SIF.

ATEGIC MANAGEMENT

{:.*w*.% a* *& {. & %#

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Walt Disney Company-

*ffi

ZOOT

www.disney.eonr

NYSE: DIS
Heatlquartered in tsurbank. Calitornir. W.ilr
Drsrrel
ci*.llri l.e.ur lTr\ cilprured rhe
attentiun o[milliorrs ot people arounti rhe uor|1. ,CrrnrfantJer
oti.r,n$aquJi*ni,ngrLrrn
rhctnc parks.
resarrs' recrearions. **ur-l.: TV shows. radio program*ilnglj*.;;;ria lrfl
underniu,
cEi:)
Bob lger who replaced Michael Eisner in u0o!,
{iisney's ,iet inconx
,rr prrce,}r i* y&fl
to $4 68 billion' whrle re'enues clirnberl 5.2 pcrcent
,,,'s:s.iniiir";;.

-"*a

,;;;;

had

rw* beir-,rrTicr

ff.:{r}t1rs,an-d'tf1pv$;;5 ist*e cari***an: ne*a w*ii,bhssr.ThsninxNT_

lfashhicjn
Disncy's Piratis of the Curihhean Tw.o mo'ie
as ;;;t ,;'04";,'ii,,*" i,,,i,,,,r,,r;..*.nJ;r;
Ruarouille. a movie from Disney's pixar .ivisr'n.
*.r" rrrr-. cil',;;; ,;;;;;r;.';;;;;,;
resuscitare the'Dirineyland fhenr parkr irr paris:anrj
Flon$ KotA.Xi fr*, pur Diwey moyres
and A8c shovs on Appre's ipaer, which :oo
has greiirry uea.ntea D;-;;;y Fre plans
r* speud
,$t;l biliion'in: 2008-20* ro rer.irariz,. un. drn.f'C;;f-*;;;ilr,*r,
'-r !..4rrvr,r
in
Anah*im.
Califonria, which has nor bcen doing weli.
History
Mr' walr Disney and his hrother Roy arrived in California
in the summer trf 1923 ro scll his cartoon'call$d Al'ff's wonderl*ul. A distributor
nameo M" l- winktei*liiit* * disrrikrte
the,
Alice comedies on ocrober r6. r923. and the Disney
Brothers crn."ri,roio

tl" years' &e compan.v produced

3::r
S.:,1, t:*Fl:nies

many carlaon s;.ttt*.,oiwa,'r tlt*

was founded.

r_tu

natzhrr

t$27) t*

t1932t. Snow White nirt ,t n Sr:rrn,flx;arfs

tr,Si;ii; ,t pinotr:hiet anel
Fantasia tr9101- The rame of rhe company wa<
ihungea u wirtr piiney &udi, irl lp?s,

ffi
"':

Mickey fltaure'balloons.
I-sureni Srna k/Alamyr lrtages

Soa rce :

COHESION CASE

31

In 1950, Disney completed its

and
eorrrp*ny
beg*n television with
in 1954. the
tlilm. Treasure /sjand,
"i.a:r::nilitilogl
Ihe Micfu1'Mouse
most
successfrl
series,
1955.
Disney's
series.
ln
Ir;mrr:.,
.uu:. :eic. ,{iso in 1955. the new Disneyland Park in Calil'orni* wa$ *pe*ed.
-,sq* --realed a series of release$ fnrm the i95k througtr the lgTS*. ineluding llre Siagg,r
.,'.r' s -l;r= \!an Poppins, and lhe l*le fiuxi. Mr. Sfalt llisney diecl iu 1966. In 1969. the
lrymr, i,*t:ur irarted its educati*nal films *nd mat*rials. Ansther important tiure of Disney's
p*;6;p-, Lts .rpening the Walt $isney Wbdd project in Orlardo, Florida in 1971. In 1982. the
im:rr --'a:=,:pened as pa* of lYak Disney World. ln I983. Tokyo Disneyland opensd'
rdiucrtc'"

h{:r*s ei'*eryed in

2OO8

li*r -i:-ircn

1928 with the first cartocn in sound.

n.t.'rerrrng

rhe network television in 1983, the company created a popular cable networlt.
-tr lec., Channel. ln 1985, Disney's Touchstone division began the successful Coklen Girls and
!!ovie.In 1988. Iliur*y ilpe$ed Grand Floridian Beach and Caribb*an Beach
.'lrlxmr
.a&T
Disney Work} along with thme new gated attrartions: the DisneyllvlGM Srudios
*euiw,m E
]irmle PEr* Pbasure Islaadi und Typh*on Lagaon. Atthc s*me time, lilmnraking hit new heights
,u l"m,mqn pr *re first time led Hollywood studios in box*ofiice gross. S$me $f the suctessful film.ti
ulr=E 3l!e' Fntmed Rctger Rabbit. Cootl Monting Viernam. Three Men and a Baby, and later'
.ilNirrmrl .' 5c/ur:i the Kids; Oie* ?nn<:; Preiry l{furxan; and
Disn*y fio-vsd futtY
y-1!
"gisarl'Acr.
r', .aunrli" Ftrollywood Pietures and qcquiring the Srather C*qp. {r:wner *f the Disneyland Hotcl)
ury rEl::irson starion KHJ {Los Angele*}, which was reiramd KCAL. {n merchandising, Disney
mn=Dac. Childcraft and opened numerous highly successful and profitable Disney Stores.

!*al;t

,Y

i-, ii93. Disney's

animation began reaching evsn Srertsr audienc*s utith I&e Lifle

r&e feas}, and dJcddin. Hollyw*od &ecords was fsrrned to offer a
r i-r .<arion of recordings ranging from rap to morie soundtracks. New telelision shows.
rre!:n &{ {src v+'ith Fegfs *nd }(ot&3 lee, Errpty Nast, Oinos*xrs. and Hanrc lmprttt'emcnt,
niimuuriiri Disney's televisian b*se. For the first dme, Disney rnoved into publishing, forming
:.,,lrum Books. Hyperi*n Eaoks fnr Children. and Disney Press, which rcleased books on
lmm,-" .::od non-Disn*y subjeetr. h: 1991, Disn*y purchased lli.rc$ver maB$ri$s. the letding
:mbilrcr *-ience monthly, As r lotally:new.yC$tut$, Disney was atvarded, in 1993, the fran:tlrx ::r a \ational Hackey League &am, th* &lighty Ducks tf Anaheim'
tr 7':. Disneyland Paris opened in France. Disney successfully completed many prujects
mrr.r.rrlr,rit the 1990s by venturing into Broadway shows" opening up 725 Disney Stores,
- ilrirl- rhe California Angels basehall team. opening Disney's Wide World of Sports in Walt
l":r1 $'orld. and acquiring Capital Cities/ABC.
to:m fffiO to 100?, Disney c*ated n*w attractisns in its theme parks, prntluced many s$tcessmur imui opened new heitels. rad built Flgng Ksng Disneyland. For eight decader, Sfalt ilisaey
*
-^srcris] has successfclly esablished itrelf asa pi$n*cr in the fieid of family ertertsinm$nt,_
{mr?l:r.rid- T-he Beaut.v

r::-;:

*nd

ff1,..-;*'*

\. -ry $k*
"+

lg -:

t,sL--{

lssues

-r.rtr:rte Struct$rs and Ii{iXiOn

r-. -daed in Exhibit l- l. Wah Disney

Company operates using a strate8ic business unit (SBU)

',r,:rganrzadonal srrucftrre cr:nsisting of four SBUs (l) Disney Consumer Products. (?) Studio
:=sranrrrcnt. {3} Parks and Resorts, and (4) Media Nerworks and Broadcasting. Note aU the wail-

rl-ero

\\

large divisions that are pafi af the Disney umbrella of crmpanies, ranging frcrm ESPN Inc.
tsoeaa Vista Records to ABC Television and more. This is a huge, weil-known an<l well-man-

,gor- Jirersified corporation. Dsney is financially srong as indicaed in Erhibirs l-2 and l-3.
Disney does not have a stated vision stateirtent.
Tbe company's mission statement is as follows:
The mission of Walt Disney Company is to be one of the world's leading produryrs and
p,ovi&rs of enterteinmsnland,lin$ar*ratlen ,[Jqing *:ur,pnrtfslir of brafids lo,differEntiile our content, services ard a**u*er produclr. we seek to develop the mosr creative,
rnrrcvative and profitable entqrteinmtsnl,experiencel and relaied produe* in the world.

.tuciats By Segrnent
= taibir I + ieveats Disney's

revenue and operating income by each business segnlent. Note that

::e Disaey Media Network* segment briags,ix the,Tns$t {e.w$ugs and operating ineome. This
s+rlent. as well as th* Ftrks & Rc*gt* segm*nt, i* gruwing. Ilowevrr, lhe companyls $tudia
Fotenainment segment and their Consumer Products $egmsnt have expe,rienced decliaing
-:'..nue\ in the lart three years. These are prohlem areas for the company.

t*.^ t

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32

PART

ExHlBlT

!-l

OVERVIEW

Oi

STRATEGIC MANAGEMENT

Disneyt Corporate 5tru(ture

l{alt }irney
t*mp*ny

:.:

:, :,:j

):1:#&g*,Wi!g@

',i..,.r:r','.,1,:,i;;1$.q

'ii.: ,i

1. l{;rlt l}ilnev
2. {}is**yland
1. Tokyrr l"li*rt*r
4. I]ixnevlmrl Firris
5. l'l*ng Ko;rg lilisneYland
6. llisn*t, Lniic* Li$*
7. llirncy v*acutj*rr Cluir

hrr.'.',1i,:..';,

?11{.$ii4ryxpgry:,,,;,;.,,.;,'';.'

;6;

. 4$,;,:,'t:::;1t:.';,:,.

&'.,|ffi,

Broadca*ting
Disnrlr'AB{i 1'e}evi*i*rr

lt'*rld

;.;t,',,.'l;,.;,

*. DisneyPubli*hing

Media l.{er}rork$

Farks ax{ Ii.esstts

:,

HSPIi Inc.
W;rlt l)i;nry
(1rr;iip

l*tern*l

ABO t)wncd TeleYi*i*fi

S{rti{1ns

i-

:,:; .'t,t

rtE{l Rrrjil

I : ii:}:i:::il

wwwt&W"q;X, Conrolidated lncorne Staternant

Revenues

4S5

Equity in the income of investees

tncome tref,ore incomc axes;rmifiority iaterests

effmtof*-ec

7::125

n1i4g chaftgg

,thr*

Cumulative effect of accounting change

[3

, .$'

4,rg$?;','..$ 3r??4:'',

$ 30J52
{26,7W

(32)

(64),

t59?}
4*3

(6r7)
372

(1,?4n,)

,3339
tl,1w,:

{t77r , ' (1917}

2,369 ''',, 2,34.,,

,{1$3}

:-

31,944

3987.

3,374

4,6,7.4

&rnutative effect of accounti*g charige

2fi)4

26

(1,8ffi)

(t77'' ,

Minoriry intcrests

2005

(27,&37)

5,ff1

(2,814t

Income taxes

70
t8
{5W7
473

t5e3)

Net interest exPense

34,?85

{28,807}

'Y

slle of eqgtry ilwe tme*t attd businss$es

neetruetur.insand impaihnent (ehsrges) and o&er credit$, net
1!1i1rs oln

ln*p

35.51S'

(28,779\

Costs and expenses

xidrl r

2006

2007

{la Milfions, Except Per fhare Data}

{36):

,,,ia:

$ 2"5p1, '$.,?+-45;'

Earningspqri$ear*.t6' ,cumdetivteffrrl.
of accounting change:
Diluted
Basic

$, 2.25 $ ,1,64 $ 1-i{---*-{

g ?.34 ' $. 1.88 s t.27 $ ,

li!4:

tcontinuadl

33

ri -+"5.

Ssl

."."rymuirryu*

Iw-

:umrm,mryy"

Consolidated lncome Statement-continued

:,i L---i--urltng cilange per share

f;s=
')

-)<

lrqiLdluflisfi

r.rH

t !-'-

I 12

tuus'lt

t.68

I nc

!. t+

mrl:;lie: ,': ;ommon and common equivaient

+\r,L0Emryr

11f,0!OE1:l. llul,fl

::n-i.i:Mtl.l{

:fiir{ruer

2"{392

:.076

2.089

4brwau.

2.004

?.005

2.*28

turfl lpnrr,

rmmmn

1-3

rrffiriilflmi*
'ilriir

-:r-r:l).-Forn l$K2lXfi

and ?007,

Consolidated Ealance Sheet

rilffilrimE fu<ept Per Share Da!a)

?007

20$6

2005

,{rlilMI
-

ru.82)

-ror

.A*-g*.

.-us'-t

**;

ca-ih equivalents

3,670
5,032

i---='..rder

2"41I

1,7?3

4,585
6?6

$41

4.7{}1
694

I*t=,s-<nn ao.t.

55'

4r5

5t0

ldu:ai

862
550

5E3

't43

145
652

I1.314

q 567

8.845

--m.,gnr:rer

income taxes

-f3Er :urrenl

T:tJ
=-nu

assets

current assets

:rr:

=levision
u$e=Ea.Li

5,123 5,23:
99:i 1.31.5

costs

4rr.i- sr:ns

and other property, at cost

n gs and cqui pment
r.:: umu lated deprec iat ion

30160 28,843

-ur-: c*t i on s bu i ldi

t5.145} {13.781i
r5.r

i5

i-,+cls in progress

I,t47

- -lNl

t.171

T.rtal Fired Assets

m';-::ihle
--rr:rl* ill

-r=*

assets. net

assets

Total Assets

Borrowings

]eferred income taxes

O{her long-term }iabilities
I{inority interests

Total Liabilites

27,570
{LZ.{}$S\
14.965

9r3
t.192

&74
1,129

7.43-1 t't.t67

t6,v68

2,494

) ?1I
t6,t)74

2,9{}}

32.085 22.3*5
r,484

987

$60.928 $59.S*8

lr;oiliries and Sharefu;klers' Equtty

Iir=ent liabi]ities
Accounts peye*le, a*d cther accrued liabilities
Current portion of borrowings
Unearned royalties and other ady*ne$$
Total current liabilities

I5.062

5.477
I ,226

$ 5,949
3,280

S53. i 58

$ 5,917 $

2.68?

?,162 1,6t1
10,2t$
11,391
fi,892

10.s43

2,573
3,024

2.651
3.13 r

1.395

1.341

30. I 75

28.178

5,339

2.3t{}
t,51?
9,168
lCI,157

2.43*
3.S,*5

r.248
26,948

{rantinusr}}

1.r06

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'

2007

?s*b

.!':?.:s{

$26,5$.1

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l,

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. -ess Seqments

.:--3niagc terms, Disncy trvcnrles h) s*g,rrri'ri rn 7$iJ6..r,*re deri"'*cl hrr::.l &'ledi* i'i*lrtl:l'li:;
,:r;enr). Parks & Res*rts {19 p*rcent), St,;riil Er.rt*ri*i*niena i'J} peri;';nt;. taii Ci.':l!:*ti
---:. ih p(r.:cnt.l. Ol,erirtrnt incoilrc l.iils rli'It';, d fr,r,ri l'1, Ct,r \,. li.t:,(' \lt I\,,'r';:' . I".irl.
: :. -ri: (2;l percent), $tuiiio Interlaismc*{ i I I perc,:nt}" **d {,.s:risilrriel' }ir+dtr*is 1.1|J l:,trL:':ir;).
'. ::,.tii,.-- Ente*ainment \cgrnclt rhu\ crrjat.d lJ pereerif oi r*.t*rrri*t tlu{ lrliv iI peicl:;il *l

"

: r ri'r. iilcome in ?0{]6. scmervh*i +i;;r irr{:h}ertr.

'

r:

',\\rli ABC Telc',irron

l,a*s.

.
'
:

a Netwsrksigroadcasting

jl

A,tsC Sporls,

\clr,,rrk irhielr ilicluii,:> \Bt. l:-r'l(';r't:lrflr'.li:i.,\{+( L},,'"::.t'.

,\l}{'[<::,]rl Al\!11:i\,J(rr'i rl'

ABC Krrl,;. [i'u{ l,5li,nc lclc,t.ir;1.:t;r(l

:i.:llre11{. Disney oia,ns ESPi'-1. Disnc-v Chanricl, .A,l}C i';rr*ilrv. T<;oi: I}i:nrv. S{-}A.Pn*t :ind
Vista Television. Dirney has equity inicre.'.,I in Lifetin're Enif;rlilintl-,.i1t S*rvir:*s" AetE

,.-.

.;.,rr Nelworks. F-l Enteri'aintncrir. LSP\. Hrsloi'1 Lh.inn, l I'ht B:c!'ri.l;itr (',r.,'lnsri
:.- 1fr Book). .rnd Disney Mchilt.
-.: increase in rever:ue in this regir"rent was primarii-Y Llue fo ga{,}1vtii ll'i'tr, , 'i'., .:ir,: \:r':l
i.ror i;.i i:.{.-- :iiiror$. whi*h are gcne rall,r' Ccrivcd ir cn r f;es ri'rar^geli *;1 a t.rtr-lli:sciib,:l i:ltl.ii.
i'Lir1r!
hitr:r'i(r:'iirl
in
i
The
inr:i*;rs*
al
ESPN'
r*tes
ril increases, *nrl higher arlverting
-l.i:i,:t',.:, rr
r:rrt
r;i'f
il.l,,n:
saits
increasr:t-i
N*tworli
an{i
Televisicrr
growth
the
ABC
*l
-;e lo

,, Theg,rowth:*ltheABe?bier,i,ticnNetyrprkwespritlaril'."*ur:-,;iltiinir-'.rrc,ir;rt1r1q. .Jierfising revenue\ rcsulting lrrlrn hiuhcr lalt'{ rnil il,l\i.'rli}iilir r,".!:;rl\'\ r','"r ;1,,' i1'1'
: ". . ir.icre;rse in sales from 'I"auchlltne 'IeJevisiorr $*rie.s v,,al ii: ll yc.slil c:1. hisi:er illia:rl.riiiii{::;.1}
oi hit drarnas such a.q Lost, {irc';'s dntirn;,i.,, iiild i'}L''1;:.ruri.
...;i.;;;;'Dti);;i"*
. ,.!.i.,.(.!. as wr.il as highcr third-part1 iicensr f'cc- lcJ br. ir'rrri'.t. ,,,hiri:.(,,1t,JjL'lc(j ,t' ili'il
r.

,-

Fetrruary 2006, Disney and Citad*l Broadcasting C*rpi;rafior tCit*eleli ulilr-:uncild an

which consists oi ?? trf llis*dl'ri {:omi}ail! rir,,tied
.
--:.:r'r-nt ro rrlerge the ABC Radio busine ss,
.>iarions and the AilC Radio Netwo*;, with Ciir:dei. ?ht: ESPN Radit a*C Railio Disn*y
I - ,;[,-. ar:tl siatioR trusinesses are not inciuderi in the trassac{ion.
..; c nrajor TV nefworks of Watt Disney Ccmp;iny (Aii{ ancl EiiPN i rccellli:,r tt,l.ick :.. iieiii
- -ebie operator Cox C*mrnunication wherehy ihese ronipani*s n** afic;' hit shct! ,i;t,j
:,11 Sanrel an dernand. While advertising in thr: ne{w*ik is a s+itice_i:i adrl:ii:;rr:,ii i.!i:':irii
' .-.: bpadcasters, it rcquirel relectivity ior ci:irtging far each eplsrdc. \"it.ii:o-ln-;ic:-;ri:rrl i.i r
- 1Cu\tr! and growrng rapiJly. expecteC t..) be a.1.0 hiili,':r'Coilrt jn'ir:rir.' l' l r'r
j.:.'entlr. Di.nq untcieO Disnel Xtrcnie DIgiral. il fic!',r'rr1f.j1g::rlr';:ilirirr .; -1':j ':'
:

. . D!\nev just reporled an increage in fiscal ?$*f seer:*r1-qr*rerler r.i !iti'r,illL litcctll a:i il
: , i .-i .rrong giins at fabls neiwork L.SP]\] and surprise n.rYi. liiii sirch ts lliir,r,folg.r. hili*:'

C\,'ER\,1|EW CF STRATEGIC LIAi\iAGEtr4Et.iT

ExHlBlr -.t-6 Media Network segment: Revenue and operating lncome

CHAN6T

(ls Millions)

:os7

2006

V5,

vt.

vs,

2*A*

3007

20CI6

2005

z*fr4

2A06

2005

2004

$ 7,262

8,001

12W;

llci<:

13V*

6,*3i

u1*,

12.?i

11?o

l20i:

Revenue
CaLrle

Netw$rks

Broaric;isting

5,*7*

Cable

Total

{}.$37

5,945

$t3,20?

$14.f]38

7clc

lc/e,

ir**nre

Netw*rls

Srraelcasting

LU0t

$r5.046 $i4,638

?bral
Segmen,t oFsfiiting

$,16?

$ 3.{X}4 S ?.?45 & 2,325

3,5S2

606
"r6.X 2-15
$3,6i0
5-1,t09
92.3i4
,$4.295
7{}3

19a/o

9clc

l8V*

I'.ir

899e

t2q,

?5il|r,

48olr,

23Vr

\<tar,rt; Ylitl\ Disncy C*mpany, A*nacl keyort 2{XXi and !{Xl?

inveslmcnts ha|e heen placed in ncw relcases an<l sequenres ttr he rclcaseJ rn ilrc srrond
antl
third quarter t:{ 2{V}7 - The Media Netwnrkr division generared thc highe-,r pnrlr oi any I)irney
segrnent dtrilrg the $eeord quarfer a{ 2#)7.
In Nover:ber 2{X}6, Disney .iold its 39.5 p*reent interest in E! Enterrain,tenr Televilion
{ElJ
to Comcast {which $wsed the re$irindpr of the intere"qts in El} lir $ L2 billion. 'lhis rer,ultert
ix
an atler-tax i*r:ome cf ${}.5 hillion, which was recc}ftied in th* first quarter of ilscal ye,ar
t$t}Z.
Specific linanrial informafion for the Metiia l{etwnrk* segmenr is pruviricrl in ErtriUit t-0.
Disney's el*rnestic braadcast telryisir:n sutions*re lis:ecl in Exhibit l-7 while ils inrcrnarional
media ttcl*urk operations are listcr-l in Exhihit I-8. Analystr cxpet.r Dlsrrcy s rij\.cnuc\ dcrired
frotn Internet operaticns to rise 40 prrr:;ent in 7ff)1 and ansrther 30 p*rccnt in ]iXlS
\Sttuttluxj &

hxtr's

Sttx'k

RtJx'rr* Aprrl 18. ltl07r.

Parks and Eesorts

Disney owns and operate\ Walt Disrrel Wrrrld Resort anr.l Cnri.e Lrner rn llonda. L)isnet,land
Resort in Califumia. ESPN Ztxc larlilities in many stares. l7 horels rt rhe Walt Disrruv
W6rtd
Reso(. Disney's Fort wilderness Camping and Recreation, Downt.wrr Drsncy. Disnel:'s wi<lc
Worlql of Sportl, Iliriney {ruise Line, ? Disney Vacati*n CIub Reso*s. Advenrures bj Di*ney,
atld 5 res*rt locations with l1 th*me parks on 3 conlinenls- W;th theme parkr. oisney has ii
percenl owncrship in Disneyland Resort Paris.4.1 pcrcenr ownership in Hung
Kung Di*neyland.

wKb**ffit.Y

rt-? sisneyt sornestic

MARKET

l{etr,Y{}rk, NY
L*e Angeles, CA

Broadcast klevisi$n stationc {1.0g?t

ANATOG

TV STATION

lVABC.TV
KABC.TV

Cbicag*, fL

CHA},Iru8L

'\tt\1-:r\

MANKTT

RA'{KING

'7
1

WLS-TY

?\*1a&e\pli1r."BL
S*n Fra*cisco. CA
Houstrir. TX

TELEVISION

,6

:1

KGO-"V
KTRK.?V

l3

Raieigh-ilurham, NC

10

$TTYT}.TV

1t

Fresns" CA

2V

KFSN-TV

Flint. MI
Tcled*. OFf

3{i
t)

55

\ryJR:{r-Tv

7'

l,,rrri

wTvc-"v

r. \\rfr I)r\r)ry Crntfuny, Forfi l(tL. {201}7 |

"?

-'t

.i

6{}

COHESION CASE 2OOB

Disney's lnternational Cable Satellite l'letworks

and Eroadcast Oprations
TSTIMATTD

5U85{Rl8ER5 iln
-L',J&':

t1

Millianr)

SWFIRsHIP %

9?

s0.r

91

8*.0

&?

8r].s

5t

80.0

89

rr]0.0

54

r{}f]-0

57

10s.0

9?

5{i.r}

^"c-:

92

37.5

-3r- :-:-. )rli

-' : i itr)ry Channe!{ 1}

o1

100.0

q1

3:t.5

8g

?p'6

Inlrrnational(2)

75

3',7.5

-'::,:re llovie Netrvork{l}

- ":'--iile Real Wrlrnen{2}

51

'50"0

l6

5S"0

., , =urope{2i

46

73"7

15

1*r).s

53

100.r)

44

39.6

39

\'t

-'r9

37.5

!1

':

r,:r-a,.

:r

.rutiliEi

)i

sney Channel.i(

]rer

ision(

L::nainment Televixiar{

-.

2)

-ll$Eajil

-*t:lr![.xm

rTi,L-

,:-

r Latin America{7}

:.Pneti

I}

l)

"-:.i)

--: Biography Channeli !)

-':'n International(l)

"5

:.::in*ied U,5. cut;lcriber eouttr **r*niing to Nielsen Media &.e*earth a-r af $cpiemb*r 10.2N)$.

\,r,i rarcd by Nie lsen. Suhscribrr

e{rur}a

rrprsnt$ nuraber

rf

sr:hrcrib,ex re*eivir:g the :en ice bi*etl on

- -'--:, i:tlnlgemenl rr:p0n\

'-

- t,. \l'alr Disney Cr:mpart y, Fitnn j {}K

,*

{.2{JdJ6}.

perccnt or*,xership in Tr:ky* Disney Reicrl as well a$ Oirneylanrt in both Calif*rnia aml
Exhibil 1-9 ;ummaries$ Di$noy'$ parks and resrrt haldings.

--nda.

Disney reveuues et its Farls and ft,esolts divisior increased 1{} percenr in 2fi}6 ro $9.9 billion
io increases of $647 million anil $255 million at its domeslic and international rcsorts,
Higher gumt spen<lrng was dile to a higher wereg& daily hotel room rate. higher
=>p'ecdvely.
- "rrage tick{rt priceri, irn{r grea($r rnercha*{ri$e spendixg at bolh re*orl}.
Disney's 50th anrdver*ary c*l**au*a at its parks and rfi*rt$ ir.:ercil:ied attendance and hotel
iJuprlnc)'. International reve$ue growth refle,c{ed the tirst full year of thenre park opcrations at
:{ .ng Kong Disneyiirnd Reson as compared to the prie)r year when the park opened in mid!:prember 2CX)5. Disneyland Resort Paris also experienced increased revenues. Some of the
.:rrease in reve.nue was off;el by thc unfavorcble imprct rf f*reign cilrrency rranrlation as a
::suit of the strengthening r:f the U.S. dallar against the Esfi). Operrting income from the Parks
,iid Resorts segment i*crsase{, 30 p*rcent, or $356 mi}lion, tar$1,5 billion. Exhibit 1-10 present*
l:iner,'s attendance. per capita theme park guest spending. and lrotel statistics lor its dolnestic

:-r

37

: a-

38

u-

.,1

:.

V t- H',/i E,v.!,J F ST RAT

REs*fiT$

ir4

A t\ A G

FAftIS

ftg5sfiT

llir**yianrl

Ilisney-MC&{ Ilisxe,viand's
$tr:dicls

I6

tv1 F

r;

r,

Disney's Sfferinqs Lrnder palks

anC Resorts
.*. *;**t5&gYl/let* ri*ru* i{*{sG
DtSr,Jf;YmN$
fi950t{T *l5tJfyl&rt*} TSi(y0
orStuY

-i:;

WALT SI5ruEY
WORLS
Eocot

.i

RESORT

nes0R?

Dis*eyla*C

Hcng Kr:ng

Perk

*i*neyiand

I*kya
&iswylaxd

Resart

'fokyc

Iiaciiiries

Sisney$ea

S.dalr

Calilbr*ie

*ir*ey

Stuclios Fark

Adre*ture
&.{agrc

t{'iJSG!-l

$rngdom

Fasilit;es

1'!lAtT

OI5NEY

e&ur5E L!lt6

0t5NtY

[sPru ZO$r

IMA6INTTNIH{

UIgne.;'.
A:rimal
Kingri+ra
Reso$
Facilities
So;irr"rr RkiI Dis**v {*mpar: y,

:. -* ,. ."

"

{orxi

l{}ll r*r,

*i,l:t lutf ' Td r::::ll

F:-*.*

130H:31*: *g5l

r&5T Ct]AsTa550RTs

lncreas* in attendarrce

i"ot:ln gircsi spending

S*alge." 1&'alt Eisney Corrp*r

rY

30$$

5n11i

20fi6

.?*

g$%

Available rsrlm aights

iin thousa*ilsi

rer

EY

r.frL_

17c

uccupency

rY
5

Incrcase in per capital guest

sp*nding

8::.?rl

8,834

Q ?aa

$31 I

$19?

TOTAT AOMESTIC

wrST cssT trS0RTl

R6SORTS

rY
200

rY

FY

?005

?00s

$7s

44*

57o

5?a

&?c

14Va

3%:

3%

93%

9*%

&7Vo

83{a

810

81S

9,644

9-587

$28?

*272

$2r&

$?06

y*-A*taxe! kept:/, {}-C$6}.

prcperries.

*xhibii

i--r r pmvider 2ffi6 afierdanla

figures rbr
30 pereent *f Disnev's to&,"u*"**,

ffi:u .:fr|[j;:e$

prney th*me

parks. These parks

and repartcrr a 3s gxreenr increase

in

Tire co;'up*r:y alro has been

hosring VIp ter:$ (addifional fees
apply), offering added_value
"silrvir.s such *s n*niber of

atrractionl being rureretl along

wiih f*r*u, guided 1o&r$, prsn"""* to
rr," *o*iuny xil*#*ru
r*"r*uee dears ror
',1-,.

ff;:;'.:g;,ff1*:H:;n"

Disrte:r has piairs to,chsnge its

concept rrf the theme parks fronr
the masses to a more mncenrrered perspe*ive. This srrategy
*,+*l* al**r*, muu*y L or"i *ori iuua_uoo,
theme parks
and resorts in cities an<t ueaclrei,

a.s weit"as nisrcy*branded

retail anJdiring dis*ict*, and
smatter and more sophisricared parks.
Dis;;;ir.rtso ptunnin;;ffi; time-share
homes in praces like rhe Caribbeai.
t*" ;f ;;;a!renges witir trris srrateSy wourd be (rvacarion
ing the niche arrractions r" rh;l;;r
) ra,orkeeping the Disney ura-na reputatron,
avoiding cannibatizarion of .r;stlrrg
and (2)

;;;*;;Jd:
p"ffiunl i**t*ioru,

. ,

fisney produces live-acrion and

animated
*al recordiags, antl live-stage plays.

rnotianpicrure*, r-*
;r
[,.**rd*r"r;;;*",!licturc$ are distribued
undot tha,rrames

lvalr *isney Ficrures a*a t'ererrisro",

picrures, Holtywood piciures,r,fliramax
Filnis, and Buena visra uo*u
r*rr*in*-"*'i"il*"ionar

+;;;;e

rhar in;ilu:*ur, oir*ey Rscards,

H"uy*o"a'[*;;;;;:il;;;;i__;;:J#;:il
Music pubrshing.

Buena Vista Records.

May 2{rt6, Disne-v ;icquired pi"ur.

tr::

r#prrlr

animarion reairer. As or geptemher

e,tr.

3!

*isr:*y Thertre Fark &tt*;'rdanc*

rn 2*S6 {li: Mi!li*.r'i;}
l-\i-t.;il,,!iinir

FAfiK
1'

::

l;

Kini:tir:n': tFlorid;i]

t{i.{"4

- .:.: , !intl f Caiiirrmiu,

, -.,i l Disney-la::d
I r'.c Disriey lea

;4.

/--j

il.

IL]

- 'itc\ i.in,l i';rl'i\

r0.6#

: 1;t,i r f-1r',t;*n,

;fi.46

l..n:v- 11{jft,l StLrd!..is { Florida)

9.1*

.i;iirnel Ki*gcio*T iFt*rida]

C:l ilornia,{iiv*nturs

sai
5.95

:{i-nr Kong Disneylrr:rd

',\,iir
Di:*ev StuJios Paris

:.:r r'. AJr,ltteii l'ru'i,tr

,,-.'.' \1:r'i,.',1.)ri.ri,j/

i,I

{lri M{l-Lt*i{5i

5,20
2.20

M*riss* L4iur. "*i;ur:.,"1 $1 Lliliiot Ai}'iriit$i-f."

lii trld $,.

i(){:tobfl l?, lr}i):r: ir

' . - -: :;.:rl rvi ilill-lrlrgih rnt,l ic... ?? iirli.ir,ngrh :.rrirriir{er! t.;r{urf\. lnil .:.il !iit'tor)n
:-',:-:
'
.',ftir:ngs in;iuiJc Fry.pcr-Vit,+. i);r1 'l-ei,:r isirrn, l--rcc'fclrvisicn. Pa,.. i-ciri is:or:
. .-.- :-::::.11ri TClevisit,n.
- ',, -- ' jrJ() ili;nr ri: Siut!ir'Enlcnainrrtcnt scgnrenl dct'reascd I prrcenr. or 15ti nriiiiorr. 1,,

'

::-:.-:-:i.r d,te l* tr':u,r,l v,'orldivici.j irolnc crittrnlrnn)elit. Thc irlcr*.rse ilt u,c,rkjwide:he
- -. l:-:urc ,iirtributi'rtl rcvenircvr,,rs prirnuriiS'dur tr, thc st:cnl'h.rx-ofljcc ft'dirgnancc
h::i: *-: --:'--"jte!. Cperati*g inri:*te lrorn this seg:refii ixli:rr:aseij $5?2 rilillion to $7lq rniliiori
.- --i-.:-,r-r5.DisrrtyL,ricrfdirrttrailinilin"lntingttr;urllc?ricniwith,r-;ro;rpcf ;r;\cltors
'..
=-!i,.n-r mtlii,.,n.,l :ilxiut+i)pcrccnlofthcprocirrctirlil:|ndrrlnrkillnrcoiisnfa.;!atcur['
: --. -:-r: ltre-rcti,:n filirrs. txcludinp certlin titlcs such as Tht t im'ni: les t{ Nuntia." Thr
' - ; 'i.:::): <:rd Tltc Wunjrobe and, jn gencrll, ser;ue ls itu prcvioris ii!nu. in icfun! lbr
-:::.r -lfi pcrdcni of ilrr'tuture !lel crrh f'l:wi gerrrral,:ti by thesc irlnrs. By clttfrrnt;nto
r ' -. ";;:i business l::trtslctions. Disn*f is r.:dur:i*g iire;'il;l{.t: iis',1/e}l ;l:i rewatdt ircm ih*
-; t ii',c-ac(i*:rr fir:n lrrodur:iion ancJ Cr"irjltitil,n.

----:'::cduct5
l :.uit-i,:i Pr*ill-tctg iifgntenl irr*:lr;rir:s iii:!.rtrratt tl,rll. lrnr.1.,i'.. ..r-,r:i.,.,1.,-r.i:;-s. ;;r.ri','iirl;-.': .:.' r',t)rl(l..vidt';i1rr.!,...,iqn,
gn.j
r,.1rr"r1 1.; X::. ,..i. I . .^.,,.r
J,,,')Utr1..'.
"r"li ; r'.il;
- - -l:rrj Dirrlr:.., r'lrir,:.,t1 rr. 'lltu rrJ:,,1ii,1 ,,tl.,rirSt it:':-: r',r:r!,:..';..r ', r .,,. ..r;.
;...rt
- .t,ii:silr:,1],16rlir;111ii1r;;'aZjtru,;,r11i1";1ri;{-i.tnr;:.:.i):r:;r..r'ir,r,,..,::rr..i..,.r..-:.. ji.,t:. r-'i,:iUCt: iittluflt h(,liiit. t,,it.u. iir..
--lt!:!c.,. iltr.,t rrt,l b,.,,.r... : ,ir..' .tr.
' '... :rrJ cr r'f l i1()ilri (i(i,.'OI.

-:. . l'''{'il :,'\f-nuus frorn ihis st8!,lelu ir}r.t,;h:;t'd l pt:rcr:;tl rc $2.1 i:illi.;n. Saies irir*lh
- " .'. 'l;1lir1't \\'e: (iur lfl lht rric&sd rif reli-puhiislrr'd tiiles beir.d on Tltt' t)ltrot:irl,,s oJ
-i,' i.irir,'!'jte vt'itcit {iild7'irewax{r*b*.
pirates

-ua.

i-

,.*::r:{erchaudise Li*ersin$

:=-f-,- -:tr'?(,riC\.
.

{iti*kert !.i*le, a*d

u./{rs

cJ'ihe {"urihhaan.

*riven by hi6herea,sred r*yaltics arfi)\i multiple

led hJ thL. str{lfig pCrformln.'e

<.rf

(irr.r. Dis:try Priri.e:.r.

atHl

L-.-'r:- :l-,lri handisc.

l:t:.itng ,ncome of this segnrent increrr$crl l4 pcr,:cnl to $618 r;rilliurr.

;r.ii:-"

piftite\ o{ lhe

yr1,irii1 iluc t{i

[,ice*sing, The d*cr**s,: a[ ]lrre nl l.ristr Gafties was driven by in*re.aseri

ln:*:L{: d<velopment spending $n futuie self-p*blislrerl titles. }n 2i}0S, *isney si;lrtr .365 oi'its
r'.--:: :,r :he Chiidren's Placc Ltndel a fi'ancirising xyrccrncnr.
:1 Merchaatlise

-'ull
::s::iizrilior-r lis lerg+ and divr:rgiiir_rd:,q lira1t f,}is*e1, 1..'l.rxii:*;i:,,. i.ri.rr.l;,:,,,,
;-.- --:r::::t ul i-tls:iicss. Tin,c \r\,.,ir-ltcr't\ il iI.JiUi :'i-ttlil,fi:, .,. ...,):: ..:
' : :'..t.rnr: ..\OL. CA*ie, Fiirrftd Efit*tii,it11!]ifi!1. fv1.;q;,qrryi:r" r:tiri i,!:,.,t, .,:,,: i'

; ":-

40

:::-

OI,/ERVIE!i' oF STRATEGIC I,IAIIAGEMEIjI"

T::r,rtir*rv 1,"tr?" fiisney $errur the

Induttry

Data
DIRECT {OMprTlTs& coMpAffs0N
DI5

Market Cap
Emplcye*s

Comparative
-:1 ---'-

"-^*'r'":@*"'t
TWX

rt{&usTftY

71.4*B

81.43ts

2.24B

,33,00*

*2;7UJ

t.69K

{}.$aw,

9.\tj{e,

7.3$clc

$ 35.208

45"1?B

19Xq*

4?.45t"b

34.61"/r:

8.748

,1.*88

r35.44M

18.lToir

17.957o

t6,559&

5.t28

EPS

$ 4.548
$ z.tt3

9.58M

?IE

t.54g

0.08

I3.89

19.35

t.i7

t"54

1,54

?.*2

t.?s

?.37

Quanerly Rev
Rcve**e

Qfi11v1i1

Cross Margin

EBITDA

()per:lring Margins
Nef lncrrne

PEG

ti

yr expf*rd)

P/S
DIS =

Ifalt

16.97

946"

r5M

Disaey Ctrmpar:ry

TV/X = Tinrc \&irrorr ln(.

lrlJu.try = Enlcfluiomenr Diversificd
,tr-.*rez.. Adap{*d

fi*m fipn..,on*o.corn {May, l{i$7j.

{iwn! Tit},s inc" AoL" w$rner Brr.rthers,

and ?BS Networks, wah }i"ney gnncmlly
i* clarsiEniertainmert-Diversifled, which directry
{ompeks witrr riire warnsr, Inq.
rh*wn
{ar
Disnry's Ep$ a,rri.p/E ruiio, rru i,*ru*

tie<i as

ir*'i"a;:fi,.i)}."[:

||ff|XJ*;;_#:[:o-r

cBS c*rpomtion and News corp*ratinn

rlirectly c*,mppte with the r#alt Bisney
company
in thc M*dia Nelwork ssgftelit, bul are
nor rivals iu the consumer pnxtrrcts
and park.r and

Resorls $egme$rs. CBS carp*r*.io&

was a p*rr or viaccrrfi,

t;;. ;;;; oo*.ur"o increpenclenrry

undercB$ colp' Newr clrporation is adiversifi#
internarinnar me*in aJa ffrrer,,inrnenr
co$rpnnv rtlar ,,perares in cighr sesmrnr$:
Fnrned E"r.r1.;;;;;;,';;;;;;*r,
prognmming, Dirscr
cabre
rvetwark
Broadcas{
sarelitaTklevi*;";,

;;;;;;;;;;ilr'-;,

Newqpa;xr*, Bonk
Publishiag' and tlther'
tr: reeenr *orporaii ,**r*"turing far
b*qhff$ carporation *nrr
News corp" tksre ilr *ofu1
industlv datu uuuiiuat* iu. cornpariron
purpo$en. cnmpetitir:x fareach
segm*nt rf Walt Di*ncy il rtiscussed
bel$w.
(ompetition ;- Media

Hetworks/Braadcasting
Gl:rbal rnedia ix a $l trillior indusfy
that i,i;iudes adve*ising, eable firms,
newspapers. ra<!in,
and television' This indurtry ir ciominated
by *cngkxnerate$ wart Di*ney, Tirne
wamer Inc..
y*rk
xew
Times" New* Corp., and crs crrfirition.
ry6*,y,,h-;;;;;-"ie* prosperduring
eleetir:n years *ue to heavy atlve.rtixing
.ur*nu* invested by th* politicians. speeial
vsnt$ $rchl
as the olympics arst-r gcnerffres rijr.riticnar
advertising ,"r.nr. r,r. ru.r,'"o*prn;*..
walt Disney fqmpeles for vjewers primarnl
with *rher televj*i*r n*t*nrt*, independe*t
lelevisicn srati,ns' and *ther vi<reo
miiia *u"i or cabre and sa*llite tsi;vi*ion prngramrning
service'r' DvD, video gatnsg' and tfie
Intemet. &arlio netwsrk$ conlpeie lvirh
other radis net,,:
work *ariius and programming services.
Adverrising d*rars,;;;;;-;rr_e of
inc.,me for :
walt Disney' also competes with,othcraavertising
media such a$ newspapers. magazines,
billboards, and the Inrerner. Arcr:r<Iing
to R.esearch &lert (25 [T]l 3; April tJg,
2[07t.sn
over,
whtlming majority of eonsumer$
{g2.i pereent) regularty ni ,r*"srioaJly rer,iearch produrt
onlinc before buving rhem in perqon. rra.,
tai.i pi...n,i ;* :j;;il;,i, ,o,,r. rikery than
women {26.? percert} to rcgLrlarly research
prociucts online beforr*bryiqg.-O,
a trtnd, lu)tt.efir:
,,on$s,lsrs are more likely than sll{rer
consumers to rescareh pr*ducts an-line;
z5-34.yert old'
i:

COHESION CASE 2OO8

r.:{iE!r

1-1f

Disney Rival Firm* in Media

Networks/Broadcasti ng, J Ferrent

Ihtri{EAiES ATTMCTIVENESS OF THAI

:3I6LIMER5 AGE 18_24

I=s-:q+t :'retu.orks
Jsrn,ESPN }ledia Nerworks
hfin'\etworks
l--. er Entertai n me nt Networks
>::::$ Neru,orks

7ZVo

bB%
5?"9*

'48Vo
43Va,

"*:.-- Unirersal Cable

'Tgqa

--:ri-:ast Cable Networks

i. , Csble Networks

'3.lEa

',r:
I

oL,TIrr To

;0mrL'rmfti-:

r-lj

34?*

A.jasted fr<>rnMullirhana*!,New.s,2g{l0}:30,March

l}5,?{W7. .

,.,.
,-,.

lik*ly

than *ftei age gr.oupu to rhare infirrmarion about produ||urfl,nil 6ftr,, .r -e:,,-:l.e.l tbr online using
a variety- of mectia, such as text meii$aging a*<l instant
lmus$'iric(:n'+ -b'!o::* n*re likely thar worle$r ule newteehnfilogies
such as blog-l anjonline com,nrtrfiillulnr;"r,r r- f;,.!-: ineir opinions.
Exhibits l-l2 and l-IS reveal uonra *ujo, competitors to
n -r: r-:-l-:tn[ of business, ar weil as percentages that indicate attractiveness of that
rll:'lu!d, - .:i:-.3:. -:e I3-24.
f i -";r.:r--:r.-n is comprised of tlre following seg*enrs; Terevi*icr" Radio, outdosranrt
trur'rqr'rirm:s. rtsS Teler i-sion is comprised sfc&$
Nenvork and ils own televisiofi gtatiou,,.elgviilr 'r
'-,i--'.r i;id s-vndication. Showtime. anil CSTV Networks. In 2ffi6. the CBS Television
rn':*-d-:- :
:'r.Br3tion contributed 66 percent of total revenue (approximately
$9.4 billion).
'i iL ; *: o-:-:-:: L-f CBS
Coqp, owns radio fitaticn$. in mqsr af the large u"s.. rnarr.ets
ana
T""q:-'- r -- -.:--.,i rs generateri frpra advertisi*g aal*s. In
?006, the &r*i* segment of cBS Corp.
i!:r.: _ _-. : :<:iinr of ihe company's total revcnue (approxirnately $2.0 biilionl
:
urrh Sl.5.j hillion in revenue, opcrates in eighi industry segments:
Filmed
*;ir!imH*rrlr:tr:: T:;evirion. Cable Netwr:rk Pmgramming, Direct
Br+adcast Sarellit*.Televi*ion
*ruuc*'i::- --:c Insens. Newspaper*, Bcnk publishi*g, and other,
Fsr the fiseatr year.
are more

l'*r'w

:--

*;

- l -.

of,&",
:; ,iis: i;::e(ainment, Televisi+n,
cable N*tw<trk plogrammi*g..and oir""t sro#asi
:-:0: , ::':a:\ion c-rntributed 68.9 percent
a,* - rricrri ra-s been moving rl&gre$$vsly or $17.4 billitln to rhe c-ompany,, t"tot o;;;;;.
t{}ward digira} te*hnologles ,u.r,
;;;;;:
rumr

-r-{zEc. and wireless. In 2tio5, News Corp. acquired MySpace.com, ^,

the Internet.s
"r-ciai networkirrg site, arld'I0l{,com {a gaming and entertairrlnent site)" The com.
':
ilunr l"r" .=r:r!ed an increase in traffis at:ffio.it CIf theif preexisting
si1** such a$ ngwspape-rl
Juiiutrld trl-L :'*1-;. and local TV rtaticng.
::
:r -:e l-El-. For TV.owned by News Ctlrp., had the most popular shnws on television
s' "i5 d- - ':-:s- audience o{ 5,1 million every night,
f$ilowed by CBS with,T.6 mil}ion vierver*l
'sErlar'r :E: rime time- lvalt Disney crmparry's ABC wi{h 5.4 millicn visil,ers
per
ir * \lc ;o*ned by Cenrrel Electric Company] with 4.8 million viewer* nighr, and
dnring,*acil
:!-.- - -: ]r=t-l(il.
- -ca :'\r nas tu cLlmpete with satellite providcrs such as DirecTV in the media network
* - - '-..o.,.n8 segnlent. lt hau heen reported that DirecTV h** rr""O,
:,i' , ' 'L: iuaflers from g percenr to l6 percent wirh earnings growrh jumping
froi 222 per-::: --- :'er.ent over thc same period.
m!

m' 1r rc

'r'

;;

::

l-e

t-u:tui-

,ri"'#ffi;:;

*arncr's media and entertainment segments own AOL,

Cable, Filmed Entertainment.

and Publishing. The cable segment services primarily anarog

and
such as voD and HDTV wirh ser-rop uoxJ equipiea wirtr
oigirat
=:rrEeE. To improve this segment of their business, 'firne warner;ust acquriec

:aL= --c adranccd sen,iccs

dirt;i;,d;;;._

Ad;il;
r -LJIion rn cash. Its Film Entenainment segmnt produces
'r-!'si
=
ani
oistritute.
,h#;;;
r' ' -r :-{-tures and telcvision sho*s. The. Nelwork

r*gm"ni consists of HBO anA Cinemax pay

r-:,':-i{-{i ;rosramming sen,ices. The publishinB segment publishes magazines

anu wel sites
E '' ''ir-trl oi artas and has a strategic alliance with Google, Inc.
Exhibit l-14 providesTime

La--r

=renuc by scgment.

41

r
i

PAF.l

] .

CVERVIEW

lji"

" w H.ffi ww*w.*eT

5l.RATEGIC I.JiAi!A.GIiviEI.iT

#h{

w.

ffi%ruffiY

Y|wrucg%w"%

Expariential fixerelse 1A
Getting Familiar, with Strrategy Terrns

Purpose
The purpo*e of this *xercise is tff get yffr fumiliar with strategy tilm$ introdueed and defired
in chapter l. [,et's apply rhese ternn$ t$ trYalt ]isrrey c*mpany (stock nymbol DIS].
=

Snstr$cti*fis
Ste:p

Step 2

Gci to http:l/www.disney.go.confhcnie/hrr*uindex.html, which is w*lt Disney

compa*y's ll&b *ite. click *n cnrporare lafio, rhen *lisk sn Inve*(or Relatierp, and rhen
elick on tunn !AK. Prinr a eopy of the ?{}*T fi,lm l$N. (Note: The tum i$X.may *
100 pages *oyou may wanf upri*rihir i* yor,ncollggelibrary, bur this Dixney dorument
will be ured thrcughout this csuree. Tlte ftiri?, J0ff csrxains excelle{* infarmation for
developiag a list af interaal $rrsngfhs and weaknesres'*f DIS, T*e ?00? funn thK was
not available when the case was wrirlen so it can also be used to update the case.
to your eollege Iibrary and make * copy cf stafi{tard & poor's Industry sureys

*o

fcr

two indu*trie*; (I),Brsadcasriag and Cable lndustry and,{ZJ Movics and }lome
Step

Ertertainrnent. These two documents will contain exeallc*t idrfarmatian for develop-:
ing a list of external opporrunities and rhrears facing DIS.

Using the Walt Disney Company Cohesion Cane. the ZOAI fi,rm /0K" and the
Industry Survey documents. on a separate shect ol'paper list what you consider tei be
otrsi* thre* mnjcr strenghs, three m*jar we*kne*ees, three rnaj*r opgxtunitics, and
thr*e majortirre*ts, Each fartor li*ted frrthis exsreise musf inslude atfu,*,$"or rario
{$ reveal r*me quanti**d fset or trend; Th*rie thctnni proride the underlying L,aris for
a sftaiegic plan trceause * *rrr strives to take advantage of srrengths, improve weak -

Stcp 4

?hrouglr class diccussiorr, *srnparc your !ist$ of *xternal and intemal fastors {o those
developed by other 5tuden{s an<! add ro vour lists of factors. Keep this int'ormarion fur
use in later exercis*s at trhe end of olher chapt*ru.

Expariential .Exercke

Evaluating Codes of Business Ethics

Purpose
This exercise *ims to familiarjze you with corgaratb eodes of burines* elhies. Called
Srantlards of Business eonduct both in the Walr Disney Company arrd its teading csmpetitor, News Corporatio:r, the busines* sthics *tatements for these two firmr are pmvided at

http:l/eorporate .disney.go.eornleorpcrafe/condnct staldards3.html ard rryww.newscorp.

co*lceirp*g<rv/sabc.html, respeetively. Headquartered in Slashington" DC, l{ews Ccrp*ration
is a $27 billion global media giant that owns Fox Studios, 20th Century Fox, HarperCr:llin*

bttok'puhlishing eomp*ny. DirecTY. and many other segme*ts that sompete with Walt
Disney. Both firms $triye {o operate in alr ethical manner"

instructions
Step

Step

Co ta the two Web sites lis'ed abo,e and print the Standards of Business Conduct for
( l) l4hlt Disney Cornpany and (2i News Corporation.
Read the two sraremenrs.
On a sparate sheet of paper, iist three aspects rhat you like mosr and rhree aspcts
thar yau like least about (I i the Walr Disney s:atemefit and (2) the liews Corporarion
-stalement. ln other words. compare thc two Stsndartls of Business Conduct statements. Conclurle by indicating which statcment of ccrntluct y,tu like best. Why do you
rhink it is best'.'

CiJArTf fr

'!

Ti-lE NATUSE OF STRATEGIC MANAGEtu1ENT

Erpiain rvhv having a code .)l bu*iness ethics is nct sufficient t'or elsririRg cihie*i
'rehevior in .in orgeni;ation, What 6ther fiie,an$ frc neefs$&qy ttl trelp e$sure ethica!
behar-iorJ Cive tlte claf,i an example of a breach ollethical coaduet th&l y$u rceall !E
rour *ork experience,

Imeriential Exercise {C
--E :-,lcs of Spying on Competitors
*:
*8,

opponunity to discuss in class ethicai and legal is*ues r*iated trr

innrf.mi:o:i :ei!'!E used by many companies to spy On c0r$peting tirrns. Gathef-ing and usi*g
ffr"r-'r'r.rc,r{ alrout competitors is afl a{ea of strategie m&llltgement thai Japanese firms clo

:*.:---!e

an
-gr1es .vou

EEE
..r : c1;.:r=:

iireei of pape r, number from I to lS. For the eighteen spying activilies listed
.:"jcale whether or noi you belie./e the activity is ettlical or uneihical and ]egal
:-.r;: e ither an E for ethical or $ for unethieel, and Sither an f for legal cr an I

,rill iixtlil!rr!-

m rli,,lt:sii

rlFr;- ::r

r!iln
ilrm4,

:.a--h

aclivity. Ccrnpare your anslrers to those of yr:ar classmates and riisc,;rs

odg::acE=.

-.ru-:- : -,-s:iicrr' plaoi tours rtn*nym$usly

. rr*-n-- n.{ :i;ic+-traiier trucks leaving conlpetitolli" lo*ding
.

trays

-r- r{ s-i r! ilislggl3phs nf competitorst facilities

..* :.-; -,-=tiitors' ilbor contracts
ii,
t$,,
i

u:-:::flrs ::-]-,-r.r!3rs and br,:ycr* about the soles of competit*rs' pradricts

.: -'-s(.rrlErs' and cornpetitors' business ulprations
rL-.--tr': ",-=+l:n; about competitors' level of manufaefuring

'rE: lT:rJr

ilxB -r.-sn:!T<{\ io briy out pliony bids

J-frig.;:
cuslcmers to reveal competilive infi:rmatic'ri
u,ii.,. i:rs. - rr'.-utcrs' lbrmer gltlFloyoes
T',T*:' :'1
-':-:.-ult3nt5 who ma5 hlve w'orked wlih r;ompctitor-s

r:i

,..:ii[,:

:l

lr

riillli

,]lt":::* .ri^ r.5+:aas artay fiom comptitors

ifmrl;uri:s :r-r !1r iob inte:-views :c get comp*tittlrs' empleiyees to reveal iniorlnation
flilrililurir il- -::[ .-E:- tO irads r*eetings to quie competiiors' ieeh*ieal *nployees
lllriiil,iit:B.L li]iH':.: ernplol:ees u'ho worked for *r wilh celinBetitor$

i$qm;renmmkil Exercise
:Sffi;mery,,r:

=a- ^ing for lvly University

.G

are the underlying basel *f strrtegi*t lbrmulated;rnd

:, --;:;izarions. Yonr college ar university laces nunrerous extsr*al
iugprillrfirliumrilird,lriaflx-3:ir.i :.r, j h:-.. many irrternal strengtlrs/weaknesses. The purp+se *f tl.ris
rfififfif,lr;rllrilrtr r iiir ihu:-r,-: *: prrxess cf id*ntifying eritic*} external a$d internal factors.
ereag: ecr.,n*mic. s*ci*}, cutrturai,
rl;l"mn-:,:r mfr:.e:c=.
=:iude trends in the following
&lillluulrm* ,ss.l,l

:---:-j. ia:tors

iechnologicai, political. legal, gr:vernn:renrai, und cornpeiitive.

1ft11iluumfluull, :lurtsT: r:rui: :=--:ode ii+:lining numbers of high scha*l griidui*e$: population sni*r.
;ll&tfifirrlllllilltrmNt@:i,j, iBdu[ir]]!s- :-t:r=:-.:c competitivene3s arnong e*lleges and universitiesl rising
rflfiillmffiffifilfi| rM rrm{h qe:q]g i-- coliege; tlecreased support frsm lccal, state, and tederal agen,uuuqi ilmllrr!f,leiiuw tssm: :i :-^rsign students a{fendifig U'S. colleges; e*4 * ri:iing numbei
tiltumfl|lliliilll|nllflruI0@L

rIf,Ifi

Jiltmfl!$ruf

:urru:[-:EJ|.1.-r[3j.

*.u48.-j:.

'

45