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Walt Disney Co.

Macro Environment, Marketing Analysis, Competitive Positioning, PEST, SWOT

Marissa Dunn

on 22 January 2013

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Transcript of Walt Disney Co.

Large growth in user-content sites (e.g., Netflix) and social networking is boosting competitive conditions, content distribution, and shifts in industry economics.
Physical formats such as CDs and DVDs are becoming obsolete as digital versions become the preferred medium
International movie viewers
61% of 3D screens are located internationally
In 2010, 50% of worldwide box office numbers were from international contributions
A push for media applications is occuring
Convergence of media platforms, makes Disney most diversified company in the industry
Ventures into Chinese local language productions Macro Environment MISSION "TO MAKE PEOPLE HAPPY." ENTERTAINMENT STUDIO
MEDIA 46% 29% 16% 7% 2% PARKS &
RESORTS ECONOMICS Increase in work hours reflects increase in vacation hours
Economic recession takes large hit in 2008 and begins incline immediately
Weakening of U.S. dollar increases spending in international markets DEMOGRAPHICS Middle class whites
Income Range: $33,500 - $59,500
Mostly with ages 3-12yrs.
Majority of Business:
Parks: 90% come from 1hr or less commute
Cruises: 70% are American
Studio: Mostly families with 3-12yrs
According to the last Census:
More guys than girls enjoy Disney SOCIETAL VALUES Eco-friendly Company
Highly active in community & charity
Strong supporter of Family
Has been viewed as a moral exemplar
Strong supporter of the homosexual agenda (Human Rights) TECHNOLOGY 3D film technology is gaining momentum
8 films were released in 2008 : $500 million box office
25 films were released in 2010 : $2 billion box office
Implementation of RFID technology
Latest gaming technology for various age groups aboard cruise liners POLITICAL ECONOMIC SOCIAL TECHNOLOGICAL Highly regulated by the Federal Communications Commission
Jan 2012 Cursing in Children's films
May 2004 "Who Wants To Be A Millionaire?"
Lobbying for S.978: Punishment for Piracy
Comply with International Laws Increase in work hours reflects increase in vacation hours
Weakening of U.S. dollar to Euro increases consumer spending in international markets
Economic recession takes large hit in 2008 and begins incline immediately
Highly Diversified & horizontally integrated company Embodies the entrepreneurial spirit
Accused of taking advantage of third world country manufacturers
Eco-friendly Company
1.47 Million Donated to Wildlife
198 Million donated to Charity
Strong supporter of family values •61% of 3D screens located internationally
•2006 acquisition of Pixar led to CGI cartoons
•Significant increase in use of RFID technology
•Increased use of interactive games specifically cruise & parks PEST ANALYSIS MARKET ANALYSIS MARKET SIZE AND GROWTH RATE *In millions SCOPE OF COMPETITIVE RIVALRY Ever-growing consumer expectations in Studio Entertainment
Release of the Avengers
Seasonal Effects for Cruise Lines
Expansion of operations in Southern Hemisphere
Consumers from around the world continue to travel to Theme Parks
Operation Disney Shanghai 2015
Operation Six Flags Dubai 2015 PRODUCT INNOVATION 3D technology implementation

“NextGen” project (RFID wrist bands for access to attractions)

The Oceaneer Club’s “Magic Playfloor” contains a 15-foot by 15-foot square of several monitors that allow kids to play interactive games by stepping and jumping on them

The Skyline Lounge—Digital windows showcase a skyscraper view of the skyline of different cities PACE OF
TECHNOLOGICAL CHANGE Deep Sea Passenger Transportation Industry DEMAND/SUPPLY
CONDITIONS Critical balance between amount of programming available and the demand from consumers
Supply competition
Between top 6 companies (nearly 80% of the market)
Demand is highly dependent on the economic conditions for the consumer
Consumer spending drives demand
Cheaper alternatives
Internet movies
Piracy VERTICAL INTEGRATION 1928 2012 1953 1937 Disney Formed Sound Production
Disney Film Recording Co. 1929 Animated and Live Action Films Released Walt Disney Productions breaks into merchandising 1950 Buena Vista Pictures Distribution formed Disneyland Theme Park Opens in California 1954 Walt Disney World opens Disney breaks into lodging 1971 Disney Channel Launch 1983 Acquistion of ABC 1995 Disney maintains vertical integration ECONOMIES OF SCALE Merchandise is Outsourced & Purchased in Bulk
High Fixed Costs & Low Variable Costs
High Level of Purchasing Power LEARNING/EXPERIENCE CURVE EFFECTS Learning Curve
Euro Disney
Created on assumptions
Walt's Successes/Failures
Experience Curve ETOP
ANALYSIS Factor Threat or Opportunity Globalization # of Rivals Product
Innovation Technological
Change Changes in
Cost International Market Growth - Russia, China, and India Improvements in other theme park shows & attractions (Harry Potter at Universal) Losing market share in Cruise Lines to major competitors With new differentiations in movies and shows, new park attractions opportunities 3D film technology gaining momentum worldwide New implementations of RFID technology in theme parks More competitors in studio entertainment industry in recent years Fewer competitors in deep sea passenger transportation industry in recent years INDUSTRY OUTLOOK COMPETITIVE POSITIONING The Industries in which Disney participates are mainly CONCENTRATED
Large Rivals
Parks: Six Flags, Universal Parks, SeaWorld
(Florida and California 70% of employment)
Studio Entertainment: Time Warner, Dreamworks
Cruise lines: Royal Caribbean, Carnival
Media: TimeWarner, Viacom, NewsCorp

Few Small Rivals New Product Introductions
BABY Disney stores - September 2012
New Park in Shanghai - 2015
Mergers and Acquisitions
Developing strong dealer networks/Global Expansion
Developing new expertise/capabilities
20+ new TV shows starting this next season RIVALRY
High barriers to entry for new entrants into Disney’s industries

Past experiences allow Disney to have a stronger idea of what customers want

Disney holds strong brand equity

Large market diversification with a vast host of services and products allows Disney to implement a more effective economies of scale

Large capital investment requirements (e.g., Disney spent $3.6 billion on its European venture, Disneyland Resort Paris) THREAT OF NEW ENTRANTS SUBSTITUTE PRODUCTS SUPPLIER BARGAINING POWER Weak Supplier Bargaining Power
Merchandise is heavily outsourced
Competition among suppliers reduces bargaining power
Standardization among suppliers limits power
ANALYSIS STRENGTHS WEAKNESSES OPPORTUNITIES THREATS •Diversification allows decreased business risk •Rely heavily on domestic market for revenue
•Expanding parks & resorts in Shanghai (to open 2015)
•Continuing popular films like Pirates of the Caribbean that promote consumer spending
•Digital distribution for downloading film through Itunes, etc. •Strong competition in all 5 industries Inbound Logistics
Quality personnel
Advanced computer systems
Top voice talent
Intricate production process (up to 4 years)
Team collaboration
Utilization of latest hardware/software capabilities
Outbound Logistics
Distribution, sales, and marketing outsourced
Firm Infrastructure
Two locations in California (Glendale and Redwood City)
Flat organizational hierarchy
Human Resource Management
Fun working environment
High compensation
Long term employee contracts
Technology Development
Alliance with HP and AMD
In-house systems building
Several patents pending with U.S. Patent Office
Latest and greatest hardware/software
Draw in voice talent VALUE CHAIN ANALYSIS Operations/Services
5 brands, 39 ships (3 new in next 3 years), 460 destinations
Customer Experience
Choice Air Program
Grand Bahama Shipyard - Oil and repair (40% owned)
Crown & Anchor Society
Active Engagement in Social Media Distribution
Travel Agencies
Research & Development
Vessel Revitalization Program
Creating greater guest capacity through ship expansion
First Starbucks/Partner with DreamWorks Animation
Human Resource Management
61,040 Employees (54,000 Shipboard)
Employee Surveys Equipment and Facilities
19 parks and resort facilities in North America (Montreal, Mexico City)
Parks on approximately 7,200 acres
Property and equipment at cost is $1,544,351,000
Advertising and Promotions
Group sales represented approximately 28% of aggregate attendance in each of the 2011 and 2010 seasons at our parks
During the 2011 and 2010 seasons, season pass attendance constituted approximately 35% and 32%, respectively, of the total attendance at parks
Supplying a family entertainment atmosphere
Human Resource Management
Approximately 18.2% of our full-time and approximately 10.6% of our seasonal employees are subject to labor agreements with local chapters of national unions Inbound Logistics
Bring in quality personnel - hiring and casting
Long, intricate production process (up to 4 years)
Directing, Food Service, and editing
Creativity and team collaboration
Utilization of latest hardware/software capabilities
Global distribution capabilities - 121 countries
Sales and marketing
Human Resource Management (relationship with Operations)
Creative, fun working environment
Long and short term employee contracts
Technology Development (relationship with Inbound Logistics and Operations)
Research - cost of keeping hardware and software up to date
Animation tools and innovation KEY SUCCESS FACTORS WEIGHT Technology Creativity Brand Finance Globalization Marketing 0.075 0.25 0.15 0.125 0.25 0.15 DISNEY Inbound Logistics
Advanced technology
Team Oriented
Latest technology
Diverse Experiences
Cruise Lines
Studio Entertainment
Human Resources
Workers are "Cast Members"
Benefits for employees
Latest software for animation
Adding new attractions to parks Strategic Group Map (SGM) COMPETITIVE STRENGTH PROFILE Walt Disney's vision lives on... Higher pricing decreases consumer demand and decreases revenue Vertical integration in Entertainment creates substitute products High Low Low High Studio Entertainment Disney Time Warner Dream-works Marketing Disney Brand Value Low High Low High Parks & Recreation Royal Caribbean Six
Flags Creativity Competitive Strength (+) or Weakness (-) Strategic Advantage Profile Internal Area Supply Chain Marketing Globalization Services Technology Human Resources Finance
Tangible Resources
Physical Resource
Financial Resources
Technological assets
Organizational resources
Intangible Resources
Cast Member training
External relationships
Comcast 10-year distribution contract January 2012
Overseas relationships - China, India, and Russia VRIO + Economies of Scale + Excellent Customer Service + All Employees are "Cast Members" (Organization)
- High Employee Turnover Rate + Largest Market Cap in Industry
- Relatively Small Margins due to Diversification + Latest Animation Technology
- Piracy of Home Entertainment + Expansion into India, Russia, & China + High Brand Recognition & Loyalty
- Negative Publicity Fierce Competition •Diversified revenue based Strong brand image and customer service •Penetration in domestic and international markets _ _ Cruise Lines targeted towards children Expansion in Russia, India & China •Change of regulatory policies could increase amount spent for
regulation and hinder profitability _ Intellectual property rights threatened by piracy IMPORTANT TRENDS DEGREE OF
PRODUCT DIFFERENTIATION Media Networks: ABC, ESPN, ABC Family, Disney Channel

Produce films through Walt Disney Pictures, Disney Animation, Touchstone, Pixar, and Marvel Entertainment

Walt Disney Parks operates Disney Land, Magic Kingdom, Hollywood Studios, Epcot, Etc. MACRO ENVIRONMENT What Is Driving ? 1997—80 ships, $3.9 billion revenue
2002—88 ships, $7.9 billion revenue, 102.6% change in revenue from 1997
2007—55 ships, $12.6 billion revenue, 59.2% change in revenue from 2002 Motion Picture Industry 1997—8,777 establishments, $20.1 billion revenue
2002—11,163 establishments, $46.7 billion revenue, 132% change in revenue from 1997
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