Strategic Management

Project Report on Walt

Disney
Faculty: Prof. Brajaraj Mohanty
Section B, Group-12
Anupa Jose(UM15068)
Lipsa Sahoo(UM15090)
Purohit Aman Gajanan(UM15099)
Somya Ranjan Nayak(UM15112)

Tapas Ranjan Tripathy(UM15119)

Contents
1.

Executive Summary......................................................................................................... 3

2.

Entertainment and media industry...................................................................................4

3.

4.

2.1.

Market value.............................................................................................................. 4

2.2.

Market Forecast......................................................................................................... 4

2.3.

MARKET SEGMENTATION-.......................................................................................... 5

2.4.

Companies in the Industry......................................................................................... 6

2.5.

Strategic group mapping Of Top 3 Companies...........................................................7

2.6.

Market Indices........................................................................................................... 7

2.7.

KEY RATIOS................................................................................................................ 8

2.8.

Critical success factors of industry............................................................................8

2.9.

Vision......................................................................................................................... 9

2.10.

Five Forces Analysis............................................................................................... 9

2.11.

PESTEL analysis................................................................................................... 11

2.12.

Buying Criteria Analysis of the Industry...............................................................13

2.13.

Key trends and future developments...................................................................13

Company Overview........................................................................................................ 15
3.1.

Company Background............................................................................................. 15

3.2.

Timeline with Key Milestones...................................................................................16

3.3.

Vision and Mission Statements................................................................................17

3.4.

Key Product and Service Portfolio............................................................................18

3.5.

Core Competencies................................................................................................. 19

3.6.

Business Model of the organization.........................................................................20

3.7.

SWOT...................................................................................................................... 23

3.8.

Competitor Analysis................................................................................................24

3.8.1.

Based on key Financial Indicators.....................................................................24

3.8.2.

Based on Market Share of Each Separate Division............................................24

Future Growth Strategy for the organization..................................................................25

4.1.

Portfolio analysis of Disney......................................................................................25

4.2.

COMPANYS STRATEGIC ROADMAP FOR FUTURE......................................................27

4.3.

Product Market Investment Strategy.......................................................................30

4.4.

Use Case Based On SMAC and IOE..........................................................................30

1. Executive Summary
This study has been focused on analysis of Disney. It attempts to study the
evolution of the company. The major focus of the study is the change in its
strategy and the industry it operates in. An attempt has been made to
visualize the past scenario that had led to the development of the
entertainment and media sector as well as Disney.
In this report different analyzing tools and techniques are used to understand
and comprehend the various intricacies of the industry. These learning are
then applied to study the evolution of Disney and the various strategies it
used.
The Walt Disney Company, together with its subsidiaries, is a diversified
worldwide entertainment company with operations in four business
segments: Media Networks, Parks and Resorts, Studio Entertainment,
Consumer Products and Interactive.
On completion of analysis we have found that macro-economic factors along
with consumer behavior and technological know- how have been found out
to be crucial factors. Based on these critical factors key success parameters
have been identified. These parameters were found out to be instrumental in
the success and have helped in sustainable growth and development of the
company over the years.
Key observations

Changes in U.S., global, or regional economic conditions could have an

adverse effect on the profitability of some or all of businesses
Changes in public and consumer tastes and preferences for
entertainment and consumer products could reduce demand for
entertainment offerings and products and adversely affect the
profitability of businesses.
Changes in technology and in consumer consumption patterns may
affect demand for entertainment products
The success of businesses is highly dependent on the existence and
maintenance of intellectual property rights in the entertainment
products and services

Increased competitive pressures may reduce our revenues or increase

our costs

2. Entertainment and media industry

The movies & entertainment market includes both producers and distributors
of public entertainment formats, such as movies, music and sports. The
sports and movie box office sectors have been valued as the revenues
received by box offices from total annual admissions. The music and video
sectors have been valued using the retail selling price (RSP) of items, such as
DVDs, Blu-rays and CDs
The media industry consists of the advertising, broadcasting & cable TV,
publishing, and movies & entertainment markets.The advertising market
consists of agencies providing advertising including display advertising
services. The market value reflects the income of the agencies from such
services.
The broadcasting & cable TV market consists of all terrestrial, cable and
satellite broadcasters of digital and analog television programming. The
market is valued as the revenues generated by broadcasters through
advertising, licensing (or public donations) and subscriptions .The publishing
market is valued as the retail sale of books, newspapers, magazines and
subscriptions.

2.1. Market value

The global media industry grew by 2.2% in 2014 to reach a value of $962.4
billion. The compound annual growth rate of the industry in the period 2010
14 was 2.6%.

2.2. Market Forecast

In 2019, the global media industry is forecast to have a value of $1,148.3 billion, an
increase of 19.3% since 2014.The compound annual growth rate of the industry in
the period 201419 is predicted to be 3.6%.

2.3. MARKET SEGMENTATIONCategory segmentation

Broadcasting & cable TV is the largest segment of the global media industry,
accounting for 48% of the industry's total value. The Publishing segment
accounts for a further 32% of the industry
Global media industry category segmentation: % share, by value, 20102014

Geography segmentation
The United States accounts for 32.9% of the global media industry value. Europe
accounts for a further 29.8% of the global industry.

Stage in the
Industry Life cycle
Observing the CAGR of
the industry over the
period 2010-14 and the
expected CAGR through to
year, we can infer that the
industry is at a mature
stage.

2.4. Companies in the Industry

There are over 200 companies in the entertainment industry and the top seven companies control
the majority of the market.Walt Disney is the number one ranked company in the industry with
revenue growth of 10% in 2015. Acquisitions of Lucas films, Pixar and Marvel further excelled
Disneys market position and scope. The top seven companies ranked by revenues by Fortune
500 are: 1. Walt Disney 2. News Corp 3. Time Warner 4. CBS
5.Viacom 6. CC Media Holdings 7.Live Nation Entertainment

2.5. Strategic group mapping Of Top 3 Companies

The key buyers of

products are

individual consumers
retailers
marketing and
advertising customers
such as businesses and
governments

2.6. Market Indices

Key Financial Data

million($)
Revenues
Net income
Total assets
Total liabilities
Employees

2010
40,881.75
2173.625
77,916.10
46,073.68
45250

Industry average of top 4 firms

2011
2012
2013
40,485.73
39,350.08
41,677.60
1,994.90
1,395.28
4454.1
80,970.15
81,368.40
83,608.83
48,947.58
51,024.40
52,616.43
46750
50000
51500

2014
45,354.73
3,657.33
86,775.18
57,674.15
51400

million($)
Revenues
Net income
Total assets
Total liabilities
Employees

2010
40,881.75
2173.625
77,916.10
46,073.68
45250

Industry average of top 4 firms

2011
2012
2013
40,485.73
39,350.08
41,677.60
1,994.90
1,395.28
4454.1
80,970.15
81,368.40
83,608.83
48,947.58
51,024.40
52,616.43
46750
50000
51500

2014
45,354.73
3,657.33
86,775.18
57,674.15
51400

Industry average of top 4 firms

2011
2012
2013
0.07375
0.054
0.13325
-0.014
-0.009
0.0635
0.051
-0.00275
0.012
0.07225
0.02425
0.01225
0.57125
0.5895
0.5935
0.0345
0.0265
0.0685

2014
0.10475
0.074
0.03025
0.10675
0.63525
0.05625

2.7. KEY RATIOS

Ratio
Profit margin
Revenue growth
Asset growth
Liabilities growth
Debt/asset
Return on assets
Revenue per
employee
Profit per
employee

2010
0.06925
-0.01225
0.05075
0.03975
0.558
0.03575
273926.5

299195

274914.5

304626.5

334973.5

26790

30977.75

30755.75

39246.25

47791

Ratio
Profit margin
Revenue growth
Asset growth
Liabilities growth
Debt/asset
Return on assets
Revenue per
employee
Profit per employee

2010
10.40%
5.30%
9.60%
7.80%
45.80%
6.00%
$255,456
$26,597

Market leader
2011
2012
2013
11.80%
13.40%
14.70%
7.40%
3.40%
6.50%
4.20%
3.80%
8.50%
3.10%
0.80%
0.50%
45.30%
44.00%
40.70%
6.80%
7.70%
8.50%
$254,68
$262,135
7
$257,377
$30,814
$34,229
$37,920

2014
15.40%
8.40%
3.60%
8.80%
42.80%
9.10%
$271,183
$41,672

2.8. Critical success factors of industry

In order for a company to accomplish its mission and flourish, it is essential that it
excels in certain areas specific to its industry so as to stand out among its
competitors. In the entertainment industry competition is fierce. In order to outshine

its competitors, a company in the entertainment industry must strive to succeed at

any or all of the following key success factors.
Demographic Appeal
Demographics include age, gender, race, religion, education level, income, location,
and others. If a company appeals to a demographic, it means that the company
offers something that customers are attracted to. The pretense of satisfaction is
immediate because customers are already attracted to the idea and even the idea
is enticing; genuine satisfaction is almost imminent. The wider the demographic
appeal, the wider the probable satisfied customer base. Customer satisfaction is a
necessity in the entertainment industry because satisfied customers keep coming
back for more.
Breadth of Product Line/ Product Selection
The more diversified a company in the entertainment industry is, the more
opportunity the company has to reach and attract more customers. If a customer is
satisfied with a product/ service in one business segment, the company has an
opportunity to provide for that customers needs in its other business segments by
drawing on its previous success. Therefore, companies have further incentive to
provide great products/ services because the success of one is reflected upon others
under the same company name.
High Utilization of Fixed Assets
Fixed assets are those assets owned by a company that are not easily converted
into cash and are generally purchased with the intention of being held for an
extended period of time, usually more than one year. Most companies in the
entertainment industry have a significant amount of money wrapped up in their
fixed assets including buildings, land, studios, equipment, contracts with stars, and
attractions.
Technological Know-How
Improvements in technology are advancing rapidly and companies must strive to be
leaders in innovation and creativity in order to stay ahead of the competition.
Companies in the entertainment industry have to invest more money into research
and development to come out with innovative new processes, like 3Dimensional
filmmaking. The key to innovative success is to increase opportunities to collaborate
and attain secure deals with inventors of new technology before less ambitious
companies.
Foreign Market Expansion

The global frontier is rich with expansion opportunities for companies in the
entertainment industry. Along with expanding business enterprises, companies must
also be aware of the exchange rates, tax laws, and regulations that come with
operating in foreign countries.

2.9. Vision
For a company to succeed in any industry, it must have a clear vision of
where it sees itself or where it would like to be in the future. Vision provides
direction for a companys mission and acts as a foundation for building a
strategy for how to achieve that mission

2.10.

Five Forces Analysis

Buyer power

The typical size of buyers in the media industry ranges from individual
consumers to large corporations and governments; ergo the number of
customers is generally large right across the industry. Buyers tend to be price
sensitive when it comes to choosing pay-TV packages, or purchasing cinema.
The degree of differentiation across the media industry has a negative
impact on buyer power.
The hugely diverse range of services and products on offer to buyers results
in a decrease in buyer power.
Buyer power is assessed as moderate.
Supplier power

The supplier power of production companies typically depends upon the

quality of content, dictated by viewing figures, to make the product saleable.
The various suppliers vary in size and number depending on the specific
supply, and different suppliers exert varying degrees of strength
One overriding factor that most sectors of the media industry shares is how
indispensable suppliers are to players, as there are few if any substitutes
available although suppliers may well be indispensable to players due to a
lack of alternative inputs, suppliers are often heavily dependent on players
for their revenues
Overall, supplier power is assessed as moderate.
New entrants

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The success of broadcasters and cable TV companies is determined by

overall viewing and listening figures, with individual consumers incurring no
switching costs unless they opt to pay for subscription TV services such as
those provided by cable and satellite TV providers
A barrier to entry for new entrants would be the degree of regulation
With the advent of the internet new entrants have easy access to distribution
channels, equally their access to suppliers is unlikely to be restricted which
serves to entice new entrants. However the level of intellectual property in
the media industry is exceptionally high and is an entry barrier for new
entrants, as is the strength of existing brands.
Recent fairly weak global growth in the media industry is likely to be
unappealing to potential new entrants. Overall, the threat of new entrants is
moderate.
Threat of substitutes

Substitutes to the products and services offered by the media industry are
many due to the broad scope of the industry.
In terms of individual end users, one of the primary substitutes and the
largest threat in relation to broadcasting and cable TV, publishing, and boxoffice and entertainment companies, is online piracy.
There are also other free alternatives such as YouTube, Vimeo and music
streaming service.
Other forms of entertainment, such as PCs, video games, board games etc.,
also offer a substitute threat to the media industry. The effect is strong.
Degree of rivalry

There are a significant number of players in the media industry due to its
scope and the number of sectors it covers, which can serve to reduce rivalry
somewhat
A vast majority of media companies operate across differing sectors of the
media industry which serves to increase rivalry, although the similarity of
players dissipates rivalry

11

Recent fairly weak global growth in the media industry is unlikely to

exacerbate rivalry by much. The degree of rivalry is assessed as moderate
overall.

2.11.

PESTEL analysis

Political Factors
The political environment of a region is one of the essential features that have a
direct effect on the entertainment and amusement industry. When a region is
politically unstable, the different sectors of the country are adversely affected due
to it, including the entertainment and amusement industry. Any changes in the
political stability have a negative effect on the operations and revenue generated
by the organization. Another area that can have a negative impact on the
operations of organization is the international political and military environment.
Economic Factors
Entertainment industry has been negatively influenced due to the adverse
economic conditions. The income spent by the people on purchase of entertainment
related products and the consumption of amusement related services has declined.
This trend shows that the economic development is a favorable condition for an
organization, while economic turbulence carries negative implications for different
industries, including entertainment and amusement industry.
The exchange rate differences and the lower purchasing ability of the people is also
an economic factor that can result in a decline in the sales of the companys
products in the international market.

12

Social Factors
The companies in the industry need to identify the taste and preference of its target
market and deliver the products accordingly. The main theme that the company
upholds in the content it produces and the themes it illustrates across its parks
indicate how the social factors shape the way a company manages its content .

The changes in economic solidity affect the purchasing behavior of the

people and companies have faced lower income when economic pressures
propelled the people to curtail their expenses... The ratio of tourists as a
social factor also contributes in the development and growth of the
entertainment industry as companies are able to increase its earnings due to
the people visiting from an international context, thus reaching out beyond
the local customers.
Technological Factors
The technological factors have a strong effect on the development and growth of
the entertainment and amusement industry. The media entertainment industry
needs to quickly adapt to these alterations and integrate newer versions of
technology to produce content that meets the customer demand and at the same
time bring the target market with the high quality content... Another area that has
brought about significant changes in the technological area is the introduction of
social media as a means of reaching the target market. Walt-Disney has been using
social media tools such as Facebook and Twitter to connect with its customers and
provide the followers updates about companys products. Some of the key factors
are

Increasing popularity of 3D technology

Maturation of films in DVD format
Emergence of innovative platforms to consume entertainment products
Increasing integration of IT in various stages of film production
Technological breakthroughs in film production

Legal Factors
The entertainment industry is heavily regulated by the laws and regulations.
Another legal factor that can affect the entertainment industry is the copyright and
intellectual property regulations. The taxation framework implemented on the
industry further formulates a part of the legal factors in the macro-environment .
Environmental Factors

13

The industry has to respond to the pressures from the environmental

protection agency by taking initiatives in the domain of conservation of
energy and taking steps that make the products more eco-friendly in nature.

2.12.

Buying Criteria Analysis of the Industry

Parameter

Details

Cost

The cost of the entertainment services should be affordable.

Availability

There should be ample availability of the entertainment services

through Television, Internet etc.
Availability of consumer products through a good distribution
network is important.
Entertainment services provided by such as games should be
compatible with latest technology like the mobile devices.

Compatibili
ty
Quality

Security
Brand

2.13.

Quality of service provided should be high in parks and resorts.

Quality of content in television channels and movies also are
important.
Also computer games and animated movies should be good in
terms of graphics and effects
Security of customers, especially kids, in parksis very important
Brand includes brand loyalty and brand recollection. Higher
recollection and loyalty lead to higher credibility of the brand.

Key trends and future developments

Creative excellence
Each organization in media and entertainment industry continues to invest both
organically and inorganically to pursue creative excellence .
Use of advanced technology

As technology rapidly evolves, a new generation of consumers is quickly

embracing all it has to offer, and the industry is expected to provide original
and compelling content to meet this growing demand. Access to content on
mobile is the single largest technology that has impacted the industry and
benefited its consumers. Organizations in the industry should embrace this

14

technology and use it to increase the distribution of content digitally and on

other platforms.
Sequels to successful movies

Sequels are attractive to creators and to publishers because there is less risk
involved in returning to a story with known popularity rather than developing
new and untested characters and settings. Audiences are sometimes eager
for more stories about popular characters or settings, making the production
of sequels financially appealing.
Exploiting successful movie franchises

Companies are increasingly using their successful franchise are a source to

horizontally induct different products in their portfolio across different
sectors.
In this way companies are leveraging the success of their existing products
to market their new offerings.

15

3. Company Overview
3.1. Company Background
The Walt Disney Company, commonly known as Disney, is an American
diversified multinational mass media and
entertainment conglomerate headquartered at the Walt Disney
Studios in Burbank, California. It is the world's second largest media
business.Founded on October 16, 1923, as the Disney Brothers Cartoon
Studio by Walt Disney and BrotherRoy O. Disney.It has been able to make
itself a leader in the American animation industry before diversifying into
live-action film production, television, and theme parks. The company also
operated under the names The Walt Disney Studio, then Walt Disney
Productions. Taking on its current name in 1986, it expanded its existing
operations and also started divisions focused upon theater, radio, music,
publishing, and online media.
Disney creates, develops, produces, markets, and distributes content
through an unmatched breadth of media platforms. The company derives its
revenues from five operating segments.

Media Networks includes ESPN, ABC, Disney Channel, among others,

and generates sales from affiliate fees, ad sales, and the distribution of
television programs. Media Networks comprise an array of broadcast,
cable, radio, publishing and digital businesses across two divisions the
Disney/ABC Television Group and ESPN Inc.
Walt Disney Parks and Resorts (WDP&R) is a provider of family
travel and leisure experiences. Parks and Resorts operate the
companys internationally prominent theme park and resorts holdings,
such as Disneyworld, Disneyland, and a number of international sites.
The Walt Disney Studio brings movies, music and stage plays to
consumers throughout the world Studio Entertainment produces and
acquires films for international distribution through Walt Disney
Pictures, Pixar, Marvel, and Lucasfilm, among others.
Consumer Products licenses Disneys intellectual property to
retailers, promoters, and publishers around the globe, and also
includes the companys Disney Store brand.
Finally, Disney Interactive is a creator of interactive entertainment
across all current and emerging digital media platforms. Interactive
creates branded entertainment across media platforms and develops
online services. Disney Consumer Products (DCP) delivers product

16

experiences across thousands of categories from toys and apparel to

books and fine art.

3.2. Timeline with Key Milestones

1923 - Walt Disney signed a contract with M.J. Winkler to produce a series
of Alice Comedies, beginning the company under the name "Disney
Brothers Cartoon Studio", with brothers Walt and Roy Disney, as equal
partners.
1926 - "Disney Brothers Cartoon Studio" changes name to "The Walt
Disney Studio" shortly after moving into the new studio on Hyperion
Avenue in the Silver Lake district
1929 - On December 16, "The Walt Disney Studio" is replaced by "Walt
Disney Productions, Ltd". Three other companies, "Walt Disney
Enterprises", "Disney Film Recording Company", and "Liled Realty and
Investment Company", are also formed. These are the first steps taken for
diversification which later on become one of the core competencies of the
company.
1937- Walt Disney's first animated film Snow White and the Seven
Dwarfs is released.
1938 - On September 29, "Walt Disney Enterprises", "Disney Film
Recording Company", and "Liled Realty and Investment Company" and
"Walt Disney Productions, Ltd." are merged to form "Walt Disney
Productions".
1940 Company goes public and moves to Burbank, California
1954 - The studio ends its distribution deal with RKO Radio Pictures and
founds "Buena Vista Film Distribution Company, Inc." to distribute its
feature films.
1967 - Construction begins on Walt Disney World Resort near Orlando,
Florida; the underlying governmental structure, called the Reedy Creek
Improvement District, is signed into law. Starts the era of catering to
family holidays and leisure.
1971 - Don Tatum becomes chairman and Card Walker becomes president
after the death of Roy Oliver Disney.
1984 - The Touchstone Films label is created to produce films aimed
towards more mature audiences.
1993 - Disney acquires independent film distributor Miramax Films.

17

1996 - The company takes on the name of "Disney Enterprises, Inc." and
acquires the Capital Cities/ABC group renaming it ABC, Inc., both under a
new "The Walt Disney Company"
2003 - Roy E. Disney resigns as the chairman of Feature Animation and
from the board of directors, citing similar reasons to those that drove him
off 26 years earlier. Fellow director Stanley Gold resigns with him. They
establish a group called "Save Disney" to apply public pressure to oust
Michael Eisner.
2005 Robert Bob Iger is appointed the new CEO.
2009 Acquires Marvel Entertainment and its properties. Gets the rights
for multiple comic character and their film and television adaptations.
2012 Acquires LucasFilm for US $4.06 Billion.

3.3. Vision and Mission Statements

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.
Walt Disney Company Mission Statement
The Walt Disney Companys Mission Statement is one likely reason for the
companys success. An effective mission statement defines a companys
current business plan, and the Disney Companys Mission Statement
accomplishes that purpose:
The Mission of the Walt Disney Company is to be one of the worlds 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
In other words, Disney combines research, client culture and preferences,
and expertise to assure that the company fulfills the Disney Mission
Statement, a statement that defines the Disney Companys plan for today.
The Walt Disney Vision

18

The Walt Disney Company Vision Statement meets the criteria of an effective
vision statement: To make people happy. This statement is broad, but
not too broad, and represents the overall goal and global direction of the
business.
Values and Ethics
The values and ethics of the Walt Disney Company are an essential element
of the companys culture. The essential components of the Disney culture are
included here.
First is innovation. The company is committed to continued innovation and
technology, just as it was when Disneys Mickey Mouse was one of the first
cartoon presentations to have sound.
Next, the Disney Company strives toward setting a high standard of
excellence and maintaining that high standard.
Third, the Disney Company is committed to positive, inclusive ideas about
family, which provide enjoyment for all ages.
Finally, the Disney Company continues a tradition of timeless storytelling
that delights and inspires.

19

3.4. Key Product and Service Portfolio

Some of the major brands under the Disney umbrella are:

Buena Vista Home Video

Buena Vista International
Buena Vista Pictures
Distribution, Inc.
Buena Vista Television
Childcraft Educational Corp.
The Disney Channel
Disney Consumer Products
International, Inc.

The Disney Store, Inc.

EDL Holding Co.
Euro Disney S.C.A.
KHJ-TV, Inc.
Lake Buena Vista Communities
Reedy Creek Energy Services,
Inc.
Walt Disney Imagineering
Walt Disney Pictures and
Television

20

3.5. Core Competencies

Walt Disney once noted: I only hope that we dont lose sight of one
thing that it was all started by a mouse. Walt Disneys original core
competence was cartoons and animated movies. By combining
Imagineering with engineering Disneys company reached unparalleled
success with the creation of the first full length animated movie. This
success led to new ideas and one of them was to open a park, a
different kind of park. In Disneyland Walt used new technology to bring
his characters to life. He called them Animatronics. With unique
storytelling and high quality of service Walt Disney created a magical
environment for his guests which none of the competitors could quite
duplicate. It became Walt Disneys core competency.

This competency is driven by superior Disney products and most

of all by cast members and their renowned guest service. Its always
been a challenge to keep up with high expectations of the guests. To
continue to improve its business Disney has set up new cast member
standards in the form of the Basics. The new standards expect cast
members to create and reinforce magical experience for the guests by
being approachable, engaging, and willing to go above and beyond.

As the company developed, many new lines of businesses have

been added such as retail, media, and sports. Over diversification and
loosing track of what the company does best has always posed a
challenged over the century. In order to stay competitive the company
had to realign and shifted attention from retail to those which are the
cornerstone of the company Intellectual Property. To reinforce its
animation business and reaffirm animation as its core competency,
Disney purchased Pixar in 2006. With Pixar, Disney is now further on
the technology curve and can exploit some synergies in marketing,
production, and distribution. In 2009 Disney purchased another
company, Marvel. This move further enhances Disneys
competitiveness and extended the collection of its characters. This was
followed by another high stake acquisition of LucasFilm in 2012.

One of the most important attribute of the company is

diversification. Disneys largest sales revenue is from media sold
outside the US. So every time the company tries to acquire a new

21

business, it is not only for the North American customers, but for
customers in all the geographies it

Each and everything done by the company, carry attributes of

quality and best in line service. Even though there have been
numerous challenges, it continues to grow leaning heavily on what the
company does best.

3.6. Business Model of the organization

Building revenues by exploiting original content across platforms

Today, Disney operates under a reinvention of the companys original

model that worked to increase revenues by repeatedly exploiting its
innovative content across multiple platforms.

This model encompasses all five of Disneys business segments

Media Networks, Parks and Resorts, Studio Entertainment, Consumer
Products, and Interactive Media business segments, and can be easily
illustrated by following the myriad ways Disney injects original content
into the public sphere through film or television and then uses
technology, marketing, and sociological trends to capitalize on its
innovation.

Strategic differentiation

Disney continues to differentiate itself as a classic entertainment

company built on tradition with a clear vision of the future.

This strategy is one that Porter recommends as profitable for a

company facing competition, and is enhanced by the companys
continued partnerships with digital technology leaders such as Apple,
Facebook, Hulu (of which it is part owner), and Sprint and desire to
sustain expansion in high-growth international markets like China,
India, and Latin America.

Key
Partners

Key
Activities

Other movie companies

Pixar and other acquired
companies
Digital technology leaders like
Apple, Facebook
Advertisers
Movie production and distribution
Marketing and brand

Motivations for partnersh

Optimization and economy
Reduction of risk and uncerta
Acquisition of resources and

Categories
Production

22

Value
Proposition
s

Customer
Relationshi
ps

management
Touristic activities: Parks and
Resorts

Great experience and collection

in cartoons creation
Diversity in offers
Provides a whole entertaining
world

Key
Resources

Association with actors or stars

Attractive offers for people who
stay longer in parks
Pins hunt for kids
Ethical messages through their
products
Animated films are mainly for
kids
Parks are for families
Media networks provide service
to mass market
Talented designers and artists
Brands

Channels

Parks and resorts

Web
Television
Merchandise

Customer
Segments

Problem Solving
Platform/Network

Mass Market
Segmented
Diversified

Types of resources
Physical: parks, resorts etc.
Intellectual (brand patents, c
Human
Financial
Channel phases
1. Awareness: Disney is a big
recollection. Moreover, it exp
platforms
2. Evaluation
3. Purchase
Consumers enjoy entertainm
Television, Internet etc. Availa
products through a good dist
important.
4. Delivery
Delivery of services should b
5. After sales

Characteristics
Newness
Performance
Customization
Design
Brand/Status
Price
Cost Reduction

23

Cost
Structure

Revenue
Streams

Salaries to employees
Right payments
Design
Infrastructure
Film production

Movie revenue (sales in theatre,

DVD etc.)
Advertising on media networks
Parks entrances

Disney is more Value Driven

creation, premium value prop

Types
Usage fee
Subscription Fees
Licensing
Advertising
Fixed pricing
List Price
Product feature dependent
Customer segment
dependent
Volume dependent

24

3.7. SWOT

Strengths

1. Strong product portfolio

2. Brand reputation

25

3. Competency in acquisitions
4. Diversified businesses
5. Localization of products
6. Content Integration:
7. Cash Surplus

Weaknesses

1. Heavy dependence on income from North America

2. Few opportunities for significant growth through acquisitions
3. Broadcasting Trends
4. High Cost of Doing Business

Opportunities

1. Growth of paid TV industries in emerging economies

2. Expansion of movie production to new countries
3. International

Threats

1. Intense competition
2. Increasing piracy
3.

Digital Alternatives

26

3.8. Competitor Analysis

3.8.1.Based on key Financial
W
a
l

t
D
i
s
n
e

$
4
.
9
EPS
0
0

.
3
D/E ratio
3
0
Gross

.
Profit
4
Margin
6
0

Operating
.
Profit
2
Margin
3
0

.
Net Profit
1
Margin
5

Indicators

C
o
m
c
a
s
t
$
3
.
1
9
0
.
9
2
0
.
7
0
.
2
2
0
.
1
2

Time
Warner
Cable
Inc

$ 6.69

2.96

0.43

Tim
e
War
ner
INC

21st
Cen
tury
Fox

$ 4.4
1

$ 3.7
2

0.92

1.09

0.4

0.36

0.2

0.22

0.17

0.089

0.14

0.15

27

3.8.2.Based on Market Share of Each Separate Division

28

4. Future Growth Strategy for the organization

4.1. Portfolio analysis of Disney
Portfolio Analysis being a way of analyzing the products and services
offered constituting a business profile, the analysis of Walt Disney
showcases a varied and vivid association of all the existing and fast
growing services and products.

The offerings of Walt Disney are:

The revenue generated in past years and present year gives the idea
about the demand, popularity and sustainability of the SBUs of Walt
Disney. Following illustrations show the revenue generated in various
timeline categorized on the basis of operating segments.

Revenue of the Walt Disney Company in the fiscal year 2015,

by operating segment (in billion U.S. dollars)

29

Walt Disney Company's revenue from 1st quarter 2010 to 1st

quarter 2016* (in billion U.S. dollars)

BCG matrix of Walt Disney:

30

Parks & Resorts

Studio Entertainment
Consumer Products
Interactive Media

Media Networks

31

MEDIA NETWORKS: This segment includes Disneys varied cable

networks such as ABC, Disney Channels and stakes in A+E network
and ESPN. Also known as ABC Television group, the groups portfolio
comprises of - ABC Television Network ABC Owned Television
o Stations Group, ABC Studios, Disney Channels Worldwide, ABC
Family, SOAPnet, Disney
o ABC Domestic Television, Disney Media Distribution, Hyperion
and Radio Disney Network. The most popular and highest
revenue generating operating segment of Walt Disney, the media
networks occupies the maximum market share.
PARKS &RESORTS: Worlds most visited theme park company, hosts
approximately 100 million of guests every year and is the second
highest revenue generating operation segment of the company.
STUDIO ENTERTAINMENT: This segment accounts for all movie
released by Walt Disney Animation, Lucasfilm, Touchstone Pictures,
DreamWorks Pictures, Marvel Studios and Pixar and provides a steady
mode of earnings every fiscal year.
CONSUMER PRODUCTS: It is the merchandising SBU responsible for
all themed textiles, apparel and luxury goods which earned
$7,278,000,000 dollars in the fiscal year 2015. This segment is placed
in cash cows as the items are in moderate demand throughout the
year.
INTERACTIVE ITEMS: Disneys fastest growing SBU with online and
mobile games and entertainment has proven to be the dark horse in
the market with its penetrative power and potential market growth
accounting it to be the question mark in the BCG matrix.

4.2. COMPANYS STRATEGIC ROADMAP FOR FUTURE

The strategic roadmap for Disney is quite vital and essential as it is the
leading market player in various entertainment segments; therefore,
for retaining the market position and maintaining a constant growth
rate the strategy should be well defined. The strategy can be
categorized and analyzed under the following headings:

Short Term Strategy of Disney:

GROWTH AREAS: In short term basis, Walt Disney has to specifically concentrate
on three key areas viz. Media Networks, Parks and resorts and being
technologically enriched.

Media Networks: - Media networks are the largest and most

profitable segment of Disney with ESPN being at the top of
revenue generation. Therefore, growth in this sector can be
catalyzed through proper anticipation in securing live
broadcasting rights which can turn out to be powerful than
expected in terms of growth.
Parks and Resorts:- The most preferred theme parks by
maximum families in the world has got a potential growth
option in their upcoming park at Shanghai which is scheduled
to open in June 16 expecting around 25 million guests in the
year.
Technological Enrichment: - Interactive segment is upcoming
profitable segment of Disney with its online games and
gadgets which is powered by a small company acquired by
the organization.

HIGH LEVEL TASKS: In short term basis, Walt Disney has to specifically concentrate on
three key areas viz. Media Networks, Studio segment, Parks and resorts
and being technologically enriched.
Media Networks: - The cost of securing live broadcasting rights has
become a costly affair and the margin of profit is decreasing
considerably, so, retaining the profitability and earnings through
this segment has become essential by cord cutting techniques as
44% of profit is contributed through media networks.
Studio Segment: - Disney is planning to release 24 movies in 24
months which is a quite demanding proposition and risky too for
maintaining the brand value.
Parks and Resorts: - Themed parks have been nearly profitable
segment like media networks hence opening of branches of parks
and exotic resorts in potential nations has become the next
essential upcoming task of Disney.
Technological Enrichment: - The youth and juveniles who form the
major customer base of Disney have developed a great liking
towards online games and gadgets thus requiring continuous
innovation and creativity.

POTENTIAL BENEFITS TO BE ACHIEVED

Media Networks: - Acquiring the major broadcasting and media

network in the global market.

Parks and Resorts: - Increasing the reach and presence of the

theme parks across the globe.
Studio Segment: - Being the preferred banner for launch of movies.
Technological Enrichment: - Upgrading a segment from question
mark to star.

REWARDS

RISKS

Showcasing versatility and being the leading player across the

segments. Disney would become the most preferred syllable in the
entertainment industry with its reach to every alternate household.

Media Networks:- Media networks is the largest and most profitable

segment of Disney and now requires leveraging options in this
competitive market through cord-cutting schemes which may
reduce the profitability of the segment.
Parks and Resorts: - Maintaining the standards and attracting huge
number of footfall throughout the season.

KEY SUCCESS FACTORS: Media Networks: - Being the largest sports network, the
entertainment network and versatile in the zone of offerings of
entertainment.
Parks and Resorts: - The exotic and luxury theme park pioneer by
being a trusted face of the industrial segment and attracting huge
number of potential and loyal customers.
Technological Enrichment: - Leveraging the intellect base for
continuous innovation and creativity to become the one stop
solution for entertainment industry.

Long term strategy of Disney

The long term strategy is basically creating trust and credibility of brand and
be the pioneer in the entertainment by:

Tangible Corporate Strategy,

High-return Acquisitions without superior stock-picking skills.

Also, according to Disney International website, for the past few years, their
main focus has been establishing the foundations for long-term growth in
the emerging markets of Latin America, Russia, India and China. (Walt
Disney International, 2009). Such business propositions have mainly been
because of the economic growth and development of the country and

consequently increase in the purchasing power of the population. It has also

renewed and revisited their focus in certain nations to serve the customers
better and incorporate more local values in the service.

4.3. Product Market Investment Strategy

Co
unt
ry
of
Inv
est
me
nt

Cat
ego
ry
Of
Inv
est
me
nt

Industry Pros

Cal
ifor
nia
,
US
(Lu
cas
fil
m)

Film
And
Tele
visi
on

Lucas Film
Valued at $4.06
Billion. Lucas
decided to retire
and sell of
franchise of Star
Wars and Disney
acquired it.

Pro
du
ct
Ma
rke
t
Inv
est
me
nt
Str
ate
gy
Sta
r
war
s
and
Indi
an
Jon
es

Investment
Rationale

To include
the more
characters
into Disney
portfolio and
theme parks

Em
ery
vill
e
US
(Pi
xar
)

Co
mpu
ter
Ani
mat
ion
Film
Stu
dio

Pixar Bought by
Disney in year
$7.04 Billion.
Pixar computer
graphics and
rendering and
Disneys
distribution and
marketing arm

Ne
w
Yor
k
(M
arv
el)

Co
mic
s
Boo
ks

For $4.2 Billion

marvel was
acquired it gave
rights of super
heroes like
Spider Man, Iron
Man And Many
More.

Co
mp
ute
r
Ge
ner
ate
d
Ani
ma
tion
Me
dia
An
d
Co
mic
s

Disney film
division will
get the
studio facility
it helped
them to
consolidate

Super hero
Characters

4.4. Use Case Based On SMAC and IOE

Social networking

Social data means what they like on Twitter, Facebook and LinkedIn to
see through their timelines. What they talk about? What they are
interested in? What they are looking forward to? If we look into these
we can revisit our customers and potential new customers. Facebook
has a billion users, Twitter has a millions and LinkedIn is the
professional networking site. These social networks will monetize
content through ads or indirectly. We have to bank on these currently.
As a Disney we collect information whenever someone visits or parks
so those data are vital. Even linking up with Netflix is a game changer
in a sense TV is rapidly replaced with Net Tubes so keep presence felt
there.

Mobile devices

Mobile has replaced the new business. How innovation is taking place.
Mobile Internet 24*7 is so important that mobile operators are not
leaving any stone unturned. It makes users to instantly Instagram,
Update their profile, getting the coupons and deals, and locate our
consumer taste choice and preferences.

Apple Pay allows Apple and credit card companies and vendors to get
the location, time and date, identity. Then available balance, type of
phone, sequence of purchases, even average battery charge and more
could be verified and used for promotional strategies.

This data from mobile can be used to include more users and enrich
experience. The wallet of Disney would help in making the set up.

Analytics programs

The data have grown larger and processors become faster it in turn
processes these data and makes millions of report. The important
aspect is human intervention to talk through data and plan business
model in accordance to it. Analytics helps in linking the entities and
make predictions easier.

With advent of Business Intelligence now graph speak more, not just
relate rows and tables, but to relate entities with one another. For
example if a customer wants to buy a specific book or subscribe a
movie (in the case of Netflix). The big data is not just a phrase it
impacts the business.

Cloud computing

The cloud refers to the capability of a business to shift the data from
data warehouse to a virtual space. You simply need to rent it from a
cloud provider, do your work and then turn it off. Microsofts Hadoop
and Azure are available for data scientists to sink into the data and
suggest comparisons, predictions and key points. Amazon and Google
are getting these specialized data services. Any of these services lets
you scale up and down your capacity and computing power.

Internet of Thing

Disney launched and distributed 10 million Magicbands. It might not

look as sophisticated as some of the smart watches and other
wearable out there. The magic is not in the band, but in the connection
to the theme park infrastructure and what it allows guests to do. Earlier
most of the day is spent in line, or else making choices between where
to go, what to eat, etc. That is part of what Disney wants to change,
and connected technology is helping that change. The journey starts

much ahead of the real visit to the theme park it tracks your choices
heart beat and moments.

Once you reach theme park it makes your entry hassle free, selects
your rides, no need for waiting in line the food in restaurant of your
choice and automatically coming to your table everything is just high
tech and easier. Even helps you to capture your candid moments to
make a short film. The user experience is completely changed. Simply
connecting to high dense information network it has changed the
experience. Similarly with help of Netflix the Disney channels are also
inventing shows and character to reach the last audience in the world.

Iota protocol software for wireless connectivity will enable toys to

interoperate with other toys and smart objects around them. It will
enhance the toy experience and make world of toys lucrative and more
interactive. It gives wings to toddler and the kids to utilize the
experience and retain our customers.

Capitalize on the value of data:

Finalize the data to use and to share with partners those are required.
It establishes interoperability and security. But it also requires new
financial models that support pay-per-use and other service-based
offerings, while appropriately apportioning the rewards of using shared
data.

Prepare for the future of work:

Move to decentralized working environments as for better access to
data devolves decision-making to workers on the front line. As we are
into service industry the continuous feedback to improvise and
innovate through synergy.