Walt Disney Overview
According to the 2011 annual ranking of America’s largest Fortune 500 Companies, The Walt Disney Company, is ranked number sixty five and is the subject for review and analysis for investment recommendation (Money Magazine, 2012). Walt Disney Company is considered the leading family entertainment and media company with four distinct business segments. These business segments provide Walt Disney Company a diversified and international presence. A brief overview of each segment is listed below:
- The Walt Disney Studios – World-renowned animated features and live-action motion pictures that include, Pixar, Disney Animation, Touchstone Pictures, Home Entertainment, Theatrical Productions, Disney on Ice, Hollywood Records and Marvel.
- Parks and Resorts – Encompasses Disney Cruise Line, Vacation Club Resorts, Adventure locations which include their theme parks and guided tours.
- Disney Consumer Products - Merchandize ranging from apparel, toys, home décor and books and magazines to interactive games, foods and beverages, stationery, electronics and fine art.
- Media Networks – Media Networks comprise a vast array of broadcast, cable, radio, publishing and Internet businesses. Key areas are: ABC Television, Disney Channels, SOAPnet and ESPN Networks.
Walt Disney’s President and CEO, Rober Igler states, “Since becoming President and CEO in 2005, I have focused on three strategic priorities: creating high-quality family content, making experiences more memorable and accessible through innovative technology, and growing internationally. In fiscal 2011, net income attributable to Disney was a record $4.8 billion, an increase of 21% over last year, and revenue was a record $40.9 billion, up 7% from last year. Diluted earnings per share increased by 24% to a record $2.52. I’m particularly gratified by our outstanding performance in fiscal 2011, given the challenging global economic environment” (Disney Company, 2011). It is clear that Walt Disney Company has the size, financial stability, diversification and international presence to be a major force in the entertainment industry short and long-term.
To provide a fair and balanced analysis of the Walt Disney Company, I conducted a thorough review of all aspects of their business and have summarized their strengths, weaknesses, opportunities and threats (SWOT) as a company. The chart listed below provides my conclusions of that analysis:
- Diverse Business Operations
- Strong Brand Identity
- Global Presence
- Efficient Use Of Resources
- Strong Marketing
- Increasing Restructuring Costs
- High Operating Expenses
- Limited Liquidity Position
- Positive Outlook for Advertising
- Growth on E-Commerce
- Expanding Entertainment & Media Industry
- New Expansion Plans
- Acquisition Plans
- Vulnerability of Intellectual Property
- Competitive Pressure
- Tough Regulatory Environment
- Fluctuating Macro Environment
Following the review of this SWOT Analysis, the most important factors for my recommendation are found in the “Strengths” and “Opportunities”. These two areas seem to outweigh the potential “Threats” and “Weaknesses”. For example, having a global presence and diverse business operations helps minimize the threat of competitive pressure and spreads the risk of fluctuating markets. In addition, by expanding their e-commerce efforts Walt Disney Company will minimize the weakness of higher operating costs. (Khurana, 2011) states, “One of the most tangible positives of ecommerce is the lowered cost. A part of these lowered costs could be passed on to customers in the form of discounted prices. Here are some of the ways that costs can be reduced with ecommerce:
- Advertising and Marketing – Organic search engine traffic, pay-per-click, and social media traffic are some of the advertising channels that can be cost-effective.
- Personnel – The automation of checkout, billing, payments, inventory management, and other operational processes, lowers the number of employees required to run an ecommerce setup.
- Real Estate – An ecommerce merchant does not need a prominent physical location”(p 1)
Over its 89-year history, The Walt Disney Company has brought great stories, characters and experiences to families around the world. They make a strong commitment to corporate responsibility because they believe it makes their brands and products more attractive. (Disney Company, 2008) states, “It strengthens our bonds with consumers. It makes our Company a more desirable place to work. And it builds goodwill in the communities in which we operate. All of this adds shareholder value”(p.3).
At Disney, they view their potential stakeholders to include people or organizations that can effect, or be effected by, Disney. According to (Disney Company, 2008) “This includes employees, consumers, communities, shareholders, distributors, licensees, suppliers, retailers, contract workers, nonprofit and nongovernmental organizations, media and governmental organizations” Disney continues, “We engage with stakeholders routinely and in a variety of ways, including in-person and Web-based meetings, conference calls, correspondence, working groups and workshops, and conferences and events. Frequently this engagement focuses on projects of joint interest”(p. 12). It is clear that Walt Disney Corporation believes that by discussing openly, frequently and through routine feedback from each stakeholder they will build better alignment, improve transparency and increase the value for each stakeholder. (Disney Corporation, 2008) states, “While complete consensus among all the divergent stakeholder interests is probably an impossible outcome, we seek to achieve transparency, so that stakeholders can understand our actions and our intentions. The company also believes that working with stakeholders enhances its ability to address impacts and contribute solutions to some of today’s most important challenges while generating value for shareholders”(p.13). I have chosen a couple of critical stakeholders to weigh how Walt Disney Company fulfills their needs.
Children and families are at the heart of the Walt Disney Company. The needs for these stakeholders are best represented through the acquisition of their products and services. Children and family’s needs are to be entertained in a safe environment, inspired by fantasy, respect for all people and animals, and to promote special times and memories together. It is my belief that the Walt Disney Company continuously fulfills this need as observed from customer satisfaction, repeat customers and financial results. (Connellan, 1999) states, “70 percent of all visitors to the Disney Parks are repeat vistors” (p 6).
The communities are another key stakeholder since Walt Disney Corporation builds large theme parks, employs a significant number of people and impacts the local where they reside. The community and governmental needs are corporate responsibility, work standards and fair wages, environmental standards and employment opportunities. Walt Disney appears to fulfill these needs by having Corporate Policies and Standards that focus on providing community centric initiatives. (Disney Corporation, 2008) states, “As part of an ecosystem management strategy, Disney purchased an “at risk” parcel of 8,500 acres at the headwaters of the Everglades in 1993 to create Conservancy’s Disney Wilderness Preserve. Disney’s $45 million investment, made in collaboration with the Florida Department of Environmental Protection, Florida water management districts, the Audubon Society of Florida and The Nature Conservancy, is a living laboratory for land restoration. Heralded by then-EPA Administrator Carol Browner as a model for all companies, the effort was a new way to approach responsible development, while acknowledging the need for growth”(p.40).
Walt Disney Company’s values focus on the human element of their employees’, cast and crew members. The needs of these stakeholders are for a safe and respectful workplace, ground-breaking creativity and innovation, challenging work and equal opportunity for career advancement with work-life balance. In review of Walt Disney Company’s policies and benefits they appear to fulfill the requirements of employees. Disney provides significant programs and services for their employees. (Disney Corporation, 2008) explains, “Disney University offers a series of development courses for all levels at Disney. To support each individual’s development, the Company has invested in a global approach to learning and development called Disney Development Connection. In addition to these learning opportunities, we provide a number of programs that offer employees and cast members with in-depth background on our history and organization, as well as our many businesses.
Shareholders of Walt Disney have expectations of a positive return on their investment over time. Although every shareholder has a different time frame what they expect to earn over time, they all share the same interest in growth in there share price. I believe that Disney has met this requirement. (Disney Company, 2011) reports, “In fiscal 2011, net income attributable to Disney was a record $4.8 billion, an increase of 21% over last year, and revenue was a record $40.9 billion, up 7% from last year. Diluted earnings per share increased by 24% to a record $2.52. I’m particularly gratified by our outstanding performance in fiscal 2011, given the challenging global economic environment”(p.5).
In conclusion, it is my recommendation to invest into Walt Disney Company. We conducted a thorough SWAT analysis of all aspects of Disney and we believe that “Strengths” and “Opportunities” outweigh the “Weaknesses” and “Threats”. In addition, we believe that in review of the key stakeholders needs and wants, Walt Disney Company fulfills all requirements for the various and diverse stakeholders.
Connellan, T. (1999). Inside the Magic Kingdom. Austin, TX: Bard Press.
Disney Company, W. (2011, January). Fiscal Year 2011 Annual Report. Retrieved from http://corporate.disney.go.com/investors/annual_reports.html
Disney Company, W. (2008, March). Corporate Responsibility Report. 2008 Corporate Responsibility Report, 1(1), 1-100.
Khurana, A. (2011, July). Advantages of Ecommerce. Retrieved from http://about.com/od/eCommerce-basics/tp/Advantages-Of-Ecommerce.htm
Money Magazine, C. (2012, January). Fortune 500. Retrieved from http://money.cnn.com/magazine/fortune/fortune500/2011