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Overview
Founder 1923 Walt and Roy Disney Headquartered Burbank, CA, USA Revenue $ 38 Billion Employees 145000 Leader in Animation Fortune Rank : 57
ABC Television Network ABC Radio Networks ESPN Disney Channel SoapNet Toon Disney Joint ventures A&E Television Networks, Lifetime Entertainment Services, The History Channel, E! Entertainment Television ESPN, ABC, Disney, and family branded Internet Web sites
The Disney Stores (TDS) Disney Store Online Disney Interactive Disney Publishing Worldwide Baby Einstein
$ 2.68 Billion
Buena Vista Home Entertainment (BVHE) Domestic and International Buena Vista Music Group Buena Vista Television Walt Disney Theatrical Movie banners: Walt Disney Pictures, Touchstone Pictures, Hollywood Pictures, Miramax, Pixar and Dimension
Walt Disney World Resort (WDW) four theme parks, two water parks, 25 hotels Disney Cruise Line Disneyland Tokyo Disneyland Honk Kong Disneyland Disneyland Resort Paris Walt Disney Imagineering
$ 10 .76 Billion
$ 6 .70 Billion
Source: corporate.disney.go.com
$ 17.16 Billion
1923-28
1928-34 1934-54 1955-71 1972-84 1984-2006
1923-28
1928-34
1934-54 1955-71 1972-84 1984-2006
Mickey Mouse and Silly Symphonies In 1928 - Walt Disney and Ub Iwerks created Mickey Mouse In 1929, DBCS was reincorporated as Walt Disney Productions, Ltd. In 1932, Disney signed an exclusive contract with Technicolor to produce cartoons in color
1923-28 1928-34
1934-54
1955-71 1972-84 1984-2006
1939 - Walt Disney Studio, CA 1940 Disney Productions IPO Onset of World War II, box-office profits began to dry up 1950 foray into television
1955-71
1972-84 1984-2006
general public 1959 Disney World, Orlando 1960 s - The long-running anthology series 1966 - Deaths of Walt and Roy Disney
1972-84
1984-2006
1970 s Opening of Walt Disney World 1979 Disney studio produced science-fiction, The Black Hole, first to carry PG rating 1980 - Launch of Walt Disney Home video 1984 - Michael Eisner and Jeffrey Katzenberg from Paramount Pictures were brought on board
1984-2006
1980 s Disney surived many takeover attempts 1993 Disney acquired Mirmax Films 1996 - Merger with ABC, bought ESPN into its network 2005 - Michael Eisner replaced by Robert Iger as CEO 2006 Purchased Pixar Animation Studio
Bargaining Power of Suppliers: - dedicated, competitive, world-class Supplier base to collaborate with Disney d Sourcing Professionals -Low bargaining power due to Disney s big volume Bargaining Power of Buyers: -Competitive products all compete on differentiation -Low switching costs
Threat of Substitute Products: -Non-existent Threat of Potential New Entrants: -Economies of Scale -Strong and Well Established Brand Name -High Capital requirements -Low threat
Intensity of Rivalry between Firms in the Industry: -High competitive in an Oligopoly (other leading firms Include News Corp., Time Warner Inc., Liberty Media Interactive, Viacom, Sony Pictures) -Strong brand identity and product differentiation -Intensity of Rivalry is moderate
High Bargaining Power of Suppliers Bargaining Power of Buyers Threat of Substitutes Threat of New Entry Intensity of Rivalry Between Firms
Moderate
Low
Value Chain
Resources:
-Tangible: cutting edge technologies, media networks, studios, distribution channel -Intangible: brand name / reputation for innovation
Core Competency:
- Content Creation and Control(Animation and Motion Pictures)
Competitive advantage:
-Brand name - Creating synergies between business - Creating shareholder value through diversification
Strengths Global Standardization Target Customer: Children Creative Process Popular Brand Name Diversification Disruption Opportunities Merchandise Global Localization: Think global, Act Local Cheaper alternatives to soft toys Disney Music Channel Disney School of Management/Training Institute
Weakness High sunk cost Excessive Research & Development Constant Up gradation High Investment High Risk Factor Threats Competitors: National, Regional & Global Employee Retention Highly Demanding in terms of Sales, Creativity and Innovation Unprofitable or hasty acquisition Brand Consistency Product Differentiation
Financial Analysis Financial Overview for Walt Disney and its nearest competitor Time Warner for Year 2010
Financial Analysis
Liquidity Ratios Current Ratio Quick Ratio The Walt Disney Company 1.11 1.01 Time Warner Inc. 1.48 1.28 Industry 1.41 1.20
The current ratio measures the company s ability to pay its short-term obligations. The ratio is mostly used to give an idea of how well a company can pay back its short-term liabilities with its short-term assets. The Walt Disney Company current ratio of 1.11 is greater than 1, which means their assets can cover their liabilities. However, the Walt Disney Company is below both the Industry and its competitor, Time Warner Inc. The quick ratio (acid test ratio) measures a company s ability to meet its shortterm obligations with its most liquid assets. The Walt Disney Company quick ratio is 1.01 versus Time Warner s 1.28. This shows that Disney actually holds less inventory than Time Warner (9% versus 13%), and Disney s quick ratio is actually less than the industry average as well.
Strategic Challenges
Lack of coordination among businesses (Overlap began to emerge) Lack of corporate synergy Lack of creativity Poor brand management Diversification in different SBU s Allocation of resources to different SBU s
Future Recommendations
Expand in Persian Gulf Countries which can be a lucrative market given their growing popularity as tourist hub Since they are already into Animation they could also get into E-Learning, which would be the next big thing They can start training institute to train world class animators Disney loses huge chunk of revenue to piracy, they need to come up with something radical to curb piracy, like Apple did with iTunes
Team Learnings
From the strategic analysis of Walt Disney Company one can learn that:-
Build your business around your core competencies Exploit the latest technology Demand perfection, but play loose Reinvent yourself when necessary Identify how to anticipate the needs, wants, stereotypes, and emotions of your customers in order to exceed their service expectations