it was all started by a

mouse

LIFE AT 24 FRAMES PER SECOND.

Aditya Nair

Overview
Founder 1923 Walt and Roy Disney Headquartered Burbank, CA, USA Revenue $ 38 Billion Employees 145000 Leader in Animation Fortune Rank : 57

The Walt Disney Compnay, (NYSE : DIS

Various lines of business of Walt Disney

USA Canada Europe Brazil Argentina

Japan Taiwan Singapore China India HK

Walt Disneys Key SBUs and its revenues

ABC Television Network ABC Radio Networks ESPN Disney Channel SoapNet Toon Disney Joint ventures A&E Television Networks, Lifetime Entertainment Services, The History Channel, E! Entertainment Television ESPN, ABC, Disney, and family branded Internet Web sites

The Disney Stores (TDS) Disney Store Online Disney Interactive Disney Publishing Worldwide Baby Einstein

$ 2.68 Billion

Buena Vista Home Entertainment (BVHE) Domestic and International Buena Vista Music Group Buena Vista Television Walt Disney Theatrical Movie banners: Walt Disney Pictures, Touchstone Pictures, Hollywood Pictures, Miramax, Pixar and Dimension

Walt Disney World Resort (WDW) four theme parks, two water parks, 25 hotels Disney Cruise Line Disneyland Tokyo Disneyland Honk Kong Disneyland Disneyland Resort Paris Walt Disney Imagineering

$ 10 .76 Billion

$ 6 .70 Billion
Source: corporate.disney.go.com

$ 17.16 Billion

1923-28
1928-34 1934-54 1955-71 1972-84 1984-2006

The silent era

Kansas City, Missouri animator Walt Disney created a short film entitled Alice's Wonderland Walt and his brother Roy Disney moved to Los Angeles, California October 16, 1923 - the Disney Brothers Cartoon Studio

1923-28

1928-34
1934-54 1955-71 1972-84 1984-2006

Mickey Mouse and Silly Symphonies In 1928 - Walt Disney and Ub Iwerks created Mickey Mouse In 1929, DBCS was reincorporated as Walt Disney Productions, Ltd. In 1932, Disney signed an exclusive contract with Technicolor to produce cartoons in color

1923-28 1928-34

1934-54
1955-71 1972-84 1984-2006

1934 - first feature-length animated film

1939 - Walt Disney Studio, CA 1940 Disney Productions IPO Onset of World War II, box-office profits began to dry up 1950 foray into television

1923-28 1928-34 1934-54

1955-71
1972-84 1984-2006

1955 - Walt Disney opened Disneyland to the

general public 1959 Disney World, Orlando 1960 s - The long-running anthology series 1966 - Deaths of Walt and Roy Disney

1923-28 1928-34 1934-54 1955-71

1972-84
1984-2006

1970 s Opening of Walt Disney World 1979 Disney studio produced science-fiction, The Black Hole, first to carry PG rating 1980 - Launch of Walt Disney Home video 1984 - Michael Eisner and Jeffrey Katzenberg from Paramount Pictures were brought on board

1923-28 1928-34 1934-54 1955-71 1972-84

1984-2006
1980 s Disney surived many takeover attempts 1993 Disney acquired Mirmax Films 1996 - Merger with ABC, bought ESPN into its network 2005 - Michael Eisner replaced by Robert Iger as CEO 2006 Purchased Pixar Animation Studio

SBU - Studio Entertainment

This segment includes 1) Movies 2) Television animation programs 3) Musical recordings 4) Live stage plays and theatrical 5) Home video 6) Television distribution

Bargaining Power of Suppliers: - dedicated, competitive, world-class Supplier base to collaborate with Disney d Sourcing Professionals -Low bargaining power due to Disney s big volume Bargaining Power of Buyers: -Competitive products all compete on differentiation -Low switching costs

Threat of Substitute Products: -Non-existent Threat of Potential New Entrants: -Economies of Scale -Strong and Well Established Brand Name -High Capital requirements -Low threat

Intensity of Rivalry between Firms in the Industry: -High competitive in an Oligopoly (other leading firms Include News Corp., Time Warner Inc., Liberty Media Interactive, Viacom, Sony Pictures) -Strong brand identity and product differentiation -Intensity of Rivalry is moderate

High Bargaining Power of Suppliers Bargaining Power of Buyers Threat of Substitutes Threat of New Entry Intensity of Rivalry Between Firms

Moderate

Low

Porter s 6th Force - Complementors

Complementors is a term used to describe businesses that directly sell a product or service that complement the product service of another company by adding value to mutual Customers For Disney s Animation movies complementors can be

1) Video Games EA Sports, Sega Games 2) Comic Books DC Comics

Value Chain
Resources:
-Tangible: cutting edge technologies, media networks, studios, distribution channel -Intangible: brand name / reputation for innovation

Core Competency:
- Content Creation and Control(Animation and Motion Pictures)

Competitive advantage:
-Brand name - Creating synergies between business - Creating shareholder value through diversification

Strengths Global Standardization Target Customer: Children Creative Process Popular Brand Name Diversification Disruption Opportunities Merchandise Global Localization: Think global, Act Local Cheaper alternatives to soft toys Disney Music Channel Disney School of Management/Training Institute

Weakness High sunk cost Excessive Research & Development Constant Up gradation High Investment High Risk Factor Threats Competitors: National, Regional & Global Employee Retention Highly Demanding in terms of Sales, Creativity and Innovation Unprofitable or hasty acquisition Brand Consistency Product Differentiation

Financial Analysis Financial Overview for Walt Disney and its nearest competitor Time Warner for Year 2010

Financial Analysis
Liquidity Ratios Current Ratio Quick Ratio The Walt Disney Company 1.11 1.01 Time Warner Inc. 1.48 1.28 Industry 1.41 1.20

The current ratio measures the company s ability to pay its short-term obligations. The ratio is mostly used to give an idea of how well a company can pay back its short-term liabilities with its short-term assets. The Walt Disney Company current ratio of 1.11 is greater than 1, which means their assets can cover their liabilities. However, the Walt Disney Company is below both the Industry and its competitor, Time Warner Inc. The quick ratio (acid test ratio) measures a company s ability to meet its shortterm obligations with its most liquid assets. The Walt Disney Company quick ratio is 1.01 versus Time Warner s 1.28. This shows that Disney actually holds less inventory than Time Warner (9% versus 13%), and Disney s quick ratio is actually less than the industry average as well.

5 Year Financial Analysis

Strategic Challenges
 Lack of coordination among businesses (Overlap began to emerge)  Lack of corporate synergy  Lack of creativity  Poor brand management  Diversification in different SBU s  Allocation of resources to different SBU s

Future Recommendations
 Expand in Persian Gulf Countries which can be a lucrative market given their growing popularity as tourist hub  Since they are already into Animation they could also get into E-Learning, which would be the next big thing  They can start training institute to train world class animators  Disney loses huge chunk of revenue to piracy, they need to come up with something radical to curb piracy, like Apple did with iTunes

Team Learnings
 From the strategic analysis of Walt Disney Company one can learn that:-

Build your business around your core competencies Exploit the latest technology Demand perfection, but play loose Reinvent yourself when necessary Identify how to anticipate the needs, wants, stereotypes, and emotions of your customers in order to exceed their service expectations

Team Learnings (ctd..)

Bring "personality to your organization by establishing a service theme and aligning your organizational resources to support it Improve the policies, tasks, and procedures within your organization to promote the delivery of quality service to your customers Create an environment that reflects your organization s commitment to quality and encourages its delivery

PGDM-B Aditya Nair 130