strategic management final case study andrea baril ashley cleary sylvia labrie
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Strategic Management Final Case Study Andrea Baril Ashley Cleary Sylvia LaBrie Marie-Michele Lachance 05/03/2012. Overview. Company Overview The Founder Growth Location Map Walt Disney’s Division Existing Mission Proposed Mission and Vision SWOT Analysis External Audit CPM - PowerPoint PPT PresentationTRANSCRIPT
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Strategic Management
Final Case Study
Andrea Baril
Ashley Cleary
Sylvia LaBrie
Marie-Michele Lachance
05/03/2012
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OverviewCompany Overview• The Founder• Growth• Location Map• Walt Disney’s Division
Existing Mission
Proposed Mission and Vision
SWOT Analysis
External Audit• CPM• Positioning Map• EFE
Internal Audit• Organizational Chart• Financial Trends• Balance Sheet• Financial Ratios• IFE
Strategic Plan• SWOT Matrix• Space Matrix• IE Matrix• Grand Strategy Matrix• BCG• Matrix Analysis• QSPM
Implementation• Assumptions• Projected Income Statement• Projected Balance Sheet• Projected Ratios
Evaluation• Stock Price• Balance Scored Card• Strategies• Recommendations• Objectives
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The founder
• 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.• Urban legend maintains his corpse would be frozen and stored beneath the Pirates of the Caribbean ride at Disneyland. . .
Walt, after the Studio had won 4 Academy Awards
Walt Disney 1901-1966
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October 16, 1923:This date is considered the start of the Disney Company first known as The Disney Brothers Studio.1928:
First Mickey Mouse cartoon, and the first appearance by Minnie Mouse.1932:
Flowers and Trees, first full-color cartoon and first Academy Award winner.1939:
The Disney Studio begins its move to Burbank, California. 1940:
Walt Disney Productions issues its first stock.
History
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1955:Mickey Mouse Club debuts on television.1971:
Walt Disney World Resort opens with the Magic Kingdom and two hotels near Orlando, Florida. 1982:
EPCOT Center opens at Walt-Disney World Resort .1983:
Tokyo Disneyland, the first international Disney theme park, opens in Japan.1987:
The first Disney Store opens, in Glendale, California.
Growth
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1989:Disney-MGM Studios opens at Walt Disney World Resort.1992:
Disneyland Paris opens.1995:
Disney agrees to purchase 25 percent of the California Angels baseball team, Disney agrees to purchase Capital Cities/ABC for $19 billion. The Disney Channel begins operation in the UK.1996:
Disney Online launches Disney.com. Radio Disney, a live 24-hour music-intensive radio network, debuts. 1998:
ESPN Magazine debuts, Disney’s Animal Kingdom opens at Walt Disney World Resort, Disney Magic cruise ship departs on its inaugural cruise.
Growth cont.
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Disney purchased Marvel Entertainment Gave a $0.35 dividend per share Roy Disney died at age 79 He was a key person in Disney’s animation
legacy Received approval to build a theme park in
Shanghai Released the movie Up
2009
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LOCATION MAP
Disney Resorts:1. California
2. Florida3. Tokyo
4. Hong Kong5. Paris
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Media Networks Park and Resorts• ESPN• Disney/ABC Television
Group• ABC Entertainment
Group• ABC News• ABC Owned Television
Stations Group• ABC Family• Disney Channels
Worldwide• Hyperion Book s
• 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
Walt Disney Divisions
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The Walt-Disney Studios Disney Consumer Products
• Walt-Disney Studios Motion Pictures
• Marvel Studios• Touchstone Pictures• Disneynature• Walt Disney Animation
Studios• Pixar Animation Studios• Disney Music Groups• Disney Theatrical Group
• Disney Licensing • Disney Publishing
Worldwide• Disney Store
Disney Interactive Media Group• Disney Online• Disney Games
Walt Disney Divisions Cont.
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"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."
Mission Statement
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Proposed Vision
Walt Disney strives to be the world’s most famous entertainment company by creating an amazing experience for individual of all ages.
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HISTORY
Proposed Mission
Our Mission is to be one of the world’s leading producer and provider of entertainment and information, from parks to network media, and website for all ages. We seek to provide a great experience for our customers, as well as for our employees. By using our unique portfolio to differentiate our content, services and consumer products, we seek to develop the most creative, innovative and profitable entertainment experiences, which would produce financial rewards to our shareholders. In everything we do, we try to contribute to our communities by giving them the best experience.
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SWOT Analysis
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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 children’s film-related products based on retail sales
Strengths
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Disney sends a corrupted influence to children Jasmine was in a forbidden relationship with Aladdin Snow White lived alone with 7 men Pinocchio was a liar Robin Hood was a thief Tarzan walked without clothes on A stranger kissed sleeping beauty and she married him Cinderella lied and sneaked out at night to attend a party Coyote runs off cliffs and blows himself up
Weaknesses
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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 Disney’s Park and Resorts are not easily accessible which
leads people to associate Disney World with a costly trip
Weaknesses
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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
Opportunities
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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 Walt-Disney expenses due to their large amount of employee.
Threats
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External Audit
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Critical Success factors Weights Rating Weighted Score Rating Weighted Score Rating Weighted Score 0.0 to 1.0 1 to 4 1 to 4 1 to 4
0 0 0
Advertising 0.12 4 0.48 4 0.48 2 0.24
Market Share 0.11 3 0.33 4 0.44 2 0.22
Company Image 0.12 4 0.48 3 0.36 3 0.36
Financial Position 0.11 4 0.44 4 0.44 3 0.33
Management 0.09 3 0.27 3 0.27 3 0.27
Global Expansion 0.12 4 0.48 4 0.48 4 0.48
Consumer Loyalty 0.12 4 0.48 4 0.48 3 0.36
Production Capacity 0.12 3 0.36 3 0.36 2 0.24
Technology 0.09 3 0.27 4 0.36 3 0.27
Totals 1 3.59 3.67 2.77
CPMMedia Network Segment
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Positioning MapMedia Network Segment
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Positioning MapPark and Resorts Segment
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EFE
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Internal Audit
Disneyland will never be completed. It will continue to grow as long as there is imagination left in the world.
- Walt Disney
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Organizational Chart
Theme Parks & ResortsInternationalABC Television GroupCo-Head InteractiveCo-Head Interactive & PlaydonHuman ResourcesMotion Picture DistributionCommunicationStategy and Business DevelopmentGovernment RelationsDisney Consumer ProductsESPN & ABC SportsESPN & Disney Media NetworksCFOLegal and SecretaryCIDSecurity
CEO
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Financial Trends
Avg P/EPrice/ Sales
Price/ Book
Net Profit Margin (%)
Book Value/ Share
Debt/ Equity
Return on Equity (%)
Return on 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 9 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 3
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(in Millions, except per share data) 2009
Revenues $36,149.00
Costs and expenses $(30,452.00)
Restrucuring and impairment charges $(492.00)
Other income (expense) $342.00
Net interest expense $(466.00)
Equity in the income of investees $577.00
Income from continuing operations before income taxes and minority interests $5,658.00
Income taxs $(2,049.00)
Minority interests $(302.00)
Income from continuing operations $3,307.00
Discontinued operations, net of tax -
Net income $3,307.00
Diluted earnings per share:
Earnings per share, continuing operations $1.76
Earnings per share, discontinued operations
Earnings per share $1.76
Basic earnings per share
Earnings per share, continuing operations $1.78
Earnings per share, discontinued operations
Earnings per share $1.78
Weighted average number of common and common equivalent shares outstanding:
Diluted $1,875.00
Basic $1,856.00
Income Statement
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Balance Sheet
ASSETS
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Balance Sheet Cont.
Liabilities
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Selected Financial Ratios 2009 2008
Liquidity Ratios
Current Ratio 1.33 1.01
Quick Ratio 1.19 0.91
Leverage Ratios
Debt-to-Total Assets Ratio 1 1
Debt-to-equity Ratio 1.12 1.93
Long-term debt-to-equity Ratio 0.1 0.12
Times-Interest-earned Ratio -12.14 -14.13
Activity Ratios
Inventory Turns 28.44 33.67
Fixed Assets Turnover 1.11 1.2
Total Assets Turnover 0.57 0.61
Profitability Ratios
Gross Profit margins 1.84 1.8
Operating Profit Margin 0.16 0.2
Net Profit Margin 0.09 0.12
Return on Total Assets 0.05 0.07
Return on Stockholders equity 0.06 0.14
Earning per share 1.78 2.34
Price-earnings Ratio 15.31 12.61
Growth Rations (yearly)
Sales -4.48% 7.66%
Net Income -25.30% -5.55%
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IFE
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Strategic Formulation
“I do not like to repeat successes, I like to go on to other things.”
Walt Disney
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SWOT Matrix
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Space Matrix Results
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Space MatrixStrategies:Market DevelopmentMarket PenetrationProduct DevelopmentForward IntegrationBackward IntegrationHorizontal IntegrationRelated DiversificationUnrelated Diversification
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IE Matrix
Total EFE Score
High 3-4
Medium 2-2.99
Low 1-1.99
Strong 3-4 Weak 1-1.99Total IFE ScoreAverage 2-2.99
Media Networks
Parks and Resorts
Studio Entertainment
Consumer Products
Interactive media
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Strategies:Market DevelopmentMarket PenetrationProduct DevelopmentForward IntegrationBackward IntegrationHorizontal IntegrationRelated DiversificationUnrelated Diversification
Grand Strategy Matrix
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BCG
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Matrix Analysis
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QSPM Matrix
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QSPM Cont.
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Implementation“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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Eliminate 10 billion out of the borrowings from the retained earnings
Finance 1 billion to buy a land in order to open indoor resort in New York in the next three years.
Invest 10 million for advertisement Spend 1 billion in each of the five
existing Park for renovation and new attractions.
= Total of 5 billion
Assumptions
Total Investment of 19.01 billion
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Projected Income Statement
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Projected Balance SheetAssets
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Project Balance SheetLiabilities
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Project Financial Ratios
Liquidity Ratios
Current Ratio 1.33 0.51
Quick Ratio 1.19 0.46
Leverage Ratios
Debt-to-Total Assets Ratio 1 0.86
Debt-to-equity Ratio 1.12 1.84
Long-term debt-to-equity Ratio 0.1 0.26
Times-Interest-earned Ratio -12.14 -12.14
Activity Ratios
Inventory Turns 28.44 40.39
Fixed Assets Turnover 1.11 1.11
Total Assets Turnover 0.57 0.62
Profitability Ratios
Gross Profit margins 1.84 1.84
Operating Profit Margin 0.16 0.16
Net Profit Margin 0.09 0.09
Return on Total Assets 0.05 0.06
Return on Stockholders equity 0.06 0.012
Earning per share 1.78 1.72
Price-earnings Ratio 15.31 14.27
Growth Rations (yearly)
Sales -4.48% 0.00%
Net Income -25.30% 0.00%
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Evaluation
“You're dead if you aim only for kids. Adults are only kids grown up, anyway.”
Walt Disney
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Stock Price Graph
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Balanced Score CardArea of Objectives Measure of Target Time Expectations Primary Responsibility
Customers1. Costumer satisfaction Customer Survey
WebinarYearly Human Resources &
CEORepresentatives
1. Employee Conditions Employee Satisfaction Biannually CEO2. Career Opportunity Lower employee turnover Biannually CEO Community / Socially
Responsible1. Eco-Friendly Company Maintain clean environment in
resortsIncrease presence of recycling in
resortsLimit food, paper and water
wasteLimit land destruction
Yearly CEO Marketing Department
2. Ethical Company Increase in donations and presence of charitable events
Yearly CEO Marketing Department
Operations/Processes1. Innovation Number of new products in each
segmentNumber of renovated products
in each segment
Yearly CEOMarketing Department
2. Brand expansion/ Accessibility
Numbers of new resorts built Yearly CEO
Financial 1. Reduce cost of production Decrease in cost of Parks,
Resorts and other property Yearly CFO
2. Increase profitability Increase Sales Reduce Expenses
Quarterly CFO
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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.
Strategies
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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.
Recommendations
In the next three years Walt Disney should..
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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
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Questions
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