Expert answer:Business Plan for Disney
Solved by verified expert:Implementation Plan: Part 1
During Unit IV, VI, and VIII, you will be working on an implementation plan for a business. The components within these
three units combined will create this plan.
Please take a look at the case studies located in your textbook on pages 372-636. There are multiple corporations that
provide a large array of services and products. Please select an organization that interests you. You will use this company
for the Unit VI and Unit VIII assignments, as well.
For Part 1, describe the company that you selected, the products/services they offer, and the history of the company.
Next, analyze the company’s strategy, mission, and organizational structure. In your analysis, include the following:
What does the strategy, mission, and organizational structure say about the company?
What are the positive aspects of the strategy, mission, and organizational structure?
What are the company’s short-term and long-term goals?
What are ways to improve the strategy, mission, and organizational structure?
Much of the information you will need to complete this segment can be found in the case study in the textbook. However,
you are welcome to conduct further outside research as needed. Some details, such as the short-term and long-term
goals, may not be explicitly stated. Please use your best judgement and analytical skills to determine that information.
Your project must be a minimum of two full pages in length, not including the title and reference pages. Include an
introduction paragraph.
Information about accessing the Grading Rubric for this assignment is provided below.
walt_disney_company.docx
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Walt Disney Company, 2013
www.disney.com , DIS
Headquartered in Burbank, California, Walt Disney Company (Disney) and its subsidiaries
compete in the entertainment and media broadcasting industry worldwide. Serving customers for
nearly 100 years, Disney is a diversified conglomerate, owning ABC, ESPN, theme parks, cruise
lines, and more. As a member of the DOW 30 and the world’s largest media conglomerate,
Disney owns ABC television and cable networks such as ABC Family, Disney Channel, and
ESPN (80 percent). Disney owns 8 television stations and 35 radio stations as well as Walt
Disney Studios that produces films through Walt Disney Pictures, Disney Animation, and Pixar.
Disney’s Marvel Entertainment is a top comic book publisher and film producer. Disney owns
and operates huge cruise boats, as well as 14 popular theme parks around the world.
Disney’s earnings in Q3 of 2013 equaled the prior year’s number, while revenue increased 4
percent, led by Disney’s theme parks, resorts, and cable networks such as ESPN. For Q3 of
2013, Disney earned $1.85 billion, on revenue of $11.6 billion, up from $11.1 billion. Revenue at
Disney’s parks and resorts grew 7 percent to $3.7 billion. Cable networks revenue grew 8
percent to $3.9 billion, led by ESPN, A&E and U.S. Disney channels. A laggard, Disney’s
broadcast revenue was unchanged at nearly $1.5 billion. Overall, Disney’s media networks
business grew 5 percent to $5.4 billion. For Q3 of 2013, Disney’s movie studio revenue fell 2
percent to $1.6 billion, due to poor results from the movies “The Lone Ranger” and “Iron Man
3.”
Copyright by Fred David Books LLC. (Written by Forest R. David)
History
Walt Disney and his brother Roy arrived in California in the summer of 1923 to sell a cartoon
called Alice’s Wonderland. A distributor named M. J. Winkler contracted to distribute the Alice
Comedies on October 16, 1923, and the Disney Brothers Cartoon Studio was founded. Over the
years, the company produced many cartoons, from Oswald the Lucky Rabbit (1927) to Silly
Symphonies (1932), Snow White and the Seven Dwarfs (1937),
and Pinocchio and Fantasia (1940). The company name was changed to Walt Disney Studio in
1925. Mickey Mouse emerged in 1928 with the first cartoon in sound. In 1950, Disney
completed its first live action film, Treasure Island, and in 1954, the company began television
with the Disneyland anthology series. In 1955, Disney’s most successful series, The Mickey
Mouse Club, began, and the new Disneyland Park opened in Anaheim, California.
Disney created a series of releases from 1950s through 1970s, including The Shaggy Dog, Zorro,
Mary Poppins, and The Love Bug. Walt Disney died in 1966. In 1969, Disney started its
educational films and materials. Another important time of Disney’s history was opening Walt
Disney World in Orlando, Florida, in 1971. In 1982, the Epcot Center opened as part of Walt
Disney World. The following year, Tokyo Disneyland opened.
After leaving network television in 1983, Disney introduced its cable network, The Disney
Channel. In 1985, Disney’s Touchstone division began the successful Golden Girls and Disney
Sunday Movie. In 1988, Disney opened Grand Floridian Beach and Caribbean Beach Resorts at
Walt Disney World along with three new gated attractions: the Disney/MGM Studios Theme
Park, Pleasure Island, and Typhoon Lagoon. Filmmaking soon hit new heights as Disney led
Hollywood studios in box-office gross for the first time. Some of the successful films were: Who
Framed Roger Rabbit, Good Morning Vietnam, Three Men and a Baby, and later, Honey, I
Shrunk the Kids, Dick Tracy, Pretty Woman, and Sister Act. Disney moved into new areas by
starting Hollywood Pictures and acquiring the Wrather Corp. (owner of the Disneyland Hotel)
and television station KHJ (Los Angeles), which was renamed KCAL. In merchandising, Disney
purchased Childcraft and opened numerous highly successful and profitable Disney Stores.
By 1992, Disney’s animation reached new heights with The Little Mermaid, Beauty and the
Beast, and Aladdin. Also that year, Disneyland Paris opened. During the 1990s, Disney
introduced Broadway shows, opened 725 Disney Stores, acquired the California Angels baseball
team to add to its hockey team, opened Disney’s Wide World of Sports in Walt Disney World,
and acquired Capital Cities/ABC.
From 2000 to 2007, Disney created new attractions in its theme parks, produced many successful
films, opened new hotels, and built Hong Kong Disneyland. Disney acquired Pixar in 2006,
Marvel in 2009, and launched Disney Dream, a new cruise liner in 2011. Newer Disney
initiatives include the April 2011 groundbreaking of Shanghai Disney Resort at a price tag of
$4.4 billion and expected opening day slated for sometime in 2015. In February 2012, Disney
finalized acquisition of UTV Software Communications, an Indian entertainment company. In
October of 2012, Disney announced plans to acquire Lucasfilm, producers of the popular Star
Wars movies. The acquisition is expected to cost $4.05 billion. Disney plans to release Star Wars
Episode VII in 2015.
Internal Issues
Vision and Mission
Disney’s vision is “to make people happy.”
Organizational Structure
As indicated in Exhibit 1, Disney operates using a strategic business unit (SBU) organizational
structure that consists of five diverse, but all family entertainment segments: (1) media networks,
(2) parks and resorts, (3) studio entertainment, (4) consumer products, and (5) interactive media.
The president, chief executive officer, and director of Walt Disney is Robert Iger. There is no
chief operations officer (COO) in the Disney hierarchy, but Andy Bird, Chairman of Walt
Disney International, functions like a COO.
Segments
Disney provides segment revenue and operating income for each of their five SBUs. Exhibit
2 displays the three most recent years of revenue and operating income per Disney SBU, along
with a percentage change for each of the last two years. Note that total consolidated revenues and
operating income increased in 2012 and 2011, albeit at a decreasing rate during the most recent
period. Note that the consumer products and the interactive media segments are small compared
to media networks and parks and resorts.
Media Networks
Media networks is the largest Disney SBU in both revenues and operating income, accounting
for 45 percent of all revenues in 2012. Revenue growth in 2012 came from increased affiliate
fees, higher advertising rates, increased viewership of ESPN programs and the shows Castle,
Once Upon a Time, and Revenge. The positive growth was limited by lower home entertainment
revenues from programs such as Lost and lower Disney Channel viewership. Production costs
increased as college sports, as well as NFL, MLB, NBA, and Wimbledon were able to negotiate
more lucrative contracts. For example, the Southeastern Conference (SEC) signed a deal with
ESPN in 2008 for $2 billion for 15-year rights to broadcast football and men’s and women’s
basketball games. However, with the 2012 additions of Texas A&M and Missouri to the SEC,
the previous contract is contractually renegotiable and a new, much more expensive, contract is
expected in the near future.
With media networks, Disney owns and operates the ABC Television Network that reaches 99
percent of all U.S. households. This segment also includes ABC-owned Television Stations
Group, ABC Studios, Disney Channels Worldwide, ABC Family, SOAPnet, Disney ABC
Domestic Television, Disney Media Distribution, Hyperion, and Radio Disney network. The
ABC Television Network operates more than 220 affiliated stations across the USA. Disney
channels worldwide consists of 94 kids and family entertainment channels available in 169
countries and 33 languages. ABC Family is a mixture of series and movies. SOAPnet owns
character-driven soapy drama, from daytime and primetime soaps, to reality shows and movies.
Disney ABC Domestic Television provides motion pictures and TV programming to U.S.-based
media platforms. Disney Media Distribution is an international distributor of branded and
nonbranded content to all platforms. Hyperion publishes fiction and nonfiction titles for adults.
Radio Disney is available in more than 40 U.S. markets, and on satellite radio, mobile apps, and
the Web.
EXHIBIT 1 Disney’s Organizational Chart
Source: Based on information in company documents.
EXHIBIT 2 A Breakdown of Disney Revenues by SBU
Change (%)
(in millions)
2012
2011
2010
2012 vs. 2011 2011 vs. 2010
Revenues:
Media Networks
Parks and Resorts
$19,436 $18,714 $17,162
4%
9%
12,920
11,797
10,761
10%
10%
Studio Entertainment
5,825
6,351
6,701
(8)%
(5)%
Consumer Products
3,252
3,049
2,678
7%
14%
845
982
761
(14)%
29%
$42,278 $40,893 $38,063
3%
7%
Interactive Media
Total Consolidated Revenues
Segment operating income:
Change (%)
(in millions)
2012
2011
2010
Media Networks
$6,619
$6,146
$5,132
8%
20%
Parks and Resorts
1,902
1,553
1,318
22%
18%
Studio Entertainment
722
618
693
17%
(11)%
Consumer Products
937
816
677
15%
21%
(216)
(308)
(234)
30%
(32)%
$9,964
$8,825
$7,586
13%
16%
Interactive Media
Total segment operating income
2012 vs. 2011 2011 vs. 2010
Source: Company documents. 2012 Annual Report, p. 31.
Exhibit 3 reveals a further breakdown of Disney’s media networks’ revenues and operating
profits. Note the recent gains.
Parks and Resorts
EXHIBIT 3 A Breakdown of Media Networks Revenues (in
millions)
2012
2011
Change (%)
Revenues:
Cable Networks
Broadcasting
13,621
12,877
6
5,815
5,837
—
19,436
18,714
4
5,704
5,233
9
915
913
—
6,619
6,146
8
Operating Income:
Cable Networks
Broadcasting
Source: 2012 Annual Report, p. 33.
Disney’s parks and resorts segment includes 10 divisions: (1) Disneyland Resorts in California,
(2) Tokyo Disney Resort, (3) Disneyland Resort Paris, (4) Hong Kong Disneyland, (5) Walt
Disney World Resort in Florida, (6) Disney Cruise Line, (7) Adventures by Disney, (8) Disney
Vacation Club, (9) Walt Disney Imagineering, and (10) Aluani, a Disney Resort and Spa in
Hawaii. Disney has a 51 percent ownership in Disneyland Resort Paris and a 47 percent
ownership in Hong Kong Disneyland. Disney’s newest theme park will be in the Pudong district
of Shanghai opening in 2015. Exhibit 2 revealed that Disney’s parks and resorts revenue for
2012 increased 10 percent to $12.9 billion, and operating income increased 22 percent to $1.9
billion. Results for 2012 reflected increases at nearly all theme parks, except a decrease at
Disneyland Paris.
EXHIBIT 4
Domestic
International
2012 2011 2010 2012
Total
2011
2010
2012
2011
2010
Parks
Increase in attendance
3%
1%
(1)%
6%
6%
1%
4%
2%
(1)%
Increase in Per Capital
Guest Spending
7%
8%
3%
1%
2%
3%
5%
6%
3%
Occupancy
81% 82% 82% 85%
88%
85% _____
83%
82%
Available Room Nights (in
thousands)
9,850 9,625 9,629 2,468 $2,466 2,466 12,318 12,091 12,095
Per Room Guest Spending
$257 $241 $224 $317
Hotels
$294
$273
$270
$251
$234
Per capita guest spending and per room guest spending include the impact of foreign
currency translation. Guest spending statistics for Disneyland Paris were converted from
euros into U.S. dollars at weighted average exchange rates of 1.36 and 1.35 for fiscal 2010
and 2009, respectively.
Per room guest spending consists of the average daily hotel room rate as well as guest
spending on food, beverages, and merchandise at the hotels. Hotel statistics include rentals
of Disney Vacation Club units.
Source: Walt Disney Company, Annual Report, page 34 (2012).
The new 4,000-passenger ship, Disney Dream, was christened at Port Canaveral in 2011 and was
designed especially for families. Disney Dream joins Disney Magic and Disney Wonder. Another
new ship, Disney Fantasy, joined the Disney fleet in 2012. Disney Dream will sail to Disney’s
private island, Castaway Cay.
a
b
Revenue in this segment is generated primarily from the sale of admissions tickets to the theme
parks, as well as hotel room charges per night and sales from merchandise, food, and beverages.
Revenue also comes from rentals and sales from vacation club properties and sales of cruise
vacations.
Exhibits 4 and 5 reveal that Disney domestic revenues from its parks and resorts division
increased 11 percent in 2011, to $12.9 billion, resulting from customers spending 6 percent more,
mainly from higher ticket and hotel prices. Revenue growth was 6 percent in international
operations stemming from 4 percent in higher spending, a 3-percent volume increase, and a 3percent gain on foreign currency appreciation.
Studio Entertainment
EXHIBIT 5 Parks and Resorts: Revenue and Operating
Income
(in millions)
2012
2011
2010
Change (%)
Revenues:
Domestic
International
$10,339
$9,302
$8,404
11%
$2,581
2,495
2,357
3%
$12,920
$11,797
$10,761
10%
$1,902
$1,553
$1,318
22%
Segment operating income:
Source: Walt Disney Company, Annual Report, page 33 (2012).
Disney produces live-action and animated motion pictures, direct-to-video programming,
musical recordings, and live-stage plays. Disney motion pictures are distributed under the names:
Theatrical Market, Home Entertainment Market, Television Market, Disney Music Group,
and Disney Theatrical Productions. Disney has also licensed the rights to produce and distribute
features films such as Spider-man, The Fantastic Four, and X-Men to third-party studios. Disney
earns a licensing fee on these films, whereas the third-party studio incurs the cost to produce and
distribute the films. Currently Disney has a diverse business line in the studio entertainment SBU
consisting of: Marvel, Touchstone, Pixar, Disneynature, Disney Studios Motion Pictures, and
more Disney-branded services. Disney’s studio entertainment revenues for 2012 decreased 8
percent to $5.8 billion and segment operating income increased 17 percent to $722
million. Exhibit 6 reveals a revenue breakdown for this segment.
EXHIBIT 6 Studio Entertainment: Revenue and Operating
Income
(in millions)
2012
2011
2010
Change (%)
Theatrical Distribution
$1,470
$1,733
$2,050
(15)%
Home Entertainment
$2,221
2,435
2,666
(9)%
Television Distribution and Other
$2,134
2,183
1,985
(2)%
$5,825
$6,351
$6,701
(8)%
$722
$618
$693
+17%
Revenues:
Total Revenues
Segment operating income:
Source: Walt Disney Company, Annual Report, page 34 (2012).
Consumer Products
Disney’s consumer products segment partners with licenses, manufacturers, publishers, and
retailers worldwide who design, promote, and sell a wide variety of products based on new and
existing Disney characters. Product offerings are: (a) character merchandise and publications
licensing, (b) books and magazines, and (c) The Disney Store. Disney released in mid-2011 a
new toy line that captured the fantasy, action, and adventure of Pirates of the Caribbean: On
Stranger Tides. Disney is perhaps the largest worldwide licensor of character-based merchandise
and producer and distributor of children’s film-related products based on retail sales. Disney’s
consumer products revenues for 2012 increased 7 percent to $3.25 billion; operating income
increased 15 percent to $937 million.
Interactive Media
Disney’s interactive media segment creates and delivers games and media for smartphones and
tablets. Interactive media revenues for 2012 decreased 14 percent to $845 million and operating
income incurred a loss of $216 million. As indicated in Exhibit 8, games and subscription
revenue increased 36 percent in 2011, but the segment has incurred losses for several years, as
revealed in Exhibit 2.
EXHIBIT 7 Consumer Products: Revenue and operating
income
(in millions)
2012
2011
2010
Change (%)
Revenues:
Licensing and Publishing
Retail and Other
Total Revenues
$2,056
$1,933
$1,725
6%
1,196
1,116
953
7%
$3,252
$3,049
$2,678
7%
$937
$816
$677
15%
Segment operating income:
Source: Walt Disney Company, Annual Report, page 35.
EXHIBIT 8 Interactive: Revenue and Operating Income
(in millions)
2012
2011
2010
Change (%)
Revenues:
Games Sales and Subscriptions
Advertising and Other
Total Revenues
$613
$768
$563
(20)%
232
214
198
8%
845
982
$761
(14%)
$(216)
$(308)
$(234)
(30)%
Segment operating income:
Finance
Income Statement
Disney’s 2012 income statement is provided in Exhibit 9. Note the 17.4 percent increase in net
income.
Balance Sheets
Disney’s 2012 balance sheets are provided in Exhibit 10. Note that Disney has $2.45 billion of
“projects in progress.” Also, note the $25 billion in goodwill, fully one-third of total assets,
which is not a good thing. Long-term debt is staying about the same at $10 billion, which is a lot
of debt to service.
Competition
Disney competes directly with NBC Universal, Paramount Pictures, Time Warner, CBS Corp.,
News Corp., Carnival Corp., and Royal Caribbean and indirectly with all family entertainment
oriented businesses globally. In essence, all hotels, restaurants, water parks, and attractions
anywhere near Disney’s 14 theme parks, are rival businesses, such as Sea World, Marineland,
and Silver Springs in Florida. There is a large, new (China state run) theme park scheduled to
open in 2014 right beside the Disney theme park (also slated for opening in 2014) in Shanghai,
China, so that will be a major competitor.
EXHIBIT 9 Disney’s Recent Income Statements (in millions of
dollars, except EPS)
Income Statement
Revenues
2012
2011
42,278
40,893
(33,415)
(33,112)
Restructuring
(100)
(55)
Other revenue
239
75
Net interest expense
(369)
(343)
Equity in the income
627
585
Income before taxes
9,260
8,043
(3,087)
(2,785)
Net income
6,173
5,258
Noncontrolling interests
(491)
(451)
$5,682
$4,807
3.13
2.52
Costs and expenses
Income taxes
Net income
EPS
Income Statement
Shares outstanding (in thousands)
2012
2011
1,818
1,909
EPS, earnings per share. Source: Company documents.
EXHIBIT 10 Disney’s Unaudited Balance Sheets (in millions)
2012
2011
Assets
Current Assets
Cash and cash equivalents
3,387
3,185
Receivables
6,540
6,182
Inventories
1,537
1,595
Television costs
676
674
Deferred income taxes
765
1,487
Other current assets
804
634
13,709
13,757
Film and television costs
4,541
4,357
Investments
2,723
2,435
38,582
35,515
Total current assets
Parks, resorts and other property
Accumulated depreciation
(20,687) (19,572)
17,895
15,943
Projects in progress
2,453
2,625
Land
1,164
1,127
21,512
19,695
2012
Intangible assets
2011
5,015
5,121
25,110
24,145
2,288
2,614
74,898
72,124
Accounts payable
6,393
6,362
Current portion of borrowings
3,614
3,055
Unearned royalties
2,806
2,671
Total current liabilities
12,813
12,088
Borrowings
10,697
10,922
Deferred income taxes
2,251
2,866
Other long-term liabilities
7,179
6,795
31,731
30,296
Retained earnings
42,965
38,375
Accumulated other loss
(3,266)
(2,630)
71,430
66,041
Goodwill
Other assets
Total Assets
Liabilities and Equity
Current Liabilities
Preferred Stock, $.01 par value, 100 million shares authorized but none
issued
Common Stock, 4.6 billion shares, 2.8 and 2.7 billion shares issues
respectively
Treasury Stock, 1.0 billion shares
Total Equity
Noncontrolling interests
(31,671) (28,656)
39,759
37,385
2,199
2,068
2012
2011
Total Equity
41,958
39,453
Total Liabilities and Shareholders’ Equity
74,898
72,124
Source: Company documents.
CBS Corp.
Headquartered in New York City, CBS is a large media conglomerate with operations in
television, radio, online content, and publishing. CBS Broadcasting operates the number-1 rated
CBS television network, along with a group of local TV stations. CBS also owns cable network
Showtime and produces and distributes TV programming through CBS Television Studios and …
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