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Strategic Management: Walt Disney Case Study

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Strategic Management: Walt Disney Case Study

  1. 1. THE WALT DISNEY COMPANYOrganizational Case StudyCallie UnruhMGT6145December 14, 2012
  2. 2. WALT DISNEY COMPANY It’s not just Disneyland!
  3. 3. OUTLINE Introduction and Overview Internal Assessment External Assessment Strategy Implementation and Financing Conclusion
  4. 4. MISSION AND VISION"The mission of The Walt Disney Company is to be one of theworlds leading producers and providers of entertainment andinformation. Using our portfolio of brands to differentiate ourcontent, services and consumer products, we seek to developthe most creative, innovative and profitable entertainmentexperiences and related products in the world."
  5. 5. INTERNAL ASSESSMENT
  6. 6. FINANCES Ratio 2008 2007 Current Ratio 1.0 0.99 Gross Profit Margin 0.20 0.19 Return on Stockholder Equity 1.36 1.52 Sales 7% 5%
  7. 7. ORGANIZATIONAL STRUCTURE Walt Disney Company Disney Consumer Studio Entertainment Parks and Resorts Media Networks Products • Walt Disney Pictures Broadcasting • Miramax Films • Walt Disney World • Buena Vista Home • • • Disney Hard Lines Disneyland Disney-ABC Entertainment • Disney Soft Lines • Tokyo Disney Television • Buena Vista • Disney Toys Theatrical • Disneyland Paris • ESPN Inc. • Disney Publishing Productions • Hong Kong • Walt Disney • Disney Press • Walt Disney Disneyland Internet Group • Disney Editions Records • Disney Cruise Line • ABC-Owned • Buena Vista • Disney Vacation Television Stations Records Club • ABC Radio • Hollywood Records • Lyric Street Studios • Pixar Studios Source: David, F (2011). Strategic Management.
  8. 8. Chair/Pres:ORGANIZATIONAL STRUCTURE Theme Parks and ResortsLEADERSHIP Co- President: Chairman: Disney Interactive and this isn’t all of them! Walt Disney Int’l Co-Chair and Pres. ABC Chair: Walt Television Disney Group Studios CEO Co-President: Disney Interactive EVP and and Playdom Chief Human Resources Officer EVP Motion Picture Distribution EVP Communicati ons EVP Strategy and Business Development President: Consumer Products President: ESPN and President ABC Sports Source: www.theofficialboard.com ESPN and Co-Chair Media Networks
  9. 9. ORGANIZATIONAL STRUCTURELEADERSHIP Recommendation… Chief Executive President and Board of Directors SBU 1 SBU 2 SBU 3 SBU 4 SBU n Geographical Functional
  10. 10. MARKET POSITION: THE COMPETITORS
  11. 11. DisneyMARKET POSITION Time Warner CBS Corp. High Market Capitalization Media Networks/Broadcasting and Studio Entertainment Low Revenues High Revenues Low Market Capitalization
  12. 12. DisneyMARKET POSITION Six Flags Ocean Park Locations (high) Parks and Resorts Visitors Visitors (low) (high) Locations (low)
  13. 13. DisneyMARKET POSITION Warner Bros. Quantity Fox (high) Consumer Products Sales Sales (low) (high) Quantity (low)
  14. 14. SWOT: STRENGTHS AND WEAKNESSES Strengths  Strong diversification  Responsiveness to markets  Brand recognition  Creative process Weaknesses  Large R&D costs  High Risk factor  Constant up gradation  High sunk costs
  15. 15. INTERNAL FACTORS MATRIX Key Internal Factors Strengths Weight Rating Weighted Score1. Strong diversification 0.15 4 0.602. Responsiveness to markets 0.12 4 0.483. Brand name 0.12 3 0.364. Creative process 0.12 3 0.36 Weaknesses Weight Rating Weighted Score1. Large R&D costs 0.15 1 0.152. High risk factor 0.12 2 0.243. Constant up gradation 0.12 1 0.124. High sunk costs 0.10 2 0.20 TOTAL 1.00 2.51
  16. 16. MARKETING STRATEGIES Top Strategies  Create a customized/targeted media advertising plan for all segments  Expand Hong Kong Disney and research one new market  R&D into storytelling to kids through technology  Target 3 new markets and develop expansion plan around consumer products  Consumer research around the use of technology and need  Digitize content to utilize technology and lower costs  Create and bank marketing strategies and promotions to use during adverse conditions or slow periods
  17. 17. EXTERNAL ASSESSMENT
  18. 18. COMPETITORS Disney CBS Time Warner IndustryMarket Cap 39.00B 4.31B 26.28B 499.59M# of employees 150,000 25,920 87,000 7.51KQtrly Rev Growth -8.2% -6.20% -2.70% 5.10%Revenue $36.99B 13.95B 46.98B 930.87MGross Margin 17.81% 37.99% 41.92% 41.92%EBITDA $8.18B 2.69B 13.34B 166.44MOper Margins 17.81% 15.48% 18.62% 10.39%Net Income $4.02B -11.67B -13.40B NAEPS $2.100 -17.428 -11.224 NA
  19. 19. COMPETITIVE PROFILE MATRIX Disney CBS Time Warner Critical Success Factors Weight Rating Score Rating Score Rating Score Advertising 0.20 3 0.6 2 0.40 3 0.6 Product Quality 0.15 4 0.6 2 0.30 2 0.3 Price Competiveness 0.12 2 0.24 1 0.12 2 0.24 Management 0.10 2 0.2 3 0.30 3 0.3 Financial Position 0.10 2 0.2 3 0.30 4 0.4 Customer Loyalty 0.10 3 0.3 2 0.20 2 0.2 Global Expansion 0.11 4 0.44 1 0.11 1 0.11 Market Share 0.12 3 0.36 1 0.12 3 0.36 TOTAL 1.00 2.94 1.85 2.51
  20. 20. INDUSTRY TRENDS Social Technology Economic Cultural PoliticalMedia HD, Mobile,Broadcasting Multi-platform content, Video on demandStudio 3-D Rise in ticket prices; Home video spendingParks Traveling with kids; Group Combining Older adults business work and family timeProducts Consumer-centricity Retail Growth of Product safety, collaboration private label tighter regulations
  21. 21. SWOT: OPPORTUNITIES AND THREATS Opportunities  Growth through further diversification  Increase Media Networks/Broadcasting market share  International growth/New markets  Changes in technology and consumer consumption Threats  Economic recession  Changes in technology and consumer consumption  Intellectual property (protection of)  Uncontrollable changes in travel and tourism
  22. 22. EXTERNAL FACTOR EVALUATION Weighted Key External Factors Weight Rating Score Opportunities1. Growth through further diversification 0.12 4 0.482. Increase Media Networks/Broadcasting market share 0.15 3 0.453. International growth/New Markets 0.12 4 0.484. Changes in technology and consumer consumption 0.15 3 0.45 Threats1. Economic recession 0.12 4 0.482. Changes in technology and consumer consumption 0.15 3 0.453. Intelectual property (protection of) 0.1 2 0.24. Uncontrolable changes in travel and tourism 0.09 2 0.18 TOTAL 1.00 3.17
  23. 23. STRATEGY
  24. 24. SWOT ANALYSIS Walt Disney SWOT Strengths Weaknesses 1. Strong diversification 1. Large R&D costs 2. Responsiveness to markets 2. High risk factor 3. Brand recognition 3. Constant up gradation 4. Creative process 4. High sunk costs Opportunities SO Strategies WO Strategies 1. Develop and research plan around emerging markets1. Growth through further diversification with low R&D costs (W1)2. Increase Media Networks/Broadcasting market 2. Create a customize/targeted media advertisingshare plan for all segments (S2) 3. Expand Hong Kong Disney and research one new 3.Target 3 new markets and develop expansion plan3. International growth/New Markets market (S3) around consumer products (W4) 4. R&D into storytelling to kids through technology 4. Consumer research around the use of technology and4. Changes in technology and consumer consumption (S4) need (W2) Threats ST Strategies WT Strategies 1. Digitize content to utalize technology and lower 1. Digitize content to utalize technology and lower costs1. Economic recession costs (S2,4) (W4) 2. Focus on one high tech segment and focus content and2. Changes in technology and consumer consumption R&D there (W1, 3) 3. Document and Create TM and IP Protection Plan3. Intelectual property (protection of) (S2) 4. Create and bank marketing strategies and promotions to use during adverse conditions or slow4. Uncontrolable changes in travel and tourism periods for parks and resorts (S2)
  25. 25. SPACE MATRIX
  26. 26. INTERNAL-EXTERNAL MATRIX IFE Total Weighted Scores 4.0 3.0 2.0 1.0 EFE Total Weighted Scores I II III 3.0 IV V VI 2.0 VII VIII IX 1.0 EFM 3.17 IFM 2.51
  27. 27. GRAND STRATEGY MATRIX Rapid Growth Market Quad II Quad 1 Weak Strong Competitive Competitive Position Position Quad III Quad IV Slow Growth Market
  28. 28. QUANTITATIVE STRATEGIC PLANNING MATRIX Strategy 2: Target 3 new Strategy 3: Digitize Strategy 1: R&D into Walt markets and develop content to utilize storytelling to kids Disney expansion plan around technology and lower through technology (S4) consumer products (W4) costs (W4) Key Factors Weight AS TAS AS TAS AS TAS Opportunities1. Growth through further diversification 0.11 4 0.44 1 0.11 4 0.442. Increase Media Networks/Broadcasting marketshare 0.09 1 0.09 4 0.36 1 0.093. International growth/New Markets 0.15 3 0.45 4 0.60 1 0.154. Changes in technology and consumer consumption 0.15 4 0.60 1 0.15 4 0.60 Threats 0.001. Economic recession 0.15 2 0.30 2 0.30 4 0.602. Changes in technology and consumer consumption 0.12 4 0.48 1 0.12 4 0.483. Intelectual property (protection of) 0.08 3 0.24 1 0.08 2 0.164. Uncontrolable changes in travel and tourism 0.15 1 0.15 1 0.15 1 0.15 Total 1.00 Strengths1. Strong diversification 0.15 4 0.60 1 0.15 3 0.452. Responsiveness to markets 0.15 4 0.60 4 0.60 2 0.303. Brand recognition 0.10 3 0.30 3 0.30 1 0.104. Creative process 0.10 4 0.40 1 0.10 2 0.20 Weaknesses 0.001. Large R&D costs 0.15 2 0.30 4 0.60 4 0.602. High risk factor 0.10 2 0.20 2 0.20 2 0.203. Constant up gradation 0.10 1 0.10 4 0.40 2 0.204. High sunk costs 0.15 2 0.30 4 0.60 4 0.60 Total 1.00 5.55 4.82 5.32
  29. 29. RECOMMENDATIONS Strategy 3: Digitize Strategy 1: R&D into content to utilize storytelling to kids through technology and lower technology (S4) costs (W4)
  30. 30. IMPLEMENTATION AND FINANCING
  31. 31. EPS/EBIT ANALYSIS Common Stock Debt Financing 50-50 Financing Recession Normal Boom Recession Normal Boom Recession Normal BoomEBIT $30.000 $35.00 $40.00 $30.000 $35.00 $40.00 $30.000 $35.00 $40.00Interest $0.00 $0.00 $0.00 $1.50 $1.75 $2.00 $0.75 $0.88 $1.00EBT $30.00 $35.00 $40.00 $28.50 $33.25 $38.00 $29.25 $34.13 $39.00Taxes $11.40 $13.30 $15.20 $10.83 $12.64 $14.44 $11.12 $12.97 $14.82EAT $11.40 $13.30 $15.20 $10.83 $12.64 $14.44 $11.12 $12.97 $14.82#Shares 1 1 1 1 1 1 1 1 1EPS $11.40 $13.30 $15.20 $10.83 $12.64 $14.44 $11.12 $12.97 $14.82 Amount Needed $5 million EBIT Range $30-40 billion Interest Rate 7.00% Tax Rate 38.00% Stock Price $65.00 Stock Outstanding 1 billion Annual Divident per share $0.65
  32. 32. EPS/EBIT ANALYSIS 12 10 8 50/50 6 DF CSF 4 2 0 30 35 40
  33. 33. CONCLUSION Strategic Planning Needed Implement strategies that help lower costs, and maintain competitive advantage Balanced approach to innovation and cost-savings

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