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An analysis of the strategic

challenges

Some historical clues

Founded by Walt Disney


Established in 1923
Headquartered in California, USA
Currently worlds largest conglomerate in
terms of revenue.

Walt Disney Vision


To make people
happy

Walt Disney Mission


Statement 2013
The Walt Disney Company's objective is to be one
of the world's leading producers and providers of
entertainment and information, using its portfolio
of brands to differentiate its content, services and
consumer products. The company's primary
financial goals are to maximize earnings and cash
flow, and to allocate capital toward growth
initiatives that will drive long-term shareholder
value.

Walt Disney
Mission Statements Evaluation
Product oriented
statement
Focus on what
products to sell
and what
services to offer
rather than on
how to satisfy
customer needs

Lack of 5
essential
components:
1.
2.
3.
4.

Customers
Technology
Philosophy
Concern for
public
image
5. Employees

Walt Disney
Recommended Vision

To make entertainment the


wheel of life

Walt Disney Recommended


Mission Statement
As the worlds leader in
entertainment and information we
seek to create an engaged and
collaborative culture for our
employees in order to turn our
customers moments into a
unique experience, by providing
special services and innovative
products through movies, parks
and the e-world. By taking
advantage of our diversified
portfolio to differentiate our
content in all segments, we aim to
develop the most profitable
entertainment company
worldwide, which would yield
increasing profits to our

Walt Disney
Overview
Segment

Revenues
12

Revenues
13

Media
Networks

19,436 mil. $ 20,356 mil. $

Growth
5%

Parks &
Resorts

12,920 mil.
$

14,087 mil.
$

9%

Walt Disney
Studios

5,825 mil. $

5,979 mil. $

3%

Disney
Consumer
Products

3,252 mil. $

3,555 mil. $

9%

Disney
Interactive

845 mil. $

1,064 mil. $

26%

Disney - contribution of segments to revenues


Media Networks 45%
Parks & Resorts 31%
Studio Entertainment
13%
Consumer Products
8%
Interactive 3%

Walt Disney Organizational


Structure

Walt Disney Objectives

Walt Disney
Corporate Strategies
PRODUCTS
Existing
Market penetration
Existing

MARKET
S

Targeted market
segmentation through
acquisitions

Ne
Newwproducts
Related Diversification
Diversification in
branding
Vertical & Horizontal
integration

New
Market development
Foreign Outsourcing
Direct Investment
Licensing

Conglomerate
diversification

Walt Disney
Grand Strategy
RAPID MARKET GROWTH

WEAK COMPETITIVE
POSITION

Market
development
Related
Diversification
Vertical
Integration
STRONG
COMPETITIVE
Horizontal
POSITION
Integration
Market
penetration

SLOW MARKET GROWTH

Walt Disney
PEST Analysis
POLITICAL
The animation industry enjoys tax benefits.
Political differences
International Trade.

ECONOMIC

are

an

obstacle

to

Tighter regulations regarding products safety.

Global financial crisis slows down growth.


Emerging markets such as India offer a cost advantage in
terms of salaries and the overall cost of production.
Economic growth, per capita income and stage of economic
development among different countries needs to be
considered.

Walt Disney
PEST Analysis
SOCIAL
Recent social trend in smartphones, tablets and apps.
Different local cultures, as well as stories and history of
the host place.
Changes in customers preferences for entertainment.
Significant role of kids and familys entertainment.

TECHNOLOGICAL
Technological advancements are having a profound
effect on the worlds media.
Changes in technology affect demand for entertainment
products as well as the cost of production.

Walt Disney
Porters 5 Forces Analysis
THREAT OF NEW ENTRANTS - (MEDIUM)
Even though there are major players, still smaller
players with lower structures can enter the market.

THREAT OF SUBSTITUTES - (HIGH)


Technological innovations & high competition in each
segment, generate many alternative choices for
consumers.

BARGAIN POWER OF SUPPLIERS - (LOW)


Disneys vertical integration reduces significantly
their power.
BARGAIN POWER OF BUYERS - (HIGH)
Disneys offerings are desires, rather than necessities.
Therefore, financial restricted consumers will not buy.

RIVALRY AMONG FIRMS - (HIGH)


Huge competition between companies within specific
sectors.
( broadcast rights/local parks/viewing
figures/box office/other brands)

Walt Disney
Porters 5 Forces Analysis

Brand Value

*http://brandirectory.com/league_tables/table/global-

Walt Disney
Financial State
Performance Indicators
Current Stock Price

$ 80.07

Consolidated Revenues

$ 45,041 millions

Net Income

$ 6,136 millions

Return on Equity

14.41

Return on Invested Capital

11.24

Gross Profit Margin

21.29

Annual Dividend per Share

$ 0.60 (2012)

Market Share on
Studio Entertainment Industry

Globally
$ 5,03 billion
Overseas
$ 3,14 billion
U.S.
$ 1,89 billion

Globally
$ 4,68 billion
Overseas
$ 3 billion
U.S.
$ 1,68 billion

Globally
$ 3,68 billion
Overseas
$ 2,26 billion
U.S.
$ 1,42 billion

Competitive Profile Matrix


WALT DISNEY

WARNER
BROS

UNIVERSAL

CRITICAL
SUCCESS
FACTORS

WEIGH
T

RATING

Advertising

.12

.48

.48

.36

Market
Share

.10

.30

.40

.20

Financial
Position

.10

.40

.30

.20

Manageme
nt

.08

.24

.24

.24

Global
Expansion

.10

.40

.40

.40

Technology

.15

.45

.60

.45

Customers
Loyalty

.10

.30

.30

.20

Brand
Awareness

.15

.60

.60

.45

Creativity

.10

.40

.40

.40

TOTAL

1.00

1-4

SCORE

3.57

RATING
1-4

SCORE

3.72

RATING
1-4

SCORE

2.90

Walt Disney
SWOT Analysis

Brand

Reputation
Highly Diversified
Portfolio
Strategic & Tactical
Acquisitions
Global Expansion &
Alliances
Economies of Scope
Top Management
Loyal Customers
Strong Financial
Position
Benefits
From IT
Advances & Mobile
Gaming
Build A More EcoFriendly Image
Further expansion in
new emerging
economies
Release of New

High Cost of
Operations
Concentration of
Revenues In North
America
Approaches Antitrust
Law Limits
Financial Rcession
Increasing Piracy
Strong Competition
Continous Need For
Technological Update
Change in Consumers
Preferences & Tastes
Negative Publicity
Due to
Unexpected
Event

External Factor Evaluation Matrix (EFE)


WEIGHTED

WEIGHT

RATING

Benefits from it advances & mobile


games

.20

.60

Build a more eco-friendly image

.05

.15

.15

.30

.05

.20

Financial Recession

.15

.45

Increasing Piracy

.10

.20

Strong Competition

.10

.30

Continuous need for technological


update

.10

.30

Change in consumer preferences and


tastes

.05

.10

Negative publicity due to unexpected


event

.05

.15

TOTAL

1.00

SCORE

OPPORTUNITIES

Further expansion in new


emerging economies (Russia, India)
Release of new successful stories and
characters

THREATS

2.75

Internal Factor Evaluation Matrix (IFE)


WEIGHT

RATING

WEIGHTED SCORE

Brand Reputation

.15

.60

Highly Diversified
Portfolio

.15

.60

Strategic & Tactical


Acquisitions

.08

.24

Global Expansion &


Alliances

.05

.15

Economies of Scope

.08

.24

Top Management

.07

.21

Loyal Customers

.10

.40

Strong Financial
Position

.05

.15

STRENGTHS

Internal Factor Evaluation Matrix (IFE)


WEIGHT

RATING

WEIGHTED SCORE

High Cost of
Operations

.15

.30

Concentration of
Revenues in Us &
Canada

.08

.16

Approaches Antitrust
Law Limits

.04

.04

WEAKNESSES

TOTAL

1.00

3.0
9

Strengths

Walt Disney
SWOT
Combined Strategies
Opportunities

1.
2.
3.
4.
5.
6.
7.
8.

Weaknesses

Brand Reputation
Highly Diversified Portfolio
Strategic & Tactical Acquisitions 1.
Global Expansion & Alliances
2.
Economies of Scope
Top Management
3.
Loyal Customers
Strong Financial Position

SO - Strategies

Benefits From IT Advances &


2-1: Develop mobile game
Mobile Gaming
2.
Build A More Eco-Friendly Image applications with Disney characters
1-2: Collaborating with WWF so as
3.
Further expansion in new
to promote environmental issues
emerging economies
(India,
6-3: Build a multinational
Russia)
management team
4.
Release of New Successful
8-4: Consumer research on their
Stories & Characters
preferences nowadays

High Cost of Operations


Concetration of Revenues In North
America
Approaches Antitrust Law Limits

WO - Strategies

1.

Threats
1.
2.
3.
4.
5.
6.

Financial Rcession
Increasing Piracy
Strong Competition
Continous Need For
Technological Update
Change in Consumers
Preferences & Tastes
Negative Publicity Due to
Unexpected Event

ST - Strategies
7-1: Offer discounts to all members
of Disney fun club
3,4-3: Expansion in Brazil market
through alliances and synergies
8-4: Invest on R&D for one high
tech department
6-5: Monthly consumer research
via online polls

1-1: Digitalization of our operations in


order to low costs & utilize technology
2-3: Target India as possible expansion
through consumer products

WT - Strategies

1-1: Re-edit and release in cinemas old


classic Disney films
2-3,4: Take advantage of operations that
take place in N. America by investing in
Technology and R&D for that area

Expansion in
Develop mobile
Brazil market
game applications
through alliances
with Disney
and synergies
characters

QUANTITA
PLANNI MATRI
STRATE
TIVE
NG
X
GIC
Key Factors

Weight

AS

TAS

AS

TAS

0.20
0.05

1
-

0.20
-

4
-

0.80
-

0.15

0.60

0.45

0.05

0.10

0.15

0.15
0.10

2
-

0.30
-

3
-

0.45
-

0.10
0.10
0.05
0.05

1.00

2
1

0.20
0.10

1
4

0.10
0.40

0.15
0.15
0.08

4
4
3

0.60
0.60
0.24

2
3
2

0.30
0.45
0.16

0.05
0.08
0.07
0.10

4
3
4
2

0.20
0.24
0.28
0.20

3
2
2
4

0.15
0.16
0.14
0.40

0.05

0.15

0.05

Opportunities
1. Mobile game sectors could grow at a compound annual growth rate of
23,6 % by 2017
2. Decrease in environmental impact by 50%
3. Emerging markets offer a cost advantage in terms of salaries and cost
of operations.
4. Extension of R&D efforts in order to release new successful stories and
characters.

Threats
1. 12% decline in average total expenditures in entertainment in USA
from 2008 to 2010.
2. Piracy costs in the US economy every year $ 250 billion.
3. Walt Disneys market share in Studio Entertainment segment is
16,62%
4. Continuous need for technological update
5. Change in consumer preferences and tastes
6. Negative publicity due to unexpected event

Subtotal
Strengths
1. 27th position in the rank of the Best Global Brands.
2. Highly diversified portfolio
3. Acquisition of Marvel, ABC, Pixar, Lucas Film, ESPN etc
4. Almost 30% of revenues from operations in Europe, Asia Pacific, Latin
America and other
5. Economies of Scope
6. Top Management follows four core concepts (3Ds+B) from 1922
7. Customers loyalty
8. Strong financial position: $7,370m intangible assets and $27,324m
goodwill for FY 2013

Implementing Strategy
Preparation of the appropriate
budget.
Allocation of personnel.
Communication of the strategic
vision, the strategic themes and their
role to the employees.
Use of presentations, workshops,
meetings, frequent updates.

Evaluation of Strategy

source: www.digi-capital.com

source: www.digi-capital.com

Mobile Games Industry


Descriptive Statistics

source: www.digi-capital.com

Evaluation of Strategy
Rumelts Criteria
The recommended strategy is:
consistent
It will be developed by the existing Interactive Department so
that interdepartmental disorder is avoided.

consonant
It will be an adaptive response to the recent social trend for
mobile games applications.

feasible
Disneys financial state can support the recommended strategy
which will result in the companys growth in the short-term.

maintaining the competitive advantage


The companys position in the market will be strengthened.