeal to the consumers.

Dependence Upon Rapidly Changing Technology

In addition, the company’s success is highly dependent upon

technology, which changes rapidly. The success of the Disney

Company depends largely on how well the company expands,

exploits, acquires, develops, and adopts these new technologies

to distinguish the Disney products from their competitors. New

technological developments may involve Disney products not yet

fully developed or in some cases, products that do not yield a

high return for the money it costs the company to invest.

Therefore, the profits from these products may fluctuate widely.

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Changing Laws Governing Intellectual Property

Laws governing the use of intellectual property, which compose a

large amount of the Disney products, may change. Disney’s ability

to have full legal authority to use intellectual property may be

costly. Certain laws regarding the use of intellectual property

can change or officials in some countries may not fully enforce

these laws, in foreign countries. The company invests a

considerable amount of company money in protecting Disney’s

rights to the use of intellectual property. This protection may

be more costly in foreign countries where the laws are weak or

not defined clearly.

Expense of Electronically Stored Data Protection

Another concern of the Disney Company is that data stored

electronically is subject to invasion, and the company spends a

considerable amount of money to protect this data. This

protection is essential because if the privacy of the company’s

business or the employees’ privacy happen to be compromised, the

results would be extremely costly; therefore, the company has a

high expense in protecting this data.

Expense of Unforeseen Events

Other unforeseen events, natural disasters and seasonal changes,

can result in excessive costs, and these expenses are from a

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variety of sources. The company cannot predict most of these

events, especially those related to nature, such as hurricanes,

tornadoes, floods, and other weather-related events. Besides the

unexpected events of nature, seasonal changes affect the

popularity of many of Disney’s events, especially the theme

parks.

Cost of New Investments

In addition, many new investments are costly and do not yield a

high rate of return, which we may not be able to expect ahead of

time. Unpredicted turmoil in financial markets can cause a rise

in the cost of borrowing, which would lead to a higher cost for

operating our businesses, especially when we have to borrow

money. Increased competition in all business areas require that

we continue to provide the highest quality and attempt to offer a

better quality product than our competitors. The competition may

change rapidly, requiring that we compete with human resources,

programming, and other resources to maintain the highest standard

at the lowest cost.

Costs of Human Resources

Other substantial costs related to our employees, such as our

contracts with media production companies, and changes in

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regulation, affect our businesses. For example, in terms of human

resources, post-retirement medical costs continue to rise, and

these costs can reduce our finances as we now have 166,000

employees worldwide. With regard to media production, we enter

into long term contracts; however, when these contracts have to

be renewed, we may not always be able to renew with favorable

terms. If that happens, then we have to pay a price in costs when

we renew the contracts. Finally, a number of regulations may

change and appreciably affect the Disney Company. For example,

FCC regulations govern television and radio broadcasting,

environmental regulations affect a number of our businesses, and

state and federal privacy regulations affect all aspects of our

company.

Laws and Regulations in Foreign Countries

Changing laws and regulations in foreign countries and in the

United States can affect the Disney Company. Foreign countries

may impose any number of a variety of restrictions---trade

restrictions, ownership restrictions, or currency exchange

controls, any of which could affect the Disney Company. The

company’s businesses in foreign countries is subject to the laws

of those countries, and those may change at any time as the

company may have to spend additional money to comply with that

country’s regulations. In the United States, labor disputes

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involving any of the Disney employees could disrupt the

operations of the company (Fiscal Year 2012 Annual Report and

Shareholder Letter, 2012, pp. 17-22).

The Path Forward

Vision Statement of the Walt Disney Company has served it well.

Most people take for granted that this giant is alive and well

into the twenty-first century, and it continues to be a strong

company. However, in recent years, the company financial

statements have revealed some inconsistencies as regards to cash

flows, margins, and gains on investments than most media

organizations of similar size. In 2012, analysts at Caris

downgraded Disney from a status of above average to a status of

average. Some reasons for this downgrade include the opinion that

has limited upside potential and that “it is fairly valued at

$54.63, with their target price set at $55. However, the stock

has risen 40% since the start of the year and is trading near $51

after recently reaching a 52-week high of $53.40” (Qineqt, 2012).

One reason for the lower Disney revenues was the deferred

affiliate fees for its cable TV networks, fees that will not be a

cost factor now or again in the near future. The position of some

analysts is that Disney’s diversification insulates the company

from economic downturns (Qineqt, 2012).

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The Disney Company’s fiscal reports for the first quarter of 2013

appear strong with a 5% increase in revenue, and multimedia

networks were particularly strong with a revenue increase of 7%

(Letter to Stockholders, 2012). The company generates revenue is

balanced among its five business segments with the media network

segment leading at 45.1% of the Disney revenue in 2010. The next

highest revenue came from parks and resorts at 28.3%, and the

next business segment was parks and studio entertainment (17.6%),

consumer products (7%), and interactive media reported the lowest

revenue percentage at 2.0% of the overall revenues. Since Disney

reports a broad and diversified revenue base, that

diversification protects the company to some degree from economic

downturns that may hit one industry. In other words, Disney’s

diversification of products and services protects the company---

five business segments share the risks among themselves.

(Marketing Mix, 2012).

The recent SWOT Analysis indicates that Disney must pay close

attention to the potential threats that can inhibit the company’s

continued growth and threaten its financial security. The Disney

Company identifies these threats in its Fiscal Year 2012 Annual

Report and Shareholder Letter.

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Stakeholder Analysis

a) Communities- The community expects a high level of quality

products and services that takes some of the tax burden off

the community.

b) Board of Directors- The board of directors expect a return

of net asset value and in increase in the growth of the

company.

c) Business Partners- The partners wan the ability to negotiate

fair dealings with Disney which will allow them to make a

profit

d) Employees- The employees want to have job security and want

to know that they have the chance to advance within the

company if they work hard along with working in a safe

environment.

e) Customers- the customers want to make sure they are provided

with the best service and products that's available in the

current market.

f) Distributors and Suppliers-Suppliers want to be informed

with what's going on with the company so that they can make

the necessary changes to keep pace with the company.

g) Investors- The investors want to have a good feeling about

their return on investment

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h) Environmental Agencies- The protection of the environment is

highly expected to insure that natural resources conserved

Alternative Strategies

Walt Disney needs to look at buying some of the competition and

look at purchasing properties that could potentially be used for

future expansion. They could use this property to open "Mini

Disney Kingdoms" through out the United States. This would give

it a more regional presence in the most populated areas while

also putting the pressure on the "Six Flags" of the world.

Recommended Strategies and Objectives

The recommended strategies for the Walt Disney Company are

composed of initiatives on two separate fronts. First SBUs must

continue to strengthen operations by identifying new

opportunities in the current target markets. This recommendation

lies squarely in the skill set of management and there are

several examples of innovation that have already been

implemented. Such examples include the investment in video on

demand technology with Cox Communications and the new attractions

that are being planned for the theme parks.

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However, the most striking example of innovative ideas is

Disney’s real estate venture that takes their “magic” to a whole

new level. In this case, Disney successfully

leveraged its incredible brand recognition in the real estate

market by creating communities with their image marketing theme

coupled with their branding, and consequentially adding value to

the consumer. The initial phase of this project was a success,

selling over 6,000 homes at a premium, and further communities

are now in the works (Reso, 2010).

This type of innovative leveraging of the Disney brand represents

the second strategy recommendation. Their endeavors into new

markets, both in and out of the SBU structure, must maintain

Disney’s values and be fully compatible with either their

entertainment niche or also possibly along the informational

divisions. Another example that falls within the traditional SBU

structure with regards to growth through acquisition that has

proven successful is Disney’s acquisition of Pixar Entertainment

(La Monica, 2006). This move was completely in line with Disney’s

strong roots in animation and not only acted to benefit that

individual SBU, but also strengthened the brand as a whole. Also,

they now have veteran innovator in the form of Steve Jobs on the

board since Jobs was the CEO of Pixar.

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Strategic Initiatives

Walt Disney is known for innovative ideas and excellence in the

entertainment industry. Planning long-term success that Disney

has endured takes creativity and drive to be the best. Disney's

determination and planning for success is evident in their

strategic and financial planning. From their exponential growth

from the 1920s to the massive organization they are today it is

obvious that they focus time and resources into planning and risk

taking. For even though planning is a priority with every new

adventure there is risk. As well as Disney has done over the

decades, the risk of plans failing is still as imminent as the

first Mickey Mouse cartoon. With the long term success of the

organization, the Disney Company has not waived from the

direction of innovative planning.

The Walt Disney strategic plan that was ingenuity for their

company established an increase in their weak earnings per share

(EPS). The increase was $0.83 per share or 32%. In the year

before, $0.63 was the EPS; there was a goal that Disney wanted to

meet and increasing their shareholder’s capital developing the

ability to expand the organization.

Time Value of Money is an initial building block for financial

planning, and Walt Disney must have a comprehensive consideration

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of this perception to accomplish financial safety through this

strategic initiative. Disney set goals that would quantify

their cash amounts; there are five variables used to interrelate

in any given circumstances. Existing and forthcoming value,

number of compounding phases, periodic payments including

interest rate; the amounts are the variables that are the degree,

which influences the cost for Walt Disney’s initiative. By means

of analyzing only the simple elements of time assessment of money

Walt Disney can calculate to and measure the upcoming value and

change for inflation. Subsequently the past two years of

financial earnings, revenue has risen 10% from 2012 to 2013.

Growth in the theme park industry is a challenge in today's

market. Theme parks will not grow if they don't diversify their

resources. The Walt Disney Corporation is a nationwide multi-

varied entertainment company which is a household name to

millions of people throughout North America. Michael Eisner who

is Disney's chairman and chief executive officer knows that his

company will have to diversify in order to meet his targeted

growth rate of 20%. Eisner wants to follow one of Walt Disney's

famous quotes which is "We cannot hit a homerun with the bases

loaded every time we go to the plate. We also know the only way

we can even get to first base is by constantly going to bat and

continuing to swing" In order for Disney to meet this 20% target

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Eisner knows he will need to look at new industries and overseas

expansion to be successful.

Since the Walt Disney Company is reaching a saturation point in

domestic markets the corporation has recruited several notable

executives and officers to fill its key management positions. Out

of these positions only one of the ten corporate officers and

three of the four group executives are Disney veterans. Eisner is

hoping that with some new blood the company may generate new

ideas to meet its corporate objectives which are:

1) To sustain Disney as the world's premier entertainment

company;

2) To maximize shareholder wealth through a target annual growth

rate of 20 percent and a 20 percent or greater return on

stockholders equity;

3) To maintain the basic integrity of the Disney name and

consumer franchise; and

4) To accomplish the above while preserving basic Disney values

in terms of quality, fairness, creativity, entrepreneurialism,

and teamwork.

If the objectives are accomplished Eisner feels that Walt Disney

can continue the process of being the number one leader in the

field of family and entertainment. Their mission is to be the

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worlds leading producer and provider of family entertainment and

Eisner is steadily directed and loyal in his commitment to

providing quality family entertainment.

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walt disney 2012 case study

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