Strategic Management

Presenters:
Rao

P Satyanarayana Dr. Sami Shahabuddin

ITM EEC Hyd Batch4 Date: 02/12/2012

Strategic Formulation

I do not like to repeat successes, I like to go on to other things. Walt Disney

Satya Sami Shahbuddin

ITM EEC Hyd Batch4

Overview
Company Overview The Founder Walt Disneys Division Mission statement Financial Trends Balance Sheet Strategic formulation: Input stage EFE IFE CPM Stage 2: Matching stage SWOT Analysis Space Matrix Grand Strategy Matrix BCG Stage 3: QSPM QSPM Evaluation Strategies Recommendations Objectives for Walt Disney

Satya Sami Shahbuddin

ITM EEC Hyd Batch4

Walt, after the Studio had won 4 Academy Awards

The founder

Walt Disney 1901-1966

Walt Disney was born on December 5, 1901 in Chicago During the fall of 1918, Walt Disney attempted to enlist for military service but he got rejected. He started a small company called Laugh-O-Grams, which eventually fell bankrupt. With his suitcase, and $20 Walt headed to Hollywood to start anew. After making a success of his "Alice Comedies," Walt became a recognized Hollywood figure. Disney took a deep interest in the establishment of California Institute of the Arts, a college-level professional school of all the creative and performing arts. Walt Disney passed away on December 15, 1966.

Satya Sami Shahbuddin ITM EEC Hyd Batch4

Walt Disney Divisions

Media Networks ESPN Disney/ABC Television Group ABC Entertainment Group ABC News ABC Owned Television Stations Group ABC Family Disney Channels Worldwide Hyperion Book s

Park and Resorts Disney Land Resorts Walt Disney World Resort Tokyo Disney Resort Disneyland Paris Hong Kong Disneyland Disney Cruise Line Disney Vacation Club Adventures by Disney Walt Disney Imagineering

Satya Sami Shahbuddin ITM EEC Hyd Batch4

Walt Disney Divisions Cont.

The Walt-Disney Studios Walt-Disney Studios Motion Pictures Marvel Studios Touchstone Pictures Disneynature Walt Disney Animation Studios Pixar Animation Studios Disney Music Groups Disney Theatrical Group

Disney Consumer Products Disney Licensing Disney Publishing Worldwide Disney Store Disney Interactive Media Group Disney Online Disney Games

Satya Sami Shahbuddin ITM EEC Hyd Batch4

Mission Statement

"The mission of The Walt Disney Company 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."

Satya Sami Shahbuddin ITM EEC Hyd Batch4

Financial Trends
Book Value/ Share

Avg P/E

Price/ Sales

Price/ Book

Net Profit Margin (%)

Debt/ Equity

Return on Return on Equity (%) Assets (%)

Interest Coverage

01-Oct-09

12.9

1.41

1.47

9.1

$18.55

0.38

9.8

5.2

9.6

01-Sep-08

14.2

1.69

1.85

11.7

$17.73

0.46

13.7

7.1

10.4

01-Sep-07

15

2.03

2.19

13.2

$15.67

0.5

15.2

7.7

10.4

01-Sep-06

16.9

1.87

1.98

9.8

$15.42

0.43

10.4

5.5

7.5

01-Oct-05

22.2

1.58

1.82

7.8

$13.06

0.49

9.4

4.6

6.3

01-Sep-04

21

1.52

1.7

7.6

$13.05

0.53

4.4

5.9

01-Sep-03

28.4

1.52

1.68

4.9

$11.82

0.57

5.6

2.7

3.4

01-Sep-02

33.4

1.2

1.29

4.9

$11.61

0.62

5.3

2.5

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Balance Sheet

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Framework

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EFE

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IFE

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ITM EEC Hyd Batch4

CPM
Media Network Segment
Critical Success factors Weights Rating 0.0 to 1.0 1 to 4 Weighted Score Rating 1 to 4 0 Advertising Market Share Company Image Financial Position Management Global Expansion Consumer Loyalty Production Capacity Technology Totals 0.12 0.11 0.12 0.11 0.09 0.12 0.12 0.12 0.09 1 4 3 4 4 3 4 4 3 3 0.48 0.33 0.48 0.44 0.27 0.48 0.48 0.36 0.27 3.59 4 4 3 4 3 4 4 3 4 Weighted Score Rating 1 to 4 0 0.48 0.44 0.36 0.44 0.27 0.48 0.48 0.36 0.36 3.67 2 2 3 3 3 4 3 2 3 Weighted Score

0 0.24 0.22 0.36 0.33 0.27 0.48 0.36 0.24 0.27 2.77

Satya Sami Shahabuddin

ITM EEC Hyd Batch4

Framework

Satya Sami Shahabuddin

ITM EEC Hyd Batch4

Strengths
One of the most recognizable entertainment company in the world Strong advertising Wide and unique portfolio Innovative entertainment business Strong customer service Strong Media Networks and Broadcasting division Disney owns a variety of companies, which allows them to generate more profits from different industry such as Media Networks and Broadcasting, Park and Resorts, Studio Entertainment and Disney Consumer Products Disney is the largest worldwide licensor of character-based merchandise and producer of childrens film-related products based on retail sales

Satya Sami Shahabuddin

ITM EEC Hyd Batch4

Weaknesses
Studio Entertainment and Disney Consumer Products divisions have been experiencing declining revenue for the last 3 years Disney as a narrow target market Disney as such a diversify product range that it can reduce efficiency and lead to a lack of strategic focus High cost of entertainment production High employee turnover Poor working conditions in factories Walt Disneys Park and Resorts are not easily accessible which leads people to associate Disney World with a costly trip

Satya Sami Shahabuddin

ITM EEC Hyd Batch4

Opportunities
Opportunity to renovate attractions in Park and Resorts Division due to increase in profit Growth from cable and satellite operators creating even more potential for Disney to make money with their network Prospect to build more theme park and resorts worldwide Openings in other areas of the travel business Opportunity to invest in building theme parks to satisfy the increase in guest spending, theme park attendance, and hotel occupancy Target new costumers group

Satya Sami Shahabuddin

ITM EEC Hyd Batch4

Threats
Lasting economic recession leading to slow growth rate High unemployment rate Park and Resorts Divisions success is unpredictable because of exchange rate fluctuations; travel industry trends; amount of available leisure time; oil and transportation prices; and weather patterns and seasonality. Changes in technology leads customers to stream online instead of buying DVD. Online streaming makes Disney vulnerable to piracy and violation of its intellectual property. Retail distribution business are influenced by seasonal consumer purchasing behavior and by the timing and performance of animated theatrical release Increase in labor cost which will have a noticed impact in WaltDisney expenses due to their large amount of employee.

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ITM EEC Hyd Batch4

SWOT Matrix

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Space Matrix Results

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Strategies: Market Development Market Penetration Product Development Forward Integration Backward Integration Horizontal Integration Related Diversification Unrelated Diversification

Space Matrix

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BCG

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ITM EEC Hyd Batch4

Grand Strategy Matrix

Strategies:
Market Development Market Penetration Product Development Forward Integration Backward Integration Horizontal Integration Related Diversification Unrelated Diversification

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Framework

Stage 3:

QSPM Matrix

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ITM EEC Hyd Batch4

QSPM Matrix

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QSPM Cont.

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Proposed strategies
Disneyland will never be completed. It will continue to grow as long as there is imagination left in the world. Walt Disney

Pixar is the most technically advanced creative company; Apple is the most creatively advanced technical company. Steve Jobs 2005-02-21

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ITM EEC Hyd Batch4

Strategies
Use product development to renovate and build new attractions in order to attract an older target market.

Use market development to build a new theme park which will be more accessible to the North East area.

Satya Sami Shahabuddin

ITM EEC Hyd Batch4

Recommendations
In the next three years Walt Disney should..

Build an indoor theme Park and Resort in New York. Improve advertising to promote entertainment which target a more mature audience. Remove the Interactive Media Segment. Remodel and build new attractions in every Park and Resorts to stay appealing to our customers.

Satya Sami Shahabuddin

ITM EEC Hyd Batch4

Objectives
In the next year Walt Disney should

Improve advertising to promote entertainment Remove the Interactive Media Segment Buy a land in New York City

Satya Sami Shahabuddin

ITM EEC Hyd Batch4

Questions

Satya Sami Shahabuddin

ITM EEC Hyd Batch4