Strategic Management

About The Walt Disney Company

The Walt Disney Company , commonly referred to

as Disney, is an American multinational media

conglomerate headquartered in Walt Disney Studio, Burbank, California, United States. Founded on October 16, 1923, by Walt and Roy Disney as the Disney Brothers Cartoon Studio, Walt Disney Productions established itself as a leader in the American animation industry before diversifying into live-action film production, television, and travel. It expanded its existing operations and also started

divisions focused upon theatre, radio, music, publishing,

and online media, it is now increasingly catering to the needs of more mature audience.

Business Segments of Walt Disney

Media Networks

Parks and Resorts

Consumer Products Interactive Media

 Vision: To make people happy. Mission: The Walt Disney is committed to balancing environmental stewardship with its corporate goals and operations throughout the world. Strategies Selling more to existing customers Expanding its market Continuous promotion Increased value offering Tracking business

Competition and Market Share of Disney

AOL Time Warner (#1, Media Entertainment Conglomerate) Viacom (#3, Media Entertainment Conglomerate)

Six Flags (regional theme park operator).

Fox Entertainment Group Inc (multi-faceted entertainment company)

Sony Entertainment Pictures

Walt Disney Imagineering

It is the design and development arm of the Walt Disney

Company, responsible for the creation and construction

of Disney theme parks worldwide. It was initially WED Imagineering is responsible for designing and building Disney

theme parks, resorts, cruise ships, and other entertainment

venues at all levels of project development. Imagineers possess a broad range of skills and talents, and thus over 140 different job titles fall under the banner of Imagineering, including illustrators, architects, engineers, lighting designers, show writers, graphic designers, and many more.

Porters 5 forces analysis

Threat of new entrants:High Due to entry barriers like economies of scale,product differentiation, capital requirement, government policies Intensity of rivalry among competitors:High Powerful competitors,slackened industry growth Bargaining power of Buyers:High Changing prefernces and taste of buyer Bargaining power of Suppliers High, differentiated product, Importance of product to the firm Threat of substitute to the product

Strengths
Work Culture Brand equity Famous characters Strong control over younger age groups Ability to stay diversified Ability to adapt to change

Weakness
Sunk costs Maintenance cost Inability to increase its internet presence Stigma of a kid brand Recent box office failures

Industry Trends
Video-On-Demand After the dot-com boom, programming was a critical driving force in the entertainment industry. In recent years, entertainment has taken on new forms in order to keep up with consumer preferences and unveiled new and effective forms of business development and advertising. One such example is Video-On-Demand or VOD, which changes the way content is delivered to and accessed by consumers. A step beyond pay-per-view, VOD allows an individual to view whatever he or she wants at the exact time desired. As digital subscriber packages become more technologically accessible and reliable, the appeal and benefits of VOD grow proportionally. In a sense, VOD is interactive multimedia that gives viewers complete control over what they watch, thereby changing program creation, advertising, and public media. Hollywood & Big Business Many experts will say that content is key in Hollywood. However, content is often driven by hits and is cyclical in nature. For this reason, movie studios are in need of steady cash flow and they look to corporate sponsorship. Magazine and television industries have relied on corporate sponsors for years, and the film and music industries are catching up to the trend, which began in the mid-1980s when the Creative Artists Agency signed Coca-Cola as a corporate sponsor. For Coca-Cola, Creative Artists Agency performed various marketing and advertising services, as well as access to celebrities and spokespeople, which led to increasing brand recognition and endorsements. This relationship resulted in a winning situation for both parties and became a precursor for future relationships between businesses and the entertainment industry. Growth of Video Games Improvements in technology have led to unique advancements in video games. The multi-billion dollar video game industry has been regarded as the fastest growing industry in the entertainment world. Several companies are developing relationships with studios whereby video games lead to blockbuster movie hits such as Max Payne and Hitman. The effects of this industry are far reaching and closely tied to advertising, marketing, technology, engineering, programming, and other fields. The Rise of Special Effects Another recent trend in the entertainment industry, and particularly in the movie industry, has to do with special effects. Many movies, as well as other forms of media, are incorporating new and appealing special effects. This gives rise to companies such as Pixar, LucasFilm Industrial Light and Magic, Silicon Graphics and others. Movies such as Harry Potter and Lord of the Rings utilize new technologies and continue to bear more and more special effects. This proves that the divide between creativity and engineering is constantly being decreased by the entertainment industry.

Entertainment and Globalization Another trend that is changing social and economic landscapes alike is the globalization of the entertainment industry. Everything from movies to music is spreading across the world with blinding speed. American movies are dubbed in dozens of foreign languages and American pop music is being listened to by millions of people all across the world. Television shows from channels such as MTV are being broadcasted in India, Germany, and Latin America. As the industry becomes more and more globalized, it creates more opportunities for business partnerships and relationships with local studios, firms, advertising agencies and internet portals. Expansions take place through new emerging markets where acquisitions and alliances are often the first steps to an entertainment firms development and expansion. Trends of Convergence Many are witnesses to the fact that forces within the entertainment industry magazines, television, books, movies, Internet are converging on many occasions. As the Internet spreads into new domains, it links all of these forms of media and entertainment. As a result, streaming media, live chat, targeted advertising, and other entertainment-related niches appear and become increasingly accessible. Thus, business opportunities are also becoming readily available, particularly in fields such as graphic design, web development, content creation and direct marketing. As the key components within the entertainment industry converge and become linked through various forms of media, so too do consumer preferences. Convergence is clearly illustrated by the fact that entertainment exists in virtually all mediums publications, television, music, movies, video games, Internet content, and even mobile phones. Entertainment and Economics Another critical impact on the entertainment industry comes from the economy. As the financial crisis worsens, companies have less capital mobility and liquidity. Furthermore, the fact that consumers are spending less is greatly impacting the operations of companies in the entertainment industry. This is illustrated by the following charts, which show that consumers intend to spend the same or less on entertainment-related activities.

Threat
Decline in the advertising market will affect the profitability of Media Networks A slower economic recovery than expected (middle of 2002) can affect investments. The cutting costs strategy can affect the quality of Disney products, affecting the brand and revenues growth. DVD market can grow in more moderate rates in the short run, affecting projections for the studio entertainment division. Another risk is a retraction in the box office business due to competition, macro economic environment and unsuccessful cost cuttings policy The international expansion of Disney Parks can fail due to cultural issues (so far it has worked very well), and/or macro economic reasons.

Opportunities
Acquisition of Marvel WD must integrate Marvels assets and come up with newer content Reduce dependence on North American markets Aggressive strategies for internet presence It can reposition its movies, newer characters, technology

BCG MATRIX
STARS THEME PARK QUESTION MARK TV RADIO

CASH COWS HIT FILMS

DOG CONSUMER PRODUCTS

GE MATRIX
ANIMATIONS
ONLINE

THEME

TV MEDIA CONSUMER PRODUCTS

RADIO

Recommendations
The company must close down its operations where its incurring losses Must venture into emerging markets considering cultural factors within each of them Increase its internet presence Adopt appropriate risk management practices. Protect its intangible assets Must not lose its corporate culture and values in an attempt to gain market share Adopt appropriate risk management measures