Walt Disney case study ppt

1. An analysis of the strategic challenges

2. Some historical clues…
 Founded by Walt Disney
 Established in 1923
 Headquartered in California, USA
 Currently world’s largest conglomerate in terms of
revenue.

3. Walt Disney Vision
“To make people happy ”

4. Walt Disney Mission Statement 2013
“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.”

5. Walt Disney
Mission Statement’s Evaluation
 Product oriented
statement
 Focus on what
products to sell
and what services
to offer rather
than on how to
satisfy customer
needs
Lack of 5 essential
components:
1. Customers
2. Technology
3. Philosophy
4. Concern for
public image
5. Employees

6. Walt Disney
Recommended Vision
“To make entertainment the wheel of life”

7. Walt Disney Recommended Mission Statement
“As the world’s leader in entertainment and
information we seek to create an engaged
and collaborative culture for our employees
in order to turn our customers‘ moments
into a unique experience, by providing
special services and innovative products
through movies, parks and the e-world. By
taking advantage of our diversified
portfolio to differentiate our content in all
segments, we aim to develop the most
profitable entertainment company
worldwide, which would yield increasing
profits to our shareholders.”

8. Walt Disney
Overview
Segment Revenues ‘12 Revenues ‘13 Growth
Media Networks 19,436 mil. $ 20,356 mil. $ 5%
Parks & Resorts 12,920 mil. $ 14,087 mil. $ 9%
Walt Disney Studios 5,825 mil. $ 5,979 mil. $ 3%
Disney Consumer
Products
3,252 mil. $ 3,555 mil. $ 9%
Disney Interactive 845 mil. $ 1,064 mil. $ 26%

9. Disney - contribution of segments to
revenues
Media Networks 45%
Parks & Resorts 31%
Studio Entertainment 13%
Consumer Products 8%
Interactive 3%

10. Corporate
CEO
Chairman, Walt Disney
International
Senior Executive Vice President,
General Counsel and Secretary,
The Walt Disney Company
Senior Vice President, Global
Security, The Walt Disney
Company
Executive Vice President, Corporate Strategy
and Business Development, Executive Vice
President, Corporate Strategy and Business
Development
The Walt Disney Company
Executive Vice President, Corporate
Real Estate, Alliances, and
Treasurer, The Walt Disney
Company
Executive Vice President and Chief
Communications Officer, The Walt
Disney Company
Executive Vice President and Chief
Human Resources Officer, The Walt
Disney Company
Senior Executive Vice President
and Chief Financial Officer, The
Walt Disney Company
Senior Vice President, Planning and
Control, The Walt Disney Company
Business
Unit
CEO
Executive Chairman, ESPN,
Inc.
President, Disney Consumer
Products
Chairman, The Walt Disney
Studios
President, Disney Interactive
Co-Chairman, Disney Media
Networks Group and
President, ESPN
Chairman, Walt Disney Parks
and Resorts
Co-Chairman, Disney Media
Networks and President,
Disney•ABC Television Group
Walt Disney Organizational Structure

11. • HUMAN
RESOURCES
• RESEARCH &
DEVELOPMENT
• MARKETING
• FINANCIAL
20% annual
growth in
earnings per
share
Family
orientation :
appeal to kids
and bring the
family together
Foster an
engaged and
collaborative
company culture
Expand the
portfolio of
characters and
drive the
company into
the e-world
Walt Disney Objectives

12. Market penetration
• Targeted market segmentation
through acquisitions
New products
• Related Diversification
• Diversification in branding
• Vertical & Horizontal integration
Market development
• Foreign Outsourcing
• Direct Investment
• Licensing
Conglomerate diversification
-
Existing
New
Existing New
PRODUCTS
MARKETS
Walt Disney
Corporate Strategies

13. RAPID MARKET GROWTH
SLOW MARKET GROWTH
Walt Disney
Grand Strategy
STRONG COMPETITIVE POSITION
WEAK COMPETITIVE POSITION
 Market development
 Related Diversification
 Vertical Integration
 Horizontal Integration
 Market penetration

14. Walt Disney
PEST Analysis
POLITICAL
 The animation industry enjoys tax benefits.
 Political differences are an obstacle to International Trade.
 Tighter regulations regarding products safety.
ECONOMIC
 Global financial crisis slows down growth.
 Emerging markets such as India offer a cost advantage in terms of salaries
and the overall cost of production.
 Economic growth, per capita income and stage of economic development
among different countries needs to be considered.

15. SOCIAL
 Recent social trend in smartphones, tablets and apps.
 Different local cultures, as well as stories and history of the host place.
 Changes in customers preferences for entertainment.
 Significant role of kid’s and family’s entertainment.
TECHNOLOGICAL
 Technological advancements are having a profound effect on the
world’s media.
 Changes in technology affect demand for entertainment products as
well as the cost of production.
Walt Disney
PEST Analysis

16. THREAT OF NEW ENTRANTS - (MEDIUM)
Even though there are major players, still smaller players with lower
structures can enter the market.
THREAT OF SUBSTITUTES - (HIGH)
Technological innovations & high competition in each segment,
generate many alternative choices for consumers.
BARGAIN POWER OF SUPPLIERS - (LOW)
Disney’s vertical integration reduces significantly their power.
BARGAIN POWER OF BUYERS - (HIGH)
Disney’s offerings are desires, rather than necessities. Therefore,
financial restricted consumers will not buy.
RIVALRY AMONG FIRMS - (HIGH)
Huge competition between companies within specific sectors.
( broadcast rights/local parks/viewing figures/box office/other brands)
Walt Disney
Porter’s 5 Forces Analysis

17. Brand Value
Listed 27th in the world’s 500 most valuable
brands*
• $ 20,548 millions brand value in 2013
• $ 23,580 millions brand value in 2014
*http://brandirectory.com/league_tables/table/global-500-2014

18. Walt Disney
Financial State
Performance Indicators
Current Stock Price $ 80.07
Consolidated Revenues $ 45,041 millions
Net Income $ 6,136 millions
Return on Equity 14.41
Return on Invested Capital 11.24
Gross Profit Margin 21.29
Annual Dividend per Share $ 0.60 (2012)

19. Market Share on
Studio Entertainment Industry
Globally
$ 5,03 billion
Overseas
$ 3,14 billion
U.S.
$ 1,89 billion
Globally
$ 4,68 billion
Overseas
$ 3 billion
U.S.
$ 1,68 billion
Globally
$ 3,68 billion
Overseas
$ 2,26 billion
U.S.
$ 1,42 billion

20. Competitive Profile Matrix
WALT DISNEY WARNER BROS UNIVERSAL
CRITICAL
SUCCESS
FACTORS
WEIGHT
RATING
1 - 4
SCORE
RATING
1 - 4
SCORE
RATING
1 - 4
SCORE
Advertising .12 4 .48 4 .48 3 .36
Market Share .10 3 .30 4 .40 2 .20
Financial
Position
.10 4 .40 3 .30 2 .20
Management .08 3 .24 3 .24 3 .24
Global
Expansion
.10 4 .40 4 .40 4 .40
Technology .15 3 .45 4 .60 3 .45
Customer’s
Loyalty
.10 3 .30 3 .30 2 .20
Brand
Awareness
.15 4 .60 4 .60 3 .45
Creativity .10 4 .40 4 .40 4 .40
TOTAL 1.00 3.57 3.72 2.90

21. Brand Reputation
•Highly Diversified Portfolio
•Strategic & Tactical
Acquisitions
•Global Expansion & Alliances
•Economies of Scope
•Top Management
•Loyal Customers
•Strong Financial Position
•High Cost of Operations
•Concentration of Revenues In
North America
•Approaches Antitrust Law
Limits
•Benefits From IT Advances &
Mobile Gaming
•Build A More Eco-Friendly Image
• Further expansion in new
emerging economies
•Release of New Successful
Stories & Characters
•Financial Récession
•Increasing Piracy
•Strong Competition
•Continous Need For
Technological Update
•Change in Consumers
Preferences & Tastes
•Negative Publicity Due to
Unexpected Event
S W
T
O
Walt Disney
SWOT Analysis

22. External Factor Evaluation Matrix (EFE)
WEIGHT RATING
WEIGHTED
SCORE
OPPORTUNITIES
Benefits from it advances & mobile games .20 3 .60
Build a more eco-friendly image .05 3 .15
Further expansion in new
emerging economies (Russia, India)
.15 2 .30
Release of new successful stories and characters .05 4 .20
THREATS
Financial Recession .15 3 .45
Increasing Piracy .10 2 .20
Strong Competition .10 3 .30
Continuous need for technological update .10 3 .30
Change in consumer preferences and tastes .05 2 .10
Negative publicity due to unexpected event .05 3 .15
TOTAL

23. Internal Factor Evaluation Matrix (IFE)
WEIGHT RATING WEIGHTED SCORE
STRENGTHS
Brand Reputation .15 4 .60
Highly Diversified Portfolio .15 4 .60
Strategic & Tactical
Acquisitions
.08 3 .24
Global Expansion & Alliances .05 3 .15
Economies of Scope .08 3 .24
Top Management .07 3 .21
Loyal Customers .10 4 .40
Strong Financial Position .05 3 .15

24. Internal Factor Evaluation Matrix (IFE)
WEIGHT RATING WEIGHTED SCORE
WEAKNESSES
High Cost of Operations .15 2 .30
Concentration of Revenues in
Us & Canada
.08 2 .16
Approaches Antitrust Law
Limits
.04 1 .04
TOTAL

25. Strengths Weaknesses
Walt Disney SWOT
Combined Strategies
1. Brand Reputation
2. Highly Diversified Portfolio
3. Strategic & Tactical Acquisitions
4. Global Expansion & Alliances
5. Economies of Scope
6. Top Management
7. Loyal Customers
8. Strong Financial Position
1. High Cost of Operations
2. Concetration of Revenues In North America
3. Approaches Antitrust Law Limits
Opportunities SO - Strategies WO - Strategies
1. Benefits From IT Advances & Mobile
Gaming
2. Build A More Eco-Friendly Image
3. Further expansion in new emerging
economies (India, Russia)
4. Release of New Successful Stories &
Characters
2-1: Develop mobile game applications with
Disney characters
1-2: Collaborating with WWF so as to
promote environmental issues
6-3: Build a multinational management
team
8-4: Consumer research on their
preferences nowadays
1-1: Digitalization of our operations in order to
low costs & utilize technology
2-3: Target India as possible expansion through
consumer products
Threats ST - Strategies WT - Strategies
1. Financial Récession
2. Increasing Piracy
3. Strong Competition
4. Continous Need For Technological
Update
5. Change in Consumers Preferences &
Tastes
6. Negative Publicity Due to
Unexpected Event
7-1: Offer discounts to all members of
Disney fun club
3,4-3: Expansion in Brazil market through
alliances and synergies
8-4: Invest on R&D for one high tech
department
6-5: Monthly consumer research via online
polls
1-1: Re-edit and release in cinemas old classic
Disney films
2-3,4: Take advantage of operations that take
place in N. America by investing in Technology
and R&D for that area

27. QUANTITATIVE STRATEGIC PLANNING MATRIX
Expansion in Brazil
market through
alliances and synergies
Develop mobile game
applications with Disney
characters
Key Factors Weight AS TAS AS TAS
Opportunities
1. Mobile game sectors could grow at a compound annual growth rate of 23,6 % by 2017 0.20 1 0.20 4 0.80
2. Decrease in environmental impact by 50% 0.05 - - - -
3. Emerging markets offer a cost advantage in terms of salaries and cost of operations. 0.15 4 0.60 3 0.45
4. Extension of R&D efforts in order to release new successful stories and characters. 0.05 2 0.10 3 0.15
Threats
1. 12% decline in average total expenditures in entertainment in USA from 2008 to 2010. 0.15 2 0.30 3 0.45
2. Piracy costs in the US economy every year $ 250 billion. 0.10 - - - -
3. Walt Disney’s market share in Studio Entertainment segment is 16,62% 0.10 2 0.20 1 0.10
4. Continuous need for technological update 0.10 1 0.10 4 0.40
5. Change in consumer preferences and tastes 0.05 - - - -
6. Negative publicity due to unexpected event 0.05 - - - -
Subtotal 1.00
Strengths
1. 27th position in the rank of the Best Global Brands. 0.15 4 0.60 2 0.30
2. Highly diversified portfolio 0.15 4 0.60 3 0.45
3. Acquisition of Marvel, ABC, Pixar, Lucas Film, ESPN etc 0.08 3 0.24 2 0.16
4. Almost 30% of revenues from operations in Europe, Asia Pacific, Latin America and other 0.05 4 0.20 3 0.15
5. Economies of Scope 0.08 3 0.24 2 0.16
6. Top Management follows four core concepts (3Ds+B) from 1922 0.07 4 0.28 2 0.14
7. Customers’ loyalty 0.10 2 0.20 4 0.40
8. Strong financial position: $7,370m intangible assets and $27,324m goodwill for FY 2013 0.05 3 0.15 1 0.05
Weaknesses
1. High cost of operations: $35,591m FY 2013 when total revenues are $ 45,041m 0.15 1 0.15 4 0.60
2. Almost 70% of operations is concentrated in US and Canada. 0.08 2 0.16 1 0.08
3. United States Antitrust Law restricts the mergers and acquisitions of organizations 0.04 - - - -
Subtotal 1.00
SUM TOTAL ATTRACTIVENESS SCORE 4.32 4.84

28. Preparation of the appropriate budget.
Allocation of personnel.
Communication of the strategic vision, the
strategic themes and their role to the employees.
Use of presentations, workshops, meetings,
frequent updates.
Implementing Strategy

29. Evaluation of Strategy
• Mobile/online games could grow to ~$60B revenue (23.6% CAGR
11-17F)
• Mobile/online games could take 60% games software market
share by 2017
• Total global games software revenue could grow to ~$100B
revenue by 2017
Mobile could drive total games software industry revenue
to $100B by 2017 .
• Games took 32% of 2013 mobile app usage (blended iOS/Android
tablet/smartphone) - 67% of tablet usage
• Games took 72% of 2013 mobile app revenue and ~40% of mobile
app downloads
Games dominate mobile app usage and revenue.
source: www.digi-capital.com

30. source: www.digi-capital.com

31. Mobile Games Industry
Descriptive Statistics
source: www.digi-capital.com

32. Evaluation of Strategy
Rumelt’s Criteria
The recommended strategy is:
 consistent
It will be developed by the existing Interactive Department so that
interdepartmental disorder is avoided.
 consonant
It will be an adaptive response to the recent social trend for mobile
games applications.
 feasible
Disney’s financial state can support the recommended strategy
which will result in the company’s growth in the short-term.
 maintaining the competitive advantage
The company’s position in the market will be strengthened.