DISNEY CASE ANALYSIS
Satyanarayana Rao P JHL2011SMBA4P008
Strategic Plan for Disney
DISNEY CASE ANALYSIS Satyanarayana Rao P JHL2011SMBA4P008
Table of Contents Introduction………………………………………………………………………………..3 Disney’s Current Published Mission Statement……………………………………………3 Proposed Mission & Vision……………………………………….…………………………..4 Disney’s External Threats and Opportunities ……………………………………………..5 Competitive Profile Matrix…………………………………………………………………..…………………….5 External Factor Evaluation …………………………………………………………………6 Disney’s Internal Strengths and Weaknesses……………………………………………….8 Internal Factor Evaluation…………………………………………………………………….………………9 SWOT Analysis ……………………………………………………………………..……….9 Strengths:…………………………………………………………………………………..9 Weaknesses: …………………………………………………………………………..…..10 Opportunities:……………………………………………………………………………..10 Threats:……………………………………………………………………………………10 Recommended Strategies and Objectives…………………………………………………10 Strategy Implementation…………………………………………………………………..11 Annual Objectives and Policies ……………………………………………………………14 Timeline for Integration of Project Coordination Office………………………………….14 Strategy Review and Evaluation………………………………………………….………..15 Introduction
DISNEY CASE ANALYSIS Satyanarayana Rao P JHL2011SMBA4P008
The Walt Disney Company represents a truly immense organization composed of four strategic
business units (SBUs) which, with the consideration of the consolidated revenue, represented
roughly a whopping 35.5 billion dollars in 2007. The four SBUs are Disney Consumer Products,
Studio Entertainment, Parks and Resorts, and Media Networks Broadcasting , and these can be
further subdivided into 28 categories and are composed of a plethora of brands. The only two
fundamental commonalities that can be deduced upon inspection of the entirety of the Walt
Disney Company’s holdings are entertainment and information. Every business activity the
organization is engaged in is related in some manner to providing its consumer base
entertainment and/or information.
Despite the two commonalities of the Walt Disney Company’s activities, there exists a
tremendous spectrum of variety in its operations. One of the growth strategies that have
helped the conglomeration reach its current level of success is the fact that the organization
has expanded, both vertically and horizontally, into new markets by targeted segmentation. In
most cases, it reaches these market segments with an acquired brand, such as ESPN, ABC, and
Miramax Films. Furthermore, it is only through the diversification in branding that Disney has
grown simply because the children’s brand is comparatively limited in terms of the target
demographic. It is also the same diversity that minimizes the systemic risk involved with
operating in too narrow of a portfolio.
Disney’s Current Published Mission Statement
Walt Disney’s does not have a published vision statement. However, their current mission
statement can be found on their website (The Walt Disney Company, n.d.). The current mission
statement reads as follows:
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
DISNEY CASE ANALYSIS Satyanarayana Rao P JHL2011SMBA4P008
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.
The mission statement is subject to criticism and seems almost as if it is outdated. For
example, Walt Disney is already one of the world’s leading producers of the goods and services
it markets. Therefore, there is no direction or purpose inherent in this statement other than
the maintenance of its current position. Furthermore, Disney’s Media Networks accounts for the
largest revenue generator (43%) among different SBUs. However, it almost seems as if the role
of information provider is somewhat downplayed by the restating of their dedication to
entertainment in the second part of the mission statement. With these criticisms in mind, an
updated version of the mission statement will be proposed.
Proposed Mission and Vision
The proposed mission statement for the company is slightly lengthier but retains the overall
composition of the current statement with slight alterations to incorporate the points
mentioned. The proposed statement reads as follows:
The mission of The Walt Disney Company is to be the largest and most trusted producer
and provider of entertainment and information. Using our portfolio of brands to
differentiate our content, services and consumer products, we will become the most
responsive and adaptable to serve the needs of the consumers’ in our target markets.
We will maintain our integrity and adhere to the core values upon which our company
was founded as we create the most innovative and profitable entertainment
experiences, most reliable and relevant informational services, and related products in
the world.
DISNEY CASE ANALYSIS Satyanarayana Rao P JHL2011SMBA4P008
It is also important to consider the fact that Disney’s diversity prohibits the possibility of
creating an encompassing mission statement for all of its various activities. This undoubtedly
reduces the possibility that a vision statement could successfully align all of the different
divisions. Consequently, this may be the primary reason why the company does not have a
published vision statement. Disney’s main competitor, Time Warner, has an even less
substantial published statement. As opposed to a conventional mission statement, Time
Warner publishes a list of core values (Time Warner Corporate, n.d.). The diversity of these
companies would only make such statements relevant at the divisional level.
Disney’s External Threats and Opportunities
The individual external threats to Walt Disney are equally as diversified as the company itself.
However, one of the greatest potential risks to the overall aspirations of the company is rooted
in the protection of its brand(s) image and credibility. The incredible history of the Walt Disney
Company and its positive reputation are deeply engrained within the United States’ cultural
heritage and as well as around the world. This is also evident in the fact that Walt Disney’s
balance sheet boasts exorbitant amounts of intangible assets and goodwill. According to the
company’s balance sheet in 2007, Disney accounted for over 24 billion dollars in intangible
assets. Intangible assets are inherently more subject to risks than more traditional assets.
Therefore, a balance must be achieved that embraces diversity in branding but also maintains a
healthy risk adversity to any potential threats to its brand(s) integrity.
Competitive Profile Matrix
The Competitive Profile Matrix has been applied to Walt Disney and how they rate with regards
to their closest competitor, Time Warner. Although this method of analysis provides some
insights to the competitive landscape, it must be noted that the two competitors do not
operate along the same lines. Disney has carved out its own niche position over the years and it
DISNEY CASE ANALYSIS Satyanarayana Rao P JHL2011SMBA4P008
operates through a unique portfolio that only directly competes with Time Warner on one front,
the Media Network. Therefore, this analysis should only be considered on a superficial level as
it may not accurately represent the state of competition between the said companies.
Table 1. Competitor Profile Matrix
Critical Success factors Weig hts
Rati ng
Weighted Score
Rati ng
Weighted Score
Rati ng
Weighted Score
0.0 to 1.0
1 to 4
1 to 4
1 to 4
0 0 0
Advertising 0.12 4 0.48 4 0.48 2 0.24
Market Share 0.11 3 0.33 4 0.44 2 0.22
Company Image 0.12 4 0.48 3 0.36 3 0.36
Financial Position 0.11 4 0.44 4 0.44 3 0.33
Management 0.09 3 0.27 3 0.27 3 0.27
Global Expansion 0.12 4 0.48 4 0.48 4 0.48
Consumer Loyalty 0.12 4 0.48 4 0.48 3 0.36
Production Capacity 0.12 3 0.36 3 0.36 2 0.24
Technology 0.09 3 0.27 4 0.36 3 0.27
Totals 1 3.59 3.67 2.77
DISNEY CASE ANALYSIS Satyanarayana Rao P JHL2011SMBA4P008
External Factor Evaluation
Disney’s External Factor Evaluation reveals that the organization operates within an incredibly
complex environment, yet, it has a plethora of opportunities. These opportunities can be
generally reduced into one of two activities; they vertically expand into new market segments
or horizontally expand into new markets all together. The opportunities also generally require
an innovative approach to manifest their success, in which Disney has rich supply of historical
examples. The major threats that Disney faces include protecting their intellectual properties,
especially in the Studio Entertainment division, as well as threats generated by an economic
downturn. Most of Disney’s products and services are priced at a premium and therefore
subject to risk in a recessionary period. Another major threat is the fierce level of competition
that each SBU faces independently. There are several competitors in the Theme Park industry
but when it comes to movies and television, the number of rivals are too numerous to even
mention.
Table 2. EFE Matrix
DISNEY CASE ANALYSIS Satyanarayana Rao P JHL2011SMBA4P008
Disney’s Internal Strengths and Weaknesses
Disney’s internal strengths are composed mainly of the company’s innovative leveraging of its
financial prowess and tremendous brand recognition to move vertically and horizontally into
new markets. Innovation has been at the core of Disney’s organizational culture virtually from
day one. The fact that their portfolio is so diversified also offers the company substantial
advantages in terms of risk mitigation. Consequently, this offers a layer of protection against
any macroeconomic turbulence.
One major weakness that Disney is currently facing is the return on investments allocated to
the Studio Productions. This is undoubtedly a consequence of piracy in the movie industry. The
case mentions the loss of income generated in terms of the required investment as a major
concern for the company. Disney’s diversity offers a competitive advantage in the movie
industry when compared to other production firms that only operate in that one particular
industry. However, the loss of the profit margins that movies once generated is a troubling
predicament for management.
Table 2. IFE Matrix
DISNEY CASE ANALYSIS Satyanarayana Rao P JHL2011SMBA4P008
SWOT Analysis
As previously mentioned, the diversity of the Walt Disney Company holdings makes
many traditional forms of analyses irrelevant at the corporate level. One of the primary
advantages of the SBU structure is that it allows the individual divisions to tailor their
strategies to fit the needs of their specific market. For example, a Porter’s Five Forces
analysis would include a barrier to entry force which could only be accurately constructed for
each individual market where the corporation operates in. Trying to encompass the vastness
of operations into a single organizational strategy requires a very broad and generalized
vantage point. To achieve this, a simple SWOT analysis is conducted to maintain the
perspective required in compiling the effects of diversity into a single analysis.
Strengths F Stable Revenue and Profit Growth F Diversified Portfolio F Tremendous Brand Recognition F Responsiveness to Markets F Substantial Asset Holdings Weaknesses F Top Tier Management Turnover F Redundancy in Business Functions Due to SBU Structure F Inclusion of High-Risk Investments in Holdings F Lack of Corporate Control over Divisions F Growth Barriers in Theme Parks Opportunities F Continued Growth through Further Diversification F New Markets Available for Expansion (Foreign Opportunities) FF Potential for Enhanced Web Presence F Further Penetration of Target Markets through Versioning F Knowledge Management-Information Transfer Threats F Loss of Control over SBUs F Recession F Negative Publicity F Fierce Competition F Poorly Integrated Acquisitions
DISNEY CASE ANALYSIS Satyanarayana Rao P JHL2011SMBA4P008
SWOT Matrix
DISNEY CASE ANALYSIS Satyanarayana Rao P JHL2011SMBA4P008
SPACE Matrix
DISNEY CASE ANALYSIS Satyanarayana Rao P JHL2011SMBA4P008
Strategies: Market Development Market Penetration Product Development Forward Integration Backward Integration Horizontal Integration Related Diversification Unrelated Diversification
DISNEY CASE ANALYSIS Satyanarayana Rao P JHL2011SMBA4P008
Grand Strategy Matrix
BCG Matrix
DISNEY CASE ANALYSIS Satyanarayana Rao P JHL2011SMBA4P008
QSPM
DISNEY CASE ANALYSIS Satyanarayana Rao P JHL2011SMBA4P008
Balanced Score Card
DISNEY CASE ANALYSIS Satyanarayana Rao P JHL2011SMBA4P008
Recommended Strategies and Objectives The recommended strategies for the Walt Disney Company are composed of initiatives on two separate fronts. First SBUs must continue to strengthen operations by identifying new opportunities in the current target markets. This recommendation lies squarely in the skill set of management and there are several examples of innovation that have already been implemented. Such examples include the investment in video on demand technology with Cox Communications and the new attractions that are being planned for the theme parks. However, the most striking example of innovative ideas is Disney’s real estate venture that takes their “magic” to a whole new level. In this case, Disney successfully
leveraged its incredible brand recognition in the real estate market by creating communities with their image marketing theme coupled with their branding, and consequentially adding value to the consumer. The initial phase of this project was a success, selling over 6,000 homes at a premium, and further communities are now in the works (Reso, 2010). This type of innovative leveraging of the Disney brand represents the second strategy recommendation. Their endeavors into new markets, both in and out of the SBU structure, must maintain Disney’s values and be fully compatible with either their entertainment niche or also possibly along the informational divisions. Another example that falls within the traditional SBU structure with regards to growth through acquisition that has proven successful is Disney’s acquisition of Pixar Entertainment (La Monica, 2006). This move was completely in line with Disney’s strong roots in animation and not only acted to benefit that individual SBU, but also strengthened the brand as a whole. Also, they now have veteran innovator in the form of Steve Jobs on the board since Jobs was the CEO of Pixar.
DISNEY CASE ANALYSIS Satyanarayana Rao P JHL2011SMBA4P008
Strategy Implementation For 2008, to continue its growth ambitions, Disney must continue its innovative developments from within the traditional SBU structure. Moreover, it must scan for opportunities, such as the real estate venture, which lie outside the traditional hierarchy. To achieve this growth, Disney Corporate must not only foster the culture of innovation that builds from a bottom up approach through the SBU hierarchy. In fact, it must also be innovative itself in identifying new opportunities. This requires a corporate project coordination team that will engage in projects management until the point when the project has been integrated into the SBUs or when it becomes a standalone SBU in the future. To maintain the level of innovation already exhibited in the SBUs, Disney must constantly revitalize the organization so that the culture does not become stagnant at any point. This will translate into giving them the room needed for creativity, and also providing
incentives and rewarding the most successful cases. Walt Disney himself had a pretty unique system to generate creativity (Mycoted, n.d.). It is important that the acquired conglomeration of separate activities not lose sight of such a foundation in the face of the pressures produced from the modern business environment. With the goal of innovation implemented through acquisitions and new projects and a new division to house a project management team and acquisition team, acquisitions generally lie within the realm of specialized project management so the group can simply be referred to as the project management coordination office. The project management team will work to inject the field’s best practices into both the SBUs’ projects as well as into the corporate projects. The role of the team is to coordinate and monitor projects without stifling any creativity from the project team. Research shows that projects, when utilizing project management best practices, are vastly more successful. It is difficult to forecast how much revenue this will generate but it can be compared to the current growth in net profits.
Between 2004 and 2007, Disney has experienced a tremendous growth in net income. To maintain such exponential growth rate is unconceivable so the target growth rate is set slightly higher than the increase since the rate of increased profitability is already almost unfathomable.
DISNEY CASE ANALYSIS Satyanarayana Rao P JHL2011SMBA4P008