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Jericca D Pearson
Alexa van Bergen
Case Analysis:
Walt-Disney
3/31/15

Walt-Disney Case Analysis

1. What is Walt-Disney Company’s corporate strategy?

Walt-Disney’s corporate strategy is to create high family focused content. They want to
have better innovation of technology to make their entertainment experience more
memorable than others. Lastly, they want to expand more internationally.

The strength of the family brand industry is not just to be animation based but to
incorporate other things like media network, theme parks and resorts, studio
entertainment, consumer products, and interactive media. This allows Disney to be more
diverse. This is not just a children named brand, it’s for the whole family, and even adults
since they own ESPN.

By purchasing and owning ESPN it has changed the way people watch their source of
entertainment. You can now watch your services on your phone, computers, and tablets
through the internet. Not only can you do this for ESPN you can do it for the Disney
channel as well.

Disney created and chose to expand its markets by adding Pixar in 2006 and Marvel in
2009. Not only did they expand in through motion picture internationally, but they did so
by hotels and resorts, theme parks, cruise liners, television stations, music publishing, and
even books directed toward children. Other than United States they have targeted China
and Russia, and is available in 100 plus countries.

Disney strategy is to improve their core animation business with new skills and
characters. By broadening their target groups through other stations like ESPN, they
continue to be diverse and use that as one of their levels of strategy. This has proven to be
most successful strategy and continues to be a factor in both current and new markets.

2. What is your assessment of the long-term attractiveness of the industries represented in

the Walt Disney Company’s business portfolio?

Disney has a decently high long-term attractiveness business portfolio. Because Disney is
so diverse, they have attractiveness in multiple industries such as media networks, theme
parks and resorts, studio entertainment, consumer products, and interactive media. Every
one of Disney’s industries create quite a bit of revenue. The one that brings in the most
income is their media network. They own a lot of channels such as the Disney channel,
 Lifetime, History, and all of the ESPN channels. Media is not the only one that is com-
mon.

As we all know, Disney is well known for its amazing theme parks and resorts. These
items are in place and will never go away. I met people from Manchester, England who
were leaving to head toward Disney World. Its impact on other countries creates a desire
for all consumers worldwide. Because this a stationary business, this will never go away.
It makes too much revenue on a constant basis.

The consumer market relies on the production and success of the other markets. With the
healthy growth of movie entertainment, television shows, and theme parks, this allows
Disney to produce products that represent each of these three items.

The biggest threat in all of Disney’s industries is their interactive media. Interactive
media is their gaming, and online video animations. They are making the least amount of
money in that part of the industry. They have suffered losses each year between fiscal
year 2009-2011. This has gone up a little bit do to the production of Marvel.

The ranking would consist as (1) Media Network, (2) parks and Resorts, (3) consumer
Products, (4) Studio Entertainment, and lastly (5) Interactive Media. Each of these show a
continuation of the business in the long-term industry.

3. What is your assessment of the competitive strength of Walt Disney Company’s different
business units?

Competitive strengths of Disney is its different business units compared to other

companies in its market. The strengths involve: strong product portfolio (said above),
brand reputation, experience in achievements, and diversification in the business. Disney
has continually advanced over competitors by targeting their weaknesses and making
them their strengths. By using their corporate strategy, having a technological advance
over the industry has created separation. Most of their motion picture characters allows
their consumer products to increase their sales. Because of the even their interactive
media helps create fans because of the video games, themes, and plots. Because Walt
Disney holds the majority of the popularity, this creates differentiation and allows Disney
to be one of the strongest competitors in its industry.

Like the question above the ranking is the same, (1) Media Network, (2) parks and
Resorts, (3) Consumer Products, (4) Studio Entertainment, and lastly (5) Interactive
Media. Obviously the top two produce the most income and revenue for Walt-Disney.

4. What does a 9-cell industry attractiveness/ business strength matrix displaying Walt
Disney Company’s business units look like?
A 9-cell industry attractiveness business strength matrix shows which of Disney’s
business units should have priority.
Our 9-cell industry matrix is a three by three grid that explains the strength and
attractiveness that positions each business by its diversified company. Each bubble is
scaled to the percentage of revenues the business generates relative to total corporate
activeness scores. The best prospects for good overall performances involve
concentrating corporate resources on business units having the greatest competitive
strength and industry attractiveness. The left top of the grid shows the high priority for
resource allocations (blue), the medium priority for resources allocation (yellow), and the
low priority for resource allocation (pink).

In the Walt-Disney 9-cell index below shows that Media is the top performer and the
weakest performer is interactive media. Each of the three items in the blue show that they
are the most attractive and strongest competitor in the industry. This is where they should
invest all their focus and continue to allot all their time on. On the other hand, interactive
media should receive the lowest amount of priority, maybe even get rid of it all together.

8.55 7.40
6.85
6.75 2.85

8.55High7.40

6.50

6.45

Medium
Industry
Attractiveness
3.50Low

Strong Average Weak

Competitive Strength / Market Position

Studio Entertainment Parks and Resorts

Media Network Interactive Media

Customer Products
5. Does Walt Disney’s portfolio exhibit good strategic fit? What value chain match-ups do
you see? What opportunities for skills transfer, cost sharing, or brand sharing do you see?

They are really seem to be a good fit strategically for Disney. We believe that because of
Interactive Media being such a loss that it is a good thought process but not very
successful. There could be good that comes out Interactive Media if they continue to
figure out the competitors and the strategy in that industry. Another one they seem to be
doing about average in is Consumer Products. If it wasn’t for the Media Network and
parks and resorts they probably would be able to have those products.

Because Disney has such an influence in television media, they are able to advertise all
about their parks, studios, movies, and any other entertainment. The success of Disney in
each of the 5 industries will continue to build on their strengths. The leverage that Disney
has in branding is at an all-time high. This is where they are extremely successful. Costs
have dimensioned mostly because it has started so long ago. They continue to generate
returns in each element. Most of their costs came from the development of their
characters. Again going back to their strategy about technology they are gaining in that
department. Walt-Disney are behind in the status quo, but as long as they continue to
break down the barriers and continue to catch up, they will most likely take over their
competitors.

6. What is your assessment of Walt Disney Company’s financial and operating performance
in fiscal years 2010-2011? What is your assessment of the relative contribution of the
Disney SBUs to the financial strength of Disney, based on the 2011 fiscal year financial
data?

Compared to 2010, 2011 did quite a bit better. Walt-Disney increased its net income by 1
million and working capital increased by 400 thousand. The company even lowered their
debt-to-equity. Overall the company did pretty well compared to the previous year. The
biggest positive is they decreased their inventory turnover.

The media is the most important strategic strategy for parks and resorts. It is a huge
contributor to the overall income for that industry. If you continue to look at the
financials separating the industry the biggest problem of the SBU for Disney is
interactive media. The other one increase the SBU slightly in 2011 compared to 2010.

7. What actions do you recommend that Walt Disney Company’s management take to
improve the company and increase shareholder value? Your recommended actions must
be supported with a convincing, analysis-based argument.

Walt Disney needs to look at buying some of the competitors and look to expand by
purchasing properties that could potentially benefit and create future expansion. They
could use these properties and make mini versions of Disney World and Disney Land in
other areas, to compete with places like six flags. This would help if they did some of this
internationally. If they take this globally they can use these areas and create a tax
standard where they can continue to pay those countries and increase revenue.

They also could remove the interactive media segment in their plan. This is where they
are losing profit and have created a loss. This would eliminate that and could benefit the
other four industries by focusing more on them. It’s hurting the BSU and you can see in
the 9-cell industry comparison that it is the weakest.