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Strategic Audit of
the Walt Disney
Company
Disneys strategic posture is also overall well secured but perhaps not
well enough structured. The companys public website does not offer a distinct
reference as far as its mission is concerned, the mission statement being
included in the corporations objectives. According to the site, these are: 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.
(thewaltdisneycompany.com)
According to the changes brought by new millennium through the
emergence of the digital era, there is a shift of the power balance from the
producer towards the consumer, thus it is highly recommended to any company
to modify and adapt its strategies accordingly (Ogrean, 2013, 30).
Disneys statement however is clearly product-oriented and unfortunately
does not make any references to the customer. It has been formulated with
regards to the companys investors (the statement can be found on the Investor
Relations section of the public website) but should have included references to
the customers or satisfying the customers needs or requirements and references
to its staff members and collaborators as well. Overall, we can conclude that
All policies are consistent with each other and reflect the companys global
operations. Through search engines I could not find instances where its current
public policies have been breached.
1. Corporate Governance
The company offers information about its board of directors, listing them
and providing a short one paragraph description with biographical data about
every one of them. The board consists of ten members:
-
The companys tenure policy prohibits board membership for more than
15 years, thus the oldest board member, Monica C. Lozano, has held this
position for 15 years and will not be able to be re-elected by the shareholders
within the Annual Meeting next year.
As far as the members knowledge, skills and backgrounds are concerned,
these pieces of information too are presented on the website for each individual.
They all present an impressing resume, having worked for top companys such
as Twitter, Facebook, Google, Starbucks, Procter & Gamble, MC Donalds,
Blackberry, Bank of America and others.
Regarding the companys shares, amongst the board members Mr. Robert
A. Iger, the chairman and chief executive officer, owns most of them. The
shares of the company are divided as follows:
Breakdown
% of Shares Held by All Insider and
5% Owners:
8%
65%
70%
1529
Shares
1,137,483
85,984
154,087
Reported
May 12, 2015
Feb 4, 2015
Mar 4, 2015
-Brent Woodford
Senior Vice President, Planning and Control
The business unit consists of five members:
-John Skipper
Co-Chairman, Disney Media Networks and President, ESPN
-Thomas O. Staggs
Chairman, Walt Disney Parks and Resorts
-Alan Horn
Chairman, The Walt Disney Studios
-Anne Sweeney
Co-Chairman, Disney Media Networks, and President, ABC Television Group
-James Pitaro
President, Disney Interactive
All top management members are well established professionals covering
a great variety of fields of expertise, from communications to finances to
marketing and technology. They all present an impressive resume, having
worked for top companies all over the world. Furthermore, some of them have
worked in different departments occupying different positions within the Disney
company for decades.
The strategic management requires, in order for a company to obtain
success, the integration of the following systems:
Management
Marketing
Financial
Production
R&D
HR
Informational (Ogrean, 2013, 7)
Looking at the functions occupied by top management we can safely state
that all this systems are covered by the Walt Disney top management team. As
far as ethic, social responsibility and environmental sustainability are
concerned, the strategic decisions of the top management seem to cover them
all.
Besides its policies covering the areas stated above (Environmental
Policy, Healthy Cleaning, Management of Chemicals in Consumer Products,
Paper Sourcing etc.), the company also has solid business and ethic standards
stated on their website, such as: harassment prevention and discrimination
policies, providing equal opportunities within its hiring practices, providing
staff training in business standards and ethics (thewaltdisneycompany.com).
The Walt Disney Company operates at a global level, with operating points,
parks and resorts spread around the world. The website provides a good
overview through the following map:
thewaltdisneycompany.com
However, as stated, this is just an overview, by clicking on the various locations
we find that in each of the mapped parts there are considerably more operating
points. For instance, for Europe there are no less than twenty locations in
different countries.
Being such a vast company and covering almost the whole globe Disney
must have designed multiple, well thought out strategies to deal with climate,
including global temperature, storms, floods, draughts, solar and wind
phenomena, not to mention extreme instances of these, natural disasters. Below
we have as a reference point the natural disasters of 2011 at a global level:
usatoday30.usatoday.com
These are just the major negative natural manifestations threatening the
different Disney locations, not to mention the smaller manifestations which, if
not dealt with strongly, can cause major damage. All these aspects are
considered threats to the companys operations and there can hardly be any
opportunities arising from these negative natural phenomena (threat).
As far as the societal environment is concerned, these too are hard to
identify for all of Disneys location given that it operates across the whole
globe. In order to narrow down the operating points, I will focus on the location
of the main Disney parks and resorts. According to the official website, these
are situated in:
-
As far as the political legal aspect is concerned this can give rise to
more threats than opportunities. The company did adapt to the legal
requirements of the country they operate their parks (opportunity). And the
countries they opened their parks in are at the moment very stable politically
and legally (opportunity). But the diversity of its locations, operating not only
in different countries but also on different continents poses a risk because they
need to constantly be prepared for regulations in one country which do not
apply for other locations. For instance a new regulation prohibiting smoking in
public places can bring along large costs for the company through the need of
setting up special smoking rooms (threat).
Regarding the socio-cultural Disney adapted themselves to this type of
environment in the various countries. This domain tends to be stable on the long
turn, culture and society change slowly and gradually over decades, thus there
should be no major problems in this area (opportunity). However, Disney has
to be careful regarding their animation and film products since there are a lot of
opinions stating that their protagonists are not enough racially diversified since
most of them are Caucasian (threat).
Concerning the technological environment Disney has proven to quickly
adapt until now. They were specialized in animation and as soon as computer
generated animation has emerged, they purchased a company which is an expert
on the field (Pixar), assuring its technological progress (opportunity).
Furthermore, all countries Disney operates in are technologically evolved, thus
they do not need to worry that their various locations will lack in this field
(opportunity).
As far as the Task Environment is concerned, according to Porters law
we have to consider the new entrants, the consumers, the substitute products,
the suppliers as influencers of the competition within the industry (Ogrean,
2013, 170). Considering that Disney is the absolute leader of its industry and the
human need of entertainment both in good and in bad times regardless of
location, I would rate the forces as follows:
a. Threat of new entrants low; the company has a long history having started
as a cartoon studio in the 1920s and today it is one of the most valuable brands
in the world. Furthermore, they are constantly improving their products and new
entrants would have to be extremely innovative to pose a threat.
b. Bargaining power of buyers high; being a business to customer company
Disney is strongly dependent on them. They are the audience of their TV
stations and films, they are the visitors in its parks and resorts.
c. Threat of substitute products or services medium; even if Disney is the
industry leader in entertainment, covering so many branches of the industry
gives rise to the threat brought about by substitute products and services. Up
until now Disney has offered great quality and if they continue to do so this
threat will affect them.
marketrealist.com
Overall, according to the above analysis, the external factors summary looks
like follows:
Opportunities
Current economical stability in the countries
where Disney operates
Customers willing to spend on entertainment for
their children regardless of minor economical
fluctuations
Current political stability in the countries where
Disney operates
Disney already culturally adapted to its various
location, and cultural changes emerge slowly
Disney adapts quickly technologically
0,75
0,20
0,15
0,45
0,20
1
1
4
Threats
Natural phenomena across the globe
Risk of legal regulation changes stability in the
countries where Disney operates
Lack of racial diversity in Disney animations
Disneys customers have a high bargaining
power
3.
4
4
0,4
1,2
3,75
atissuejournal.com
The image depicts the animation studios creational structure and without
having to perform a detailed analysis we can conclude that the organization type
is not a hierarchical one but a cyclic one, with the managers/directors placed at
the core of the company. From the center towards the outer circle we have the
various department leaders who communicate with the directors and among
themselves on the one side, and with their staff on the other. Even if the chart
states that it designates operations and not authorities, this is a model which can
not be implemented and sustained at companies following a strict hierarchical
model. The company structure can hardly compare to the structure of other
companies in its industry given the multitude of fields it covers.
As far as the corporate culture is concerned, the companys values are
clearly stated on the website dedicated to people looking for a career at Disney.
At the core of their values lie diversity and culture. Regarding the cultural
aspects, the side enumerates following values:
Brand Strategy
Development of Integrated Franchise Plans
Consumer Insights
Multicultural Market Development
Despite its success, the company still invests great amounts of money on
advertising. According to the Business Insider, Disney spent $ 1.96 billion on
advertising in 2013, which was a 4.5% increase from 2012. The costs were
divided the following way: TV: $524 million; magazines: $113 million;
newspapers: $23 million; internet: $140 million and other media: $1.1 billion.
Regarding the companys finances, as stated, Walt Disney has a market capital
of $179,5 and registered sales of $ 49,78 B. (forbes.com).
The company periodically publishes annual reports and quarterly earning
reports for all its operating points. Lets take for example the report published
for the second quarter of 2015. Among others, it states the following: The Walt
Disney Company today reported earnings of $2.1 billion for its second fiscal
quarter ended March 28, 2015. Diluted earnings per share (EPS) for the second
quarter increased 14% to $1.23 from $1.08 in the prior-year quarter. EPS for the
six months ended March 28, 2015 increased 18% to $2.50 from $2.11 in the
prior-year period. Excluding certain items affecting comparability, EPS for the
six months increased 16%. The following table summarizes the second quarter
and six-month results for fiscal 2015 and 2014:
(thewaltdisneycompany.com)
As can be seen in the table above, the company registered positive changes in
income from March 2014 to March 2015, varying from 7% to 28% .
Disney also excels in the R&D department, dedicating a great amount of
effort to this aspect and even having a separate website entirely for this purpose.
Upon entering the website, on the homepage we find the following introduction:
Disney Research was launched in 2008 as an informal network of research labs
that collaborate closely with academic institutions such as Carnegie Mellon
University and the Swiss Federal Institute of Technology Zurich (ETH). We are
able to combine the best of academia and industry: we work on a broad range of
commercially important challenges, we view publication as a principal
mechanism for quality control, we encourage engagement with the global
research community, and our research has applications that are experienced by
millions of people. We are honoring Walt Disneys legacy of innovation by
researching novel technologies and deploying them on a global scale.
(disneyresearch.com)
According to the website Disney possesses six main research labs based
in California, Pittsburg, Boston and Zurich. Their main subjects of research are
computer graphics, video processing, computer vision, robotics, wireless
communication and mobile computing, human computer interaction, behavioral
science, material research and machine learning and optimization. On the
website we can also find dozens of projects planned and implemented by the
various research teams. All these prove that the R&D field is definitely one of
Disney strengths. Since this one of Disneys main fields of activity is strongly
related to information technologies, most of the facts stated above are also
applicable for this kind of resources.
Walt Disney operates in multiple locations around the globe as already
stated (Australia, China, Hong Kong, India, Singaport, UK and Ireland, United
States and Canada) and needs a well planned and designed network for
operations and logistics. Their main points of focus and objectives covering this
area, clearly stated and consistent with their overall policy, are published on the
public website are the following:
Retail Sourcing: Our Merchandise Sourcing teams help bring Disney magic to
life by sourcing our branded products globally for The Disney Store, Walt
Disney Parks and Resorts and for our wholesale partners. The team is
passionate about pursuing the lowest total cost of ownership while ensuring
each
product
reflects
our
unique
brand
promise.
Logistics: Our Supply Chain Solutions team work as internal consultants to
identify and implement efficiencies which both reduce costs and our carbon
footprint. The teams ongoing optimization initiatives contribute significantly to
the bottom line. The team also manages the logistics for products from point of
origin
to
their
destination
around
the
globe.
Product Integrity: By applying engineering expertise and administering
meaningful policies, this group protects Disney guests, and our brand, by
ensuring the quality and safety of products that bear the characters, brands, and
intellectual property of The Walt Disney Company and affiliated companies.
(disneycareers.com)
All these prove that despite its diversity of products, services and
locations Disney manages to successfully coordinate its operations and logistic
processes across the globe. The same goes for the human resources component,
despite its ampleness and cultural diversity, the company succeeds in managing
its employees according to its values, mission, objectives and policies as stated
previous within this paper.
The companys current chief human resource officer is Jayne Parker. She
has held this position since 2009, but has worked for the company for twenty
years, and according to the website she has changed the function, culture and
impact of HR across the company to support its business goals and strategies as
well as the needs and aspirations of its 180,000 employees around the world.
She has worked with leaders across Disneys many lines of business to build
and manage an HR organization that reflects their dynamic needs and helps
them achieve their goals and results. While Ms. Parker has been CHRO, Disney
has acquired Marvel, Lucasfilm and Maker Studios, and has grown its global
employee population by more than 30,000 people.
As far as the information technology resources are concerned, since one
of Disneys main resources, the R&D resources, are strongly linked to them, the
facts enumerated above strongly overlap (see the description in the R&D
section above).
Concluding, Disneys core competencies are linked to the diversity of its
products and services, to the variety of its locations spread across the globe, to
the companys ability to adapt to the economical, technological, political and
socio-cultural trends and changes and to the market. Furthermore, despite its
global outreach, the company still is capable of promoting itself worldwide, of
gaining financial success, of investing in research and informational technology,
of coordinating the operation and logistics processes and managing its human
resources in a cultural sensitive matter.
Opportunities
Well balanced organizational structure
Good marketing strategies
Well developed and structured logistics network
Keeping up with newest technologies
Well developed R&D network
Threats
Overgrown expansion, structure could be shaky
Ampleness brings about great marketing costs
Difficult quality management for manufacturing
Constant need of creative ideas
Fluctuation of lower placed employees
5. Bibliography:
Primary sources:
Ogrean, C., Management Strategic, Universitatea Lucian Blaga din Sibiu,
2013
Walt Disney Company Websites:
Official website: http://thewaltdisneycompany.com/
Career website: http://disneycareers.com/
Research website: http://www.disneyresearch.com/
Secondary sources:
Atissue, Walt Disneys Creative Organization Chart http://www.atissuejournal.com/2009/08/07/walt-disney%E2%80%99s-creativeorganization-chart/
Business Insider, The 12 Companies That Spend The Most On Advertising http://www.businessinsider.com/12-biggest-advertising-spenders-in-2013-20146?op=1#ixzz3azjn9Gmk
Forbes, The Worlds Most Valuable Brands, Walt Disney http://www.forbes.com/companies/walt-disney/
Market Realist, Guide to Walt Disneys Competitors http://marketrealist.com/analysis/stockanalysis/technology/media/charts/?featured_post=35911&featured_chart=36040
USAToday, Worldwide woes
http://usatoday30.usatoday.com/weather/news/extremes/story/2012-0104/world-disasters-costliest-earthquake-tsunami/52377642/1
Yahoo Finance, DIS Major Holders,
http://finance.yahoo.com/q/mh?s=DIS+Major+Holders