The Walt Disney Company:

Financial Improvement Plan

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 I will be discussing the examination of the industry’s dominant economic

characteristics, driving forces impacting the industry, and the industry’s key success

factors. This analysis will include an assessment and the identification of Walt Disney’s

current strategy, an examination of its recent financial performance, and a SWOT

analysis. These recommendations will identify a specific course of action that Disney

should pursue. You will be sure to know that this course of action will coincide with Walt

Disney’s mission statement, that being “one of the world's leading producers and

providers of entertainment and information, using its portfolio of brands to differentiate

its content, services and consumer products” (Walt Disney, 2013). These

recommendations will also act as solutions to the issues I found, and where Disney

should focus their highest priority.

We will begin our discussion highlighting a few points on strengths, weaknesses,

opportunities and threats of Walt Disney. This is called a SWOT analysis. I would like to

begin with a brief highlight of Disney’s diversification strategy. Walt Disney is diversified

in media, entertainment, theme parks, resorts and hotels, motion picture production and

distribution, cable television, television networks, cruise ships, and retail stores.

Disney’s revenue in 2007 was $35.5 billion dollars which increased in 2014 with a total

revenue of $45 billion dollars. These numbers are far from Disney’s financial struggle

during the 1980s, which led the company’s performance to a commendable success

every year since Walt Disney created Mickey Mouse in 1928. A major influence in

Disney’s rather recent revenue increase would be a result of Robert Iger’s views and

plans of action since being CEO from 2005 to 2012. He has been a major influencer in

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the business sector including ventures in business with ESPN, acquisition of Pixel’s

Marvel, strong branding of both Pixel’s Marvel in the United States and Globally.

Iger also understood the importance of diversification, as he is diversified in

territories outside of the United States. Iger’s seven-year reign successfully expanded

the company’s diversification strategy globally. Establishing themes parks in Hong

Kong, Paris, and Toyko, as well as purchasing a fleet of ships for their cruise line, and

obtaining the acquisition of Marvel Entertainment. In comparison, to Disney’s ambitious

beginnings of their 20-year venture to build two parks within the United States. Disney

based 50% of their profits from the United States before him, though other areas include

Shanghai, Hong Kong, Paris, and Tokyo. Disney’s diversification by acquisition used a

bold strategy in specific to Walt Disney Studios; by venturing out several channels,

ABC, Miramax, ESPN, Fox Family Channel, and Anaheim Angel; Disney had a channel

for every type of audience. In regards to Disneyland Development, these theme parks

hit the global market, located in Paris, France, Hong Kong, California Adventure Park,

Cruiseline, Disney World Studios in Ordlando, Disney Gaming, and the Disney store.

Walt Disney wanted to restore reputation through Blockbuster animated films with

Disney Classics such as The Little Mermaid (1989), Beauty & The Beast (1994), and

The Lion King (1994).

Prior to Iger, the core business was the continental U.S. He aligned the

emerging globalization of Disney through the realization you have to reach customers

interactive media. is not very diverse given that 50% of their bottom line profits come

from the United States. Disney’s largest concern was being regionally focused, not

globally focused. Iger changed those views. The focus on developing to a wider

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audience, an online audience as opposed to the everyday American. As we know, the

amount of time and effort it takes to brand a business within an area does not always

add up financially.

A solution for this would be to buy a company that is already established within

the region and to use their reputation and their tenure to get their customers. If Disney

used their business strategy within marketing in the United States, on a global

standpoint, they could have successfully diversified their units. Most importantly,

establishing business in The Big Four; India, China, Turkey, and Russia would gain

successful venture in all their business units. Due to the exposure to billions of people,

Disney’s exposure of business units would sky rocket. However, these ventures take

investing which is a part of their business strategy I believe they should have focused

on.

Iger’s strategic group map for the company and competitive analysis shows at

the comparative plan from 2006 to 2012. Iger set off in attempting, and succeeding, at

diversifying the company through multiple ventures. In 2006, Iger led a 7.4 billion

acquisition with Pixar Animation and purchased the rights to the first Disney cartoon

character, Oswald, the lucky rabbit from NBC Universal. In 2007, Disney added two new

340 meter ships to their Cruise Line. By 2009, Iger led an acquisition with Marvel

Entertainment for motion pictures of several characters including, Iron Man, The

Incredible Hulk, Thor, Captain America, and Spiderman. In 2010, the company divest

sold MiraMax & Dimension Film assets for approximately $663 million. Finally, by 2012,

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Disney added 2 new 680 meter ships to their Cruise Line and the motion picture, The

Avengers debuted hitting the box office at $1 billion worldwide by May 2012.

In 2014, Walt Disney Company’s business operations included three major

strategies; (a) high quality family content, (b) exploit technological innovations to make

entertainment experiences more memorable, and finally (c) expand internationally. The

company’s business units were organized in five divisions; (1) media networks, (2)

parks and resorts, (3) studio entertainment, (4) consumer products, and (5) interactive

media. Television production was limited to television programing for ABC and 178 local

tv stations were all ABC affiliates. Six of Disney’s eight domestic television stations

were located in the ten largest U.S. television markets, in all ABC had 238 affiliates in

the United States. Iger stated that most tend to be number one in the market, if not

number one then number two in the market. The company’s trend is to tend to rely on

very strong local news brand, which is not a television market but a media world - at

home, at work, walking, at school - media is consumed everywhere. Media has

expanded further than filmed entertainment, it now includes gaming, surfing websites,

and social networking. The company also launched a television everywhere application

to watch The Disney Channel and its other programs, as well as, ABC and ABC family

networks.

These factors include political policies, including the extent to which a

government intervenes in the economy. They include such matters as tax policy, fiscal

policy, tariffs, the political climate and the strength of institutions such as the federal

banking system. Some political policies affect certain types of industries moe than

others. An example is energy policy, which affect energy producers and heavy users of

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energy more than other types of business. Understanding the political aspect in the

countries that Walt Disney wished to penetrate in is crucial. Disney must evaluate the

political views and rulings of government in the specific countries due to the different

legal requirements that a foreign investor that has to adhere. This includes the tax

requirements that Disney have to follow besides other tariffs that will impact Disney.

Economic factors greatly impact business strategy. Through how businesses

operate and make decisions are key components in a successful business. Economic

conditions are factors to consider would be the following; interest rates, exchange rates,

the inflation rate, the unemployment rate, the rate of economic growth, trade deficits or

surpluses, savings rates, and per-capita domestic product. Economic factors also

include conditions in the markets for stocks and bonds, which can affect consumer

confidence and discretionary income. In relation to Disney, we would have to consider

locations across the global first and foremost, following which factors would greatly

influence our business strategy. For example, the previous economic crisis that hit

globally would have definitely changed the marketing strategies of Disney due to the

lower global demand particularly in the hotels and travels. Moreover, exchange rates

also impact the costs of exports, trades, and imported goods across the globe. These

factors would affect the very nature of Disney resorts, theme parks and cruise lines.

In order to be a global brand, Disney must consider how to market to a

multicultural and non-age specific customer. First and foremost, we must consider the

upcoming millennial generation. Children around the world are the focus audience of

Walt Disney, which would assume their parents are the target client. Disney provides

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entertainment through mainly, the animated series and theme parks. We can ask

ourselves questions like, “What storylines are most relatable to this generation? What

scenarios at home, school, and in their daily lives would they relate to? How could

Disney approach a generation so exposed to on demand media?” For example, Disney

Classics such as The Little Mermaid (1989), Beauty & The Beast (1994), and The Lion

King (1994), all have a common storyline the classic tale of the princess falling in love

with a prince. Consequently, Disney is the targeting even younger girls, even babies.

Nevertheless, Disney also targets adults as they are the decision makers for their

children.

Furthermore, since its inception, Disney has been appealing to young girls

through the Disney Princesses Belle, Ariel, Sleeping Beauty, Snow White, Cinderella,

and Jasmine. Now, Walt Disney is under continuous pressure to continue growing their

Disney Princess Sector, but with a different lens. All in all, these movies appealed to

many generations for their kid-friendly musicals, colourful animations, and fairytale

storylines. Although, now as a society we are more educated, have wider perspectives

on relationships, and exposure to online platforms provide younger generations with an

abundance of hot topics.

I would argue that the 21st century learner is more concerned about the

environment, women have a larger voice and demand to see heroines in the storylines,

and finally, to have a culturally diverse cast of characters. We as a society also want to

teach our children about more important topics than a princess finding her prince. How

humans imprint on the environment, promoting that woman can be their own heroes,

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and teaching to love all cultures are all notions we find in Disney’s more recent motion

picture films. These ideologies relate to the changing social constructions of gender

roles and identity. Disney would also need to consider the various communities

recognized in society such as LGBTQ. Age distribution is another factor that needs to

be considered on a social business standpoint. How will Disney accommodate their

marketed audience? Trends are a large part of social routine, and have been for many

generations. How will Disney take social trends into consideration in relation to

marketing their brand, product development, etc.?

As previously discussed, Disney’s business strategy needs to include how to

incorporate customers’ interests globally and online, as opposed predominately being

based in the United States. Therefore, this would move the 50% bottom line profit from

the United States to 50% global higher revenue base. Technological improvements and

global online media are two ways to engage the 21st century child. These are an

innovative approach in realistic human animation, distinctive character animation, and

special effects. In relation to the business unit of Studio Entertainment, I believe Disney

should move away from cable television and motion pictures due to how quickly online

media is growing. The social demand for entertainment is based on the convenience of

the viewer. My solution is for Disney to collaborate with social media platforms to

expansively market, grow and strengthen the Disney brand. Social media platforms

such as YouTube, Instagram, and Snapchat are all tools to ensure success Disney’s

studio entertainment business unit.

Adhering to the legal and regulatory factors of the country Disney decides to do

business is important, as it may financial implications in penalties and interest if these

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regulations are not met. They must comply with the regulations and laws dealing with

consumer laws, antitrust laws, labour laws, and occupational health and safety

regulation. Whether Disney endeavors to build theme parks and resorts, open retail

stores or to establish a media presences, it must always ensure it considers the legal

and regulatory factors to avoid penalties and interest for not complying and potentially

attracting costs to defend lawsuits.

That being said, we are living in a time where society is becoming more

conscious of investing their time and money into companies that stand by a premise to

lessen our carbon footprint. Disney is of no exception here. Can Disney market

themselves as an environmentally conscious company? More importantly, can they

improve their resorts, theme parks, cruise lines, and retail stores to reflect this premise?

Standing by what you market to the world is what will build a foundation for a success

business. The tourism business unit will be most affected by the conscious socially

responsible citizen.

A major issue recognized through PESTEL analysis would be the focus of online

media. I believe that Disney still invests majority of their time and money into cable

television and motion pictures. As much as this type of entertainment is still prevalent in

our society, I find that most audiences watch mainstream media through online

streaming and online platforms. My recommendation is for Disney to move away from

conventional media streams and find themselves available through online platforms

such as YouTube, Snapchat, Instagram, etc. By doing so, Disney would be reaching a

much broader audience; from children to teenagers to adults. The implications of not

carrying out these recommendations solely takes Disney off the market in

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entertainment. There far more opportunities for local and global small companies to

market to a larger audience using online platforms and I believe if Disney does not

change, they will be left in the 90s.

Another major issue recognized through the PESTEL analysis was the

consideration of cultures, values, and lifestyles when expanding their market to other

parts of the world. I recommend that in order for Disney to be successful in other parts

of the world, they must take on local ideologies in order to appeal to that market. Rather

than attempting to expand their market by using Western ideologies or business

strategies. The implications that will occur if these recommendations are not carried out

Disney will be unsuccessful when expanding globally. With globalization in mind, to go

into other regions and countries will strengthen and expand the Disney brand but

Disney must take into consideration lifestyles, societal values, and sociocultural forces

in order to develop a market for the audience to relate to the product and therefore want

to be a consumer of the product.

In conclusion, these recommendations have identified with the course of action to

improve Disney’s financial performance and shareholder returns. I believe this goal is

achievable given the adjustments and avenues we have discussed in this paper. By

considering political, economic, social, technological, legal, and environmental factors

when improving Disney’s financial performance. This examination of the industry’s

dominant economic characteristics, driving forces impacting the industry, and the

industry’s key success factors included an assessment and the identification of Walt

Disney’s current strategy, an examination of its recent financial performance, and a

SWOT analysis. We have accomplished Walt Disney’s mission statement, corporate

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values, and have used them to guide our success into future endeavours. Having said

that, I believe these recommendations will most certainly continue to expand the Disney

brand, broaden our market deeply creating a sound and stable consumer base for

future stability and prosperity.

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 KEY ITEMS MISSING
1. SWOT ANALYSIS
2. PORTER’S FIVE FORCES
3. WEIGHTED AVG MATRIX COMPARING DISNEY’S VARIOUS BUSINESSES
4. GO FORWARD FINANCIALS I.E. IMPLICATION OF EXECUTING ON
RECOMMENDATION
5. TIMELINE FOR IMPLEMENTATION OF RECOMMENDATION

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