WD Thesis

Aleksandra Perisic
Capstone Thesis 2013
The Walt Disney Company-Strategic Audit

Monday, May 13, 2013
By Aleksandra Perisic
Aleksandra Perisic
I. Current Situation
A. Current Performance
Generating over $42.3 billion in revenue in 2012 and being positioned at 66 th place in Fortune
500 (Fortune 500, 2012) and 74th place in FT Global 500 (FT Global 500, 2012), Walt Disney
Company is considered to be one of the leading entertainment and media corporations in the
world. According to the Hoovers list of top media companies, Disney is the worlds largest
media conglomerate (Hoovers, 2012). It operates in five different segments: Media Networks,
Parks and Resorts, Studio Entertainment, Consumers Products and Interactive (The Walt Disney
Company, 2012). In 2012, Walt Disneys revenue equaled $42.3billion, which is an 11% increase
from $37.8 billion in 2008. At the same time, the net income increased 30%, from $4.4 billion in
2008 to $5.7 billion in 2012. Over the past five years, Disneys earnings per share increased by
37% from $2.28 to $3.13.
Furthermore, Disneys management evaluates the performance of its operating segments based
on its segment operating income. As seen in the Figure 1. Media Networks accounts for the
largest revenue generator, 65% with $6.619billion in 2012. Parks and resorts account for 19%,
but have the highest growing net income of 22% when compared to the other five segments.
Studio Entertainment and Consumer Product make 7% and 9% ,while Interactive media had a
net loss of 216 million in 2012 (The Walt Disney Company,2012). This segment has been
unprofitable for the last five years. Despite this, Disney is a financially sound company; its debt
ratio currently sits at a healthy 44%, demonstrating that the expansion of the company is being
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done with a controlled plan so that big amounts of debt are not being used to finance
improvements of the parks.
FIGURE 1. THE WALT DISNEYS SEGMENT OPERATING INCOME, 2012
Consumer Products, 9%
Media Networks, 8%
Parks and Resorts, 19%
Studio Entertainment, 65%
Source: The Walt Disney Financial Report, 2012
B. Strategic Posture
Mission
According to Disneys corporate website, the mission statement is: To be one of the world's
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 "
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(The Walt Disney Company, 2012). The mission is in line with the original vision and the
objectives which defines the purpose of the company.
Objectives
Disneys objective is to be the worlds leading producer and provider of

family entertainment and information (The Walt Disney Company, 2012). The
companys founder believed he had to be one step ahead of the competition
to be the most innovative and creative animator. He strived for premium
quality, surrounding himself with the best artists and the newest technology
in the industry. This philosophy is deeply rooted into the companys culture
which stayed in line with its original values. Furthermore, Disneys financial
objective is to maximize earnings and allocate capital to growing businesses
to drive long-term shareholder value. The organization contributes to the
well being of the community by participating in charities, protecting the
environment and encouraging members, suppliers and employees to
participate in local activities that help the society.
Policies
Disneys policies are based on the commitment to product safety, protection of the environment
and safe, inclusive and respectful workplace (The Walt Disney Company, 2012).
Strategies
The Walt Disneys corporate strategy is focusing on: continuously generating excellent content
for its target (children of all ages), making it more attractive, exciting and available through
technology, and expanding Disney businesses and products in markets worldwide (The Walt
Disney company, 2012). Disney uses a differentiation strategy that is aimed at broad mass
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market by creating products and services that are perceived throughout its industry as unique.
Most of Disneys products and services are priced at a premium, but its brand loyalty lowers the
customers sensitivity to price. Everything from its theme parks to channels and movies is
created to fulfill the needs of both children and their families.
II. Strategic Managers

A. Board of Directors
The Walt Disney Companys success is a result of an amazing team of entrepreneurs who
manage the five branches. All the members are well-respected, global industry leaders with
exceptional knowledge and experience. Currently, the board of directors consists of 10 members
along with the companys Chairman and CEO Robert Iger. The company recognizes the value of
diversity in knowledge, skills and background; therefore it strives towards a Board with expertise
in business, education and technology. The board mostly consists of American, independent
outsiders that have been in service from three to fifteen years.
Robert Iger joined the Disney senior management team in 1996 as Chairman of the ABC Group
and officially became President and Chief Executive Officer of The Walt Disney Company in
2005. During his leadership, Disney continued to build its empire by acquiring: Pixar in 2006,
famous for its hits such as Toy Story and Finding Nemo, Marvel Entertainment in 2009,
with its army of comic-book heroes such as The Avengers, and the most recent mega-franchise
Lucasflim, the production company behind the Star Wars (The Economist,2012).
Susan Arnold has been on the Board since 2007. From 2007 to 2009 she served as President of
Global Business Units of Procter & Gamble. Ms Arnold was also Vice Chair of P&G Beauty and
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Health from 2006, Vice Chair of P&G Beauty from 2004 and President Global Personal Beauty
Care and Global Feminine Care from 2002. She also serves on the Board of Directors of the
McDonalds Corporation.
John S. Chen has been on the Board since 2004. Mr. Chen has been a Chairman and CEO of
Sybase Company since1998. Prior to that Mr., Chen was President of the Open Enterprise
Computing Division, Siemens Nixdorf, and CEO and Chairman of the Siemens Pyramid. He also
serves on the Board of Wells Fargo & Company.
Judith Estrin has been on the Board since 1998. Ms. Estrin is currently a CEO of JLABS, LLC,
privately owned company focusing on improvement of global trade. From 1998 to 2000, she
served as Chief Technology Officer and Senior Vice President of Cisco Systems Inc.
Furthermore from 1995 till 1998 she was President and Chief Executive Officer of Precept
Software Inc. Ms. Estrin also served on the Board of FedEx Corporation from 1989 to September
2010.
Fred H. Langhammer has been on the Board since 2005. He is currently Chairman, Global
Affairs, of The Este Lauder Companies. From 2000 till 2004 he was an official CEO of The
Este Lauder Companies. He originally started his career with The Este Lauder Companies in
1975 as President of its operations in Japan. Furthermore, Mr. Langhammer was on the board of
The Shinsei Bank Limited and AIG, but currently serves on the Board of Central European
Media Enterprises.
Aylwin B. Lewis has been on the Board since 2004. He was President and CEO of Potbelly
Sandwich Works since June 2008. Before that, Mr. Lewis served as President and CEO of Sears
Holdings Corporation, a nationwide retailer, from 2005 to 2008. Mr. Lewis was also CEO, Chief
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Operating Officer of YUM!Brands, a franchisor and licensor of KFC, Long John Silvers, Pizza
Hut, Taco Bell and A&W. He served on both Boards of Sears Holding and Kmart.
Monica C. Lozano has been on the Board since 2000. She is currently CEO of ImpreMedia,
LLC, and Publisher and Chief Executive Officer of La Opinin. Ms. Lozano also serves as a
member of the Board of Regents of the University of California and a trustee of the University of
Southern California. She has been a director of Bank of America Corporation since 2005 and is a
director of the Weingart Foundation.
Robert W. Matschullat has been on the board since 2002. He was Vice Chairman of the Board
and CFO of The Seagram Company Ltd. Additionally, Mr. Matschullat was a head of worldwide
investment banking for Morgan Stanley & Co. He served as a director of McKesson Corporation
from 2002 to 2007.
Sheryl Snadberg has been on the Board since 2010. She served as COO of Facebook from
2008. Ms. Snadberg was also the Vice President of Global Online Sales and Operations for
Google Inc. Additionally she is a former Chief of Staff of the United States Treasury Department
and prior to that she served as a management consultant with McKinsey & Company and as an
economist with The World Bank. Ms. Sandberg also served as a director of Starbucks and
eHealth.
Orin C. Smith has been on the Board since 2006. He was President and CEO of Starbucks from
2000 to 2005. Prior to that, he was Vice President and CFO of Starbucks in 1990, President and
COO in 1994, and official director of Starbucks in 1996. Furthermore, before even joining
Starbucks, Mr. Smith spent 14 years working for Deloitte &Touche. Additionally, he was also a
director of Nike, Inc. since 2004 and of Washington Mutual, Inc. since 2005. He is also a
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Chairman of the Starbucks Foundation Board and serves the Board of Directors of Conservation
International and the University of Washington Foundation.
The blend of skills and expertise these members posse guide the company in the right direction
since its performance continues to improve. They are responsible for Disneys current situation.
B. Top Management
James Rasulo is a Chief Financial Officer and Senior Executive Vice President of the Walt
Disney Company since 2010. He joined Disney in 1986 as Director of Strategic Planning and
Development, and later became Senior Vice President of Corporate Alliances. He has a degree in
economics from Columbia University and an MBA from the University of Chicago. Before
joining Disney, he held positions with Chase Manhattan Bank and the Marriott Corp.
Alan Braverman is Senior Executive Vice President, General Counsel and Secretary of Walt
Disney Company form 2003. He manages a team of attorneys in charge of all aspects of Disney's
legal affairs around the world. Previously, Mr. Braverman was executive vice president and
general counsel of ABC. In that capacity, he oversaw the legal affairs of the ABC Broadcast
Group, ESPN and Disney/ABC Cable.
Christine McCarthy is Executive Vice President of Corporate Real Estate, Sourcing, Alliance,
and Treasurer of the Walt Disney Company since 2000. She is responsible for the companys
wide management of a variety of functions including corporate finance, capital markets, financial
risk management, pension and investments, risk management, global cash management, as well
as the real estate organization, including facilities development, operations and portfolio
management.
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Kevin Mayer is the Executive Vice President of Corporate Strategy and Business Development
of Walt Disney Company. He previously was Partner and Head of the Global Media and
Entertainment Practice of L.E.K. Prior to that, Mr. Mayer held positions at interactive and
Internet businesses. As chairman and CEO of Clear Channel Interactive, he managed all aspects
of new media business, including content, sales, business and technology development, and
distribution. Mr. Mayer first joined Disney in 1993 as manager, Strategic Planning where he
spearheaded strategy and business development for all of Disney's interactive/Internet and
television businesses worldwide.
III. External Environment

(EFAS, Exhibit 1)
The present forces in the market form challenges for the future development
of the Walt Disneys company. In order to find opportunities and recognizing
possible threats, the company needs to analyze key trends.
A. Natural Environment
The weather patterns in the US, France, China and Japan, can affect the profitability of theme
parks segment, and thus are considered to be a one of the key natural environment forces and
potential threats. Better weather conditions generate a higher number of park attendances. When
analyzing Disney theme parks, we can notice that some parks are subject to hurricane season,
which can further affect the revenue and create physical damage.
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B. Societal Environment
1. Economic
Economic factors are of significant importance when it comes to industry development. The
Global economic Recession is seen as a threat since it could affect the demand for any of the five
segments in which Disney operates, thus reducing revenues and earnings. According to the New
York Times magazine, the theme parks and consumer goods are the most dependent on
economic factors and thus most vulnerable to swings in economy. The Healthier economy
usually encourages people to spend on entertainment products and services. In the US, median
household income of $50,054 in 2012 is about 9% lower than in 1999 (The New York Times,
2012). This limits consumer purchasing power and confidence to spend on services that are not a
necessity.
Furthermore, the second economic factor represents the fast growing markets in the developing
nations such as BRICs. These emerging nations are experiencing constant rise in GNP which
means higher income and living standards. In 2012, Brazils GNP accounted for 2.26 trillion;
Russia had 2.85 trillion, India 4.49 trillion, and China $11.33 trillion. It is estimated that Brazil
will continue growing annually by 5%, Russia by 4%, India by 10% and China 7 % (The
Economist, 2012). In the long run, these markets are projected to expand even further, despite the
economic crisis, mainly because of the fast-growing middle class and billion-plus population.
According to the New York Times, India has the most potential due to its size of the working
population that is predicted to reach the same size as in the US. This economic trend is seen as an
opportunity for Disney; therefore its management should focus on how to enter these markets
and further develop all of its business segments.
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2. Demographics
The baby boomers represent the major group in all developed countries, especially Europe. This
group of 80 million people who are now in their 50s and 60s affect the market demand in many
industries, including entertainment. This is mostly because there is a decline in the proportion of
the population composed of children, and a rise in the proportion of the population that is elderly.
The conducted research shows that the median age in the US will rise from 35 in 2000 to 40 by
2050s (Time Magazine,2012).The expanding senior market in the industrialized countries can be
interpreted as both opportunity and threat, because Disney could take advantage of trend and
change its strategy to fit the older crowd or I could lose sales in future .
3. Technological
Technology has changed almost every industry, but its impact on media and entertainment has
been so powerful that it completely restructured the industry. Throughout the value chain, from
content creation, to distribution and consumption, technology has changed the way consumers
view and use entertainment. The same applies to mobile-based and tablet technologies that are
predicted to have the greatest effect on the media and entertainment industry in the next three
years (The New York Times, 2012). Smartphones and tablets are used more and more for
entertainment purposes, including games, shows and videos. In 2012 ADSL connections in the
U.S. totaled to 96 million along with 180 million wireless subscribers with access to smartphones
and tablets. This means there is a vast market for online entertainment and media whose segment
represents one of the most powerful advertising revenue markets.
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Even though, movie-studios are earning stable profits from higher ticket prices from 3D movies
only 1.28 billion movie tickets were sold in America in 2011, which is the lowest rate since 1995
(The Economist,2012). The online streaming and increasing amount of piracy has lead to flat
growth in movie attendance. Consumers seem to prefer small screens and only visit cinemas for
blockbusters such as Iron Man, Avatar, Harry Potter or The Spiderman. Downloading
has turned out to be more popular because it is easy and cheap. Technology is constantly making
it easier for consumers to be involved with copyright infringement such as pirated DVDs and
illegal streaming of the movies.
3. Political-Legal
Political and legal factors shape the system of the competition such as product safety, foreign
ownership law, work conditions, intellectual property rights, and environmental sustainability.
The most recent example of foreign ownership policy change was in China, which loosened the
foreign ownership to 49%, allowing the other 51% to be owned by a joint venture partner (The
Wall Street journal, 2012). This is an opportunity for Disney to further expand its business
segments in Shanghai and other cities in China.
Furthermore, the increase in environmental responsibility caused by environmental laws and
regulations is another trend that aims to conserve water, energy, minimize waste, and inspire
public consciousness in support of environmental sustainability. By going green, the company
has an opportunity to improve its image and attract green customers.
Lastly, under the intellectual property and copyright the Walt Disney Company has currently
over 115 patents and copyrights. The companys competency depends on its ability to provide
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unique content that attracts global audiences; therefore the loss of this content could severely
damage their business.
4. Socio-cultural
Culture is a factor that can be seen as both an opportunity and a threat for many international
markets due to the differences in values, beliefs and aptitudes. With differences in lifestyles,
there is always a potential risk of corporations violating the cultural norms of the people in the
host country. The cultures are diverse in terms of religion, food, lifestyle, vacation patterns and
clothing; therefore Disney must adjust and incorporate these values along with its unique
strengths. Tokyo Disneyland was the first theme park ever created outside the US, and was a
huge success from the start. It was created in the same style as parks in the US, and Japanese
consumers loved the idea behind it. On the other hand, the same construction in Paris ended up
being a failure. French locals protested against the homogenization and mass American culture
forcing the company out of business. Disney adapted by incorporating European culture in the
rides, events, shows and cuisine. This is why socio-cultural trends need to be analyzed and
incorporated in the strategies. Today, the new Disney theme park in Shanghai has classic
attractions along with the original rides created specifically for Shanghai customers,
incorporating Chinese traditions and history.
Furthermore, one of the most influential socio cultural trends is considered to be age
compression. This trend represents the shift from traditional toys and games to more elaborate
and sophisticated video games. In the past Disney has been focusing mostly on creating simple
games such as Cars, Mickey Mouse or The Avengers, which are aimed towards the three
year olds. As a result, Interactive Media segment as a constant net loss over the past five years.
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In 2012, the loss accounted for $216 million. The vast majority of todays children and teenagers
would rather be playing more complex and serious games such as Call of Duty, FIFA,
Assassins Creed and Halo 4 then Mickey Mouse. The video game industry is expected to
exceed $112 billion by 2015 (The New York Times, 2012).
C. Task Environment
Disney falls under the Entertainment Diversified industry category as a service sector (Yahoo
finance, 2012). News Corporation, NBC Universal Media (Comcast Corporation), and Time
Warner are the Walt Disneys main competitors within this industry.
When analyzing Film industry using Porters five forces the top five film studios include 20th
Century Fox, Columbia Pictures, Universal Studios, Warner Bros and Disney studios. The value
chain film industry consists of acquisition/development, production, licensing, distributors,
buyers (cinemas, home videos, online streaming) and lastly consumers. The entry barrier is high
due to the distribution channel access as all the movies are licensed internationally to distributors
in each country. The distributors pay to receive the film and have the rights to exploit it over a
specified period of time depending on the agreement and the movie franchise. They have a final
say in how much the film should be advertised (TV commercials, internet, magazine, posters,
trailers, and special promos). They usually arrange industry screenings for exhibitors, and use
other marketing techniques that will make the exhibitor believe they will profit financially by
showing the film. These licenses and agreements keep the new entrants out due to the required
investments, connections and territorial rights.
Studios like Columbia Pictures, Warner Bros, Universal studios and Disney stand behind the
established, well-known brands that represent American culture and tradition. They produced the
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most successful mega-franchises such as The Avengers, Pirates of the Caribbean, Harry
Potter, Skyfall, and have been dominating the market for more than eighty years. It would be
highly challenging for new entrants to develop brand recognition and differentiation. In 2012,
Columbia Pictures accounted for 16.6% of the US/Canadian market share, Warner Bros. 15.4%,
Disney 14.3%, Universal 12.2%, 20th Century Fox 9.5 % (Box Office Mojo, 2012).
Buyer power is medium because it all depends on the agreement and the estimated profit the
movie is supposed to bring. Distributors and cinemas would not risk advertising and putting
unknown franchise movies in the main displays when famous film studios guarantee the sales.
Supplier power is also medium since it includes technology and labor that studios need to
produce a movie. The sophistication of technology depends on the movie budget.
The substitutes are there to replace the fun family or friends bonding, adventure and memories,
which movies provide to customers. In this case, the substitutes are medium since the
replacement for movies could be going to an event or a show or simply watching TV.
The rivalry is high. In this case, the rivalries are all approximately the same size, and their parent
companies are operating in different segments of entertainment and media industry.
On the other hand, the top two competitors in the Parks and Resorts industry include: Universal
Studios (Comcast Corporation), and Six Flags (Six Flags Entertainment Corporation). The park
and resort segments generate revenue from sales of admissions to theme parks, food, drinks,
sales of merchandise, and hotel room charges. The equipment and the startup capital in this type
of industry are high. The operating costs and expenses include labor, sales and marketing, fuel,
repair, maintenance along with the constant expansion and reinvestment in new rides. All
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companies enjoy the economies of scale due to the volume of production, which represents a cost
disadvantage for new entrants and another significant barrier to entry.
The bargaining power of buyers is medium. The entry prices are more or less in the same rage,
around $70-$80 per person; therefore the customers are not incurring any cost in switching by
going to the competitor. As a result to this, companies offer incentives such as discounts, special
family packages and free rides to attract customers. The products and services that are offered by
these are companies are pretty unique, thus customers might not be so price sensitive. Special
features and brand identities differentiate theme parks peers. Disney is positioned as Magical,
Lovely, Happy world of family entertainment known for bringing out the kid inside of
everyone. The Universal Studios is positioned more as an adult theme park in terms of more
powerful 3D rides, shows and event. It allows the audience to experience the legendary
Hollywood studio tour and be behind the scenes of the real working-studio. Another thing that
sets Universal Studios apart from the Walt Disney World is the availability of alcohol that
consumers may purchase at the fast food restaurants and Universal stores. Moreover, Six Flags
focuses on extreme adventure, challenge, intense thrill and action that families and friends can
experience together.
The bargaining power of suppliers is low. The Walt Disney has a wide range of suppliers from
roller coasters and merchandise manufactures to labor, food and beverages. Since all roller
coasters need to be designed specifically for each theme park, the companies get to choose from
a wide range of over thirty companies such as Bolliger&Mabillard or Mac Rides (Yahoo
Finance,2012). Furthermore, suppliers have very limited number of customers to whom they can
sell roller-coasters; therefore this gives the theme park industry more power over the price. The
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switching cost is low, but since Disney is considered to be an important customer due to its size
and the volume its orders. This creates a stronger relationship with the suppliers.
The threat of substitutes is low. It includes beaches, museums and other vacation destinations.
The substitutes are there to replace the adventure, fun family bonding vacation and memories.
Many customers are loyal to its brands since they offer a unique form of entertainment created to
please every member of the family; therefore the willingness to switch is low.
The final force that impacts the industry is the rivalry among the existing companies and in this
case is medium. The three rivals are all approximately the same size, and their parent companies
are operating in different segments of entertainment and media industry. Disney owns and
operates eight parks in California and Florida that attract over 73 million visitors each year (The
New York Times, 2012). The company manages and has 51% ownership interests in Disneyland
Paris along with the 48% in Hong Kong and 43% in Shanghai Disney resort (The Walt Disney
Company, 2012). Disney also licenses Tokyo Disney Resort in Japan. On the other hand,
Universal Studios (Comcast Corporation) fully owns and operates three parks in California and
Florida, with annual attendance of about 18 million. They license Universal Studios Japan and
Universal Studios Singapore. Furthermore, Six flags is more local, owning and operating
nineteen parks of which sixteen are in the US, two are in Mexico and one in Canada. Industry
growth rate is a factor that determines the level of rivalry. The theme parks and resorts represent
one of the few areas of steady growth, other than cable television for media and entertainment
conglomerates (New York Times, 2012). In Walt Disney case, Parks and Resorts have the highest
growing net income, 22%, when compared to its other business segments. The theme park
industry is experiencing growth mainly due to the tourism industry growth, both domestically
and internationally.
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By analyzing the Theme Park and resort industry using Porters five forces it is evident due to the
medium of power of the most forces that the industry is profitable.
IV. Internal Environment

(IFAS, Exhibit 2)
A. Corporate Structure
Disney has Strategic business unit (SBUs) structural form, which consists of divisions composed
of independent product-market segments where managers have full authority and responsibility
for the performance results of their units. Disney operates in five different units: Media
Networks, Parks and Resorts, Studio Entertainment, Consumer Products, and Interactive Media.
The structure of an organization influences the flow of information, the context and nature of
human interactions. The company is at Stage III of corporate development therefore it has central
headquarters and decentralized operating SUBs. Disneys headquarters coordinate the activities
of SUBs through performance-and results-oriented control reporting system. At the same time,
the company follows profit multiplier model by developing concepts that through synergy can
generate profit.
B. Corporate culture
The Walt Disney cultural value is based on bringing happiness to millions, celebrating, nurturing,
and spreading wholesome American values. The company strives to maintain an organization
that is diverse and professional by investing in its employees. They try to maintain the highest
standard, which reflects their name, lifestyle and customer service. All the members receive
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training at the Disney Institute that is specifically created to educate employees about quality
service, brand loyalty, leadership excellence, people management and creativity. More than half
of Fortune 100 companies professionals from all areas of business attended the Disney Institute
to improve their management and customer service. Disneys organization shows cultures depth,
strong norms, promoting quality and consistency. The company has a strong belief in reducing its
environmental impact by decreasing electricity consumption, waste, and water use. It inspires
employees, business partners and consumers to take action for the environment in their own
communities. According to Fortune worlds most admired companies the Walt Disney Company
is number nine.
C. Corporate Resources
1. Marketing
Proper implementation and the execution of a strategic marketing plan is essential for the success
of any company. Disney has been able to translate storytelling, magic and happiness into a
lifestyle and highly profitable business. Its unique strategy is focused on entertaining the whole
family, instead of only targeting kids or adults. To achieve the competitive advantage they
differentiate themselves through the powerful and unique ability to capture the targets hearts,
and feelings of nostalgia along with the service quality and constant innovation. They position
themselves in the market as Magical, Lovely, and Happy world of family entertainment. For
every animation that Disney produces, the Disney store, parks and channels take part in the
promotion. This type of cross promotion and synergy allows the company to minimize
advertising cost and increase profits in different business units. This concept cant be easily
learned or duplicated by others. Deep and broad knowledge about family entertainment and
customer service is a capability on which Disney relies to create corporate-level competences in
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terms of advertising and marketing. The company focuses on responsible marketing by offering
family packages, discounts and special promotions for its customers. According to the Business
Insiders list of companies with the highest advertising budget Disney is rated number ten with
$2.1 billion in 2012 (Business Insider, 2012).
2. Financial Analysis
Liquidity Analysis
The current ratio is mostly used to give an idea of how well the company can pay its short-term
liabilities. The Walt Disney current ratio of 1.07 is greater than 1 which means their assets can
cover their liabilities. However, when compared to the industry average of 1.64 we can clearly
see that Disney Company is not as liquid as its competitors. Standard current ratio that is
acceptable is 2:1 for a healthy business; however for entertainment diversified industry it is
1.5:1. Furthermore, quick ratio shows that Disney holds fewer inventories than its competitors.
For every dollar of Disneys current liabilities, it has $0.95 of very liquid assets to cover the
immediate obligations. The reason why Disney is not as liquid as it peers is because it has higher
operating costs by keeping its range of theme parks and cruise ships running. These projects
cause a major drain on Disneys liquidity therefore it's reflected in lower-than-average quick
ratio of 0.95 and current ratio of 1.07.
TABLE 1.LIQUIDITY RATIOS
Liquidity
ratios
2008
2009
2010
2011
2012
Industry
average
Current
ratio
Quick
ratio
1.01
1.33
1.11
1.14
1.07
1.64
0.91
1.19
0.98
1.01
0.95
1.40
(Industry average: Time Warner, News Corporation; data taken from CNBS)
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Asset Utilization Analysis

Fixed asset turnover is a ratio of sales to net fixed assets, and it measures how effectively the
firm uses its plant and equipment. The result during the past five years is constantly under the
industry average, indicating that Disney is not using its fixed assets as intensively as other firms
in the industry. This is mainly because Disney has a lot more fixed assets including hotels, theme
parks, property and equipment when compared to its competitors. In 2012, Disneys net fixed
assets accounted for $21,512 billion while Time Warner and News Corporation had $3,942
billion and $5,814 billion. In this case, fixes asset turnover is not a good indicator of Walt
Disneys efficiency. However, total asset turnover shows that Disney is effectively using its
assets. In 2012, the ratio was 27.5 compared to the industry average of 13.7. The total asset
turnover is the amount of sales generated for every dollars worth of assets and the higher the
number the better.
Inventory turnover ratio shows how many times the Walt Disney Company sells its inventories
and replaces it with new ones during the year. In this case, inventory includes vacation timeshare
units, merchandise, materials, and supplies. The consolidated income statement does not include
the exact number of merchandise products, DVDs, and movie tickets sold. In Table 2, we can see
that each item of Disneys inventory is sold and restocked, or turned over, 27.5 times per year
which is higher than the industry average. This shows strong sales and that Disney does not hold
excess inventory. On the other hand days sales outstanding represents the average length of time
the firm must wait after making the sales before receiving cash. Disney has 56 days sales
outstanding, well below the 80-day industry average. This indicates that Disneys customers, on
average, are paying their bills on time.
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TABLE 2. ASSET MANAGEMT RATIOS

Asset
utilization
2008
2009
2010
2011
2012
Industry
average
Fixed
asset
turnover
Total
asset
turnover
Inventory
turnover
DSO
2.16
2.05
2.14
2.08
1.97
5.39
0,61
0,57
0,55
0,57
0,56
0.47
33.7
28.4
26.4
25.6
27.5
13.7
52
49
55
55
56
80
Profitability Analysis
The net profit margin indicates how much of every dollar of sales the company keeps in
earnings. Disneys net margin has been constantly increasing, from 11.7% in 2008 to 13.4% in
2012, with the exception to 9.2% in 2009 due to the economic recession. However, compared to
the industry average of 9.6%, Disney has a higher level of earnings than its peers. As mentioned
earlier, Media Networks is the largest contributor to Disneys performance, due to the growth in
operating income at Cable Networks driven by the constant growth at ESPN and higher equity
income at A&E Television Networks. Furthermore, return on assets shows how much has been
earned for each dollar invested in assets while return on equity measures companys profitability
by showing how much profit the firm make with the money the actual shareholders have
22
Aleksandra Perisic
invested. From the table, we can see that Disney has ROA of 8.1% which is higher than the
industry average of 4.5%. Since a lower net margin is usually followed by a lower return on
assets, it comes as no surprise that Disneys return on assets has decreased in 2009 from 7.1% to
5.2% in 2008. Moreover, the return on equity in 2012, 14.3% is higher than the average 9.8%
therefore Disneys performance in utilization of shareholders equity is higher than its peers
average.
TABLE 3. PROFITABILITY RATIOS
Profitabilit
y ratios
2008
2009
2010
2011
2012
Industry
average
Net Profit
Margin
ROA
11.7%
9.2%
10.4%
11.8%
13.4%
9.6%
7.1%
5.2%
5.7%
6.7%
8.1%
4.5%
ROE
13.7%
9.1%
10.6%
12.9%
14.3%
9.8%
Leverage Analysis
The debt to asset ratio indicated what proportion of funds is provided by the creditors. Disneys
debt ratio has never been above 50% over the past 5 years and currently sits at a healthy 44.0%
which indicates the less aggressive method to finance its growth with its debt, reducing its risk as
a company. From the table 4, we can see that Disneys expansion is being done in a controlled
manner since its debt ratio is far below the industry average of 54.2%. Times Interest Earned is a
measure of the firms ability to meet its debt obligations through interest payments. From the
table, we can see that Disneys interest cover ratio is in an excellent position as it generates
enough revenue to satisfy the interest expenses.
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TABLE 4. DEBT MANAGEMENT RATIOS

Leverage
ratios
2008
2009
2010
2011
2012
Industry
average
Debt ratio
44.0%
43.9%
46.0%
45.3%
44.0%
54.2%
TIE
26.1
24.5
17.2
24.6
26.9
4.4
(Industry average: Time Warner, News Corporation; data taken from

CNBS)
Investor ratios
The price-earnings ratio is an indication of the amount the investors are willing to invest per each
dollar of earnings. It is also important to investors since it gives them an idea of when will their
investments be paid off through dividends. The P/E ratio is above the industry average, so this
suggests that the company is growing. On the other hand the dividend payout ratio is the actual
dividends that shareholders receive as a percentage of the profits of the company. It can be a
representation of a policy of paying high dividends or providing for future growth of the
company and the sustainability of the companys operations.
TABLE 5. MARKET VALUE RATIOS
2008
2009
2010
2011
2012
Industry
average
P/E
11.2
17.1
17.9
14.07
16.8
15.6
Dividend
s payout
15.0%
19.7%
16.9%
15.6%
18.9%
24
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ratio
The strength of the Walt Disney Company can be seen through its record sales and net income in
2012. Its earnings per share increased 37% from $2.28 to $3.13 over the past 5 years. All in all
Disney is financially sound company due to the low debt ratio and higher than the industry
average ROA and ROE. Its net profit margin increased to 13.4% in 2012. Even in the economic
recession Disney outperformed the S&P 500 index and its competitors, with a decline of roughly
32% compared to the S&P 500's 40%, Time Warner's 54%, and Viacom's 45%.
3. R&D
The Walt Disney Imagineering is in charge of creating and building theme

parks,
resorts,
cruise
ships
and
other
entertainment
ventures.
The
companys Imagineers have expertise in 150 diverse disciplines such as

writing, architecture, illustrations, electrical engineering and graphic design.
These artists are guided by the philosophy of its founder, If you can dream
it, you can build it. The creative approach and focus on innovation allowed
Imagineering to protect over 115 patents.
4. Human Resources
The main philosophy of Disneys HRM consists of linking the employee

experience together with the customer experience. Only employees who are
satisfied and motivated provide outstanding services. This is why Disney
developed a system called Role and Purpose which emphasizes that
everybody has a different function in the organization, but all employees
have the same goal: making sure that every guest has the most splendid
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experience. This system aims to achieve that everyone knows how his or her
work matters in the final outcome.
V. Analysis of Strategic
Factors (SFAS, Exhibit 3)
A. Situational Analysis (SWOT)
Disney has developed a strong, well known brand name and image over the past 120 years. By
redefining the amusement parks, inventing the theme parks and brining animated characters into
life, Disney opened the door to the new world of imagination that surpassed everyones
expectations. The brand name has become the most popular bookmark in every childs
upbringing and thats the quality which many competitors would strive to acquire. According to
the Interbrands top 100 brands, The Walt Disney Company is the 13 th most recognized brand in
the world. Its second strength is the international recognition that allows Disney to expand into
other markets without investing into heavy advertising and promotion. According to the Hoovers
report, The Walt Disney Company is the largest media and entertainment company in the world
(Hoovers, 2012).
Disney also owns one of the most powerful brands in the entertainment industry such as ESPN,
ABC, Marvel, Pixar and Lucas arts. It has a diversified portfolio and doesnt rely solely on the
individual unit segments. This approach reduces the risk of going out of business. Its corporate
culture is built upon innovation, quality, community and family values. Disney has created a
culture where employees feel valued and motivated. According to the Forbes list of most
admirable companies Disney is rated number nine.
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Aleksandra Perisic
Along with many strengths Disney also has some weaknesses. Maintaining high operating costs
of theme parks, resorts and cruise ships reduces Disneys liquidity. These projects represent the
biggest weakness of this high capacity business. Another weakness is the Interactive media
segment net loss of over $200 million that has been constant for the past five years.
When it comes to opportunities, Disney should consider phenomenon of age compression or
the shift from traditional toys and games to more sophisticated video games. The company
doesnt have a large presence in the rapidly growing video game market even though its
constantly investing in this sector. In 2012, Disney invested over $100 million in a new
Infinity game (The Walt Disney Company, 2012). The company has been focusing mostly on
creating educational games that are aimed towards toddlers.
Furthermore, BRICs nations are experiencing the growth in GNP by 4% due to the fast-growing
middle class and booming working population. With the economic recession in the US and
Europe, Walt Disney should take advantage of this emerging economies and penetrate the Asian
market even further to make up for the possible losses in the rest of the world. As mentioned
earlier, Chinese government loosened the foreign ownership to 49%, allowing the other 51% to
be owned by a joint venture partner which creates even more opportunities for Disneys growth
(The Wall Street journal, 2012).
B. Review of Current Mission and Objectives

No changes required for mission and current objectives are appropriate.
27
Aleksandra Perisic
VI. Alternative Strategies

and Recommended
Strategy
A. Strategic Alternatives
Due to Walt Disneys strong financial standing and increasing revenue growth rate, along with
the companys growth objectives and strategies, retrenchment and stability are not considered
here as beneficial options. Thus, all strategies will be aimed at growing the company.
Alternative strategy #1
The first option is growth through concentric diversification by acquiring Rosetta Stone,
language Instruction Company. The company combined language learning with technology
offering its services in the United States and internationally. It sells language-learning products
and services, such as software, online services, mobile applications, and audio practice books in
more than 40 languages. The whole learning experience is interactive designed to teach,
improve, and quiz learners through its software program. The main reason for Disney to choose
concentric diversification as strategic direction through Rosetta Stone is because it already
operates in a similar industry through its consumer product segment (Disney Publishing). It
owns Disney English, which specializes in English language training for young learners
through 43 centers across China. Disney is planning to further expand the program to 150
schools teaching 150,000 children annually with operating earnings expected to surpass $100
million by 2015. Additionally, Disney owns the Baby Einstein Company, aimed at teaching
28
Aleksandra Perisic
babies and toddlers through interactive activities and discovery kits. Lastly, Disney continues to
grow their interactive unit, recognizing the need for a strong computer software industry. Rosetta
Stone is a solid choice since it has a strong and unique brand name, and at the same time is still
relatively small, with annual revenue of $280 million. Rosetta Stone sells its products and
services through retail stores, online, call centers, and direct sales. This acquisition would help
Disney expand its technology and software development sections.
The second strategy is horizontal growth through acquisition of Electronic Arts, a major
developer of video games and popular franchises. Electronic Arts produces, markets, and
distributes game software contents and services for the best-selling platforms, computers,
smartphones, and tablets. It is known for the collection of sports-based video games based such
as Madden Football, NBAJam, NCAA, FIFA, NHL, UCF, and Real Racing. These mega
franchises are not one hit wonders, but rather popular games that are renewed annually. The
reason for choosing this particular company is due to Disney's emphasis on sports by owning the
ESPN brand. This strategy will help Disney gain control over the sports video game market and
give a chance to compete with the major giants in this industry. EA is also a provider of casual
games for a mass audience under the PopCap brand, for both mobile devices and socialnetworks. Additionally, Disneys Interactive has been unprofitable for the last ten years; therefore
the company needs a popular game producer with knows titles that is going to improve
interactive segments financial position. EA Company is a publicly traded and brings in annual
revenue of $4.2 Billion. The company sells its products worldwide through retailers, electronics
stores, and game software specialty stores. On the other hand, the video game industry is
29
Aleksandra Perisic
expected to reach $70.1 billion by 2015, could finally have a chance to compete with the best
players in the industry.
The third growth option is product development strategy which involves modifying new products
and services and offering them to the existing market. In this case, Disney could introduce
Marvel Adventure and Star Wars theme parks. Due to the outstanding global box office
success of The Avengers, and Iron Man the company should develop Marvel theme park and
take the rides to the next level. This approach would further differentiate them from the
Universal Studios and Six Flags. Iconic characters such as Hulk, Iron-Man, Spider-Man, and
Fantastic Four should have their own attractions and rides. Even though, Universal Studios
currently owns the rights to Marvel attractions in Florida and Japan, Disney can wait for those
licenses to expire and start with the Marvel Adventures in Asia, and later expand to the US and
Japan.
Disney's existing parks had outstanding performance with 22% increase in the segment operating
income, when compared to year 2011. In the first three months of 2013, operating income in
parks and resorts rose 73% to $383 million and the sales increased 14%. However, Star Wars
theme park should be marketed for adults since true Star Wars fans are now in their 40s and 50s.
There could be rides for the kids, but this park would have amazing roller costers and interactive
features that engage people of all ages.
The fourth growth option is market development strategy which focuses on finding new markets
30
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for current products to increase the companys performance by rising sales and profits.
Companies can develop market on geographical or demographical level. In this case Disney
should expand to BRICs, Singapore and South Korea since these nations have the fastest
growing GNP. In 2012 the average GNP growth for BRICS was 4 % in comparison to 0.7% for
G7. On the other hand South Korea and Singapore have developed market and constant
economic growth of approximately 2 % per year. After locating the new Disneyland in Shanghai,
the company should further expand its theme parks and resorts in Moscow (Russia), the Sentosa
Islands (Singapore) and Hwaseong (South Korea). Universal Studios opened the resorts in
Singapore and South Korea in 2010 and announced the new opening in Moscow by 2018. Ever
since Comcast acquired NBC Universal, the Universal Studios stepped up the game by investing
$265 million in Harry Potter-themed addition to its resorts which increased the attendance by 30
% (The New York Times). It also invested around $100 million for the 3-D ride themed to
Transformers movies.
B. Recommended strategy
Horizontal growth through acquisition of Electronic Arts Company is the
recommended strategy, since it could lead to a number of great synergies.
Placing EA Sports and ESPN under the same family would improve the
interactive media performance, reach a wider audience, acquire new skills
and technologies and eventually reduce costs. With a market capitalization of
$6,75billion, EA could be acquired by a giant like Disney.
VII. Implementation
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Aleksandra Perisic
Through the series of acquisitions such as Marvel, Pixar, Lucas arts, The Walt Disney Company
has gained valuable experience in the process of integrating companies under the Disney family.
The ability to effectively determine where to expand was important to the companys ability to
differentiate itself in the marketplace. In order to implement the acquisition of EA Company,
Disney needs to put objectives, strategies and policies into action by developing programs,
budgets and procedures.
Programs
The first step involves the evaluation of the EA Company and making sure the structure follows
differentiation strategy. Stages of the corporate development are categorized by different
objectives, strategies, reward systems and problems within the organization; therefore it is
crucial that EA follows the same pattern of development. The next step would be implementation
of the management by objectives (MBO) that supports decision making through shared goal
system. The final objective should focus on the performance improvement, increased value by
reaching different targets, reducing costs and creating synergy. The top management should
select the right people key positions by integrating the skills and knowledge of different
company members. Furthermore they should encourage new work relationships based on trust
and teamwork. To avoid potential clash of corporate cultures Disney should implement
assimilation method of managing the two cultures where the EA members could adopt Disneys
values and strong quality-oriented culture. The next step would involve developing a marketing
plan and constantly reviewing the implementation process to correct the initial obstacles.
Budgeting
Disneys decision to acquire the EA Company is based on the fact that it can increase the wealth
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Aleksandra Perisic
of its shareholders. The company is financially healthy and able to borrow cash from banks, due
to the low debt ratio and high amount net fixed assets on the balance sheet. The budgeting
process would require the budget for the buyout depending on the evaluation and initial offer
price. The company need to increase its investment in research and development because that is
the main competence of EA. Board members with more global business experiences should be
recruited towards the future growth. Disney will have to further create a budget for marketing
strategy, new salaries, distribution and licensing agreements.
Procedures
Disney is following differentiation competitive strategy therefore it controls and manages sales
force more closely than the cost leader. Differentiation strategy focuses on long term customer
relationships created due to the strong sales force. Disneys procedures need to ensure that their
customer service is consistent and that all of its brands reflect its standard.
VIII. Evaluation and

Control
To evaluate the companys performance and effectiveness Disney needs to take in consideration
both financial and non-financial measures. For the financial control Disney should include key
measures such as ROE/ROI, Operating and Net Profit Margins, Cash flows and Incremental
sales. On the other hand for the non-financial measures it should focus on quality performance,
customer satisfaction rate, sales and profits. It should also include reviews and market share
33
Aleksandra Perisic
growth numbers. Since EA Company doesnt share the same work ethic and cultural values,
managers must encourage communication and teamwork
Exhibit 1. EFAS Table (External Factor Analysis Summary)

Weight
Rating
Wt.
Score
Comments
Age compression trend
0.1
0.1
Age compression- shift

from traditional toys and
games to video games. The
video game industry is
expected to exceed $112
billion by 2015
Mobile-based and tablet popularity

for entertainment purposes
0.1
0.4
Increase in popularity of
Mobile-based and tablet
technologies
for
the
entertainment purposes such
Key Internal Factors

Opportunities:
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Aleksandra Perisic
as games, videos, movies
Developing World
0.08
0.24
Rise in GNP - In 2012,

Brazil had 2.26 trillion,
Russia 2.85 trillion, India
4.49 trillion, China $11.33
trillion.Those nations which
are experiencing the highest
growth are likely to bring
most wealth
Chinas foreign ownership policy
0.08
0.24
China loosened up their

foreign ownership policy
from 49% to 51%
Expanding seniors markets
0.08
0.24
Decline in the proportion of

the population composed of
children and increase in
elderly population in the
industrialized nations
Economic Recession
0.1
0.3
Less income available for the

entertainment
Tax Increase
0.08
0.24
Example - Japan doubling the

5%
consumption
taxcitizens are less willing to
spend money on luxury
items,
services
and
entertainment
Intellectual property and copy rights
0.1
0.3
Core competency
Licenses and Piracy
0.09
0.27
In 2011 only 1.28 billion

movie tickets were sold in
America, which is the lowest
rate since 1995. The start of
online video and a rising
amount of piracy has led to
slow or flat growth in movie
attendance
Changing household composition
0.09
0.09
Changing
household
composition, single person
households
are
most
common household type in
the US- less families
Cultural differences
0.09
0.36
Culture is a main obstacle
Threats:
35
Aleksandra Perisic
that can be seen as both
opportunity and threat for
many international markets
due to the differences in
values, beliefs and aptitudes.
Total scores
1.00
2.89
Exhibit 2 IFAS Table (Internal Factor Analysis Summary)
Key Internal Factors

Strengths
1. Brand name and image
2. International recognition
Weight
Rating
Wt.
Score
Comments
0.1
0.5
0.1
0.5
Not only does the company

have
strong
corporate
brands, they also own
additional brands such as
ESPN, Miramax, Touchstone
, Pixar and Lucasfilms
Disney is the largest media
and entertainment company
in the world. According to
the Interbrands top 100
brands, The Walt Disney
company is the 13th most
36
Aleksandra Perisic
3. Experienced top management
0.09
0.36
4. Unique products and services
0.09
4`
0.36
5. Corporate culture
0.08
3`
0.24
6. Diversified portfolio
0.08
0.24
Weaknesses
1. High operating cost
0.1
0.3
2. Interactive media loss
0.1
0.1
3. High and risky investments
0.06
0.12
4. Disneys success depends on the

overall economic condition
0.2
0.6
Total scores
1.00
recognized brand in the

world
Management with expertise
in
business,
finance,
communication and film
production
Differentiation-powerful and
unique ability to capture
targets hearts, and feeling of
nostalgia,
representing
American culture and values
Disney is #9 on Fortunes
most admired companies
Company operates in 5
different segments
In 2012 Disneys cost
accounted for$33,415billion.
Gross margin was 0.21
which was less when
compared
to
NWS(0.38),TWX(0.45).
This is because the company
has wide range of productslow margin of safety
Has been experiencing a net
loss of $216 million in 2012
that has been constant for the
past 5 years
Lucasfilms-$4
billion
investment in a project that
will start generating revenue in
4 years (risky investment)
From 2008 till 2009, there was
25% decrease in net income
due to the economic crisis
3.32
37
Aleksandra Perisic
Exhibit 3 SFAS Table (Strategic Factors Analysis Summary)

SFAS
Weight
Rating
Wt
Comments
score
S1.
Brand Image
0.1
0.5
S3.
Corporate culture
0.1
0.3
W2.
Interactive media loss
0.1
0.1
Not only does the company have strong

corporate brands, they also own
additional brands such as ESPN,
Miramax, Touchstone , Pixar and
Lucasfilms
Disney is #9 on Fortunes most admired
companies
Has been experiencing a net loss of $216
million in 2012 that has been constant
for the past 5 years
W4.
Disneys success depends on the
0.15
0.45
overall economic condition
From 2008 till 2009, there was 25%

decrease in net income due to the economic
crisis
Chinas foreign ownership policy
0.1
0.3
China loosened up their foreign
38
Aleksandra Perisic
O4.
O3.
ownership policy from 49% to 51%

Developing World
0.1
0.3
Rise in GNP - In 2012, Brazil had 2.26

trillion, Russia 2.85 trillion, India 4.49
trillion, China $11.33 trillion and the
UAE $380.51 billion. Those nations
which are experiencing the highest
growth are likely to bring most wealth
O2.
Mobile-based and tablet
0.1
0.4
Increase in popularity of Mobile-based
popularity for the entertainment
and tablet technologies for the
purposes (videos, games,
entertainment purposes such as games,
movies, shows)
videos, movies
T1.
Economic recession
0.15
0.45
Less income available for the entertainment
T4.
Licenses and Piracy
0.1
0.3
Increase in online streaming and free

downloading
Total scores
1.00
3.1
Works Cited
12, April. "Disneyland in Tokyo Is a 10-Year Hit : Entertainment: The Attraction Thrives, Even during an
Economic Downturn. It Has Had 140 Million Visitors." Los Angeles Times. Los Angeles Times, 12 Apr.
1994. Web. 12 May 2013. <http://articles.latimes.com/1994-04-12/business/fi-45190_1_tokyodisneyland>.
Appelbaum, Binyamin. "As Men Lose Economic Ground, Clues Are Seen in Changing Families." The New York
Times. The New York Times, 21 Mar. 2013. Web. 12 May 2013.
<http://www.nytimes.com/2013/03/21/business/economy/as-men-lose-economic-ground-clues-in-thefamily.html?ref=economy>.
"Beijing Loosens Some Foreign Ownership Limits." The Wall Street Journal, 4 May 2013. Web. 13 May 2013.
"THE BILLIONAIRES' CLUB: Only 36 Companies Have $1,000 Million-Plus Ad Budgets." Business Insider.
N.p., n.d. Web. 12 May 2013.
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Bilton, Nick. "Video Game Industry Continues Major Growth, Gartner Says." Bits Video Game Industry
Continues Major Growth Gartner Says Comments. The New York Times, 5 July 2011. Web. 12 May
2013. <http://bits.blogs.nytimes.com/2011/07/05/video-game-industry-continues-major-growth-gartnersays/%20>.
"DIS: Summary for Walt Disney Company (The) Commo- Yahoo! Finance." Yahoo! Finance. N.p., n.d. Web. 12
May 2013. <http://finance.yahoo.com/q?s=dis>.
"EA Video Games." EA Games. N.p., n.d. Web. 12 May 2013.
The Economist. The Economist Newspaper, 21 Nov. 2012. Web. 12 May 2013.
<http://www.economist.com/news/21566576-singapore>.
The Economist. The Economist Newspaper, 21 Nov. 2012. Web. 12 May 2013.
<http://www.economist.com/news/21566579-south-korea>.
"Electronic Arts." Electronic Arts. N.p., n.d. Web. 12 May 2013.
Fonda, Daren. "Zapped! How the Toy Industry Is Being Outplayed by Video Games This Holiday Season." Time.
Time, 17 Dec. 2004. Web. 12 May 2013.
<http://www.time.com/time/magazine/article/0,9171,1009648,00.html>.
"Fortune 500 2013: Annual Ranking of America's Largest Corporations from Fortune Magazine." CNNMoney.
Cable News Network, n.d. Web. 12 May 2013.
"Global 500 Companies 101-200." CNNMoney. Cable News Network, n.d. Web. 12 May 2013.
Luscombe, Belinda. "Modern Family: More Likely to Be Multigenerational, Unmarried or Interracial |
TIME.com." Time. Time, 30 Apr. 2012. Web. 12 May 2013.
Mezyaev, Alexander. "BRICS: New Geopolitical Model and Russias Foreign Policy Priority." Strategic Culture
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"Multi-generation Households Are on the Rise." CNNMoney. Cable News Network, 03 Apr. 2012. Web. 12 May
2013.
"Official Rosetta Stone - Learn a Language Online - Learn Spanish." Official Rosetta Stone - Learn a
Language Online - Learn Spanish. N.p., n.d. Web. 12 May 2013.
"OUR COMPANIES." Interbrand. N.p., n.d. Web. 12 May 2013.
"Plunkett Research, Ltd." Entertainment Media Publishing Market Research.N.p., n.d. Web. 12 May 2013.
<http://www.plunkettresearch.com/entertainment-media-publishing-market-research/industry-andbusiness-data>.
Richtel, Matt. "Digitally Aided Education, Using the Students Own Electronic Gear." The New York Times. The
New York Times, 23 Mar. 2013. Web. 12 May 2013.
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Aleksandra Perisic

Capstone Thesis 2013

The Walt Disney Company-Strategic Audit

FIGURE 1. THE WALT DISNEYS SEGMENT OPERATING INCOME, 2012

Parks and Resorts, 19%

Studio Entertainment, 65%

Source: The Walt Disney Financial Report, 2012

Disneys objective is to be the worlds leading producer and provider of

II. Strategic Managers

III. External Environment

IV. Internal Environment

Asset Utilization Analysis

TABLE 2. ASSET MANAGEMT RATIOS

TABLE 4. DEBT MANAGEMENT RATIOS

(Industry average: Time Warner, News Corporation; data taken from

The Walt Disney Imagineering is in charge of creating and building theme

companys Imagineers have expertise in 150 diverse disciplines such as

The main philosophy of Disneys HRM consists of linking the employee

B. Review of Current Mission and Objectives

VI. Alternative Strategies

VIII. Evaluation and

Exhibit 1. EFAS Table (External Factor Analysis Summary)

Age compression trend

Age compression- shift

Mobile-based and tablet popularity

Key Internal Factors

Rise in GNP - In 2012,

Chinas foreign ownership policy

China loosened up their

Expanding seniors markets

Decline in the proportion of

Less income available for the

Example - Japan doubling the

Intellectual property and copy rights

Licenses and Piracy

In 2011 only 1.28 billion

Changing household composition

Culture is a main obstacle

Exhibit 2 IFAS Table (Internal Factor Analysis Summary)

Key Internal Factors

Not only does the company

3. Experienced top management

4. Unique products and services

2. Interactive media loss

3. High and risky investments

4. Disneys success depends on the

recognized brand in the

Exhibit 3 SFAS Table (Strategic Factors Analysis Summary)

Interactive media loss

Not only does the company have strong

Disneys success depends on the

overall economic condition

From 2008 till 2009, there was 25%

Chinas foreign ownership policy

China loosened up their foreign

ownership policy from 49% to 51%

Rise in GNP - In 2012, Brazil had 2.26

Mobile-based and tablet

Increase in popularity of Mobile-based

popularity for the entertainment

and tablet technologies for the

purposes (videos, games,

entertainment purposes such as games,