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Experiential Exercise 6A

SWOT matrix:

Walt Disney COMPANY


Strengths 1. Revenue from parks and resorts is growing at an average of 11% annually 2. International segments operating income generated resulted to 22.46% margin of the total operating income of the company 3. Growth on Disney Xtreme Digital, a networking site, with 82% of worlds internet population prefers networking 4. Walt Disney has 4 differentiated segments 5. Popular brand name for over 88 years 6. Disney has 11 theme parks several cable channels 7. Services and product innovation capacity 8. One of the largest media entertainment in the world 9. Acquisition of Pixar animation SO Strategies 1. Add Disneyland theme parks as well as new attractions on its parks on geographical areas like on countries surveyed to have the happiest people on earth. (S1, S6, S2, O4) 2. Make new animation movies through Pixar animation studios in partnership with Disney with combined portfolio of new and old Disney characters with content related to past Pixar hit releases. (S8, S9, O6) 3. Add new cable channels and internet subscription channels with program filled contents and touch of networking. In addition, a Disney website that will handle Weaknesses 1. High operating cost, average of 84.73% of total revenues 2. Limited range of target audience mainly children 3. Large workforce 4. Lagging consumer products revenues 5. Creation of successful and new creative products and services is constantly needed

Opportunities

1. HDTV SUBSCRIBERS ROSE TO AT LEAST 69% OF ALL THE HOUSEHOLDS IN UNITED STATES. 2. VIDEO-ON-DEMAND IS A MAJOR
INDUSTRY AND GROWING AND GROWING RAPIDLY, OVERALL SUBSCRIPTION ON DEMAND OFFERINGS SAW A 10% INCREASE IN TOTAL TRANSACTIONS.

3. Increasing impact in music


industry

4. EXPANSION IN UNTAPPED
GEOGRAPHICAL AREAS

5. INTERNET ADVERTISING GROWS

WO Strategies 1. Produce music albums just like what Sony and Time Warner to expand its market and audience share. (W2, O3) 2. Build parks on newly emerging geographical areas rather than on older and expensive areas. (W1, O4) 3. Recreate the past Disney characters by offering consumer products like rereleasing Disney films on Blu Ray Discs with added features and interactive. (W4, W5, O6) 4. Retrench some labor and

the Internet channel viewings together with advertisements CURRENTLY. and announcements of 6. Reuse of past portfolio of upcoming events of Disney. (S6, Disney characters S3, O1, O2, O5) 7. Much cheaper labor cost on 4. Launch Disney Recording Studio other countries like India and to compete with the music Philippines. industries. (S4, S7, O3) Threats ST Strategies 1. Estimated 8.7% 1. Introduce and push new and unemployment rate cheaper entertainment and worldwide product options instead of high 2. Changing customer priced options. (S7, S8, T5) preferences 2. Introduce different interactive 3. Global piracy rate from 40% entertainment on the internet. in 2001 and constantly rising (S8, W6) currently; copyright and intellectual property rights infringements 4. Tight competition locally and internationally 5. Slower/struggling economic growth 6. Availability of other internet entertainment 7. Fast pace of technological and media changes
IN 2007 AND CONTINUES

hire workforce based on other countries that require much cheaper cost but with the same level of competence. (W3, O7)

WT Strategies 1. Research on having lower cost entertainment rather than having the costly choices. (W1, T5) 2. Continue on innovating unique products that will conform on the consumers tastes and preferences. (W5, T2)

SO Strategies SO strategies are strategies that utilize an organizations internal strengths to take advantage of external opportunities. By doing the SWOT matrix, 4 strategies have been developed. 1. Add Disneyland theme parks as well as new attractions on its parks on geographical areas like on countries surveyed to have the happiest people on earth Since the revenue on Disneys theme parks and resorts is growing and the operating income on international segments shows significant portion in relation to companys total operating income, the strategy of adding theme parks on geographical areas like on countries which were surveyed to be the top happiest countries in the world is desirable. This is also in line with the companys vision of making everyone happy. The magical theme park of Disney will add happiness to those countries that will enable Disney to generate more revenues.

2. Make new animation movies through Pixar animation studios in partnership with Disney with combined portfolio of new and old Disney characters with content related to past Pixar hit releases This SO strategy will be able to maximize its acquisition of Pixar Animations by producing animated films through the use of Pixar itself. It can also come up with the idea of producing films using its vast portfolio of old and famous characters in related contents to Pixars hit movie releases. 3. Add new cable channels and internet subscription channels with program filled contents and touch of networking. In addition, a Disney website that will handle the Internet channel viewings together with advertisements and announcements of upcoming events of Disney Since the cable tv subscribers and internet users worldwide are growing in numbers, Disney can add new cable channels that will add new attractions to subscribers. Also, the Disney can maximize the use of its website by showing their a live streaming of what was showed simultaneously on the television. It can also offer video downloads for the subscribers for the movies they prefer to watch. In the website, there can be also a bulk of advertising. Members of this website will be requested to refer the website to at least two friends so that it can grow and be known. 4. Launch Disney Recording Studio to compete with the music industries Just like the Sony and Time Warner recording studios, Disney can expand its services on producing musical albums of superstars and upcoming musical artists. This will enable the company to expand its audience shares and compete with the music industry. WO Strategies WO strategies are strategies that take the external opportunities to improve its internal weaknesses. By doing SWOT matrix, 4 strategies were developed. 1. Produce music albums just like what Sony and Time Warner to expand its market and audience share The match of having limited market share mainly children and the increasing impact on music industry came up with the strategy of producing music albums from famous artists and upcoming ones. This will enable to increase its market share and expand it to teenagers and adults. This is due to the musics universality and flexibility. 2. Build parks on newly emerging geographical areas rather than on older and expensive areas When looking to expand, The Walt Disney Company should look to new, emerging economies in which to plant and foster new parks and initiatives. Disney should consider emerging markets such as India, Brazil, and South Korea to cut costs and beat the crowds, in a sense. Where emerging markets develop so does the population. If Disney can plant parks in these areas before the growth stabilizes, then they have made a sound financial decision. 3. Recreate the past Disney characters by offering consumer products like rereleasing Disney films on Blu Ray Discs with added features and interactive. In order to improve the weakness of lagging consumer products and the constant need of making successful product, Disney can recreate and rerelease their portfolio of old characters by offering Blu

Ray Discs movies of previously showed films with added extra features and interactives. This is a cheaper way of boosting revenues of the company. 4. Retrench some labor and hire workforce based on other countries that require much cheaper cost but with the same level of competence. In order to minimize the cost of labor, the company can use the opportunity of having much cheaper labor on countries such as India and Philippines provided they possess the competence and skills as the retrenched labor had. ST Strategies ST strategies are strategies that utilize the companys internal strengths to reduce the impact of external threats. 1. Introduce and push new and cheaper entertainment and product options instead of high priced options Seeing as consumers are experiencing the poor economy just like members of the business communities, offering cheaper-priced entertainment options would be a sure way to include the struggling consumer in the consumption of entertainment products. 2. Introduce different interactive entertainment on the internet The company can use its status as one of the largest media entertainment in the world to provide different entertainment attractions on the internet. Interactive entertainment, gaming, networking can be introduced primarily not just for kids, but also for adults. WT Strategies WT strategies were defensive strategies that reduce internal weaknesses and avoids external threats. 1. Research on having lower cost entertainment rather than having the costly choices Because of increasing costs of operation, Disney needs to consider less expensive options. Disney is known for their excellence, not their sheer size. That being said, the Company should consider building a water park in Chicago or a small amusement park in Kansas City. The savings would be great for the company and it would open its doors to areas of the country that could access the parks without travelling, causing currently economically-struggling citizens to visit the parks in greater numbers than if the parks stayed hundreds of miles away in their sunny Floridian and Californian homes. 2. Continue on innovating unique products that will conform on the consumers tastes and preferences Because the company needs constant creation of successful products and services, the products they are going to make should conform to what the consumers prefer. Through this, the company will be able to meet the consumers tastes as well as making the products and services they are going to offer to be successful.

Experiential Exercise 6B
SPACE matrix:

Walt Disney COMPANY


Ratings 4 4 5 5 3 21 4.2

Financial Strengths Gross Profit Margin Increased from 15.98% in 2006 to 19.10% in 2007 Low Leverage Return on Assets increase to 7.69 % Current ratio is close to 1 (2006-2007) with just a marginal increase I the year Earnings per share (2007) is 2.34 higher than industry Total Average

Competitive Advantage Global expansion Disney is the worlds largest amusement park company Quality products Decades of experience in the technological aspects of entertainment/film Products life cycle of Disney characters been popular Total Average

Ratings -2 -1 -1 -3 -2 -9 -1.8

Environmental Stability Competitive Pressure Technological changes Barriers to entry in film and entertainment industries Recession phase in economy affects the operations Price range of competitive products Total Average

Ratings -2 -1 -1 -4 -4 -12 -2.4

Industry Strength There is no ease of entry into the film/entertainment industry Profit potential Financial Stability Growth potential Total Average Conclusion: ES Average -12/5 = -2.4 CA Average -9/5 = -1.8

Ratings 5 4 3 5 17 4.25

IS Average 17/4 = 4.25 FS Average 21/5 = 4.2

Directional Vector Coordinates: x-axis: -1.8 + (4.25) = 2.45 y-axis: -2.4 + (4.20) = 1.8

This graph shows that the Walt Disney Company falls with first quadrant of the SPACE Matrix Graph. This means that the company should pursue AGGRESSIVE strategies.

Experiential Exercise 6C
bcg matrix:

Walt Disney COMPANY


RELATIVE MARKET SHARE POSITION IN THE INDUSTRY

High 1.0 High +20


STARS II

Medium .50

Low 0.0
QUESTION MARKS I 22%

55% 8% INDUSTRY SALES GROWTH Medium RATE (Percentage)

15%

Low -20

CASH COWS III

DOGS IV

Division

Revenues

Percent Revenues 21% 30% 42% 7% 100%

Profits

Percent Profits 15% 22% 55% 8% 100%

Percent Market Share 68% 35% 86% 18%

Studio Entertainment Parks and Resorts Media Network Consumer Products Total

7491 10626 15046 2347 35510

1210 1710 4285 631 7836

Industry Growth Rate -.5% 7.06% 2.79% 7.02%

QUESTION MARKS

Parks and Resorts have a low relative market share but it competes in growing industry thats why they fall in this category. As a proof Disney land Parks and Resorts have direct competitors such as Six Flags Discovery Kingdom with 32 parks and have revenue of 1 billion in 2005. Due to Demographic changes in increases in aging population, Viacom Inc. has also started opening adult play grounds offering virtual reality game. But not all Parks are doing well Hong Kongs oldest amusement park has been doing much better than Hong Kong Disneyland. Based on the report of USA Today(June 5, 2007 p.9A) Hong Kong Disneyland has been refinance the debt which shows that cash needs of this segment are high than its cash generation. STRATEGIES: PRODUCT DEVELOPMENT-Revitalize the Disney California Adventure in Anaheim, California by spending $1.1 billion in 2008-2011. MARKET DEVELOPMENT-Build vacation homes in places like Caribbean.

Consumer Products has a low relative market position and operates in a high growth industry. This segment has produced the lowest revenue for 2007 which is only 7% of the total revenue of Walt Disney. The leading competitors of Walt Disney in this segment are warner Brothers, Fox, Sony, Marvel and Nickelodeon. Consumer Products are complements to the rest of Disneys asset. The clothing, toy

and other accessories accompany Disney movies and theme parks. Operating Results for licensing and retail distribution business are influenced by seasonal consumer purchasing behavior and by the timing and performance of animated theatrical releases.
STRATEGY: Retrenchment- , Disney currently sold 365 of its stores to the Childrens Place under a franchising agreement.

STARS
MEDIA NETWORKS AND BROADCASTING. Disney has control of several television networks: ABC, ABC Family, A&E, and The Disney Channel and ESPN. Global media is a high growth industry and Walt Disneys media network has a large market share therefore it is considered a star. This segment has the highest share in the companys total revenue and also with its total profit with 42 % and 55 % respectively. Walt Disney competes primarily with other television networks, independent television stations, and other video media such as cables and satellite television programming services. Advertising is also a major source of income for Walt Disney, also competes with other advertising media such as newspapers, magazines, billboards and internet. STRATEGY:

Horizontal integration- Merged with ABC. ABC added distribution network with more TV and radio network. Horizontal integration- acquisition of club penguin one of the fastest growing virtual online for kids. The addition of club penguin to Disneys existing online asset will further

strengthen the companys objective of establishing clear leadership in online virtual for kids and family.
Product Development-Also Disney unveiled Disney Xtreme Digital, a networking site that competes against MySpace, owned by News Corp. Horizontal Integration-Acquisition of KHJ (Los Angeles) television station.

CASH COWS
Studio Entertainment Disneys studios are as good as their competitors in the film industry it has a low growth industry and a high relative market share making it a cash cow . Whether or not Disney films generate large revenue depends on the number of people who attend, which varies by film. If moviegoers do not like a film then the production company will lose money as a result. Piracy has also become a factor why there is a decline in profit of studio entertainment although , this segment is still
generating a lot of revenues from the increase in worldwide theatrical motion picture distribution due to strong box-office performance of selected movie

STRATEGY: Retrenchment- lower its cost and share its production cost for film by financing with investors. This will lessen the risk of Walt Disney with producing and distributing films.

Experiential Exercise 6D

QSPM matrix:

Walt Disney COMPANY


Introduce and push new and cheaper entertainment and product options instead of high priced options Launch Disney Recording Studio to compete with the music industries AS 3 TAS .33 Make new animation movies through Pixar animation studios in partnership with Disney with combined portfolio of new and old Disney characters with content related to past Pixar hit releases AS TAS 4 .44

Key Factors Opportunities 1. HDTV SUBSCRIBERS ROSE TO AT LEAST 69%


OF ALL THE HOUSEHOLDS IN UNITED STATES.

Weight .11

AS 2

TAS .22

2. VIDEO-ON-DEMAND IS A
MAJOR INDUSTRY AND GROWING AND GROWING RAPIDLY, OVERALL SUBSCRIPTION ON DEMAND OFFERINGS SAW A 10% INCREASE IN TOTAL TRANSACTIONS.

.06

.24

.12

.18

3. Increasing impact in
music industry 4. EXPANSION IN
UNTAPPED GEOGRAPHICAL AREAS

.05 .09

3 -

.15

4 -

.20

1 -

.05

5. INTERNET ADVERTISING
GROWS IN 2007 AND CONTINUES CURRENTLY.

.05

.15

.05

.10

6. Reuse of past
portfolio of Disney characters 7. Much cheaper labor cost on other countries like India and Philippines. Threats 1. Estimated 8.7% unemployment rate worldwide

.05

.03

.08

2. Changing customer preferences 3. Global piracy rate from 40% in 2001 and constantly rising currently; copyright and intellectual property rights infringements 4. Tight competition locally and internationally 5. Slower/struggling economic growth 6. Availability of other internet entertainment 7. Fast pace of technological and media changes Strengths 1. Revenue from parks and resorts is growing at an average of 11% annually 2. International segments operating income generated resulted to 22.46% margin of the total operating income of the company 3. Growth on Disney Xtreme Digital, a networking site, with 82% of worlds internet population prefers networking 4. Walt Disney has 4 differentiated segments 5. Popular brand name for over 88 years 6. Disney has 11 theme parks several cable channels

.10 .07

4 1

.40 .07

3 3

.30 .21

2 4

.20 .28

.12

.48

.24

.36

.05 .09

4 1

.20 .09

2 3

.10 .27

3 4

.15 .36

.05

.20

.10

.15

1.00 .14 3 .42 2 .28 4 .56

.08

.24

.16

.32

.05

.05

.2

.2

.1

.13

.52

.13

.39

.06

7. Services and product innovation capacity 8. One of the largest media entertainment in the world 9. Acquisition of Pixar animation

.07 .06

4 2

.28 .12

2 3

.14 .18

3 4

.21 .24

.04 -

Weaknesses 1. High operating cost, average of 84.73% of total revenues 2. Limited range of target audience mainly children 3. Large workforce 4. Lagging consumer products revenues 5. Creation of successful and new creative products and services is constantly needed

.10

.30

.1

.2

.06

.18

.06

.12

.05 .07 .04

4 4

.28 .16

2 3

.14 .12

2 2

.14 .08

1.00

4.9

3.43

4.18

Holy Angel University Angeles City College of Business and Accountancy

Walt Disney
COHESION CASE:

EXPERIENTIAL EXERCISES 6A, 6B, 6C AND 6D

Group name: Gamemaster Members: Henson, anne freya Hipolito, ruby Poy Lorenzo, Kaceelyn Pineda, Joanna marie Tan, john Joshua Instructor: Mrs. Carmelita lao Date:

21 FEbruary 2012

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