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Strategic Management Final Case Study Andrea Baril Ashley Cleary Sylvia LaBrie Marie-Michele Lachance

05/03/2012

Company Overview The Founder Growth Location Map Walt Disneys Division Existing Mission Proposed Mission and Vision SWOT Analysis External Audit CPM Positioning Map EFE Internal Audit Organizational Chart Financial Trends Balance Sheet Financial Ratios IFE

Overview
Strategic Plan SWOT Matrix Space Matrix IE Matrix Grand Strategy Matrix BCG Matrix Analysis QSPM Implementation Assumptions Projected Income Statement Projected Balance Sheet Projected Ratios Evaluation Stock Price Balance Scored Card Strategies Recommendations Objectives

Walt, after the Studio had won 4 Academy Awards

The founder

Walt Disney 1901-1966

Walt Disney was born on December 5, 1901 in Chicago During the fall of 1918, Walt Disney attempted to enlist for military service but he got rejected. He started a small company called Laugh-O-Grams, which eventually fell bankrupt. With his suitcase, and $20 Walt headed to Hollywood to start anew. After making a success of his "Alice Comedies," Walt became a recognized Hollywood figure. Disney took a deep interest in the establishment of California Institute of the Arts, a college-level professional school of all the creative and performing arts. Walt Disney passed away on December 15, 1966. Urban legend maintains his corpse would be frozen and stored beneath the Pirates of the Caribbean ride at Disneyland. . .

History
October 16, 1923: This date is considered the start of the Disney Company first known as

The Disney Brothers Studio.


1928: First Mickey Mouse cartoon, and the first appearance by Minnie Mouse. 1932:

Flowers and Trees, first full-color cartoon and first Academy Award
winner. 1939: The Disney Studio begins its move to Burbank, California. 1940: Walt Disney Productions issues its first stock.

Growth
1955: Mickey Mouse Club debuts on television.

1971:
Walt Disney World Resort opens with the Magic Kingdom and two hotels near Orlando, Florida. 1982: EPCOT Center opens at Walt-Disney World Resort . 1983: Tokyo Disneyland, the first international Disney theme park, opens in Japan.

1987:
The first Disney Store opens, in Glendale, California.

Growth cont.
1989: Disney-MGM Studios opens at Walt Disney World Resort. 1992: Disneyland Paris opens. 1995: Disney agrees to purchase 25 percent of the California Angels baseball team, Disney agrees to purchase Capital Cities/ABC for $19 billion. The Disney Channel begins operation in the UK. 1996: Disney Online launches Disney.com. Radio Disney, a live 24-hour music-intensive radio network, debuts. 1998: ESPN Magazine debuts, Disneys Animal Kingdom opens at Walt Disney World Resort, Disney Magic cruise ship departs on its inaugural cruise.

2009
Disney

purchased Marvel Entertainment Gave a $0.35 dividend per share Roy Disney died at age 79 He was a key person in Disneys animation legacy Received approval to build a theme park in Shanghai Released the movie Up

LOCATION MAP
Disney Resorts: 1. California 2. Florida 3. Tokyo 4. Hong Kong 5. Paris

Walt Disney Divisions

Media Networks ESPN Disney/ABC Television Group ABC Entertainment Group ABC News ABC Owned Television Stations Group ABC Family Disney Channels Worldwide Hyperion Book s

Park and Resorts Disney Land Resorts Walt Disney World Resort Tokyo Disney Resort Disneyland Paris Hong Kong Disneyland Disney Cruise Line Disney Vacation Club Adventures by Disney Walt Disney Imagineering

Walt Disney Divisions Cont.

The Walt-Disney Studios Walt-Disney Studios Motion Pictures Marvel Studios Touchstone Pictures Disneynature Walt Disney Animation Studios Pixar Animation Studios Disney Music Groups Disney Theatrical Group

Disney Consumer Products Disney Licensing Disney Publishing Worldwide Disney Store Disney Interactive Media Group Disney Online Disney Games

Mission Statement

"The mission of The Walt Disney Company is to be one of the world's leading producers and providers of entertainment and information. Using our portfolio of brands to differentiate our content, services and consumer products, we seek to develop the most creative, innovative and profitable entertainment experiences and related products in the world."

Proposed Vision

Walt Disney strives to be the worlds most famous entertainment company by creating an amazing experience for individual of all ages.

Proposed Mission
Our Mission is to be one of the worlds leading producer and provider of entertainment and information, from parks to network media, and website for all ages. We seek to provide a great experience for our customers, as well as for our employees. By using our unique portfolio to differentiate our content, services and consumer products, we seek to develop the most creative, HISTORY innovative and profitable entertainment experiences, which would produce financial rewards to our shareholders. In everything we do, we try to contribute to our communities by giving them the best experience.

SWOT Analysis

Strengths

One of the most recognizable entertainment company in the world Strong advertising Wide and unique portfolio Innovative entertainment business Strong customer service Strong Media Networks and Broadcasting division Disney owns a variety of companies, which allows them to generate more profits from different industry such as Media Networks and Broadcasting, Park and Resorts, Studio Entertainment and Disney Consumer Products Disney is the largest worldwide licensor of character-based merchandise and producer of childrens film-related products based on retail sales

Weaknesses

Disney sends a corrupted influence to children


Jasmine was in a forbidden relationship with Aladdin Snow White lived alone with 7 men

Pinocchio was a liar


Robin Hood was a thief Tarzan walked without clothes on

A stranger kissed sleeping beauty and she married him


Cinderella lied and sneaked out at night to attend a party Coyote runs off cliffs and blows himself up

Weaknesses

Studio Entertainment and Disney Consumer Products divisions have been experiencing declining revenue for the last 3 years

Disney as a narrow target market Disney as such a diversify product range that it can reduce efficiency and lead to a lack of strategic focus

High cost of entertainment production High employee turnover

Poor working conditions in factories


Walt Disneys Park and Resorts are not easily accessible which leads people to associate Disney World with a costly trip

Opportunities

Opportunity to renovate attractions in Park and Resorts Division due to increase in profit

Growth from cable and satellite operators creating even more potential for Disney to make money with their network

Prospect to build more theme park and resorts worldwide Openings in other areas of the travel business Opportunity to invest in building theme parks to satisfy the increase in guest spending, theme park attendance, and hotel occupancy

Target new costumers group

Threats

Lasting economic recession leading to slow growth rate High unemployment rate Park and Resorts Divisions success is unpredictable because of exchange rate fluctuations; travel industry trends; amount of available leisure time; oil and transportation prices; and weather patterns and seasonality. Changes in technology leads customers to stream online instead of buying DVD. Online streaming makes Disney vulnerable to piracy and violation of its intellectual property. Retail distribution business are influenced by seasonal consumer purchasing behavior and by the timing and performance of animated theatrical release Increase in labor cost which will have a noticed impact in WaltDisney expenses due to their large amount of employee.

External Audit

CPM
Media Network Segment
Critical Success factors Weights Rating 0.0 to 1.0 1 to 4 Weighted Score Rating 1 to 4 0 Advertising 0.12 4 0.48 4 Weighted Score Rating 1 to 4 0 0.48 2 Weighted Score

0 0.24

Market Share
Company Image Financial Position Management Global Expansion Consumer Loyalty Production Capacity Technology Totals

0.11
0.12 0.11 0.09 0.12 0.12 0.12 0.09 1

3
4 4 3 4 4 3 3

0.33
0.48 0.44 0.27 0.48 0.48 0.36 0.27 3.59

4
3 4 3 4 4 3 4

0.44
0.36 0.44 0.27 0.48 0.48 0.36 0.36 3.67

2
3 3 3 4 3 2 3

0.22
0.36 0.33 0.27 0.48 0.36 0.24 0.27 2.77

Positioning Map
Media Network Segment

Positioning Map
Park and Resorts Segment

EFE

Internal Audit
Disneyland will never be completed. It will continue to grow as long as there is imagination left in the world. - Walt Disney

Organizational Chart
Theme Parks & Resorts International ABC Television Group Co-Head Interactive Co-Head Interactive & Playdon Human Resources Motion Picture Distribution Communication Stategy and Business Development Government Relations Disney Consumer Products ESPN & ABC Sports ESPN & Disney Media Networks CFO Legal and Secretary CID Security

CEO

Financial Trends
Book Value/ Share

Avg P/E

Price/ Sales

Price/ Book

Net Profit Margin (%)

Debt/ Equity

Return on Return on Equity (%) Assets (%)

Interest Coverage

01-Oct-09

12.9

1.41

1.47

9.1

$18.55

0.38

9.8

5.2

9.6

01-Sep-08

14.2

1.69

1.85

11.7

$17.73

0.46

13.7

7.1

10.4

01-Sep-07

15

2.03

2.19

13.2

$15.67

0.5

15.2

7.7

10.4

01-Sep-06

16.9

1.87

1.98

9.8

$15.42

0.43

10.4

5.5

7.5

01-Oct-05

22.2

1.58

1.82

7.8

$13.06

0.49

9.4

4.6

6.3

01-Sep-04

21

1.52

1.7

7.6

$13.05

0.53

4.4

5.9

01-Sep-03

28.4

1.52

1.68

4.9

$11.82

0.57

5.6

2.7

3.4

01-Sep-02

33.4

1.2

1.29

4.9

$11.61

0.62

5.3

2.5

Income Statement
(in Millions, except per share data) Revenues Costs and expenses Restrucuring and impairment charges Other income (expense) Net interest expense 2009 $36,149.00 $(30,452.00) $(492.00) $342.00 $(466.00)

Equity in the income of investees


Income from continuing operations before income taxes and minority interests Income taxs Minority interests Income from continuing operations Discontinued operations, net of tax Net income Diluted earnings per share: Earnings per share, continuing operations Earnings per share, discontinued operations Earnings per share Basic earnings per share Earnings per share, continuing operations Earnings per share, discontinued operations Earnings per share Weighted average number of common and common equivalent shares outstanding: Diluted Basic

$577.00
$5,658.00 $(2,049.00) $(302.00) $3,307.00 $3,307.00

$1.76

$1.76

$1.78

$1.78

$1,875.00 $1,856.00

Balance Sheet

Balance Sheet Cont.

Selected Financial Ratios


2009 2008

Liquidity Ratios
Current Ratio Quick Ratio 1.33 1.19 1.01 0.91

Leverage Ratios
Debt-to-Total Assets Ratio Debt-to-equity Ratio Long-term debt-to-equity Ratio Times-Interest-earned Ratio 1 1.12 0.1 -12.14 1 1.93 0.12 -14.13

Activity Ratios
Inventory Turns Fixed Assets Turnover Total Assets Turnover 28.44 1.11 0.57 33.67 1.2 0.61

Profitability Ratios
Gross Profit margins Operating Profit Margin Net Profit Margin Return on Total Assets Return on Stockholders equity Earning per share Price-earnings Ratio 1.84 0.16 0.09 0.05 0.06 1.78 15.31 1.8 0.2 0.12 0.07 0.14 2.34 12.61

Growth Rations (yearly)


Sales Net Income -4.48% -25.30% 7.66% -5.55%

IFE

Strategic Formulation I do not like to repeat successes, I like to go on to other things. Walt Disney

SWOT Matrix

Space Matrix Results

Strategies: Market Development Market Penetration Product Development Forward Integration Backward Integration Horizontal Integration Related Diversification Unrelated Diversification

Space Matrix

IE Matrix
Strong 3-4 Total IFE Score Average 2-2.99 Weak 1-1.99

Media Networks
High 3-4

Studio Entertainment Total EFE Medium Score 2-2.99 Consumer Products Parks and Resorts

Low 11.99

Interactive media

Strategies: Market Development Market Penetration Product Development Forward Integration Backward Integration Horizontal Integration Related Diversification Unrelated Diversification

Grand Strategy Matrix

BCG

Matrix Analysis

QSPM Matrix

QSPM Cont.

Implementation
Disneyland will never be completed. It will continue to grow as long as there is imagination left in the world. Walt Disney

Pixar is the most technically advanced creative company; Apple is the most creatively advanced technical company. Steve Jobs 2005-02-21

Assumptions
Eliminate

10 billion out of the borrowings from the retained earnings Finance 1 billion to buy a land in order to open indoor resort in New York in the next three years. Invest 10 million for advertisement Spend 1 billion in each of the five existing Park for renovation and new attractions. = Total of 5 billion
Total Investment of 19.01 billion

Projected Income Statement

Assets

Projected Balance Sheet

Liabilities

Project Balance Sheet

Project Financial Ratios


Liquidity Ratios
Current Ratio Quick Ratio 1.33 1.19 0.51 0.46

Leverage Ratios
Debt-to-Total Assets Ratio Debt-to-equity Ratio Long-term debt-to-equity Ratio Times-Interest-earned Ratio 1 1.12 0.1 -12.14 0.86 1.84 0.26 -12.14

Activity Ratios
Inventory Turns Fixed Assets Turnover Total Assets Turnover 28.44 1.11 0.57 40.39 1.11 0.62

Profitability Ratios
Gross Profit margins Operating Profit Margin Net Profit Margin Return on Total Assets Return on Stockholders equity Earning per share Price-earnings Ratio 1.84 0.16 0.09 0.05 0.06 1.78 15.31 1.84 0.16 0.09 0.06 0.012 1.72 14.27

Growth Rations (yearly)


Sales Net Income -4.48% -25.30% 0.00% 0.00%

Evaluation You're dead if you aim only for kids. Adults are only kids grown up, anyway. Walt Disney

Stock Price Graph

Balanced Score Card


Area of Objectives Customers 1. Costumer satisfaction Representatives 1. Employee Conditions 2. Career Opportunity Community / Socially Responsible 1. Eco-Friendly Company Maintain clean environment in resorts Increase presence of recycling in resorts Limit food, paper and water waste Limit land destruction Increase in donations and presence of charitable events Yearly CEO Marketing Department Employee Satisfaction Lower employee turnover Biannually Biannually CEO CEO Customer Survey Webinar Yearly Human Resources & CEO Measure of Target Time Expectations Primary Responsibility

2. Ethical Company

Yearly

CEO Marketing Department

Operations/Processes 1. Innovation Number of new products in each segment Number of renovated products in each segment Numbers of new resorts built Yearly CEO Marketing Department

2. Brand expansion/ Accessibility Financial 1. Reduce cost of production

Yearly

CEO

Decrease in cost of Parks, Resorts and other property

Yearly

CFO

2. Increase profitability

Increase Sales Reduce Expenses

Quarterly

CFO

Strategies

Use product development to renovate and build new attractions in order to attract an older target market. Use market development to build a new theme park which will be more accessible to

the North East area.

Recommendations
In the next three years Walt Disney should..

Build an indoor theme Park and Resort in New York.

Improve advertising to promote


entertainment which target a more mature audience.

Remove the Interactive Media Segment.


Remodel and build new attractions in every Park and Resorts to stay appealing to our

customers.

Objectives
In the next year Walt Disney should

Improve

advertising to promote

entertainment
Remove Buy

the Interactive Media Segment

a land in New York City

Questions

Sources
Home, The Walt Disney Company, < http://thewaltdisneycompany.com/<ALDRIDGE, B. Walt Disney, Brad Aldridge Productions, Berkley, CA, August 2002, http://www.justdisney.com/walt_disney/> Annual Reports, The Walt Disney Company, <http://thewaltdisneycompany.com/investors/financial-information/annual-report> Who Owns the Media? Media Ownership Charts, Free Press, Florence, MA, <http://www.freepress.net/ownership/chart> Investor Relations, The Walt Disney Company, <http://thewaltdisneycompany.com/investors> Walt Disney Company (DIS) News The New York Times <http://topics.nytimes.com/top/news/business/companies/disney_walt_company/index.html> Stock Quote for Walt Disney Co MSN Money, page generated 9:55PM, <http://investing.money.msn.com/investments/stock-price?Symbol=dis&ocid=qbeb> DIS: Summary for Walt Disney Company (The) Common Yahoo! Finance <http://finance.yahoo.com/q?s=dis&ql=1>

Organizational Chart The Walt Disney Company TheOfficialBoard, <http://www.theofficialboard.com/org-chart/walt-disney>


Disney Corporate Press Releases , The Walt Disney Company, <http://thewaltdisneycompany.com/disney-news/pressreleases?tid=All&field_press_release_date_value[value][year]=2009&title=&page=3>