Walt Disney Company:

Its Diversification Strategy

Brion, De Los Santos, Lee, Ramos, Venturina & Yun

COMPANY INTRODUCTION

CEO: Robert Iger Brief History Successful Films

Industries: 1928: 1937 - 1961 :

- Media Networks
1955: Opening in
Anaheim, California
- Parks & Resorts
1966: Death of Walt Disney
- Studio Entertainment Current Strategies:
Generic Strategy - Broad Differentiation
International Strategy - Global
- Consumer Products 1.) Creating high-quality family content
2.) Exploiting technological innovations to make
entertainment experiences more memorable
- Interactive Media 3.) Expanding to new markets internationally
EXTERNAL ANALYSIS: INDUSTRY ANALYSIS

Major Competitors:
Media Networks Parks & Resorts
EXTERNAL ANALYSIS: PESTEL ANALYSIS & PORTERS FIVE FORCES

Pestel Analysis Porters 5 Forces

Political :
- Political Differences that serves as a Barrier THREAT OF NEW ENTRANTS : Mod - High
Economical :
- Consumer Disposable Income
THREAT OF SUBSTITUTES : High
- Economic Growth/Recession
Sociocultural :
- Consumers Preference for other sources of
BARGAIN POWER OF SUPPLIERS : Low
entertainment and its Value
- Increase in Travel and tourism
Technological:
- Adapting to New Technologies BARGAIN POWER OF BUYERS : Moderate
Environmental :
- Environmental Standards to Operate (Proper
Waste Disposal & Treatment) RIVALRY AMONG FIRMS : High
Legal :
- Safety Regulation Requirements (Products/Parks)
EXTERNAL ANALYSIS: OPPORTUNITIES & THREATS
Opportunities
O1: Use of Technological
Advancements (IT & Mobile Gaming)
O2: Growth through Expansion to
Emerging and Developed Countries
O3: New Development (More
Successful Films, Characters &
Products)
Threats
T1: Issues on Piracy
T2: Intense competition
T3: Changes in Consumer
Preferences
T4: Negative Event that could
Affect the Brand Image
T5: Strict Safety Regulations /
Standard Requirements
EXTERNAL ANALYSIS: EFE MATRIX
Key External Factors Weight Rating Weighted
Score

Opportunities
1. Use of Technological Advancements 0.12 3 0.36
2. Growth through Expansion to 0.15 4 0.6
Emerging and Developed Countries

3. New Development(More Successful 0.15 4 0.6

Films, Characters & Products)

Threats

1. Issues on Piracy 0.12 2 0.24

2. Intense competition 0.1 2 0.2

3. Changes in Consumer Preferences 0.14 4 0.56

4. Negative Event that could Affect the 0.12 3 0.36

Brand Image

5. Strict Safety Regulations / 0.1 3 0.3

Standard Requirements

Total 1.00 3.22

INTERNAL ANALYSIS: SUPPLY & VALUE CHAIN
INTERNAL ANALYSIS: FINANCIAL ANALYSIS
Horizontal and Vertical Analysis

Common-Size Income Statement

2009 2010 2011

Revenue 100% 100% 100%

Cost and 84.24% 82.33% 80.97%

Expenses

Net Income 15.65% 17.41% 19.67%

Before Tax
INTERNAL ANALYSIS: FINANCIAL ANALYSIS
Financial Ratios

2009 2010 2011

Current 1.11 1.14

Ratio

Debt Ratio 0.43 0.45

Net Profit 15.65% 17.42% 19.67%

Margin

Total Asset 0.57 0.55 0.57

Turnover

Equity 1.87 1.84 1.93

Multiplier

DuPont 16.77% 16.84% 20.39%

ROE
INTERNAL ANALYSIS: STRENGTHS & WEAKNESSES
Strengths
S1: Strong brand recognition
S2: Strong financial performance
S3: Strong diversification
S4: Strategic Acquisitions
(Acquiring brands that add value
to the company)
S5: Penetrating the global market
Weaknesses
W1: Not doing well in the
interactive media business
W2: High operating costs
W3: High cost of recent
acquisitions
INTERNAL ANALYSIS: IFE MATRIX
STRATEGY ANALYSIS: I/E MATRIX
IFE Total Weighted score

Strong Average Weak

4.0 3.0 2.0 1.0

High

3.0
Medium

2.0
Low

1.0
STRATEGY ANALYSIS: GRAND STRATEGY MATRIX
RAPID Market Penetration
MARKET Market Development
GROWTH Vertical Integration
Horizontal Integration
Product Diversification

WEAK STRONG
COMPETITIVE COMPETITIVE
POSITION POSITION

SLOW
MARKET
GROWTH
STRATEGY ANALYSIS: I/E MATRIX
Internal

External
Key Strategic Issues
What are the other opportunities left to be maximized by the company?
How can we improve the companys Interactive Media?
What should be considered before further expanding into emerging markets such
as Asia?
Alternative Course of Action 1
Alternative Course of Action 2
Alternative Course of Action 3
Final Recommendation
1. Invest in R&D
2. Collaborate Game Developers to enhance the companys interactive media
Implementation Plan
1. Invest in R&D
a. Market Analysis per target country for the products to be produced
i. Popular characters
ii. Willingness to pay / purchasing power
b. Innovate Products
i. Consumer game play behavior and trends
ii. Game trends
c. Feasibility Study
2. Collaborate Game Developers to enhance the companys interactive media
a. Find a better console developer other than Activision (spider man) like Naughty Dog, Ubisoft,
Rocksteady, etc
b. Use characters in Marvel for the console games like what DC did using Batman.