Brief History of Walt Disney

Xavier Bruch
Ismael Gonzlez
Estefana Sez
Eduard Taltavull
Chonglin Zhan
Strategic Management The Walt Disney Company
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1. BRIEF HISTORY OF WALT DISNEY ........................................................................................ 3
2. MISSION AND VISION ................................................................................................................. 3
3. SITUATIONAL ANALYSIS ........................................................................................................... 5
3.1. MACRO ENVIRONMENT ANALYSIS (PESTEL ANALYSIS) ............................................................... 5
3.1.1 Society ...................................................................................................................................................... 5
3.1.2 Economy .................................................................................................................................................. 5
3.1.3 Technology ............................................................................................................................................. 6
3.1.4 Ecology ..................................................................................................................................................... 6
3.1.5 Politics and legibility: ........................................................................................................................ 6
3.1.6 Competence: .......................................................................................................................................... 6
3.2. INTERNAL ANALYSIS............................................................................................................................. 7
3.2.1. Organizational structure: .......................................................................................................... 7
3.2.2. Functional areas ............................................................................................................................ 9
4. SWOT .............................................................................................................................................10
5. STRATEGY IMPLEMENTATION .............................................................................................11
5.1. MARKET DEVELOPMENT ................................................................................................................... 12
5.2. DISNEYLAND STRATEGIES ................................................................................................................. 13
5.3. MOBILE APPLICATIONS ..................................................................................................................... 13
5.4. ABC AND ESPN .................................................................................................................................. 16
5.5. MARVEL ENTERTAINMENT ............................................................................................................... 16
5.6. TRILOGY STAR WARS......................................................................................................................... 16
5.7. PIXAR .................................................................................................................................................... 17

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1. BRIEF HISTORY OF WALT DISNEY
Walt Disney is the company with whom millions of children have been growing up
together and has accomplished the illusion of lots of them. Beside, it is the most
important company in the world in terms of cinematography, animations,
attraction parks and so on.
Walt Disney was born in 1923 and based in California as an animation studio by
brothers Walt and Roy Disney. The company went growing up quickly till 1943,
time when began the Second World War and the company was almost forced to
close the business. After the war, Disney experienced a time of quick recovery but
in 1983 it faced another financial problem that almost leaded it to the bankrupt
again.
Today, the Walt Disney Company comprises a set of brands related to various
forms of entertainment and all this in interpreted on the small shoulders of a
mouse and one mans dream.
The Disney brand was built on characters and animated features, after 1955,
Disney began to extend its business further beyond cartoons and animated shorts
with the opening of Disneyland. The theme park expanded and shared Disneys
positive associations past simply film and animation to include life experiences as
well.

2. Mission and vision
As all we know Disney is one of the most successful companies in the business
world. However, what makes Disney that famous? Obviously it is related to its
vision, mission and values.
The mission of Disney is to be one of the worlds leading producers and providers
of entertainment and information, which excels in being a diversified,
international, family entertainment and media company.
With the vision of to make people happy Disney just wants to achieve to be the
preeminent leader in the field of family entertainment. The purpose consists on
commitment to produce unparalleled entertainment experiences based on its rich
legacy of quality creative content and exceptional storytelling.

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Five forces of values are main key for the success of Disney as we can observe in
the chart below.

Innovat
ion
follow a strong tradition of innovation
Quality
strive follow a high standard of exccellence, maintan high-quality standards
across all products categories
Commu
nity
create positive and inclusive ideas about families, provide entertainment
experiences for all generations to share
storytel
ling
every product tells a story, timeless and engaging stories delight and inspire
optimis
m
entertainment is about hope, aspitation and posotive resolutions
decency
honor and respect the trust people place in us, fun is about laughing at our
experiences and ourselves
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3. SITUATIONAL ANALYSIS
3.1. Macro environment analysis (PESTEL analysis)

3.1.1 Society
Disney works in a market where the illusion of children remains although the
society and the environment change. Disney tries to follow the new trends of
technology in a classical and peaceful way so as not to create polemic in the society
but involving the new technology trends.
Although the products that are offered directly by Disney to children, indirectly
these products are also purchased by parents that accompany their children and
adults that recall time of their childhood.
3.1.2 Economy
Disney has different ways to put its products on sale. The main strategy is to try
selling the star products to everybody so that everybody can afford them, apart
from that, they also offer high-class products segmented to a concrete target of
clients that must have a higher purchasing power to afford them.
Finally, Disney guarantees that its star products are affordable to all families
although there are any changes on environment.
Organization
Political
Economic
Sociocultural
Technological
Ecological
Legal
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3.1.3 Technology
Disney has been always using pencil to make its draws in initial time, however, due
to the technological evolution, Disney was forced to change the way turning the
draws to be made by computers since it means less cost. Thanks for the purchase
of Pixar that brings parts of its innovation and research; Disney has accomplished
this process of technology switch.
3.1.4 Ecology
The universally worried conversation issue of many firms like the global warming
is also worried and treated by Disney. In addition, Disney tries to save the natural
resources that keep remaining in the world today using removable energies o just
as its project of amigos por el mundo (friends around the world) which invites
young people and families to join in order to cooperate with the protection of the
environment realizing simple actions in four basic fields: climate change, lack of
water, waste and the habitat.
3.1.5 Politics and legibility:
To operate in the international market, its easy to find different laws and policy
belonged to each country, and this could affect also in the tax benefits. Political
differences of each country that Disney works are obstacle to international trade
due to that Disney needs to adopt the regulations of each country according to the
local law.
Beside, the regulations of product safety are tighter than others features, so that
Disney needs to care a lot about on this.
3.1.6 Competence:
The main competitors of Walt Disney today are the Warner Bros Company and
universal Company.
Warner Bros is an American company and at the same time one of the most
companies of film production and television around the world, it also has theme
parks and subsidiary companies as Disney has.
Warner produces movies as well known as Disneys ones like Harry Potter, Matrix
or Scooby-Doo.
Universal is also an American company that Works on production and cinematic
distribution. It is one of the main studios of American cinema.
Although many of its products are destined to different segments, Disney in the
moment has not introduced on some of them.

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$ 5,03 billion $ 4,68 billion $ 3,68 billion
Market share on Studio entertainment Industry

Porters 5 forces analysis
The force of threat of new entrants is medium because even though there are
major firms, however smaller firms with lower structures can enter the market
Threat of substitutes is high because technological innovations and high
competition in each segment generate many alternative choices for costumers
Bargain power of supplies is low because Disneys vertical integration reduces
significantly their power
Bargain power of buyers is high because Disneys offerings are desires, rather than
necessities. Therefore, financially restricted consumers will not buy
Rivalry among firms is high because there is huge competition between companies
within specific sectors.
3.2. Internal analysis
3.2.1. Organizational structure:
We can distinguish the four organizational structures that Wald Disney Company
has, which ones are divided in products to Disneys consumers, studio
entertainment, theme parks and resorts, and media networks broadcasting.
We stand out the studio entertainment because we have focused on this structure.
The strong point would be Walt Disney Picture, Pixar Studios, Buena Vista records
and theatrical productions.

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1. Disney consumer products
It may appear that Disneys target audience is primarily children, but its products
arrive to all audiences from preschoolers to adults.
Disney products include television programs, books, magazines, musical
recordings and movies (Walt Disney).
Radio Disney is available in more than 40 U.S. markets and on satellite radio,
mobile apps and the web.
Disneys Consumer Products segment includes worldwide licenses, manufacturers
and retailers who design and sell a variety of products based on Disney characters.
These products include character merchandise and publications licensing, books,
magazines and the Disney Store
2. Studio Entertainment
This is regarded as the most visible business within the Disney Company, is also
the most extensive with the integration of then production branches, like Walt
Disney Pictures and Television, Miramax Films, Pixar Studios...
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The majority of the revenue comes from fees charged to cable, satellite and
telecommunication service providers who operate under multi-year agreements
3. Parks and resorts
Parks and resorts from Walt Disney that we can find around the world like
Disneyland Paris and Tokyo Disney.
This part creates the essence of animation to live it in person
4. Media Networks Broadcasting
The groups portfolio includes: ABC Television, ABC Owned Television Stations
Group, Disney Channels Worldwide, Disney Media Distribution, Hyperion and
Radio Disney Network.

3.2.2. Functional areas
How much does each functional area contribute to the company?

55%
35%
1%
9%
Revenues & Sales
Media networks and
interactive
Parks & Resorts
Studio entertainment
Consumer products
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4. SWOT
Strengths Weakness
Brand reputation/loyalty (worldwide
known brand)
High diversification
Is strongly present in some branches
of the entertainment industry
Strategic and tactical acquisitions
Economies of scope
High quality products
Largest worldwide licensor of
character based merchandise
Global standardization
Responsiveness to markets
High costs (sunk costs, R&D costs
and costs of operations)
Walt Disney highly associated with
specific target audiencechildren
Unstable top management
Approaches antirust law limits
Concentration of revenues in North
America
High risk factor
Parks and Resorts success
unpredictable:
o Seasonal
o Leisure time
o Travel trends
o Not easily accessible leading
to a costly trip for visitors
Opportunities Threats
To develop the market in emergent
countries
Growth through further
diversification
Improve through new technologies
Build a more eco-friendly image
Creation of new successful stories
and characters
Increase Media Networks market
share
Strong competitors in the
entertainment industry
Competition on finding and affording
the most creative human resources
Increasing salaries and labor costs
Lack of protection of intellectual
property in many non-developed
countries (piracy)
Changing consumption behavior
Decrease of DVD sales
Maintaining product differentiation
Economic recession
Continuous need for technological
update

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5. Strategy implementation
Strategies that Disney has used in its beginning after 1920s under the vision
formula for success.
The Disney Company has implemented certain critical strategies that contributed
to its success. Disney has got the success because Disney has always maintained its
vision and mission, the use of innovative technology and the global market have
affected the company to change its strategies as they have turned to use computer
to draw instead of pencils.
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 and Sprint, and desire to
sustain expansion
Product differentiation
Walt Disney has additional brands such as ESPN (one of the biggest sports
channels in the world), Miramax, Touchstone and Pixar.
Disney stores are located in malls and super centers. Particularly in urban
locations in order for them to be visible and accessible by the public
Walt Disney Studios produces films through imprints Walt Disney Pictures, Disney
Animation, and Pixar, and its Marvel Entertainment is a top comic book publisher
and film producer.
Walt Disney Parks and Resorts operates the companys popular theme parks
including Walt Disney World and Disneyland
The multiplane allowed the animator to re-use the same background, foreground,
or any elements not in motion, saving hours of labor.

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You can see all the strategies of the Walt Disney Corporation in the Ansoff matrix:

Market Penetration

New Products
Targeted Market
Segmentation Though
acquisitions
Related Diversification
Diversification in
branding
Vertical & Horizontal
integration.

Market development

Conglomerate Diversification
Foreign Outsourcing
Direct Investment
Licensing
---------------

5.1. Market Development
- Expanding movie market
The way for Disney to enter the new movie market which increasing the
quality of movie
- Big Entertainment Company
Disney enter the new level of big entertainment company and the result is
famous and popular brand of Disney
- Enter the new Advertising Corporation
Become the target from the other company to advertise
- Conglomerate of Entertainment Business
Disney become the great company with the nature of conglomerate to many
business field in entertainment world
PRODUCTS
Existing
New
Existing
New
MARKETS
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5.2. Disneyland strategies
Disney Company has got impressive loyalty with his clients. And we all wanted to
know how does it get this success, as far as we concerned, here are some major
strategies worth thinking about.
1. All theming, all the time,
If you take away the theming, theres nothing particularly special about
Disneylands rides. The thing is, Disneys theming isnt just slapping a few cartoon
animals on the sides of rides. Its immersive, complete.
2. Immersion
Fans keep coming back because theres always more to see. Disneys motto isnt
Lots of Ridesits The Happiest Place on Earth. And Disney maintains constant
interest by making sure theres always something else to notice as following
elements:
Interesting and interactive areas for the rides.
Sporadic and spontaneous performances by Mary Poppins or Alice and the
Mad Hatter at various times of day.
Rides like the Jungle Cruise that is strikingly different at night.
Holiday theming. Different fireworks displays. Limited-time only eatables.
3. Everyone is a princess
Disneys strategy consists on offering to clients the experience they desire and
they can complement it with Disney. For instance, Cast members give children
badges and balloons at random; princesses stop to greet little girls dressed in
princess gear; guests are allowed to captain the Jungle Cruise or Mark Twain
Riverboat. Beside, Disney is very considerate with guests of disabilities, and avoids
allergic food.
5.3. Mobile Applications
Once analyzed the SWOT, we can observe certain opportunities in the market that
might be filled.
Once of them was the chance to obtain huge benefits with the advances and mobile
games, this allowed at the same time realize various stories with characters and
personages that were created.
Therefore, according to these opportunities, Walt Disney decided to create and
develop different mobile applications and games by adding new personages that
the company has saved in its portfolio
1- Strategy Implementation
Preparation of the appropriate Budget
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Allocation of personnel
Communication of the strategic vision, the strategic themes and their roles to the
employees
Use of presentations, workshops, meetings, frequent updates
2- Evaluation of Strategy
Mobile could drive total games software industry revenue to $100B by 2017
Mobile/online games could grow to $60B revenue
Mobile/online games could take 60% games software market share by
2017
Total global games software revenue could grow to $100B revenue by 2017
Games dominate mobile app usage and revenue
Games took 32% of 2013 mobile app usage (smartphones, tablets with
IOS/Android)
Games took 72% of 2013 mobile app revenue and 40% of mobile app
downloads

Source: www.digi-capital.com

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Source: www.digi-capital.com
3. Evaluation of strategy Rumelts criteria
The recommended strategy is:
1. Consistent
It will be developed by the existing Interactive Department so that
interdepartmental disorder is avoided
2. Consonant
It will be an adaptive response to the recent social trend for mobile games
app.
3. Successful
Disneys financial state can support the recommended strategy which will
result in the companys growth in the short-term
4. Maintaining the competitive advantage
The companys position in the market will be strengthened

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5.4. ABC and ESPN
During the fist stage at 80s, Disney bought the ABC chain by 19.000 millions of
dollars, with the objective to integrate it with ESPN that was a posterior purchase
achieved in 1995 and sign the conglomerate ABC sports. Disney began to produce a
big amount of parallel programs to its main signals, which were segmented by
sports with alternatives that best fit the American taste.
Disney made all these purchases in order to center in the three factory brands:
Disney, ABC and ESPN.
5.5. Marvel entertainment
Another purchase was realized in august of 2009 that Disney paid 4.1 billons of
dollars for Marvel Entertainment due to it has some licenses of movies like
Wolverine or Iron Man 2, and also a big amount of video games. We should recall
the purchase by 763 millions of dollars for Playdom.
5.6. Trilogy Star Wars
In the end we should detach the operation with Lucas film, purchased by 4.05
billons of dollars. This purchase opens positive sceneries for Disney as it has
advertised a new trilogy of Star Wars that will be screened out in 2015. With this
operation Disney snatched to Fox (ex-distributor of Saga), one of the major world
and historical collections.

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5.7. Pixar
Disney bought the Pixar Company in match of 2006 by 7.4 billons of dollars. The
reason was the success that Pixar registered with its productions as Toy Story,
Bichos, and Monsters etc. After the purchase, the company kept growing with
success as Cars, Ratatouille, Up
Owing to this transaction, Steve Jobs became the biggest actionist of Disney with
7% of actions since he had already owned 50.1% of Pixars actions
Strong capabilities Pixar has and comparative with Disney.

Pixar Walt Disney
Area Short films and commercials Animation movie
Animation
3D
Leading computer animation
technology
Traditional 2D
Software
10 years of proprietary software
In 2005, used in 100 films and 44 of
the last 47 movies won the Oscar
No available
Skill
Most technical employees held PhDs
(doctors)
Lack of CG skill (CG creative
multimedia, poorly)
Asset
CG
Story telling creativity
Movie industry knowhow and
experience
Great movies (sequel)
Distribution
channel
No available Movie, TV, DVD.
Culture
Bottom up
Free-spirited Creativity
Egalitarian Collaboration
Perfectionism
Top down
Managers establish and
reinforce culture
Operation
cost
No required the skills of hundreds of
people working over 2-3 years
Toy story was made with 110
staff
Large staff, Large Budget, lots of
time
Tarzan (99)
Budget = $80 million vs
$150 million
Animator (drawing)

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For Disney, are there any other alternatives like strategic alliance better than
acquiring Pixar?

CAPS Computed animated production system
Make 2D animation movies ex (Rescuer Down under, Lion King)
Feature Film Agreement Co-production agreement
Date May 1991 February 1997
Length One movie + 2 movies (option) Until 5 film is delivered (10years)
Exclusivity
Disney exclusivity film, TV,
home video, theme parks
Approval of Disney-
commercials, special effect for
film and live show
Exclusivity on movies until 12
months after the 5
th
movie
featured
Disney exclusivity-film, TV, home
video, theme parks
Non exclusivity commercials,
special effect for film and live
show
Revenues Small % for Pixar 10-15% 50:50 (12,5% for distribution fee)
Ownership
Tech Pixar
Film Disney
Characters Disney
Sequels Disney
Tech Pixar
Film Disney and Pixar
Characters Disney and Pixar
Sequels Disney and Pixar
Creative
control
Pixar propose, Disney decides Pixar and Disney (Pixar had full
creative control of Cars)
Increasing Power & influence of Pixar / Less profitable contract with Pixar.
Acquiring human & technology asset
Developing 3D technology internally
Too mucho development cost & fierce competition
Interval development
Strategic alliance with other studios
Hard to build new realtionship
Distribution channel factors
Strategic alliance (not Pixar)
CAPS
Feature film agreement
Co-production agreement
Strategic alliance (with
Pixar)
Revitalize animation department
Eliminate competition
Acces to technology, human capital
M&A
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Risks factor when trying to acquire Pixar Disney
Mainly include 2 risk factors that we believe important
1. Financial stock dilution
The company is valued by Pixar 6.5 billion when the purchase is 7.4 trillion and
Steve Jobs to become the largest shareholder of Disney
2. Different culture between Pixar and Disney
Disney Company is a huge bureaucracy due to its size; it has more than 150,000
employees and shows a distance between the directional structure and the middle
managers that could be a problem for Disney because it has a brain drain owing to
that they are not allowed to be more creative
Disney tries to find more profitability of its norms but quality; therefore the
executives are ones who make decisions more creative as they work with a tight
agenda.
In contrast of Disney, Pixar has a major freedom towards its employees that they
can contribute their creativity being by this way free spirit.
Their work places are decorated individually, they can wear shirts as Hawaii style
and they are against a policy then against the contract
In Pixar, there is an egalitarian collaboration where the spaces are open, there are
area for games and living room for entertainment.
The employees of Pixar called their installations in Emeryville, California as the
Pixar University where they give class to their employees. What they want to find
out it talented workers who could be promoted and developed its capacity in the
company.
The projects are worked by team and for them, art is a team sport, in which
everyone receives a bonus and are perfectionist in its short films and stories.
We can stand out three basic principles that Pixar has
Whole the world can offer ideas
All workers have freedom to communicate with any person
Maintain the innovations that happen in academic community
After this analysis, we can observe some important differences between Disney
and Pixar
Disney is a solid company in searching profitability
Pixar is an artistic company with the junction of creativity and the freedom
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Market Support the future growth with full potential
Competition Eliminated potential competitor
Customers Expand and attract the new consumer segments
Costs Good deal since pay cash $1 billion
Capabilities
Talents recruiting - including Steve Job and Pixar's Executive members
Acces to valuable resources and technology
Cultural adaption

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