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Case: Walt Disney

Company, 2013

Strategic Management
MBA 704
FEU-Manila

Submitted by:
MA. THERESA M. MAMAUAG

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I. CASE BACKGROUND
The Walt Disney Corporation is the top-most diversified entertainment company

with a profile recognizable across the globe due to its influence in the industry. The

company has earned itself a name by not only maintaining but also constantly improving

its brand while stimulating progressive transformations in the entertainment and mass

media industry. Headquartered in Burbank, California, Walt Disney company (Disney)

and its subsidiaries compete in the entertainment and media broadcasting industry

worldwide. Serving customers for nearly 100 years, Disney is a diversified conglomerate,

owning ABC, ESPN, theme parks, cruise lines, and more. Disney provides segment

revenue and operating income for each of their five SBUs such as (1) media networks, (2)

parks and resorts, (3) studio entertainment, (4) consumer products, and (5) interactive

media. Media networks is the largest Disney SBU in both revenues and operating

income, accounting for 45 percent of all revenues in 2012. Disney’s studio entertainment

revenues for 2012 decreased 8 percent to $5.8 billion and segment operating income

increased 17 percent to $722 million. Interactive media revenues for 2012 decreased 14

percent to $845 million and operating income incurred a loss of $216 million.Disney

competes directly with NBC Universal, Paramount Pictures, Time Warner, CBS corp.,

News corp., Carnival Corp., and Royal Caribbean and indirectly with all family

entertainment oriented businesses globally.

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II. PROPOSED VISION AND MISSION STATEMENT

Vision Statement

“The Walt Disney Company aims to be the world’s leading international

entertainment and media enterprise bringing happiness in every home”

Mission Statement

“The Walt Disney Company is committed to produce entertainment experiences

through creative contents, services and products to its customers. We excel in being a

diversified, international family entertainment and media business. We endeavor to

maximize our earnings to deliver success and growth that will benefit our shareholder

value for long term.”

III. IFE MATRIX

Weighted
Key Internal Factors Weight Rating
Score
Strengths      
1.      Strong brand name and reputation  0.15  4  0.60
2.      Diversified business  0.17  4  0.68
3.      Competency in acquisitions  0.08  4  0.32
4.      Strong product portfolio  0.10  4  0.40
5.      Strong financial performance  0.05  3  0.15
6.      World’s largest licensor of character-based merchandise, producer
and distributor of children’s film-related products  0.04  3  0.12
Weakness      
1.      Poor results of the studio entertainment segment  0.15  1  0.15
2.      Decreased revenue in interactive media  0.13  1  0.13
3.      Increased operational and production costs  0.08  2  0.16
4.      Low Disney Channel viewership  0.05  2  0.10
Total 1.00    2.81

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IV. EFE MATRIX

Weighted
Key External Factors Weight Rating
Score
Opportunities      
1.      Growth of entertainment industry  0.15  4  0.60
2.      Growth of developing markets  0.13  4  0.52
3.      Technology advancement  0.10  4  0.40
4.      Strong growth of online TV application and online movie rental  0.05  2  0.10
5.      Increased number of online users  0.07  2  0.14
Threats      
1.      High competition  0.15  4  0.60
2.      Rapid changes of trends in the consumer behavior  0.12  4  0.48
3.      Rising labor cost in various countries  0.03  1  0.03
4.      Economic fluctuations  0.07  1  0.07
5.      Regulatory pressures  0.05  1  0.05
6.      Increasing piracy of products and contents  0.08  3  0.24
Total      3.23

V. SWOT MATRIX
SO Strategy WO Strategy
1. Extend Disney’s products and contents to 1. Develop a Disney’s online streaming service.
developing countries. (S1, S2, S4, S6, O1, O2) (W1, W4, O3, O4, O5)

ST Strategy WT Strategy
1. Focus in advertising products for studio
1. Diversify into new product categories. (S2, S5, entertainment and interactive media. (W1, W2,
T1, T2, T6) W4, T1, T2, T6)
2. Acquire competitors in entertainment industry.  2. Cut operational and production costs for
(S3, T1, T2, T6) movie production. (W1, T3, T4, T5)

Suggested Strategies:
 Extend Disney’s products and contents to developing countries Advantages
1. Increase in number of customers.
2. Increase in sales.
3. Increased Visibility for the brand.

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Disadvantages
1. Need to comply with each country's rules regarding products imported from other
countries.
2. Need to customize your product or service to each culture.
3. Need to invest a huge amount of money.
4. Products may not be patronized due to high prices.

 Diversify into new product categories

Advantages
1. Respond to customer changing needs.
2. Create a culture of innovation in your company.
3. Dilution of competitor’s advantage and enable The Walt Disney Company to
increase its competitiveness.
4. Provides a great opportunity for the organization to build new revenue streams.
Disadvantages
1. Very costly and time consuming.
2. Businesses risk ruining reputation if new products or contents did not meet the
customers demand.
3. Inability to respond quickly to market changes.

 Acquire competitors in entertainment industry

Advantages
1. Create economies of scales.
2. Increase the market share of the company.
3. Can broaden the target customers.
Disadvantages
1. Run the risk of being redundant.
2. Culture and values that the other company established may clash with the culture
and values of your existing business
3. May have distinct objectives.

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 Develop a Disney’s online streaming service.

Advantages
1. Wider customer reach.
2. Increase customer satisfaction.
3. Increase the business’ competitive advantage among competitors.
4. May offer lower prices and larger collection of Walt Disney contents.
5. Contents will be accessible anytime and anywhere.
6. Increase in revenues.
Disadvantages
1. Need to invest a huge amount of money.
2. Very time consuming.

 Focus in advertising products for studio entertainment and interactive media

Advantages
1. Increase sales for studio entertainment and interactive media products.
2. May reach customers at different times.
3. Provides awareness about the products to large audience.
Disadvantages
1. Can be highly expensive.
2. Possibility of people sharing dislike of ads.

 Cut operational and production costs for movie production

Advantages
1. The baseline of cost reduction increases in profit margins.
2. Cost reduction helps in lessening the expenses and burdens of the company.
3. Helps in improving standards of the processes.
Disadvantages
1. Can be harmful at times and cause additional losses instead of profits and
improvement.
2. The quality of the product may be sacrificed.

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VI. PROJECTED BUDGET PLAN
Chosen Strategy: Develop a Disney’s online streaming service.

R&D $5,000
Ideation  
Research  
Planning  
Information Technology $10,000
Database System  
Other Operating Expenses $2,500
Advertisement $1,000
News Paper  
Magazines and Publications  
Direct Mail  
TV Commercials  
Internet Advertising  
Product Placements  
Social Networking Sites  
Distribution $3,000
  $21,500

VII. ACTION PLAN

Responsible Person/s, or
Action Plan Department/s, Team/s, Timeline
etc
Ideation of New Product R&D Day 1-60
Research and Conceptualization R&D Day 61-90
Validation and Consumer Interaction R&D Day 91-150
Product Development Operations Department Day 151 - 331
Product Scaling Operations Department Day 332 - 422
Inspection and Qualification Operations Department Day 422 - 483
Marketing Department
Launching of New Products and Product Management Day 484 - 545

VIII. CONCLUSION

The Walt Disney Company is one of the most successful companies in the world
having divisions in theater, radio, music, publishing, and online media, etc. Over the

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years, Disney developed a strong financial performance through its five SBUs and proven
its capacity to acquire other businesses, especially its competitors. Using its portfolio of
brands, the firm continually generate high revenues and is able to compete aggressively
with its competitors. Thus, to constantly be gain effective strategic management, the firm
can utilize its resources, capacities and necessary factors for Market Penetration, Market
Development and Product Development.

IX. RECOMMENDATION
The Walt Disney Company is well-known for producing popular and box-office
of entertainment contents and information. With that, other entertainment and media
company get license from the firm to publish its films through their channels. Hence, it is
recommended for Disney to develop its own online streaming service to extend its
contents to the online users. This online streaming database will house all the firm’s
contents to gain competitive advantage over its products. It can revoke the license of the
competitors over its content to lessen the competition. This service will allow the
customers to watch commercial free Disney contents anytime and anywhere. The firm
can develop different type of subscription fee and apply necessary prices for the pay-per-
view services.

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