Walt Disney Case

1. What is Walt Disney Company’s corporate strategy?

The company's corporate strategy was centered on (1) creating high-quality family content, (2) exploiting technological innovations to make entertainment experiences more memorable, and (3) international expansion.

2. What is your assessment of the long-term attractiveness of the industries represented in Walt Disney Company’s business portfolio?

Based on Walt Disney’s previous fiscal report and on going strategy planning, Media Networks Business Unit would be the most long-term attractiveness business. Attractiveness: media networks, park and resorts, studio entertainment, interactive media, consumer products.  The content generator units are more attractiveness for long-term business operation than its appendix services. On the other hand, those appendix business units can strengthen its brand image and loyalty.

 

3. What is your assessment of the competitive strength of Walt Disney Company’s different business units?

The high quality content generated from different divisions that are all stand on the top one or two position in the industries. All these business units help the weaker unit to grow rapidly.

4. What does a 9-cell industry attractiveness/business strength matrix displaying Walt Disney Company’s business units look like?

5. Does Walt Disney’s portfolio exhibit good strategic fit? What value chain match-ups do you see? What opportunities for skills transfer, cost sharing, or brand sharing do you see?

Walt Disney’s portfolio does good strategic fit in their five SBU. The Media Network unit can extend the life cycle of their Studio Entertainment unit’s products and help promoting all other units’ products. For instance, the Media Network unit shares its marketing and advertisement cost to only one brand, Walt Disney. The movie staff and animation picture teams can do better job by sharing each other their experience and technic on composing a special scene.

The value chain:

6. What is your assessment of Walt Disney Company’s financial and operating performance in fiscal years 2010-2011? What is your assessment of the relative contribution of the Disney SBUs to the financial strength of Disney, based on the 2011 fiscal year financial data?

Ratio	2011	2010
Operating Profit margin	18.89%	16.96%
Net profit margin	11.76%	10.41%
Return on equity (ROE)	14.29%	12.86%
Return on assets (ROA)	7.59%	6.66%

Ratio includes operating profit margin, net profit margin, return on equity and return on assets. Higher ratio is better for business operating and the trend upward is preference.

Business Unit	2011	%
Media Network	18,714 M	45.76%
Park and Resort	11,797 M	28.85%
Studio Entertainment	6,351 M	15.53%
Consumer Products	3,049 M	7.46%
Interactive Media	982	2.40%
Total	40,893 M	100.00%

The media network generated the highest profit 45.76% in 2011. The Park and resort unit and the studio entertainment unit had contributed 44.38% in combination. First, the SBU portfolio seems having too heavy tendency to the Media network. In addition, the consumer product unit has only 7.46% of total revenue which need to put more resource on it for profit growing.

7. What actions do you recommend that Walt Disney Company’s management take to improve the company and increase shareholder value? Your recommended actions must be supported with a convincing, analysis- based argument.

Business Unit	2011 Net Profit Margin
Media Network	32.84%
Park and Resort	13.16%
Studio Entertainment	9.73%
Consumer Products	26.76%
Interactive Media	-31.36%

According to the profit margin, net profit margin and individual business unit net profit margin, the Media network unit generated the largest revenue and net profit margin. Based on the net profit margin report, the media network unit and consumer product unit have the best net profit generate ability. Even though, the consumer product unit is locating at the average business strength and average attractiveness in the 9-cell industry attractiveness/ strength analysis, it still can earn good net profit to the corporation.

The corporation can put more R&D and technology resource to the consumer product unit. Storyline and storytelling are the most valuable property that Walt Disney can use to boost their product selling. By using new technology and storytelling method to create more attractive story experience to the young kids will improve its market share and also increase total profit. Finally, the action can balance its inclination of revenue distribution.