1. LA SIERRA UNIVERSITY (MBA - MGMT 691)
Corporate Critique
Jayson T. French
9/5/2012
Professor Eric Anderson, M.B.A., Ph.D. - La Sierra University - School of Business

2. P a g e | 1
1 | P a g e
I. The Walt DISNEY Company Corporate Overview
The Walt Disney Company (DISNEY) was founded on October 16, 1923, by Walt and Roy DISNEY, in Los
Angeles, CA. Robert A. Iger is the current CEO and President. DISNEY employs 156,000 and had annual revenues in
2011, of $40.893 billion, net income of $4.807 billion, and is traded on the NYSE, and its stock has a current market cap
of $88.78 billion (8/30/2012). The Walt Disney Company, along with its subsidiaries, is a diversified worldwide
entertainment company with operations in five core business segments including: (1) Media Networks, (2) Parks and
Resorts,(3) Studio Entertainment, (4) Consumer Products, and (5) Interactive Media.
The Media Networks business segment (MN) includes cable networks and broadcasting businesses. The core
cable networks subsidiaries include ESPN, DISNEY Channels Worldwide, ABC Family, and SOAPnet Networks. The
broadcasting businesses include ABC Television Network, ABC.com, ABC News Now, ABC Studios, Live Well
Network, and ABC Media Productions labels. Altogether with affiliation agreements The Media Networks can reach
99% of all U.S. television viewers. All programming is either acquired, joint ventured, or produced in-house for air on the
media networks. The majority of Cable Network revenues derive from Multi-channel Video Service Providers (MVSPs)
multi-year agreements based on audience type and size of viewership for a set rate with cable, satellite, and
telecommunications service providers (fixed-income). In 2011, revenues for the MN segment for affiliate fees were $8.79
billion (47% of MN revenues). Additionally revenues are earned through ad spots on network programming, based on
fluctuations in viewership and audience (variable income). Revenues from advertising in 2011, were $7.598 billion
(40.6% of MN revenues) The last revenue source is through the sale of programming to third parties worldwide in pay
and syndication markets as well as DVD/Blu-Ray and online formats. The growth in the number of other networks
distributed by MVSPs has increased competitive pressures for advertising revenues and sports programming for both
broadcasting and cable networks throughout the annual seasonal demand has fluctuations (summer is low, fall is high).
Revenues for the Media Networks were $18.714 billion and represented 45.76% of all DISNEY revenues and $6.146
billion in net income before taxes in 2011 for the Media Networks (69.6% of EBT for DISNEY). Operating leverage for
the Media Networks is 1.36 in 2011 (1.42 in 2010). MN is the most lucrative business segment within DISNEY.
The Media Networks arm is also subjected to extensive regulation by the Federal Communications Commission
by licenses granted for up to eight years for each television and radio station owned or any acquisition or transfers made.
Another element is the FCC limitations on the number of television stations and radio stations that can be owned in a
specific market, no more than one, and the aggregate percentage of national viewership to 39% cap of national audience,
21% is reached. All programming is regulated, limited commercials, digital television required, and all other rules and
additions are subject to change and therefore an element of risk. This limits growth and ad revenues.
The Parks and Resorts business segment (PR) owns and operates the Walt DISNEY World Resort in Florida, the
Disneyland Resort in California, Aulani, the DISNEY Vacation Club, the DISNEY Cruise Line, and Adventures by
DISNEY. Domestic parks raised revenues of $9.302 billion (79% of PR revenues). It also owns 47% in Hong Kong
Disneyland Resort, 51% in Disneyland Paris, 43% in Shanghai DISNEY Resort, and licenses the operations of the Tokyo
DISNEY Resort in Japan. International revenues for PR included $2.495 billion (21% of PR revenues) for 2011. All parks
and resorts are designed and developed under The Company's Walt DISNEY Imagineering unit. Basic statistics for PR for
2011, were relatively unchanged as occupancy was at 82%, available room nights 9.625 million, overall domestic park
attendance increased of 1% and 6% in international (respectively), and an increased per room guest spending of $241
(2011) from $224 (2010).
The PR segment earns revenues primarily from admissions sales to theme parks, hotel room charges,
merchandise, food and beverage sales, rentals of vacation club properties, cruise vacations. The cost breakdown consists
of labor, depreciation, costs of goods sold, marketing and sales , repairs and maintenance, and entertainment. The central
competition for PR is any substitution of entertainment, lodging, tourism, and recreational activities. The greatest
influencers for economic success includes the business cycle, exchange rate fluctuations (international tourism and
international parks), travel industry trends, leisure time for customers, oil and transportation prices, weather patterns, and
the state of the economy (discretionary income). The peak attendance and resort occupancy occurs during summer
months, early-winter, and spring-holiday periods. Revenues for PR overall were $11.797 billion and represented 28.85%

3. P a g e | 2
2 | P a g e
of all DISNEY revenues and $1.553 billion in net income a 19% increase from 2010 (17.6% of EBT for PR). Operating
leverage for the PR is 2.84 in 2011 (3.01 in 2010).
The Studio Entertainment business segment (SE) produces and acquires live-action and animated motion
pictures, direct-to-video content, live stage plays, and musical recordings. The main films are branded under the Walt
DISNEY Pictures, Pixar, Marvel, and Touchstone Pictures names. It has also entered into an agreement with
DreamWorks Studios to distribute live-action motion pictures. In the theatrical market all marketing and distribution is
primarily done through DISNEY and the costs incurred typically create losses prior to the theatrical release of the film.
Revenues for theatrical distribution represent 27% of SE revenues or $1.733 billion. The Home Entertainment market
distributes motion pictures and related content to digital and DVD/Blu-Ray formats three-to-six months after theatrical
release. Home entertainment represents 38% of SE revenues or $2.435 billion. Television distribution and other revenues
accounts for 35% of SE revenues or $2.183 billion. Per marginal revenue SE gains the lowest profit margin percentage,
outside of IM, which has had losses.
Altogether SE revenues were $6.351 billion, operating income was $618 million, and operating leverage was
5.2. This is DISNEY's most unprofitable business segment for the revenue generation; however, it is an essential element
to all of its other operations as it is the framework for marketing its PR and Consumer Products divisions. The key
reasoning behind such high costs were due to heavy selling, general, and administrative ($2.465 billion), and operating
expenses of $3.136 billion; due to production and marketing big budget films.
The Consumer Products business segment (CP) works with licensees, publishers, retailers, and manufacturers
globally to design, publish, develop, promote, and sell DISNEY products. It includes merchandise licensing includes such
items as toys, apparel, home décor, furnishings, stationery, accessories, health and beauty, food, footwear, and consumer
electronics. The publishing segment includes DISNEY Publishing Worldwide and publishes children's books and
magazines and includes DISNEY and Marvel product lines. The retail segment includes the DISNEY Store (357
globally), DISNEYStore.com, and DISNEYOutlet.com. Licensing and publishing make up 63% of CP revenues while
37% is from retail and other. The competition for this business segment includes the seasonal consumer purchasing
behavior and the timing and performance of animated theatrical releases and cable programming broadcasting. Revenues
for the CP were $3.049 billion and represented 7.5% of all revenues for DISNEY and $816 million in net income before
taxes in 2011 for the CP (9% of EBT for DISNEY). Operating leverage for the CP is 2.1 in 2011 (2.13 in 2010).
The Interactive Media business segment (IM) includes the Interactive Media Group and delivers branded
entertainment and lifestyle content across interactive media platforms across games and online. The Games business
creates, develops, markets, and distributes handheld, console, games globally. The online segment develops, publishes,
and distributes content for branded online services for family entertainment. It includes DISNEY Online, DISNEY.com,
DISNEY Family Network, and the various sites for DISNEY Channel, Parks and Resorts, Walt DISNEY Pictures, and
DISNEY Consumer Products. The competition for these products success is based primarily on customer taste and the
success of other DISNEY programming and theatrical releases as well as customer economic climates. Revenues for the
IM were $982 million and represented -3.35% of all revenues for DISNEY and $308 million in a net loss in 2011 for the
IM. Operating leverage for IM is -0.81 in 2011 (-0.77 in 2010). Interactive Media is the DISNEY's most unprofitable
business segment and the only one recurring losses. IM with its acquisition of Playdom has incurred substantial
acquisition accounting expensing and operating costs over 2011.
II. Vision, Mission, and Principles
The success of an organization is based on the alignment of a vision that answers what a company's success
looks like in the world (why it is trying to win), a mission that answers how the company will achieve its success (what it
does to win), and values or principles (guiding psychology) that will answer how the company will strategically achieve
its mission and therefore its vision. Essentially, Vision = Goals that achieve values and principles that build strong
mission success. Everything undertaken by a company should succeed in achieving its vision. If what you do does not get
you where you are intending to go, it does not matter what your mission is, you will not get there. Therefore vision guides
your direction, it separates effectiveness from efficiency. Companies that do not understand this focus on the mission of
what it does instead of its vision and fail to differentiate themselves through innovation.

4. P a g e | 3
3 | P a g e
In analyzing The Walt DISNEY's vision, mission, and principles it is essential to be able to define and measure
its success. In order to more fully inspect all three elements collectively. The following is the current vision and mission
statements of The Walt DISNEY Company:
Vision Statement
"To be the most admired company in the world: equally admired for the integrity of our people and the way
we behave as citizens of the world, as we are for the quality of our exceptional entertainment experiences.
Mission Statement
"We will achieve exceptional performance by embedding ethical business practices into all of our daily
decisions and actions."
Principles Statement
(1) "Act and create in an ethical manner and consider the consequences of our decisions on people and the
planet."
(2) "Champion the well-being and happiness of kids and families in our endeavors."
(3) "Inspire kids and families to make a lasting, positive changes in the world."
In analyzing the vision statement the DISNEY is defining its measurement of success by its ability to be globally
admired for the (1) integrity of its people, (2) its corporate citizenship, and (3) providing exceptional quality
entertainment experiences. In analyzing the mission statement DISNEY is stating that success will come from being
ethical. In analyzing the principles statement DISNEY is stating that acting and creating ethically, championing well-
being and happiness for families, and inspiring families to positively change the world will achieve exceptional
performance (mission) and therefore close the gap to achieving integrity, citizenship, and quality entertainment that will
ultimately build DISNEY into the most admired company in the world (vision). You can never critique a company
without looking at all three core elements of its strategy and understand how they interrelate.
DISNEY wants to create admiration by having ethical exceptional performance through its people and its core
principles. It can be argued as to whether or not these exact principles or their goals outlined will create success, for that
is a scientific process of success and failure. It can be said that to create admiration you must create respect through
success and trust, which is formed from consistent quality and integrity that is ethical within the culture. Therefore in both
the psychological and ideological debate there can be a strong fit and alignment between the vision, mission, and
principles. Only time will prove this to be true, all else is speculation and opinion.
The vision statement is future oriented, direct and to the point, easy to understand, empowering, very
inspirational, and directional as to what the DISNEY and each employee is to create for society--the most admired
company in the world. The vision statement does not have any systemic problems and it has an ongoing challenge to
achieve.
The mission is a core element to achieving its vision in helping to create admiration through exceptional performance
built on ethical decision making.
The mission is clear, concise, easy to understand, and focuses on a core underlying principle that psychologically
produces admiration. DISNEY may be in the entertainment business, however, it is actually in the admiration business.
Produce unethical, untruthful, or disrespectful entertainment and it loses its success of admiration.
The mission statement may be a little short in regards to how it will succeed at providing exceptional quality
entertainment experiences, however, its goals would be a better place to look for such answers. It could be stated that the
mission could have included various stakeholders and their priorities, the geographic locations served, the business it is
in, explained the entertainment industry environment, identify target markets, explain the tools and skills the company
has, what products or services it offers, or focused on a better way to state it in order to have it be clearer or simpler. This
is too confining and is a major reason why companies focus on mission instead of the most important element, vision.
Stakeholders may change, target markets change (or their preferences), tools and skills change, problems and solutions

5. P a g e | 4
4 | P a g e
change, geographic and industry environments also change. The mission should not change because it is an unchanging
ideal that results in the achievement of its vision. Principles should not change either. Only goals and objectives should.
This allows for flexibility to change entire business lines or industries as innovation calls while still satisfying the same
fundamental customer need and creating the same outcome.
III. Principles, Values, Strategies, and Goals
The DISNEY structured their strategy to include principles, values, strategies, and goals. Their specific goals
outline a specific deadline and measurement that will result in a desired strategy success. The strategy will fulfill a value
and that value will uphold a core principle and will result in the mission and vision's success. The higher up this chain the
more broad and psychological and ideological things become. This promotes strong flexibility for solutions while keeping
the same fundamentals rooted (reputation and effects on the customer's psyche).
The first principle is to "act and create in an ethical manner and consider the consequences of our decisions on
people and the planet." For the sake of space, each goal has information listed the key measurements of performance
already taken as well as the context of the goal. The principles core values, strategies, and their respective goals include:
(1) Environmental Footprint - Minimize our environmental footprint.
(a) Achieve zero net direct greenhouse gas emissions:
- By 2012, achieve 50% of our long-term goal of zero net direct greenhouse gas
emissions through a combination of reductions, efficiencies and offsets.
(b) Reduce Indirect greenhouse gas emissions from electricity consumption.
- By 2013, reduce electricity consumption of existing assets by 10% compared to 2006
baseline in existing assets.
- Pursue renewable sources of electricity to reduce emissions from electricity.
(c) Send zero waste to landfills.
- By 2013, decrease parks and PR annual solid waste to landfill to 50% of 2006 baseline level.
- By 2013, divert at least 80% of waste from landfill at the Summer X Games and 90% of
waste from the landfill at the ESPYs.
(d) Have a net positive impact on ecosystems.
- By 2013, apply our integrated approach to sustainable design, engineering, and habitat
protection for a pilot construction project.
- Between 2009 and 2013, annually increase the level of support to nonprofit
organizations from DISNEY Worldwide Conservation Fund (DWCF).
(e) Minimize water use.
- By 2012, Water Conservation Plans will be adopted to identify areas for water-
conservation improvement at all major locations.
(f) Minimize Product Footprint
- By 2011, strategic suppliers of key product lines will complete an Environmental
Responsibility Index (ERI) survey.
- By 2014, demonstrate continued improvement in environment in environmental
performance for strategic suppliers in plush, apparel accessories, and toys.
- By 2011, all paper used in paper-based books and magazines books and by DISNEY's
non-licensed North American publishing businesses will fully meet the responsible paper target, meaning it
will either contain recycled content, be sourced from certified forests, or be of known source origin.
- By 2011, all other non-licensed businesses will identify a timeline for achieving the
responsible paper target.
- By 2012, DISNEY Stores North America will expand their commitment to organic cotton
by making all DISNEY Baby apparel and sleepwear from 100% organic cotton.
(2) Respectful Workplaces - Foster safe, respectful, and inclusive workplaces wherever we do business.
(a) Develop and support a diverse workforce.
- In 2012, introduce a global workplace and women's initiative.
- Increase the diversity of our employee base.
- By 2015, create at least 1,000 job and career opportunities for U.S. veterans across The
Walt DISNEY Company.
(b) Maintain safe workplaces in our owned operations.
- By 2012, include additional, safety-specific expectations as part of employee-
performance evaluations at Walt DISNEY Parks and Resorts.

6. P a g e | 5
5 | P a g e
- By 2013, create a Community Watch presence in offices across most businesses and
affiliated companies around the world and increase the percentage of U.S.-based
employees who are trained in key awareness areas by 50% over our 2011 baseline.
(c) Support Employee Career Development
- Continue to enhance career development efforts across our business units.
(d) Hold Licensees and Vendors in our supply chain accountable to the standards in our Code of
Conduct
- By 2014, increase visibility into facilities producing DISNEY-branded products in high-
risk countries by 50%, and achieve 100% visibility by 2018.
- By 2013, implement an enhanced global training and education program for key internal
stakeholders focused on better understanding and implementation of our International
Labor Standards program requirements.
(e) Support programs and initiatives that address core labor issues within our supply chain.
- By 2013, increase financial and other support for independent programs and initiatives addressing core labor
issues within our supply chain.
(3) Strategic Philanthropy - Utilize strategic philanthropy to make a lasting, positive change in
communities around the world.
(a) Build on our philanthropic legacy with programs that share our resources to make lasting,
positive change in communities and promote the happiness and well-being of kids and
families.
- By 2013, implement a philanthropic strategy with three focus areas: compassion,
conservatism, and creativity.
(b) Leverage our core assets and competencies to help children in need.
- By 2020, positively impact the lives of 10 million children and families in need.
- By 2014, donate 18 million books to organizations that provide new books to children
in need.
(4) Safe Products - Design, manufacture, and operate products with safety as a top priority.
(a) Promote leading policies on product and guest experience safety.
- By 2013, share a restricted substance list with our vendors and licensees.
- By 2012, improve upon existing safety protocols by implementing a global, integrated
product management system to track food quality and safety compliance of existing
licensee base.
- By 2015, validate all licensees' compliance with internationally-recognized safety
standards consistent with DISNEY requirements.
- Walt DISNEY Parks and Resorts will increase availability of DISNEY-licensed technology
and expertise on safety and accessibility for third-party use.
(5) Integrated Citizenship - Support the business through responsible governance practices.
(a) Disclose relevant citizenship information in a timely manner.
- Publish annual updates on citizen data.
- By 2012, complete a pre-assurance process on key citizenship content and data.
(b) Engage with our stakeholders on a regular basis.
- Continue to meet with a formal external stakeholder group that provides regular
feedback on citizenship performance.
(6) Human Rights - Respect and support international principles aimed at protecting and promoting human
rights.
(a) Respect human rights within our operations.
- By 2012, assess the measurable steps DISNEY has taken to advance its Human Rights
Policy Statement and determine if additional steps are necessary to achieve its ends.
In assessment of the first core principle and its correlating strategies and goals there is an overall alignment to
the mission and vision. Many of these goals provide a specific marker for improvement as well as various ways to achieve
it, generally speaking. These goals must have further information that would back up their exact step-by-step execution.
There were several goals that lacked a measurement time frame for completion, including , 1b2, 1d2, 1e1, 2a1,2a2, 2c1,
2e1, 3a1 (highlighted in yellow) lack a definitive type of improvement or a measurement of its success.
The second principle is to "champion the well-being and happiness of kids and families in our endeavors." The
principles core values and strategies include:
(1) Healthier Families - Partner with parents in their quest to raise healthy kids.
(a) Prioritize and promote nutritious foods.
- By 2020, sell over 5 billion servings of fruit and vegetables to kids and families.

7. P a g e | 6
6 | P a g e
- By 2020, increase the percentage of globally licensed wholesale food sales dedicated to
everyday foods that meet our global nutrition guidelines from 66% to 85% target in
North America.
(b) Inspire kids and families to be physically active and spend more time outdoors.
- By 2016, support the creation of 50 play spaces for kids.
- Promote physical activity and healthy living messages through our media platforms
with over 500 hours of programming annually.
(c) Increase access to and participation in health and wellness programs for our employees and
their families.
- By 2013, create and promote participation in kid-friendly physical activity events for
employees and their families in all major U.S. geographies where our employees reside
(CA, CT, FL, and NY).
- By 2013, provide financial incentives to employees and their families for at least three
specified "healthy" results through DISNEY's results-based Wellness Rewards Program.
(2) Parental Involvement - Listen to, understand, and respect the needs and expectations of parents and
caregivers.
(a) Promote policies and programs that support parents and caregivers in the workplace.
- By 2015, grow backup child care and elder care efforts that result in a 20% increase in
the total number of employee workdays saved across DISNEY.
(b) Integrate feedback from parents and caregivers into the development of our entertainment
experiences.
- Continue to listen to the opinions of parents and caregivers in the development of our
entertainment experiences.
(c) Provide parents and caregivers with the tools to help them make informed entertainment
choices.
- Build world-class console experiences for gaming and DISNEY enthusiasts that receive
no higher than a T rating based on the standards of ESRB (Entertainment Software
Rating Board) and PEGI (Pan European Game Information).
(3) Responsible Marketing - Maintain clear and respectful guidelines for marketing kids.
(a) Develop marketing for kids that focuses on the positive attributes of our entertainment
experiences in a respectful and appropriate manner.
- Maintain advertising and marketing guidelines for all media outlets that target children
12 and under.
(4) Kids Experiences - Create safe, age-appropriate, and culturally diverse entertainment experiences for
kids.
(a) Promote safety for kids.
- Continue to integrate internet safety initiatives across all DISNEY Internet Media Group
(DIMG) platforms and products.
- By 2012, support Internet safety programs through our external partnerships that will
train over 100,000 children, parents, and teachers globally.
(b) Create age-appropriate entertainment experiences for kids.
- Continue to implement our policy of zero instances of tobacco depictions in North
American DISNEY-branded films.
(c) Reflect a diversity of cultures and backgrounds in our entertainment experiences for kids and
families.
- All North American DISNEY Stores will host in-store events that entertain and educate
kids about different cultures, backgrounds, behaviors or skills to expand their awareness
of and appreciation of the world.
- Walt DISNEY Parks and Resorts will increase its external partnerships to ensure cultural
relevancy worldwide.
The second principle and its goals are consistent to the mission and vision. A few of them create concern,
including (2b1) that lack any measurability or performance markers, (4a1) needs a deadline, (4c1) lacks a measurement
for success, (4c2) also needs to give clarity of when and how it will be measured as a success.
The third principle is to "inspire kids and families to make a lasting, positive change in the world." The
principles core values and strategies include:
(1) Catalyze Action - Create Opportunities for kids, parents, employees, and communities to help people
and the planet.

8. P a g e | 7
7 | P a g e
(a) Provide kids and families with opportunities to take positive actions for their communities,
people and the planet.
- By 2020, provide kids and families to take 20 million actions that help people,
communities, and the planet.
(b) Recognize kids who make positive contributions to their environment or communities.
- By 2016, air 300 hours of content annually that showcases kids' contributions to their
communities and the environment.
(c) Encourage volunteerism to make a meaningful difference in communities.
- By 2020, contribute more than 5 million hours of employee community service through
the DISNEY VoluntEARS program.
- By 2013, set a baseline for the percentage of employees who volunteer at least one hour
of service annually in the VoluntEARS program.
(d) Integrate citizenship into the responsibilities of every DISNEY employee.
- Maintain the high level of understanding that employees have about the role they can
play in helping DISNEY be a responsible company.
- By 2013, all employees will receive citizenship information during recruitment,
orientation, or on-boarding.
(2) Encourage Compassion - Provide happiness, hope, and laughter to those who need it most.
(a) Use the power of entertainment to promote giving back.
- By 2012, engage over 4 million players through online games to raise awareness of, and
encourage participation in, giving back to people and the planet.
(3) Nurture Creativity - Harness the power of creativity and imagination to improve the lives of kids and
the communities they live in.
(a) Collaborate with organizations to support creativity programs and imaginative play.
- By 2012, launch a pilot creatively project.
(4) Connect Kids to Nature - Connect kids to nature to develop lifelong conversation values.
(a) Connect kids to nature through exploration and discovery.
- By 2015, connect 35 million kids and families with nature experiences.
In review of the third and final principle there is continuity with the mission and vision. There were no large
deficiencies in goals. All of them had deadlines, measurements of success, or backing information to support their
realization and definitiveness, except the ones noted. In connection with all the goals and principles and the mission and
vision DISNEY has a strong fundamental system in place. They are a successful company for a reason. They focus on
how they treat people and the environment and in return they are admired globally for both their customer service and
their unique brands.
III. SWOT Analysis
Factor Location Factors
Favorable Unfavorable
Internal
Strengths Weaknesses
1. Leading entertainment company.
2. Broad product portfolio and
synergy.
3. Strong cable and broadcast
networks.
4. Marvel brand (films).
5. Customer service and reputation.
6. Theme Parks and Resorts.
7. High revenue generation
compared to competition.
1. Weak Studio Entertainment
Performance (operating leverage).
2. Losses in Interactive Media (operating leverage).
3. Negative opinions of Hong Kong
Disneyland resort and Disneyland
Paris.
4. Diverse brands requiring key
management.
5. Changing technologies and consumer behaviors.
6. Increased cost of capital over the past few years.
External
Opportunities Threats
1. International markets (developing
economies).
2. Cruise line expansion.
1. Intense competition for
Entertainment (films), lodging,
Tourism, currency fluctuations and CPI/DI.

9. P a g e | 8
8 | P a g e
3. New attractions and resorts.
4. Marvel feature films.
5. China, India, and South America.
2. Piracy around the globe.
3. Regulatory risks (FCC,
Healthcare, taxes, FTC, etc.)
4. Foreign exchange rates.
DISNEY's internal strengths and weaknesses are key in their ability to combat external threats and take advantage of
opportunities in the marketplace. DISNEY's core strengths include its size and strength in brand development and synergy
across many platforms. Its newly acquired Marvel films have been a major success through DISNEY's marketing efforts.
DISNEY has strong history and customer loyalty within its theme parks and resorts and its customer service and overall
reputation is a household name. Its weaknesses however, have occurred due to its weak live-action films, Playdom
acquisition, poor international reputation from Hong Kong and Paris management. The wide brand integration required.
Changing technology and consumer behaviors due to mobile and online devices, rather than traditional television. Also its
increased cost of capital over the past years has been troubling. Altogether DISNEY needs to focus on its brands that are
well known and drive cash flows (Marvel and DISNEY animations), take management control of international parks, and
lower overall operational leverage from poorly chosen projects that do not make up for their high marketing and
distribution costs.
DISNEY has many external opportunities and threats to work through. Opportunities in developing economies
specifically in China, India, and South America are core in branding new customers. The further expansion of their Cruise
line, and additional resorts and parks in growing economies are opportunities that could be achieve if DISNEY can
provide entertainment relevant to the varied degree of cultures.
IV. Stakeholders Analysis
Function 8
Customers
End-Users
7
Partners
6
Employees
5
Executive
4
Gov.
3
Owners
2
Board
1
Community
Total
Environmental Footprint X X X X X X X 33
Respectful Workplaces X X X X X 21
Strategic Philanthropy X X X X X 18
Safe Products X X X X X X X 33
Integrated Citizenship X X X X 14
Human Rights X X X X X X 31
Healthier Families X X X X X 24
Parental Involvement X X X X X 24
Responsible Marketing X X X X X X 26
Kids Experiences X X X X X 24
Catalyze Action X X X X X X 31
Encourage Compassion X X X X X 24
Nurture Creativity X X X 19
Connect Kids to Nature X X X X X 24
The various stakeholders at DISNEY include customers and end-users, partners, employees, executives,
government, owners, board of directors, and the community as a whole. The core functions include the major values
(goals). The environmental footprint is a high priority at DISNEY as it is important to almost all stakeholders. The
executive management set strategic goals while employees carry them out and therefore all goals should be important to
both groups, if it is to be fulfilled. Customers are focused on all the family based goals. Partners and employees value safe
products, respectful workplaces, human rights, and catalyzing action. Government has a tie with the environment, safe

10. P a g e | 9
9 | P a g e
products, human rights, responsible marketing, catalyzing action, as well as goals dealing with kids and education for
health and nature as well as community service . The community is involved with almost all of these goals as many of
DISNEY's goals involve the larger society as a whole in its programming, parks, and many of its programs.
Altogether the stakeholder analysis owners are almost non-existent to the key goals, however, financial health
and profitability is most important to them. Overall the environmental footprint is one of the most important goals, then
producing safe products for the consumers, followed by human rights and catalyzing action. All the others were very
close to the others between 18 and 26.
VI. Competitor Analysis
DISNEY has a wide array of competition within each of its five business segments. Its top competition is from News
Corp, Time Warner, and Viacom. News Corporation competes with DISNEY in the studio entertainment, media network,
as well as consumer products and interactive media with FOX, and HarperCollins. Time Warner Corporation competes
with DISNEY with its TBS, TNT, HBO, and CNN networks. Viacom competes with DISNEY with MTV, VH1, BET,
Nickelodeon, Comedy Central, Spike TV, and Paramount Pictures. Other competitors include Universal with Universal
Studios and NBC, as well as Six Flags amusement parks, and SeaWorld.
Financials (2011) DISNEY News Corp. Time Warner Viacom
Revenue $40.893 $33.405 $28.974 $14.914
Operating Expenses (22.961) (21.058) (16.311) (7.868)
EBITDA 17.932 12.347 12.663 7.046
Fixed Expenses (9.691) (7.810) (6.865) (3.336)
Equity/Other Income 0.584 0.606 0.007 0
Other Expenses (0.439) 0 0 0
EBIT (Operating Income) 8.386 5.143 5.805 3.710
Operating Leverage 2.14* 2.4* 2.18* 1.9*
Interest Expense (Other
Loss)
(0.343) (0.966) (1.439) 0.465
EBT 8.043 4.177 4.366 3.245
Taxes Paid (2.785) (1.029) (1.484) (1.062)
Tax Rate 35% 25% 34% 33%
Financial Leverage 1.03* 1.23* 1.33* 1.14*
Total Leverage 2.2042* 2.95* 2.9* 2.17*
Net Income 4.807 2.739 2.886 2.136
Free Cash Flow 3.5619 4.419 3.84 2.441
Operating Profit Margin 20.5% 15.4% 20% 25%
Basic Earning Power 11.6% 8.3% 8.6% 16.3%
Return on Equity 12.2% 9.1% 9.6% 25%
Current Ratio 1.14* 2.28* 1.51* 1.33*
Debt to Equity 0.83* 1.06* 1.26* 1.16*
Market Cap 88.76 55.5 39.43 25.75
(All Numbers in billions of dollars, * denotes a number not in billions of dollars, except percentages).
Using fundamental analysis between DISNEY, News Corp, Time Warner, and Viacom there are many key
performance indicators to evaluate DISNEY's financial strength within its core industry. Focusing on value creation rather
than accounting income (net income) or cash flows even, DISNEY is king in its ability to generate revenue, however,
Viacom has absolutely crushed DISNEY in return on equity. News Corp. has the highest free cash flow due to the low
taxes it pays compared to all the others even with higher leverages. DISNEY has the largest tax burden, the lowest total
financial leverage (great), and has a strong operating profit margin, and BEP. Overall DISNEY needs to focus on creating

11. P a g e | 10
10 | P a g e
long-term value and increase its free cash flows, work on reducing its tax burden, and maintain its overall earning power.
There is the main argument between value generation and short-term accounting income. DISNEY could be better
financially if it is desiring to be the most value-driven company in creating long-term DCF.
X. Control Mechanisms
DISNEY has very strong and unique brands. DISNEY is an integrated cost leader and focuses on differentiation.
The power of its success is driven by its ability to continually create quality entertainment and in doing so it has a
powerful effect with customers as they have become a household name through their effective marketing. Control
mechanisms help to shape the effectiveness of an organization as it operates, however, there are times when plans fail and
successful companies are those who can quickly transition towards their "plan B". DISNEY has no publicly available
contingency plans available.
DISNEY has had a hard time in different business segments over the past few years and is in need of some
contingency plans. The SE, IM, and MN business segment have high fixed costs due to marketing. In the SE segment
major losses occur from risky releases of feature films such as "John Carter," mainly due to its lack of star power and high
distribution/advertising costs. The SE segment takes continued risks with big budget films. One control mechanism would
be to have a wider number of focus groups with key audience segments in order to evaluate upcoming storylines and casts
perceived success. There needs to be scrutinizing budget stop loss points (many films went over budget), choosing higher
star power, limiting marketing costs for more risky films. These are several examples of contingency control mechanisms
that will help to reduce the risk of feature film failures as well as keeping marketing and distribution costs down for
broadcasting, networks, and gaming.
Additional control mechanisms would be to ensure that corporate values are implemented throughout DISNEY.
This includes instilling the right corporate culture and instilling customer service and integrity. Including additional
training and volunteer-based alliance projects. In terms of finance, ensuring that projects and products are properly priced
and that fixed costs are minimized. Another key strategy would be to develop advertising with a lower CPM in targeted
channels as technology and social media are changing. Companies are more able to connect with customers and also
create direct target relationships with them, using this could reduce costs rather than TV, billboard, and other print
mediums. Transitioning further programming to online and mobile would also allow for further off-prime time revenues
through ads and contracting with sites such as Hulu, Netflix, and up and coming sites. In regards to the environment and
eliminating the footprint, DISNEY should work on implementing core partnerships (suppliers) in lowering wastes outside
of simply their own efforts.