Strategic Management

Final Case Study

Andrea Baril
Ashley Cleary
Sylvia LaBrie
Marie-Michele Lachance



05/03/2012
Overview
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


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

The founder
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. . .


Walt, after the Studio
had won 4 Academy
Awards
Walt Disney 1901-1966
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.




History
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
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.


Growth cont.
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

2009
LOCATION MAP
Disney Resorts:
1. California
2. Florida
3. Tokyo
4. Hong Kong
5. Paris
Media Networks Park and Resorts
ESPN
Disney/ABC Television
Group
ABC Entertainment Group
ABC News
ABC Owned Television
Stations Group
ABC Family
Disney Channels
Worldwide
Hyperion Book s
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
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
Walt Disney Divisions Cont.
"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."

Mission Statement
Proposed Vision
Walt Disney strives to be the worlds
most famous entertainment
company by creating an amazing
experience for individual of all ages.
HISTORY
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 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
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

Strengths
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

Weaknesses
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

Opportunities
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.

Threats
External Audit
Critical Success factors Weights Rating Weighted Score Rating Weighted Score Rating 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
CPM
Media Network Segment
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
Theme Parks & Resorts
International
ABC Television Group
Co-Head Interactive
Co-Head Interactive & Playdon
Human Resources
Motion Picture Distribution
Communication
Stategy and Business Development
Government Relations
Disney Consumer Products
ESPN & ABC Sports
ESPN & Disney Media Networks
CFO
Legal and Secretary
CID
Security
CEO
Financial Trends
Avg P/E
Price/
Sales
Price/
Book
Net Profit
Margin (%)
Book
Value/
Share
Debt/
Equity
Return on
Equity (%)
Return on
Assets (%)
Interest
Coverage
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 9 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 3
(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 $1.76
Earnings per share, discontinued operations
Earnings per share $1.76
Basic earnings per share
Earnings per share, continuing operations $1.78
Earnings per share, discontinued operations
Earnings per share $1.78
Weighted average number of common and common equivalent shares outstanding:
Diluted $1,875.00
Basic $1,856.00
Income Statement
Balance Sheet
Balance Sheet
Cont.
Selected Financial Ratios
2009 2008
Liquidity Ratios
Current Ratio 1.33 1.01
Quick Ratio 1.19 0.91
Leverage Ratios
Debt-to-Total Assets Ratio 1 1
Debt-to-equity Ratio 1.12 1.93
Long-term debt-to-equity Ratio 0.1 0.12
Times-Interest-earned Ratio -12.14 -14.13
Activity Ratios
Inventory Turns 28.44 33.67
Fixed Assets Turnover 1.11 1.2
Total Assets Turnover 0.57 0.61
Profitability Ratios
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%
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
Space Matrix
Strategies:
Market Development
Market Penetration
Product Development
Forward Integration
Backward Integration
Horizontal Integration
Related Diversification
Unrelated Diversification
IE Matrix
Total EFE
Score
High 3-4
Medium
2-2.99
Low 1-
1.99
Strong 3-4 Weak 1-1.99
Total IFE Score
Average 2-2.99
Media Networks
Parks and Resorts
Studio Entertainment
Consumer Products
Interactive media











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


Assumptions
Total Investment of 19.01 billion
Projected Income
Statement
Projected Balance Sheet
Assets
Project Balance
Sheet
Liabilities
Project Financial Ratios
Liquidity Ratios
Current Ratio 1.33 0.51
Quick Ratio 1.19 0.46
Leverage Ratios
Debt-to-Total Assets Ratio 1 0.86
Debt-to-equity Ratio 1.12 1.84
Long-term debt-to-equity Ratio 0.1 0.26
Times-Interest-earned Ratio -12.14 -12.14
Activity Ratios
Inventory Turns 28.44 40.39
Fixed Assets Turnover 1.11 1.11
Total Assets Turnover 0.57 0.62
Profitability Ratios
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%
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
Representatives
1. Employee Conditions Employee Satisfaction Biannually CEO
2. Career Opportunity Lower employee turnover Biannually CEO
Community / Socially
Responsible
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
Operations/Processes
1. Innovation Number of new products in each
segment
Number of renovated products in
each segment

Yearly CEO
Marketing Department
2. Brand expansion/ Accessibility Numbers of new resorts built

Yearly CEO

Financial
1. Reduce cost of production Decrease in cost of Parks, Resorts
and other property
Yearly CFO
2. Increase profitability Increase Sales
Reduce Expenses

Quarterly CFO
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.

Strategies
Build an indoor theme Park and Resort in New
York.
Improve advertising to promote
entertainment which target a more mature
audience.
Remove the Interactive Media Segment.
Remodel and build new attractions in every
Park and Resorts to stay appealing to our
customers.



Recommendations
In the next three years Walt Disney should..
Objectives
In the next year Walt Disney should
Improve advertising to promote
entertainment
Remove the Interactive Media Segment
Buy 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>