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

Disney Consumer
Products

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

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
HISTORY
the most creative, 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
Walt-Disney 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

Weighted Score

Rating
1 to 4
0

Weighted Score

Advertising

0.12

0.48

0.48

0.24

MarketShare

0.11

0.33

0.44

0.22

CompanyImage

0.12

0.48

0.36

0.36

FinancialPosition

0.11

0.44

0.44

0.33

Management

0.09

0.27

0.27

0.27

GlobalExpansion

0.12

0.48

0.48

0.48

ConsumerLoyalty

0.12

0.48

0.48

0.36

ProductionCapacity

0.12

0.36

0.36

0.24

Technology

0.09

0.27

0.36

0.27

Totals

3.59

3.67

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

Financial Trends

Avg P/E

Price/
Sales

Price/
Book

Net Profit
Margin (%)

Book
Value/
Share

Debt/
Equity

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

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

Interest
Coverage

Income Statement
(in Millions, except per share data)

2009

Revenues

$36,149.00

Costs and expenses

$(30,452.00)

Restrucuring and impairment charges

$(492.00)

Other income (expense)

$342.00

Net interest expense

$(466.00)

Equity in the income of investees

$577.00

Income from continuing operations before income taxes and minority interests

$5,658.00

Income taxs

$(2,049.00)

Minority interests

$(302.00)

Income from continuing operations

$3,307.00

Discontinued operations, net of tax

Net income

$3,307.00

Diluted earnings per share:

Earnings per share, continuing operations
Earnings per share, discontinued operations

$1.76

Earnings per share

$1.76

Basic earnings per share

Earnings per share, continuing operations
Earnings per share, discontinued operations
Earnings per share

$1.78

$1.78

Weighted average number of common and common equivalent shares outstanding:

Diluted

$1,875.00

Basic

$1,856.00

Balance Sheet

A
S
S
E
T
S

Liabiliti
es

Balance Sheet
Cont.

Selected Financial Ratios

2009

2008

Current Ratio

1.33

1.01

Quick Ratio

1.19

0.91

Leverage Ratios

Debt-to-Total Assets Ratio

1.12

1.93

0.1

0.12

-12.14

-14.13

28.44

33.67

Fixed Assets Turnover

1.11

1.2

Total Assets Turnover

0.57

0.61

Gross Profit margins

1.84

1.8

Operating Profit Margin

0.16

0.2

Net Profit Margin

0.09

0.12

Return on Total Assets

0.05

0.07

Return on Stockholders equity

0.06

0.14

Earning per share

1.78

2.34

Price-earnings Ratio

15.31

12.61

Growth Rations (yearly)

Sales

-4.48%

7.66%

Net Income

-25.30%

-5.55%

Liquidity Ratios

Debt-to-equity Ratio
Long-term debt-to-equity Ratio
Times-Interest-earned Ratio

Activity Ratios
Inventory Turns

Profitability Ratios

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

Grand Strategy Matrix

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

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

1.33

0.51

Quick Ratio

1.19

0.46

Leverage Ratios

Debt-to-Total Assets Ratio

0.86

1.12

1.84

0.1

0.26

-12.14

-12.14

28.44

40.39

Fixed Assets Turnover

1.11

1.11

Total Assets Turnover

0.57

0.62

Gross Profit margins

1.84

1.84

Operating Profit Margin

0.16

0.16

Net Profit Margin

0.09

0.09

Return on Total Assets

0.05

0.06

Return on Stockholders equity

0.06

0.012

Earning per share

1.78

1.72

Price-earnings Ratio

15.31

14.27

Growth Rations (yearly)

Sales

-4.48%

0.00%

Net Income

-25.30%

0.00%

Debt-to-equity Ratio
Long-term debt-to-equity Ratio
Times-Interest-earned Ratio

Activity Ratios
Inventory Turns

Profitability Ratios

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

Measure of Target

Time Expectations

Primary Responsibility

Customers

1. Costumer satisfaction

Customer Survey
Webinar

Yearly

Human Resources &

CEO

1. Employee Conditions

Employee Satisfaction

Biannually

CEO

2. Career Opportunity

Lower employee turnover

Biannually

CEO

1. Eco-Friendly Company

Maintain clean environment in

resorts
Increase presence of recycling in
resorts
Limit food, paper and water
waste
Limit land destruction

Yearly

CEO
Marketing Department

2. Ethical Company

Increase in donations and

presence of charitable events

Yearly

CEO
Marketing Department

Number of new products in each

segment
Number of renovated products
in each segment

Yearly

CEO
Marketing Department

Numbers of new resorts built

Yearly

CEO

Decrease in cost of Parks,

Yearly

CFO

Representatives

Community / Socially
Responsible

Operations/Processes

1.

Innovation

2. Brand expansion/
Accessibility
Financial

1. Reduce cost of production

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.

Recommendation
s
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
Remodel

the Interactive Media Segment.

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/press-releases?tid=All&field_press_release_date_value
[value][year]=2009&title=&page=3
>