Read the Walt Disney Company case, and from the perspective of an executive with the firm, prepare a  strategic plan to grow the business over the next three years. Your strategic plan must be future-oriented and include the following:

• A critique of the company’s mission statement based on the article ‘Mission Statements (Links to an external site.)Links to an external site.’
• “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.”
• One- to two-sentence vision statement for the company.
• An assessment of the targeting and segmentation strategy of the company within its five major segments.
• An evaluation of the external environment (industry, market, and the  general environment), and the internal situation (core competencies,  brand reputation and loyalty, and customer-value proposition) of the  company.
• A SWOT analysis detailing on the strengths, weaknesses,  opportunities, and threats that may affect the organization. Choose  three or four areas from your SWOT analysis and explain why the areas  you have chosen are essential to your strategic plan.
• An assessment of the implications of digital TV and internet-based business models on the strategies of the company.
• An evaluation of the factors determined Disney’s international  diversification strategies. Use the analytical framework proposed for  the study of global media conglomerates (fig 9.4.- page 198 of the textbook).

The final paper / strategic plan:

• Must be 12 to 15 double-spaced pages in length (not including title  and references pages) and formatted according to APA style.
• Must use at least five scholarly sources in addition to the course  text. Remember to incorporate information that you have learned from this course as well as your personal experience.

Due no later than Saturday, March 30 midnight ET.

Cassandra Williams

 

 

Introduction

 

The Walt Disney Company represents a truly immense organization composed of five strategic business units which, with the consideration of the consolidated revenue, represented roughly $42.3 billion as of their fiscal year end on Sept 29, 2012. (Fiscal Year 2011 Annual Financial Report and Shareholder Letter, 2011). The five SBUs are Disney Consumer products, Studio Entertainment, Parks and Resorts, Media Networks Broadcasting, and Interactive Media. (Fiscal Year 2011 Annual Financial Report and Shareholder Letter, 2011). These five SBUs can be further subdivided into 28 categories and are composed of a variety of brands. The only two common areas that can be found in the Walt Disney Company’s holdings are entertainment and information. Every business activity the organization is engaged in is related in some manner to providing its consumer base entertainment and or information.

Despite the two commonalities of their activities, there exists a wide array of variety in their operations. One of the growth strategies that has aided the corporation reach its current level of success is the fact that the organization has expanded both vertically and horizontally into new markets by targeted segmentation. In most cases, it reaches these market segments by acquiring a previously established brand such as ABC, ESPN, and recently Marvel Comics and Lucasfilms. (Walt Disney Company subsidiaries). Furthermore, it is only through the diversification in branding that Disney has grown simply because the children’s brand is comparatively limited in terms of the target demographic. It is also the same diversity that minimizes the systemic risk involved with operating in too narrow of a portfolio.

The individual external threats to Walt Disney are as diversified as the company itself. However, one of the greatest potential risks to the overall aspirations of the company is rooted in the protection of its brand(s) image and credibility. The history of the Walt Disney Company and its positive reputation are deeply engrained within the cultural heritage of people worldwide. This is also evident in the fact that their balance sheets show excessive amounts of intangible assets and goodwill. According to their balance sheet in 2011, Disney accounted for almost $80 million in intangible assets. (Fiscal Year 2011 Annual Financial Report and Shareholder Letter, 2011). They are more subject to risks than more traditional assets. Therefore, a balance must be achieved that embraces diversity in branding but also maintains a healthy risk adversity to any potential threats to brand’s integrity.

The major threats that Disney faces include protecting their intellectual properties, especially in the Studio Entertainment division, as well as threats generated by an economic downturn. Most of Disney’s products and services are priced at a premium and are at risk in a period of recession. There are several competitors in the theme park industry, but when it comes to movies and television, the number of rivals are too numerous to mention.

Disney’s internal strengths are composed mainly of the company’s innovative leveraging of its financial expertise and tremendous brand recognition to move vertically and horizontally into new markets. Innovation has been at the core of Disney’s organizational culture virtually from day one. The fact that their portfolio is so diversified also offers the company substantial advantages in terms of risk mitigation.

SWOT Analysis

Strengths

· Brand recognition

· Strong customer loyalty

· High quality products and services

 

Weaknesses

· High operating costs

· Brand is mainly associated with children

· Growth barriers in theme parks

Opportunities

· Further foreign expansion

· Unlimited character development

· Multicultural marketing (Cinco de Mayo, Lunar New Year, etc.)

Threats

· Other theme parks

· Other online retailers

· Recent acquisitions of Marvel and Lucasfilms could post low or unprofitable sales

Recommendations

The recommended strategies for the Walt Disney Company are composed of initiatives on two separate fronts. First, SBUs must continue to strengthen operations by identifying new opportunities in the current target markets. This lies solely in the skill set of management. One example of such is the new attractions being planned for the theme parks.

However, the most noticeable example of innovative ideas was Disney’s real estate venture that takes their “magic” to a whole new level. In this case, Disney successfully leveraged its incredible brand recognition in the real estate market by creating communities with their image marketing theme coupled with their branding and consequentially adding value to the consumer. (Watson, 2010).

This type of innovative leveraging of the Disney brand represents the second strategy recommendation. Their endeavors into new markets, both in and out of the SBU structure, must maintain Disney’s values and be fully compatible with either their entertainment niche or also possibly along the informational divisions. Another example that falls within the traditional SBU structure with regards to growth through acquisition that has proven successful is Disney’s acquirement of Pixar Entertainment in 2006. (LaMonica, 2006). This move was completely in line with Disney’s strong roots in animation and not only acted to benefit that specific SBU, but also strengthened the brand as a whole.

In conclusion, to continue its growth ambitions, Disney must continue its innovative developments from within the traditional SBU structure. Moreover, it must scan for opportunities, such as the real estate venture, which lies outside the traditional hierarchy. To achieve this, Disney must not only foster the culture of innovation that builds from a bottom up approach through the SBU hierarchy. In fact, it must also be innovative itself in identifying new opportunities. This requires a corporate project coordination team that will engage in project management until the point when the project has been integrated into the SBUs, or when it becomes a standalone SBU in the future. It is difficult to forecast how much revenue this will generate, but it can be compared to the current growth in net income.

Net Income		Growth
2009	$613 million
2010	$953 million	6%
2011	$1.08 billion	30%

Between 2009 and 2011, Disney has almost doubled their net income. Below is a chart showing how much revenue each SBU is responsible for.

 

Based on these figures, I believe that every SBU could be classified as a Cash Cow with the exception of Interactive Media. While it’s showing to be the lease productive as far as revenue wise, it has shown the most gain over the past year, with a rise of 29%. The other SBUs each have respectable gains in their own right, except Studio Entertainment, only due to the fact they didn’t release that many movies this past year. (Fiscal Year 2011 Annual Financial Report and Shareholder Letter, 2011).

The objectives proposed consist of identifying opportunities for acquisition or entrance into a new market and creating a project team to capture this opportunity. This proposal recommends that the project portfolio be evaluated quarterly. Each separate SBU should have some freedom to decipher the projects scope, schedule and budget while a corporate team leads initiatives that fall outside the realm of the traditional SBU structure. The centralized project coordination office will then have the ability to compare the proposed net present value among all projects across the traditional divisional lines to make sure that the projects with the greatest benefits secure funding and all projects follow a set of best practices. Centralization of this unit also opens the doors to creating a knowledge management base that can also be share across divisional lines. The key advantages of this method are:

· Retain corporate control over acquisitions and projects

· Allow the SBUs freedom for creativity while maintaining functional efficiencies

· Maintain aggressive profit growth by funding projects with the greatest net present value.

It is recommended that the project coordination team be developed to maintain project management best practices without being overly intrusive to the project’s objectives. Also, acquisitions must be monitored as well since these will represent a bulk of the company’s growth strategy. Subsequently, change management practices must be adhered to during such integrations. Disney must also be cognizant of the corporate culture that is subject to any acquisition to ensure that integration does not come with insurmountable resistance.

Ultimately, the proposed focus on innovation and acquisition must be subject to evaluation, and the scorecard for all businesses is written in economic terms. Within the five primary SBUs, such evaluations are comparatively simple to conduct due to the large amount of historical performance data available. New projects and acquisitions require more craft in terms of evaluations but these can be compared with the net benefit analysis produced before the project’s inception to provide a measure of success.

 

 

 

 

 

 

 

 

 

 

 

Works Cited Fiscal Year 2011 Annual Financial Report and Shareholder Letter. (2011). Retrieved from The Walt Disney Company: http://cdn.media.ir.thewaltdisneycompany.com/2011/annual/WDC-10kwrap-2011.pdf LaMonica, P. R. (2006, January 25). Disney buys Pixar. Retrieved from CNN Money: http://money.cnn.com/2006/01/24/news/companies/disney_pixar_deal/ Walt Disney Company subsidiaries. (n.d.). Retrieved from The Disneywiki: http://disney.wikia.com/wiki/Category:Walt_Disney_Company_subsidiaries Watson, B. (2010, June 23). Golden Oaks: Why Disney’s Latest Real Estate Gamble Isn’t Such a Goofy Move. Retrieved from Daily Finance: http://www.dailyfinance.com/2010/06/23/golden-oak-why-disneys-latest-real-estate-gamble-isnt-goofy/

Sales Media Networks Parks and Resorts Studio Entertainment Consumer Products Interactive Media 18714 11797 6351 3049 982

 

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Assignments # 5, week 5

Chapter 8 Question # 1, 2, 7, 8, and 9.

1. Bond Investment Decision Based on your forecast of interest rates, would you recommend that investors purchase bonds today? Explain.

2. How Interest Rates Affect Bond Prices Explain the impact of a decline in interest rates on:

a. An investor’s required rate of return.

b. The present value of existing bonds.

c. The prices of existing bonds.

7. Coupon Rates If a bond’s coupon rate were above its required rate of return, would its price be above or

below its par value? Explain.

8. Bond Price Sensitivity Is the price of a longterm bond more or less sensitive to a change in interest

rates than to the price of a short-term security? Why?

9. Required Return on Bonds Why does the required rate of return for a particular bond change

over time?

Assignment 6

Chapter 9 Question #s 2, 3, 4, 10, 11, 12, 16, 22.

2. Mortgage Rates and Risk What is the general relationship between mortgage rates and long-term

government security rates? Explain how mortgage lenders can be affected by interest rate movements.

Also explain how they can insulate against interest rate movements.

3. ARMs How does the initial rate on adjustable-rate mortgages (ARMs) differ from the rate on fixed-rate

mortgages? Why? Explain how caps on ARMs can affect a financial institution’s exposure to interest

rate risk.

4. Mortgage Maturities Why is the 15-year mortgage attractive to homeowners? Is the interest rate

risk to the financial institution higher for a 15-year or a 30-year mortgage? Why?

10. Exposure to Interest Rate Movements Mortgage lenders with fixed-rate mortgages should

benefit when interest rates decline, yet research has shown that this favorable impact is dampened.

By what?

11. Mortgage Valuation Describe the factors that affect mortgage prices.

12. Selling Mortgages Explain why some financial institutions prefer to sell the mortgages they originate.

16. Mortgage-Backed Securities Describe how mortgage-backed securities (MBS) are used.

22. Subprime versus Prime Mortgage Problems How did the repayment of subprime mortgages

compare to that of prime mortgages during the credit crisis?

 

dq board is not up

week 9 assingments

Chapter 13 #1, 2, 3, 4, 7, 12, 14,16,17, and 19

1. Futures Contracts Describe the general characteristics of a futures contract. How does a clearinghouse

facilitate the trading of financial futures contracts?

2. Futures Pricing How does the price of a financial futures contract change as the market price

of the security it represents changes? Why?

3. Hedging with Futures Explain why some futures contracts may be more suitable than others

for hedging exposure to interest rate risk.

4. Treasury Bond Futures Will speculators buy or sell Treasury bond futures contracts if they expect

interest rates to increase? Explain.

7. Hedging with Futures Assume a financial institution has more rate-sensitive assets than

rate-sensitive liabilities. Would it be more likely to be adversely affected by an increase or a decrease in

interest rates? Should it purchase or sell interest rate futures contracts in order to hedge its exposure?

12. Cross-Hedging Describe the act of cross-hedging.

What determines the effectiveness of a cross-hedge?

14. Stock Index Futures Describe stock index futures. How could they be used by a financial institution that is anticipating a jump in stock prices but does not yet have sufficient funds to purchase large amounts of stock? Explain why stock index futures may reflect investor expectations about the market more quickly than stock prices.

16. Systemic Risk Explain systemic risk as it relates to the futures market. Explain how the Financial Reform Act of 2010 attempts to monitor systemic risk in the futures market and other markets.

17. Circuit Breakers Explain the use of circuit breakers.

19. Hedging Decision Blue Devil Savings and Loan Association has a large number of 10-year fixed-rate

mortgages and obtains most of its funds from shortterm deposits. It uses the yield curve to assess the market’s anticipation of future interest rates. It believes that expectations of future interest rates are the major force affecting the yield curve. Assume that an upward-sloping yield curve with a steep slope exists. Based on this information, should Blue Devil consider using financial futures as a hedging technique? Explain.

Chapter 14 #1, 2, 4, 5, 7, 8, 10, 11, 13, and 16

1. Options versus Futures Describe the general differences between a call option and a futures contract.

2. Speculating with Call Options How are call options used by speculators? Describe the conditions under which their strategy would backfire. What is the maximum loss that could occur for a purchaser of a call option?

3. Speculating with Put Options How are put options used by speculators? Describe the conditions under which their strategy would backfire. What is the maximum loss that could occur for a purchaser of a

put option?

4. Selling Options Under what conditions would speculators sell a call option? What is the risk to speculators who sell put options?

5. Factors Affecting Call Option Premiums Identify the factors affecting the premium paid on a

call option. Describe how each factor affects the size of the premium.

7. Leverage of Options How can financial institutions with stock portfolios use stock options when they expect stock prices to rise substantially but do not yet have

8. Hedging with Put Options Why would a financial institution holding the stock of Hinton Co. consider buying a put option on that stock rather than simply selling it?

10. Put Options on Futures Describe a put option on interest rate futures. How does it differ from selling

a futures contract?

11. Hedging Interest Rate Risk Assume a savings institution has a large amount of fixed-rate mortgages

and obtains most of its funds from short-term deposits. How could it use options on financial futures to hedge its exposure to interest rate movements?

Would futures or options on futures be more appropriate if the institution is concerned that interest rates will decline, causing a large number of mortgage prepayments?

13. Change in Stock Option Premiums Explain how and why the option premiums may change inresponse to a surprise announcement that the Fed will increase interest rates, even if stock prices are not affected.

16. Backdating Stock Options Explain what backdating stock options entails. Is backdating consistent with rewarding executives who help to maximize shareholder wealth?

 

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