The Walt Disney Co. Analysis

July 7, 2010

Team 32

Serena Wales Alvarez, Paola Castillo, Leon Chen, Renee Christensen, Ashley Dordan, Nishat Jannah, John Miller, Stephen Silver, Vadim Zakharau, Rie Sugiura

TABLE OF CONTENTS

Executive Summary …………………………………………………………………. 2-5

Identification & Description of Business ……………………………………………. 6-15

Corporate Level Strategy …………………………………………………………… 15-16

Corporate DNA Analysis …………………………………………………………… 17

Industry Analysis …………………………………………………………………… 17-28

Company Challenges & Recommendations ……………………………………….. 29-39

Teaming, Leadership, & Communication ………………………………………….. 39-40

People Management & Accountability …………………………………………….. 40

Resource Allocation & Deployment ……………………………………………….. 41

Meeting Management & Record Keeping ………………………………………….. 41-42

Project Management ……………………………………………………………….. 42-43

Technology Choices ………………………………………………………………… 43

Description of the Presentation …………………………………………………….. 45-45

Description of the Facilitation ……………………………………………………… 45-46

Appendix …………………………………………………………………………… 47-49

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Works Cited ………………………………………………………………………… 50-52

EXECUTIVE SUMMARY

COMPANY OVERIEW

The Walt Disney Company is widely known to be the “largest media and entertainment conglomerate in the world (Walt Disney Company).” The company is exceptionally committed to providing the highest entertainment experiences relative to quality creative content and storytelling to audiences across the globe most especially to its consumer market: children and their families. A heart warming and well-determined individual named Walter Elias Disney founded the company. He was born on December 5, 1901 in Chicago, Illinois. The company is comprised of four business segments, which are media networks, parks and resorts, studio entertainment, and consumer products (Corporate Information & Walt Disney Company).

One of Disney’s greatest achievements would be the creation of Disneyland theme park(s), which would later be recognized as “the happiest place on Earth.” Disney had built two amusement parks, one located at the West and East Coast of the country. Disneyland was built in Anaheim, California, where it had officially opened its doors to the general public in July 18, 1955. With the immediate success of the theme park, Disney decided to build a second Disneyland. This second Disneyland was built in Orlando, Florida, where it was later named Walt Disney World, which had opened its doors to the general public in October 1, 1971 (Company Overview).

The Disney media works networks include Disney-ABC Television Group, ESPN Inc., Walt Disney Internet Group, and ABC Television Network.. The Walt Disney Studios include motion pictures distributors such as Walt Disney Pictures and Touchstone Pictures. The consumer products include Disney brand merchandise such as apparel, toys, home décor, books and magazines, interactive games, foods and beverages, stationery, electronics, and fine art.

The Walt Disney Company was founded in October 16, 1923, where it had started out as a Disney Brothers Cartoon Studio gradually growing to become a world-renowned leader in media and entertainment. The company currently generates revenue of 36.1 billion (USD), has an operating income of 5.78 billion (USD), a net income of 3.31 billion (USD), and total assets of 63.1 billion (USD). It currently has 15,000 employees

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affiliated with the Walt Disney Company. Furthermore, it also has theme parks across the globe that includes Disneyland Tokyo, Paris, and Hong Kong (Walt Disney Company).

Some fun facts of Walt Disney Company contributing to the betterment of society and/or the environment are as follows:

- The Disney Wildlife Conservation Fund has donated more than $6 million (USD) to various organizations around the world (Disney’s Fun Facts).

- Walt Disney Company employees throughout the country has partnered with nonprofit organizations that has led to the donation of 527 tons of reusable materials (Disney’s Fun Facts).

- One of Disney’s business lines, the Walt Disney Feature Animation, has donated valuable animation production equipment that includes desks, computers, and printers to local high schools and colleges throughout Southern California (Disney’s Fun Facts).

CHALLENGES

The Walt Disney Company has been faced with challenges that may affect the company’s brand image, operations, and/or future developments. These challenges are divided into three environments that include the general environment, the industry environment, and the internal environment. First, the general environment challenges consist of the demographic, economic, sociocultural, political and legal, technological, and global segment. Second, the industry environment challenges consist with strong rivalries and their threat to providing substitute products and services. Lastly, Disney’s internal environment challenges consist of integration difficulties within its acquisitions.

First, for the general environment challenges based on the demographic segment, Disney is faced with the constant struggle to satisfy its audience not just on a national level, but also on an international level. Disney’s target group is largely children, and their challenge is to satisfy the Generation Z population comprised of children born between 1995-2010. Disney anticipates that this generation’s would highly favor sophisticated media and “on demand” availability. This was largely attributed to a society that is Internet and computer-driven. Second, for the economic segment, Disney’s challenge is to look for ways to help improve its decreased revenue and/or sales due to the recent economic downturn. The economic recession from 2007-2009 had detrimental effects on Disney’s business segments such as studio entertainment and its parks & resorts. Third, for the sociocultural segment, the challenge for Disney is to properly maintain and oversee its many businesses located in many geographic areas in the world. Managing diversity among its businesses and employees is key in today’s world of globalization. Fourth, for the political and/or legal segment, the challenge Disney faces is to work with and help displaced individuals who had been distressed and wrongfully removed from their homes. This was a major challenge to the company because of Disney’s theme park expansion in Shanghai, China. Disney needs to work with the Chinese government to determine positive results/outcomes for all parties. Fifth, for the technological segment, the challenge would be to be current and keep in pace with the rapid speed technological changes and/or advancements to this business industry. Sixth, for the global segment, the challenge for Disney is to take Disney’s standardized products throughout international theme parks, and provide adequate levels of local customization.

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From the industry environment challenges, Disney is faced with fierce competitive rivalries in different business categories. Competitors have imitated the Disney products thus, producing product substitutes and/or services. Some of Disney’s rivalries in the media or studio category are widely known names that include Paramount Pictures Corporation, Sony Pictures Entertainment, and Warner Brothers Entertainment. Under the amusement parks category, Disney competes with Universal Studios and Six Flags. The fierce competition between these giant companies pushes Disney to find new ways in achieving product and service differentiation as well as preserving their patent rights.

Lastly, for the internal environment challenges, Disney needs to properly adapt, handle, and integrate business synergies through business acquisitions.

SOLUTIONS & RECOMMENDATIONSThe solution that Disney recommends on the demographic segment challenge

would be to provide services on highly sophisticated media and “on demand” availability. The company intends to provide services on streaming select television shows on its Internet media channel through its subsidiary, ABC.com. With this, Disney would be able to develop its own media portal to channel on-demand content to better fulfill this market need. Second, the solution that Disney recommends on the economic segment challenge would be to leverage on low-cost building expenses, which can provide the opportunity to help grow the company at a reduced cost. This will allow Disney to create and build cutting-edge attractions during down times. Third, the solution that Disney recommends for its sociocultural segment challenge is to focus their attention to worker sensitivity to properly maintain its operations across the world. Fourth, the solution that Disney recommends for its political and/or legal segment challenge would be to work closely with the Chinese government in compensating and relocating Shanghai residents who had been affected by Disney’s theme park expansion. Fifth, the solution that Disney recommends for its technological segment challenge is to maintain compliance with current technology, and to explore further innovative services and products. Disney needs further facilitate the needs of a high-tech audience by providing Disney applications and/or media-rich content. Sixth, the solution that Disney recommends for its global segment challenge is to retain the essence of its Disney characters. To facilitate with local customization, Disney intends to comply with cultural norms and accepted behaviors. Further, the company would ensure that Disney characters do not transmit offensive ideas, behaviors, and/or languages towards the local people.

From the industry environment challenge, the solution to counteract competitive rivalries would be continually exploring for innovative products and services that are unique. Disney needs to ensure superior quality in services, resources, and products are present, and that the company explores many different aspects of uniqueness. Furthermore, Disney sees to enforce strict patent rights to properly protect their brand image and Disney characters.

From an internal environment challenge, the solution that Disney recommends for its integration difficulties on acquisitions would be to understand the business cultures of both Pixar Animations and Marvel Entertainment, which are complete opposites of one another. Disney would need to ensure proper flow and coordination between these two large business lines to further assess future developments and projects.

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TEAM PROCESS

Managing a team is a difficult task because it consists of team members from different cultural, ethnic, and educational backgrounds. Each team member had different suggestions, opinions, and perspectives towards ides being generated by the team on the Walt Disney Company. Although there were differences in each team member’s direction and/or perspective(s) of the company, the team had managed to pull through and get things done in a well-sought out plan and manner. The team had assigned each team member roles on what essentially needs to be done throughout this project. These roles were reflected on the strengths and weaknesses of each team member. Nishat and Vadim took the roles of presenting the company because they were really excellent in public speaking, communication, and speech. John, Serena, and Ashley took the roles of writers because they were passionate about writing research papers. Paola, Rie, and Leon were the researchers of the company because they were very knowledgeable with gathering resources. Renee took the role of PowerPoint creator because she was very talented at creativity and technology. Stephen took the role as communications director because he is excellent in communicating and delivering clear messages to the team.

In order for the team to complete this project on the Walt Disney Company, the team had to formulate a structure and assign deadlines. First, the team requested the researchers to gather information and resources about the company. From there, story creators were asked to outline and create the direction of what business perspectives the company shall entail for the presentation. Then, the writers would gather the resources and information collected from both the researchers and story creators to formally write about the company in a written report. The written report would consist of information about the company, its history, industry analysis, challenges being faced, and recommendations/solutions. Once the written report is complete, the PowerPoint creator would reference the written report to create slides for the presentation on main topics that features concise words and information. The PowerPoint slides would be supplemented with exceptional pictures and graphics. Thus, the presenters would finally present to the class about the team’s company- Walt Disney Company.

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IDENTIFICATION & DESCRIPTION OF BUSINESS

The Walt Disney Company is widely known to be the “largest media and entertainment conglomerate in the world (Walt Disney Company).” The company is exceptionally committed to providing the highest entertainment experiences relative to quality creative content and storytelling to audiences across the globe most especially to its consumer market: children and their families. The company is comprised of four business segments, which are media networks, parks and resorts, studio entertainment, and consumer products (Corporate Information). The founder was Walter Elias Disney, who was born on December 5, 1901 in Chicago, Illinois. He had skills of an American film producer, director, screenwriter, voice actor, animator, entrepreneur, and an entertainer. One of the most valuable assets of Walt Disney was his entrepreneurial mind-set and business skills, which had propelled him to the top of his game. There is more to the company than just the famous “Mickey Mouse” and popular Disney characters.

SEGMENT 1: WALT DISNEY STUDIOSThe Walt Disney Studios is the groundwork, in which the company was built

upon and further developed, which is based on animated features and live-action motion pictures. Disney Studios generally produces movies, television animation programs, musical recordings, and live plays (Kirkman). The Disney Studios enabled writers, story creators, and illustrators to collaborate with one another in the creation of Disney characters. Full-length animated films that feature Disney characters such as Mickey Mouse and Snow White and the Seven Dwarfs quickly became a hit among children across the country. These cartoon films not only entertained both children and adults, but the Disney characters and storylines appealed to them. These motion picture movies provided quality entertainment for the whole family, where it created enough hype and buzz for Disney to rapidly become a global name (Corporate Information & Calderon).

The Walt Disney Studios distributes motion pictures through several distribution outlets, which are Walt Disney Pictures, Touchstone Pictures, Hollywood Pictures, and Miramax Films. Walt Disney Pictures include studios such as Walt Disney Animation Studios, Pixar Animation Studios, and DisneyToon Studios. In addition to that, The Walt

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Disney Studios Motion Pictures International is the hub for international distributions with Disney. Walt Disney Studios Home Entertainment distributes Disney films to rental and sell-through home entertainment markets globally. Disney Theatrical Productions is acknowledged as one of the largest producers of Broadway musicals, which include Disney Live Family Entertainment and Disney On Ice. Disney is also popularly known for its music, where Disney Music Group distributes its original music content and motion picture soundtracks through music record labels such as Walt Disney Records, Hollywood Records, and Lyric Street Records (Corporate Information & Calderon).

SEGMENT 2: PARKS & RESORTSWalt Disney Parks and Resorts are considered to be the most famous in the world,

where all Disney characters reside with Mickey Mouse. Among them are the Disney princesses: Ariel, Cinderella, Snow White, Belle, Jasmine, and Sleeping Beauty, and many more. The Disney Parks and Resorts are also known for their popularized slogan, “Where Dreams Come True.” There are two Walt Disney Parks and Resorts in the United States, which are Disneyland Resort and Walt Disney World Resort, located at Anaheim, California and Orlando, Florida respectively. Walt Disney Parks and Resorts subdivision of the Walt Disney Company also expanded internationally, where there are now Tokyo Disney Resort Japan, Disneyland Resort Paris, and Hong Kong Disneyland. Furthermore, Walt Disney Company also has a world-class Disney Cruise Line and eight Disney Vacation Club resorts (Corporate Information & Calderon).

DISNEYLAND, CALIFORNIAThe Walt Disney Company has a theme park popularly known as Disneyland,

which is generally an amusement park that is located in Anaheim, California. Walt Disney had personally supervised the creation and build-up of the Disney theme park, and had opened the Magical Kingdom on July 18, 1955 to the public. Disneyland is admirably considered as the most cumulative attendance theme park in the world. It had a cumulative attendance of approximately 600 million guests since it had first opened back in 1955. It is considered as the second world’s largest and most visited resort and theme park (Disneyland). CONCEPT GENERATION

Walt Disney created the concept for Disneyland when he and his daughters had first visited Griffith Park. Disney observed his daughters riding the Merry-Go-Round, and had generated an idea of having a place where both “adults and children can go and fun together (Disneyland)”. Along with fond memories and experiences with the World’s Columbian Exposition of 1893 in Chicago and other visited parks that included Tivoli Gardens Greenfield Village, Playland, and Children’s Fairyland, Disney became inspired and motivated to build a theme park that would later captivate the hearts and imagination of both adults and children throughout the world- Disneyland (Disneyland). PLANNING & EXECUTION

Disney had chosen to acquire 160 acres of land filled with orange grooves and walnut trees in Anaheim, California, which was sought as the area’s potential growth according to Harrison Price, a researcher from Stanford Research Institute. Due to the many difficulties of funding his project and being considered as a first mover in the market, Disney explored new ways of obtaining funds through tangible resources. From

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there, he had chosen television as a source of income for the project. In exchange of creating a show called “Disneyland” that had broadcasted in ABC television network, the television network company agreed to help Disney in his quest to build Disneyland by financing his project (Disneyland). This had tremendously helped Walt Disney because it had allowed him to pursue his dream. BUIDLING & OPENING

The construction project began on July 16, 1954, which had accumulated to a cost of $17 million (USD) to complete. The theme park opened a year later on July 18, 1955, but had a special event held prior to the official opening, which was known as the “International Press Preview” event. The event was held on Sunday, July 17, 1955, and was initially intended for invited guests and the media. The purpose of the event was to enable the invited guests to share their experiences and excitements of what Disneyland was truly about. The media would cover Disneyland by televising the opening day nationwide. Hollywood celebrities from movie stars to other famous figures also made an appearance on the opening day of the theme park, which also sparked attention (Disneyland).

Unfortunately, the opening day event did not run accordingly, where Disneyland was expected to become a grandeur event, but it had actually turned out to be chaotic and less pleasing. The special event attracted 11,000 expected people to an overwhelmingly 23,154 people on the opening day of Disneyland theme park. The theme park was then overcrowded with invited guests and people with counterfeit tickets. Plus to make all matters worse, the temperature on that day was unusually high to about 101 degrees Fahrenheit in addition to the park’s inoperable drinking fountains (Disneyland).

The opening day of July 17, 1955 took a major toll on the reputation of Disneyland because it had generated negative publicity. There were complaints that included high-heeled shoes sinking into the asphalt because it was poured on the morning on that day, vendors running out food, and gas leaking in Fantasyland that had caused Adventureland, Frontierland, Fantasyland to shut down for the afternoon. Attendees weren’t thrilled of their experience of Disneyland, but Walt Disney managed to invite his guests back for a private second day experience. Disney wanted his attendees to experience Disneyland as they should have experience- a proper experience. (Disneyland).

The official opening day of Disneyland had occurred the day after, and had created such anticipation, excitement, and buzz towards the general public. The crowds started to gather in line early morning, and had the opportunity to experience Disneyland as expected- a grandeur experience without an overcrowding (Disneyland). TRANSITIONING

During the late 1990s, the Disneyland theme park began to evolve and expand to become a greater vacation resort development. The components that were added to the resort were another theme park known as Disney’s California Adventure Park, shopping, dinning, entertainment complex, Downtown Disney, Disney’s Grand California Hotel, Disney’s Paradise Pier Hotel, and “Mickey and Friends” parking lot structure (Disneyland). These additions improved Disneyland’s image on not just being an entertainment theme park, but also being acknowledged as an ultimate vacation destination spot for vacationers around the world. This has also contributed to the

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dramatic increase of visitors inside Disneyland, where visitors can prolong and further enjoy their stays at the theme park and resorts (Corporate Information). MODERN DISNEYLAND

Matt Ouimet had taken the leadership role of leading Disneyland Resort in 2003. He was the former president of the Disney Cruise Line. Ouimet had quite an expertise background because he had held multiple executive leadership positions at Walt Disney World Resort, Florida and was affiliated with Disneyland as an employee. Although he had admired the leadership of Walt Disney and his many business strategies, he needed to come up with his own objective(s)/goal(s)/strategies to lead the company to a more promising future. The new leadership of Ouimet had innovated Disneyland by incorporating cosmetic maintenance. There were more than 5,000 gallons of paint, 100,000 lights, and millions of plants that were added to the beautification of the theme park. As a result, Disneyland became more attractive and appealing to people. This has contributed to the increase of visitors annually. Ouimet later announced he would be leaving the company, and was replaced by Ed Grier, who was an executive managing director of Walt Disney Japan. Grier then had retired on 2009, where George Kalogridis became the current President of Disneyland (Disneyland).

As Disney’s 50th Anniversary neared in 2005, there were many renovation projects that had occurred in the theme park(s) in preparation for a remarkable Golden Anniversary since its first opening in 1955. Some of the many restored attractions were Space Mountain, Jungle Cruise, the Haunted Mansion, Pirates of the Caribbean, and Walt Disney’s Enchanted Tiki Room. Disneyland Resort celebrated its golden anniversary with their “Golden Mickey Ears” on May 5, 2005 to September 30, 2006. This once in a lifetime 50th Anniversary enabled Disney fans and visitors to experience an unprecedented celebration of achievement, happiness, and fun (Disneyland).

On Disneyland’s 55th Anniversary, Disney Parks announced the “Give a Day, Get a Disney Day” volunteer program on January 1, 2010. This program enabled volunteers to receive a free Disney Day on Disneyland, California or Walt Disney World Resort, Florida. In exchange, these volunteers would have to participate with the Disney Charity. The volunteer program had encouraged people of all ages to participate, and had reached its goal of one million volunteers in just 3 months of its launch. Disney not only promoted more visitors with this program, but it had established the importance and value of helping others (Disneyland). ATTRACTIONS & RIDES

Disneyland has a variety of attractions and rides throughout its “Magical Kingdom.” Disney fans and visitors can explore the excitement and fun of the park’s attractions and rides. The first theme park, Adventureland, has a theme of an exotic tropical place yet to be discovered in the world. It emphasizes on the remote jungles of Asia and Africa, and represents an era far from civilization. Some of the famous attractions include Jungle Cruise, the “Temple of the Forbidden Eye” in Indiana Jones Adventure, Tarzan’s Treehouse, and the Enchanted Tiki Room. Second theme park, the New Orleans Square, is a theme based on 19th century New Orleans. It resembles colorful houses during that time period incorporating Southern roots. Attractions include Pirates of the Caribbean and the Haunted Mansion. Third theme park, Frontierland, is a theme based on the American pioneering days, its history, its culture, and the “pioneering spirit of our forefathers.” Frontierland reflects the home of Pinewood Indians, who had lived on

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the banks of the Rivers of America. Some of the famous attractions include Fantasmic, Big Thunder Mountain Railroad, Mark Twain Riverboat, and Pirate’s Lair at Tom Sawyer Island. Fourth theme park, Critter Country, is a theme based on the home of an Indian Village, where tribespeople perform their dances and customs. Famous attractions include Splash Mountain and the Country Bear Jamboree. Fifth theme park, Fantasyland, is based on the imagination of a child, where there are endless possibilities of adventure. Famous attractions include Peter Pan, Alice & Wonderland, and King Arthur Carrousel. Sixth theme park, Mickey’s Toontown, is a theme based on the Walt Disney release of Who Framed Roger Rabbit. Mickey’s Toontown is where one can find the houses of Disney’s most popular carton characters such as Mickey Mouse, Minnie Mouse, and Goofy. Famous attractions include Gadget’s Go Coaster and Roger Rabbit’s Car Toon Spin. The last theme park, Tomorrowland, is based on theme where science and the space age collide. Tomorrowland is a reflection of what the future holds, and features famous attractions that include Space Mountain, Innoventions, Star Tours, Captain EO Tribute, Autopia, the Disneyland Monorail Tomorrowland Station, the Astro Orbitor and Buzz Lightyear Astro Blasters, and Finding Nemo Submarine Voyage (Disneyland & Corporate Information).

The Disneyland Railroad is a short-line railway of five oil-fired and steam-powered locomotives that provides a “Grand Circle Tour” of Disneyland. The 19th century train departs from Main Street Station, where it has scheduled station stops to Frontierland Station, Toontown Depot, the gateway of Fantasyland, and Tomorrowland Station. The “Grand Circle Tour” finally ends with a last visit to the “Grand Canyon/Primeval World Station (Disneyland).”

WALT DISNEY WORLD, FLORIDAThe Walt Disney World Resort is located in Orlando, Florida, and is considered

as the world’s largest and most visited resort and theme park. The resort is much larger than the Disneyland, California because it is comprised of 25,000-acres and has more rides. Walt Disney World is made up of four theme parks (Magic Kingdom theme park, Epcot, Disney’s Hollywood Studios, and Disney’s Animal Kingdom), two water parks, 24 theme resort hotels, two health spas and fitness centers, recreational venues, and entertainment (Walt Disney World). CONCEPT GENERATION

In 1959, the quest to supplement Disneyland towards the East Coast region of the country had been thought and developed by Walt Disney and Walt Disney Productions. According to research, Disney had identified a small percentage of Disneyland visitors that had came from the East Coast. Disney realized that a majority of the population of the United States had resided in that region, and he wanted to venture into the possibility of tapping that market for potential growth and expansion (Walt Disney World). PLANNING & EXECUTION

Disney had chosen an area that he had favored greatly because of the sight of a well-developed network of roads. In 1963, he had chosen to develop the second Disneyland (later to be called Walt Disney World) in Orlando, Florida. Although Disney had most of his attention focused to this project, he had also managed to participate in the New York World’s Fair from 1964-1965. On December 15, 1966, he had passed away, and had never saw his Walt Disney World vision completed (Walt Disney World).

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BUILDING & OPENINGBefore his death, Disney went through some obstacles in acquiring 27,000 acres

of land. He had to purchase and repurchase parts of lands that were essential in the build up of the second Disneyland. He had to deal with companies such as the Latin-American Development and Management Corporation, Reedy Creek Ranch Corporation, and Tufts University in order to properly obtain the desired amount of land and mineral rights of the land (Walt Disney World).

Disney’s brother and business partner, Roy O. Disney took the initiative to oversee the “Florida project” construction. The Walt Disney Company had collaborated with Robert Hart, a widely recognized New York architect, to further develop, create, and manage the plans for the theme park. In 1967, Roy had acknowledged that in order for the plan to succeed, a special district would need to be formed, which would consist of the Reedy Creek Improvement District, City of Bay Lake, and the City of Reedy Creek. Roy went through legal affairs in acquiring a special district and immunity from any current or future country or state land-use laws. Thus, with enduring perseverance and determination, construction of drainage canals began, where Disney built roads and the Magic Kingdom was built. Walt Disney World had its official opening day on October 1, 1971, where it had included the Disney’s Contemporary Resort, Disney’s Polynesian Resort, and Disney’s Fort Wilderness Resort & Campground (Walt Disney World). RECOGNITION

Roy Disney decided to name the second Disneyland of the East Coast region in honor of his beloved brother, Walt Disney. Roy had acknowledged that his brother was the man who “had started it all” and had thrived on his imagination to create a theme park(s) where both adults and children can have fun together (which was his core competency/ value). Roy had passed away on December 20, 1971, which was three months after the official opening of Walt Disney World (Walt Disney World). MODERN WALT DISNEY WORLD

The Walt Disney Resorts are categorized into five groups, which are the Deluxe, Moderate, Value, Disney Vacation Club Villas, and Campground. Deluxe Resorts are Disney’s Animal Kingdom Lodge, Disney’s Beach Club Resort, Disney’s BoardWalk Inn, Disney’s Contemporary Resort, Disney’s Grand Floridian Resort & Spa, Disney’s Polynesian Resort, Disney’s Wilderness Lodge, and Disney’s Yacht Club Resort. Moderate Resorts include Disney’s Caribbean Beach Resort, Disney’s Coronado Springs Resort, Disney’s Port Orleans Resort French Quarter, and Disney’s Port Orleans Resort Riverside. Value Resorts include Disney’s Pop Century Resort, Disney’s All-Star Movies Resort, Disney’s All-Star Music Resort, and Disney’s All-Star Sports Resort. Disney Vacation Club Resorts include Disney’s Old Key West Resort, Disney’s BoardWalk Villas, The Villas at Disney’s Wilderness Lodge, Disney’s Beach Club Villas, Disney’s Saratoga Springs Resort & Spa, Disney’s Animal Kingdom Villas, and Bay Lake Tower at Disney’s Contemporary Resort. Cabins and Campgrounds include Disney’s Fort Wilderness Resort & Campground. A Disney’s Magical Express service are provided, where guests with Disney Resort(s) reservations are transported to their respective Disney Resort once arriving at the Orlando International Airport. This would make visitors’ experiences with Walt Disney World more pleasant and have their vacation arrangements run smoothly (Walt Disney World & Corporate Information).

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In addition to that, Disney Resorts has two future development projects, which include the Golden Oak at Walt Disney World Resort and the Disney’s Art of Animation Resort. The Golden Oak would become homes designed by the Walt Disney Company in a luxury residential community expected to open in 2011. The Disney’s Art of Animation Resort that would feature themes from hit Disney animation films such as Finding Nemo, The Lion King, Cars, and The Little Mermaid. The resort would be expected to open in 2012 (Walt Disney World & Corporate Information).

The current executive management of Walt Disney World includes Meg Crofton, the President; Jim MacPhee, the Senior Vice President of Operations and Next Generation Experiences; George Aguel, the Senior Vice President of Operations, Sales, and Alliance Development; and Eugene Campbell, the Vice President of Community Relations and Minority Business Development (Corporate Information).

SEGMENT 3: CONSUMER PRODUCTSIn 1929, Walt Disney had ventured on Disney merchandising, where he and a

businessman first started to put Mickey Mouse as a forefront of a children’s writing tablet. From there, Disney merchandising further developed and grew rapidly with the imprinted faces of many Disney characters into product branding (Corporate Information). Disney licenses Disney characters to consumer manufactures, retailers, publishers, and distributors across the globe (Kirkman). Disney merchandising became formally known as Disney Consumer Products, where it and along with other affiliates, expanded the company in merchandise that ranged from apparel, toys, home decoration(s), books, magazines, interactive games, computer software products, computer software products for the educational marketplace, foods, beverages, stationery, electronics, and fine arts. These Disney products are created and disbursed through business lines that include Disney Toys, Disney Apparel, Accessories & Footwear, Disney Food, Health & Beauty, Disney Home, and Disney Stationery (Kirkman & Corporate Information). In 1987, Disney retail chain stores had opened for the public, where Disney fans are able to purchase their favorite Walt Disney characters on apparel, toys, books, and many more. The Walt Disney Company owns and operates the Disney chain stores throughout North America, Europe, Japan, and other parts of Asian countries. Furthermore, the Walt Disney Company has its own official website called the “disneystore.com”, where consumers are able to easily purchase Disney merchandise from the shopping portal (Corporate Information).

Walt Disney Company also has its own publisher known as the Disney Publishing Worldwide, which is also acknowledged as the largest publisher of children’s books and magazines in the world. Disney’s publisher has certainly achieved exceptional recognition because they continue to reach more than 100 million readers each month in over about 75 different countries. Disney Libri, Hyperion Books for Children, Jump at the Sun, Disney Press, and Disney Editions are some of the well-known imprinting business lines of Disney (Corporate Information & Calderon).

SEGMENT 4: MEDIA NETWORKSThe Walt Disney Media Networks consist of a variety of broadcast, cable, radio,

publishing, and Internet businesses. The main network areas are Disney-ABC Television Group, ESPN Inc., Walt Disney Internet Group, and ABC owned television stations.

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Disney uses a network cooperative strategy to work with these well-known television network channels. The Disney-ABC Television Group provides worldwide entertainment and news television that include ABC Daytime, ABC Entertainment Group, and ABC News divisions. It also features Disney Channels Worldwide Global Kids’ TV Business, ABC Family, Lifetime, E! Entertainment, and SoapNet (Kirkman & Corporate Information).

Some of the many favorite day-time shows that gained the attention of kids were the original movie High School Musical, Playhouse Disney, the original sitcom Hannah Montana, the original sitcom The Suite Life of Zack & Cody, the original sitcom and popular Wizards of Waverly Place, the musical made-for-cable movie The Cheetah Girls, the movie The Jonas Brothers, the original sitcom That’s So Raven, and many more (Disney Channels & Calderon).

The Walt Disney Media Networks also include The Walt Disney Internet Group, which provides Disney audiences and/or users across the globe with interactive entertainment and informational content and services for Internet and mobile devices. The Walt Disney Internet Group includes websites such as Disney.com, Family.com, and Movies.com. They continue to build and develop new media experiences, products, and services designed with unequal quality and content. Furthermore, they are considered to be the industry’s leader in online virtual worlds for kids and families. Some of these online virtual worlds include Disney’s Club Penguin, Disney’s Toontown Online, Pirates of the Caribbean Online and Disney Fairies Pixie Hollow (Corporate Information).

CORPORATE HISTORY1923-1928: The Silent Era

In 1923, Walt Disney at that time was an animator in Kansas City, Missouri, where he had created a film that was titled, “Alice’s Wonderland,” which was a short film that was about a child interacting with animated characters. This captured the attention of Margaret Winkler, a film distributor who had liked what she had seen. She and Disney agreed to a contract agreement, where he would “distribute a whole series of ‘Alice Comedies’ based on his film. This enabled Walt Disney and Roy Disney to move to Los Angeles, California, where they had then opened up a shop called the “Disney Brothers Cartoon Studio.” Furthermore, Walt Disney had developed his first original character, “Oswald, the Lucky Rabbit,” which was an all-cartoon series (Walt Disney Company & Oswald, The Lucky Rabbit). 1928-1933: The Mickey Mouse Era

Walt Disney had lost his rights to “Oswald, the Lucky Rabbit” because Winkler’s husband had taken over the distribution company, where at that time, Disney was working to open his own animation studio. Then, Disney along with other animators created a cartoon mouse that was originally named “Mortimer Mouse,” but was brilliantly changed to a fun name we now know today- “Mickey Mouse.” In 1928, he and other animators had produced several silent Mickey Mouse cartoon films. These films did not turn out to be a success as it was expected of them. However, such setbacks did not hinder Disney’s determination to succeed as an animator, where he had created the third Mickey Mouse cartoon film with synchronized sound. This film brought Disney success, where it was exhibited in New York in the late 1928. This enabled Disney to create the

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Mickey Mouse series, which became popular throughout the country. In addition to that, Disney later created the Walt Disney Productions (Walt Disney Company). 1934-1945: Snow White and the Seven Dwarfs

Walt Disney had the passion and determination to strive for more in the boundaries of animation. In 1934, Disney then began to venture on producing his first feature-length animated film, which was a challenging task that took approximately three years to complete. The motion picture film became known as “Snow White and the Seven Dwarfs,” which was based on a fairy tale and had debuted in the late 1937. Disney’s hard work had paid off because the film immediately became a success by claiming to be the highest grossing film in that time period of 1939. From that on, Disney and Walt Disney Studios continued to release animated shorts and features that included Pinocchio and Fantasia both in 1940, Dumbo in 1941, and Bambi in 1942. The period of World War II did not hinder Disney’s efforts to produce films despite decreased profits and a decline in the industry, but rather helped produced training and propaganda films to help fund his projects and developments (Walt Disney Company). 1946-1954: More Films & Television

Although World War II had greatly impacted the industry environment and had been a threat to the business, Walt Disney had managed to produce a collection of short films known as “package films”. By 1950, Disney had released another feature-length animation cartoon titled “Cinderella,” which had proven to be a success. This enabled Disney to further release more films such as “Alice In Wonderland in 1951” and “Peter Pan” in 1953 (Walt Disney Company).

In 1950, the Walt Disney Productions partnered with The Coca-Cola Company for the Disney to debut itself on television through “An Hour In Wonderland” documentary featured in an NBC television network. By 1954, Disney and ABC network had officially launched “Disneyland,” which was Disney’s first regular television series. The series became widely popular throughout the country, and became “one of the longest-running primetime series of all time (Walt Disney Company).” 1955-1965: Disneyland

In 1954, Walt Disney with his strategic management process conjured up an idea of enabling both children and adults having fun together. Disney used his “Disneyland” series to convert his ideas to a theme park. Disney created Disneyland theme park in Anaheim, California, which officially opened in July 18, 1955 to the general public. Due to the success of Disneyland and the potential growth in the East Coast of the country, Disney had made plans to build another Disneyland in Orlando, Florida (Walt Disney Company). 1966-1971: Deaths of Walt & Roy Disney

The theme park in Orlando, Florida would not be recognize with the same name as the Disneyland in California, but would ultimately be recognized as Walt Disney World in memory of Walt Disney. Walt Disney died of lung cancer in December 15, 1966. After his brother’s death, Roy Disney took the leadership role, as the president of the company to help complete is brother’s vision of having a Disneyland in the East Coast. Walt Disney World did not officially open until October 1, 1971, which was much larger than Disneyland, Anaheim, California. Roy Disney died of a stroke in the following months after the Walt Disney World opening in December 20, 1971 (Walt Disney Company).

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1972-1984: New Leadership & ExpansionAfter the death of Roy Disney, Donn Tatum, Card Walker, and Ron Miller had

took the initiative to become part of the new leadership of the company. Walt and Roy Disney trained each of them, where they were each very competent of their leadership roles. The company managed to continue releasing films that include “Escape to Witch Mountain” in 1975, “Freaky Friday” in 1976, “Robin Hood” in 1973, “The Rescuers” in 1977, and “The Fox and the Hound” in 1981. In 1983, the Disney Channel was created as a subscription-level channel. The company also saw opportunities to expand internationally by building a Disney theme park in Japan later to be known as Tokyo Disneyland, which opened in April 1983 (Walt Disney Company). 1985-2004: Disney Renaissance Era

Under the new leadership of Michael Eisner, the company had experience a tremendous growth and golden age period. He had contributed greatly by his efforts in creating the Disney Store, Euro Disneyland, great television presence, and producing more films annually. He had changed the original company name from Walt Disney Productions to The Walt Disney Company (Walt Disney Company). 2005-Present: The Walt Disney Company Now

In 2005, Walt Disney’ nephew, Roy E. Disney took the initiative to return to the company to become affiliated with the new management of the company. The Walt Disney theme parks and resorts have celebrated their 50th Anniversary since Disneyland had first opened on 1955. To further add to the company’s global expansion, it had built and added Hong Kong Disneyland. The company also added Pixar Studios to many of its business lines, and continues to grow further into the future (Walt Disney Company).

CORPORATE LEVEL STRATEGY

The Walt Disney Company is one of the most leading industries in the world, and has been acknowledged by consumer research studies- that the key to Walt Disney Company was simply “magic.” The whole of Walt Disney Company is “far greater than the sum of its parts (Case Analysis).” The company is more than just the largest media and entertainment conglomerate in the world that features business segments on media networks, consumer products, theme parks and resorts, and studio entertainment (Kirkman). Walt Disney Company is genuinely devoted to happiness, laughter, fun, and excitement of the imagination beyond a child and adult’s dream- the “magic” within. However, in terms of corporate level strategy, Disney succeeds through by incorporating synergies across its diverse businesses. Disney diversifies itself by acknowledging a clear and concise corporate strategy that has exceptionally created value. The founder, Walt Disney has famously quoted, “It all started with a mouse,” exudes simplicity, but with deep thought and careful thinking, he genuinely infers that distinctive competitive advantage is not the case of understanding corporate culture. Disney’s corporate culture although unique and differentiated among its competitors with their magical products- the magic does not exist unless the products “interrelate and complement each other (Kirkman).”

To illustrate such diversification, one must go back in time and trace the roots of what the Walt Disney Company had done to accomplish synergies. The company began

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to diversify itself at an early stage, where in 1928, the first Disney cartoon was released. The following year in 1929, Disney had licensed a pencil tablet, and by 1932, the Mickey Mouse Club was created. This club was an essential marketing strategy because it had functioned as the “vehicle for selling Disney products”, and had acquired more than 1 million members or Disney fans. Furthermore, Disney had produced training and educational films at the time of war during 1941-1945. In 1949, the company had expanded into music. Walt Disney knew how much great of an impact television is able to create through entertainment and motion pictures. Through television, it enabled Disney to reach millions of people, where they became fully aware of the Disney characters. Walt Disney’s understanding and incorporation of interrelation of new industries has led to his most accomplished and highly valued work- Disneyland (Kirkman).

Walt Disney’s greatest accomplishment and strategy was not inventing the Disney character Mickey Mouse, but his ability to create synergies across businesses to reinvent the wheel. According to researcher Michael Porter, there are three tests that determine Disney’s successful diversification. These three tests are the attractiveness test, the cost-of-entry test, and the better-off test. First, to validate Disney’s attractiveness test, the amusement park industry was not a thriving business at the time because it had high entry barriers and fixed costs. Amusement parks were at a rate of decline and were less amusing to the public. Disney’s “theme” park was unfamiliar to people and had a unique featured concept, which was also used as a differentiation strategy. Second, to validate the cost-of-entry test, although Disney had high fixed costs or high risk, it had perceived that their expected profits would exceptionally exceed these costs by having above-average returns. This proved to be true as the years progressed, and is validated due to the tremendous success of the Disneyland today. Third, to validate the better-off test, Disney made its efforts to diversify itself through movies, which it had helped built its brand momentum through consumer goods, music, television shows, and then the Disney theme parks (Kirkman).

Some of the Disney’s competitive advantages or strategic competitiveness were superior control and leadership. These considered business-level strategies were imperative to overseeing the growth and expansion of the company. Firstly, for control, the company had learned a valuable lesson due to the early loss one of its popular characters. Disney’s loss was having had lost its rights to “Oswald, the Lucky Rabbit to Universal Studios, in which it is to be considered as one of Disney’s competitive rivalries. (Oswald & Analysis of WD). This led Disney to enforce full control of its Disney characters as much as possible, and to do this, Disney had controlled all of its operations from creator, to supplier, and to distributor. These are examples of the company’s primary activities. Furthermore, Disney also gained full control of its Disneyland operations, where it had enforced strict employee rules and regulations to ensure order, proper flow, and organization. In addition, the Disney company had purchased back all of the park’s equity to prevent any obstacles that might occur and/or hinder its goal(s), objective(s), or future project(s)/development(s). Secondly, for leadership, the company was guided and directed by Walt Disney himself, the founder. In addition to Walt Disney’s contribution to the early success of Disney, Michael Eisner had taken the leadership role in 1984. Although he had admired Walt Disney’s leadership and success with the company, Eisner took his own initiative to create his own vision(s) and

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objectives to further developments and projects. He had contributed to the creation of the Disney Store, Euro Disneyland, Disney’s first broadcasting outlet known as KHJ-TV, the establishment of extensive television presence, and increased films being released from 2 to a 15-18 films annually. Furthermore, Eisner helped the company create three business units, which were studios, consumer goods, and attractions. These units enabled the company to incorporate synergies between its businesses, which allowed the company to have its continued success as we see today (Kirkman).

The Walt Disney Company was the ultimate rolling ball for advertising, where it had the momentum to constantly evolve into different business segments that catered to children and families on its superior services and products. The magic of Walt Disney was his everlasting achievement of creating synergies between different businesses, which led to diversification, which then led creating shareholder value (Kirkman).

CORPORATE DNA ANALYSIS“Disney creates synergies between diverse businesses, creating diversification

and value.”

INDUSTRY ANALYSIS

The Walt Disney Corporation is in the Entertainment-Diversified industry. This industry makes up companies that are involved in music, television and publishing. Some of the popular, well-known companies include Warner Brother’s, Motown Records, Universal Studios Home Entertainment, Time Warner, Sony Pictures Home Entertainment and Capitol Records, making up the Entertainment-Diversified industry. This specific industry is part of the service industry, which includes areas like major airlines, broadcasting, marketing services, and sporting activities (Yahoo Finance).

When discussing a specific industry, it is important to understand various aspects of the industry environment, most of these will be discussed. In this industry analysis, a lot of the Entertainment-Diversified industry will be discussed and a portion of the service industry, which the Entertainment-Diversified industry is in, will be included. This analysis will also go into some depth with specific information on Walt Disney World in Florida. First the industry size, including some financial information will be discussed. Then the analysis will go into the actual geographic area for this industry. Products/services that are available within this industry will follow the geographic area. Then supplier’s power in this industry, as well as their part in The Disney Corporation, will be discussed. Next the industry, and again, as well as The Disney Corporation’s buyer’s power will be explained. It is important to know what customers to target within an industry, as well as a company, this will follow buyer’s power. As discussed earlier in the paper, some company information will be talked about, relating The Disney Corporation to the Entertainment-Diversified industry. The Disney Corporation’s direct competitors within this industry, as well as Walt Disney World’s competitors, will then be discussed in depth in this analysis. Finally, the industry analysis will conclude with new market entrants.

INDUSTRY SIZE

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The service industry is quite large and has the ability to reach many customers every day, bringing in billions of dollars. The Entertainment-Diversified industry has a total market capitalization of 150.8 billion dollars, where the overall market capitalization for all service industries is 2547.1 billion dollars (Yahoo Finance). Within the Entertainment-Diversified industry, The Walt Disney Corporation has a market capitalization of 65.57 billion dollars. Market capitalization is a way to measure a corporation’s size. These numbers show that the Entertainment-Diversified industry is about 6% of the service industry as a whole. The Walt Disney Corporation however, is about 43% of the Entertainment-Diversified industry. Within this industry, fourteen companies are public with the remaining 183 companies being private or foreign.

The Entertainment-Diversified industry has an average market capitalization of 12.63 billion dollars and an average cash amount of 2.81 billion dollars (Y Charts). The leading company in market capitalization is The Walt Disney Company, 65.1 billion dollars while the company with the lowest market capitalization is Stereo Vision, 1.5 million dollars (Yahoo Finance). The industry’s average revenue growth and average profit margin however are negative percentages. The average revenue growth for the industry is -7.59% and the average profit margin is -1.72% (Y Charts). With these negative percentages of growth, the Entertainment-Diversified industry is showing no growth from the companies in it. Even though many companies are doing well financially, it is important to see some growth from the companies making up this industry.

GEOGRAPHICAL AREAThe Entertainment-Diversified industry has the potential to reach customers

locally, regionally, nationally, and globally. Because the industry is made up of companies that are responsible for television networks, movies, music, and even parks and resorts, there are a lot of people targeted by this industry in many different areas. The Walt Disney Corporation has a similar geographic area to cover, however, first the industry as a whole will be discussed then The Walt Disney Corporation will be discussed, following a more in-depth discussion on Walt Disney World’s geographic areas.

With companies like CBS and The Walt Disney Corporation’s ABC networks, the Entertainment-Diversified industry can reach customers regionally. These two network stations provide local news for various regions nationwide. For example, ABC in the San Francisco Bay Area reaches customers from San Jose to Richmond and San Francisco to Livermore. The news station covers local news as well as national news and global news (ABC Local Website). CBS and ABC also reaches customer nationally with their network shows consisting of daytime, primetime, and late night shows. Although each station is based on whatever region they are in, they still play the same television shows throughout the nation. The CBS network has the popular shows The Early Show, The Young and the Restless, Survivor and the CSI series (CBS Website), while ABC’s popular shows include Good Morning America, All My Children, The Bachelor, Grey’s Anatomy, 2020, and Jimmy Kimmel Live (ABC Website). Besides reaching customers just in the United States, these two networks have the potential to reach customers in other countries because their network shows can be viewed online. Although countries outside of the United States are probably not the intended customers, these countries can be

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reached due to Internet capabilities. These two networks help the Entertainment-Diversified industry two specific areas and one that might not have been intentional.

Within the Entertainment-Diversified industry there are many companies who are involved in making movies. Most movies that are made in the United States end up reaching global audiences if the film is popular and gives people in other countries the opportunity to relate to the film by making it available outside of just the United States. The Walt Disney Corporation has various theme parks throughout the world. The two in the United States, Disneyland in California and Walt Disney World in Florida, target people across the nation. With the two parks being placed on the west and east coast, there are opportunities for people in the United States to visit one park or the other. Both parks attract people from outside of the United States. Because the corporation has constructed three other parks outside of the country, there are more chances of reaching other country’s markets. Due to this strategic action, The Walt Disney Corporation’s parks and resorts are geographically located all over the world. PRODUCT

Within the Entertainment-Diversified industry, most companies are providing a service to its customers. In some cases however, a product can become available as a result of the service. This section will talk about the industry as a whole and what it has to offer its customers, and then there will be some information on what Walt Disney World has to offer to the guests who visit its park.

Being a service-based industry does not leave a lot of room for actual physical products. When companies like Warner Brothers make a movie, their initial goal is to get people to go and see the movie that they are creating. Eventually the movie will come out on video, giving customers the ability to actually purchase the movie so they can watch it whenever they want. Initially the goal for a company making a movie is to draw in customers and make them want to see the movie they are creating. Then they need to please the customers who are viewing the movie. Finally they want the customer to leave the theater wanting to see the movie again and later make a purchase in buying the movie. The overall goal when it comes to movies is to satisfy the customer’s need of wanting a good form of entertainment that is not too expensive.

For those companies in the Entertainment-Diversified industry who are involved in music have similarities to that of the movie industry, but almost reversed. The first part of the music industry is getting a performer recognized, mostly by getting them on the radio. Then a need is created. People want to buy a tangible good, which would be the performer’s CD. From there this area of the industry becomes satisfying more intangible service needs. The most common service would be a concert, where customers can go and physically see the performer, but they would not leave the concert with a tangible good.

Most of this industry involves the creation and production of movies, film, and music. All of these areas do have a tangible product that can be made available for customers, but the overall goal is to provide a good service for these customers. Most people do not want to pay money to go see a movie or concert and leave unsatisfied, and neither do the companies who made these forms of entertainment possible. There is one are that makes up this industry that is different from these methods of providing entertainment to customers and Walt Disney World can offer that.

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Walt Disney World offers a much different form of entertainment for customers. They physically get to take part in the entertainment process and Disney’s park. Riding a rollercoaster, playing games, and meeting characters from Disney movies is all part of what customers get when they visit Walt Disney World. This is one of the few places where you can be happy and have fun the whole time you are there. Obviously you can purchase products as a memento of your visit to Walt Disney World, but what is actually being sold here, is the experience. When people visit Walt Disney World, they are not paying for a physical product, when they pay for a ticket to the park they want to walk away feeling happy and entertained by rides, attractions, and shows. According to The Walt Disney Corporation’s web page, they talked of Walt Disney and said, “His worldwide popularity is based upon the ideas his name represents: imagination, optimism and self-made success in the American tradition.” (Disney Website), this can also relate to Walt Disney World as well.

SUPPLIER’S POWERThe Entertainment-Diversified industry is a large industry that uses many

suppliers to meet the needs of each company and the industry as a whole. Suppliers for this industry could include companies who produce equipment for movies and television, set builders, companies who print magazines, and companies who fabricate the parts used for making rides at Walt Disney World. This industry has so many uses for suppliers it is hard to discuss all of them, so mainly The Walt Disney Corporation’s use for suppliers, like the Entertainment-Diversified industry, is quite large and very important. The Walt Disney Corporation has contracts with a large number of suppliers that are not only local and regional, but also global (Disney Website). Because The Walt Disney Corporation is so large, ranging from producing movies and television shows to its parks and resorts, it is important that the corporation gains positive supplier ties and maintains these ties.

Suppliers have the potential to cause problems for companies or they could help make a company strong. Dominating suppliers have control when there are no other options for a company to use, whether that are based on pricing or lack of competitors. In the Entertainment-Diversified industry, there are companies who supply physical goods such as film for movies, equipment for a concert, food for a theme park, or cameras for a television show. Within this industry there are also companies who supply services such as marketing and financial services, or parking attendants for a concert.

When deciding whom The Walt Disney Corporation would consider as a potential supplier they have a list of areas that need to be met. Some of these areas of consideration include the supplier’s pricing of products, the quality of what is being offered, if the corporation can effectively communicate with the supplier, the supplier’s financial stability, making sure the supplier is environmentally ethical, and finally if they supplier will follow The Walt Disney Corporation’s International Labor Standard and Disney’s Code of Conduct for Suppliers (Disney Website). The Walt Disney Corporation wants to make sure they maintain their positive image, so deciding on suppliers is important to the corporation. If a supplier affiliated with the corporation engages in unethical practices, for example, that would reflect on The Walt Disney Corporation due to their popular name and reputation.

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Diversity plays an important factor as well when The Walt Disney Corporation looks for suppliers. The corporation has a group of professionals who make sure they use suppliers who are minorities or women owned companies. When these professionals look for diverse suppliers they reach out to suppliers by attending trade shows and advocacy groups. They also engage in due-diligence through visitations to the company, interview, or possible research completed by another party. The potential supplier must also be qualified according to The Walt Disney Corporation by meeting competencies and capacity. Finally the needs of the supplier as well as The Walt Disney Corporation’s stakeholders must be met through the supplier partnership. (Disney Website)

BUYER’S POWERLike every industry, the Entertainment-Diversified industry relies on its buyers to

keep the companies within it alive. There are many events that could effect a buyer’s decision to purchase from a specific company or industry. External threats such as competitors taking competitive action to improve their market position or economic factors can take place could affect a buyer’s purchasing habits. A way an industry could prepare for this is by scanning to notice any early signals of change in the industry’s environment.

Over the past recent years, the United States economy, as well as the world’s economy, has taken quite a hit. This makes family vacations to theme parks like Walt Disney World difficult afford. Going to see the newest Disney animated film becomes a $50 weekend activity for a family of four. The Entertainment-Diversified industry mostly seems like it could somewhat withstand a damaged economy because most of the industry consists of television, music, and film. For The Walt Disney Corporation it is a different story when it comes to their theme parks and hotels.

Walt Disney World has been a main attraction for people who want to see their children’s faces light up when they see Mickey Mouse or for adults who want to relive their vacations to the “happiest place on earth”. When economic restraints imposed a threat to the theme park, as well as the other Disney parks, The Walt Disney Corporation could have just taken the hard hit and tried to keep moving. This corporation did not do that, they thought of the buyer and what they needed. In order to keep people coming to Walt Disney World and keep them staying in their hotels, they offered promotions such as paying for four nights and getting to stay for seven (The Conference Board Review). This form of incentive offered the Disney quality and service at a reasonable cost based on the effects of the current economy.

TARGET CUSTOMERSTarget customers for the Entertainment-Diversified industry are people who want

to find a means of entertainment through different media outlets. These customers can range in many different aspects. The basis for consumer segmentation for this industry can be based on things like income, cultural differences, lifestyle, and consumption patterns. The industry would most likely target customers with a high disposable income rather than those who live paycheck to paycheck. When targeting international customers for movies and music, it is important to recognize other countries cultural differences and how a person’s cultural or religious beliefs may cause them not to see a certain movie or buy a certain CD. Companies within this industry would obviously

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want to target people who are capable of a lifestyle involving entertainment, such as having free time, money and the desire to go see a concert or visit a park or resort. Finally it would be a good idea to focus on people’s consumption patterns and target these different groups based on how frequently or not they engage in entertainment activities. It would be important to try to draw in new customers, but also maintain a strong relationship with those who are frequent customers. Through market segmentation, you can target customers to a specific area of the Entertainment-Diversified industry.

The Walt Disney Corporation targets different customers based on the different areas of the corporation. Trying to come up with a target market for the whole corporation would be quite difficult since the corporation is broken up into four categories. Essentially, the corporation could group its target market together because most of its customers probably overlap in some of these areas, however it would be smart to try and target different customers for each area of the corporation.

The target customer for The Walt Disney Studios area of the corporation would consist of targeting moviegoers, and those who listen to music. Overall this would seem to be families, children enjoy Disney’s characters and their parents are the ones who can actually pay to see a movie or buy a CD. The Walt Disney Studios does a good job of making their movies not only kid friendly and entertaining, but they take into consideration that there is most likely adults who will be watching their films as well. Disney’s parks and resorts also cater to families. Many families around the world visit the various Disney parks for their family vacations. Again, like with The Walt Disney Studios, adults can afford to pay to go to these parks and by visiting a Disney park, they can satisfy their children and in a way be a kid again. Disney parks are not just visited by families with young children, but also individuals and families whose members are all grown, but like the memories of visiting the popular parks. By offering Disney resorts and the Disney Cruise Lines, the corporation can target different customers or returning customers who want something new.

Disney’s Consumer Products mostly target children and their parents, like The Walt Disney Studios and Disney parks and resorts do. Most children have favorite characters or films, and through the Disney Store and their online site, parents can purchase a wide range of products. This area and its customers are tied into the two previous areas of the corporation. If a family goes to see a Disney movie, there is a good chance that if the same family is in the Disney Store and sees the main character from the film they just saw on a t-shirt, the child will probably want the shirt, which in turn the parent may purchase that shirt.

Finally, Walt Disney’s Media Networks provide shows for a wide range of customers. This is the one area of the corporation that may not fit together with the other three areas. Mostly Disney’s Media Networks target those who watch television. This is a wide range of people especially because ABC, the main channel that is run by the corporation, provides various shows that can please almost anyone. Just ABC alone can target different groups, those who are interested in primetime drama shows, or people who watch Live with Regis and Kelly every morning. And because ABC can be seen with basic cable, the corporation is able to gain a large audience and a differentiated group of target customers.

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With such a large customer following, it is very important that The Walt Disney Corporation focus on each area of the corporation so they can meet the needs of every customer. It would not make sense to try to market to single adult male for going to a Disney children’s movie. However, they could market a television show or sports game that would be on ABC. Meeting customer’s needs is a key factor in gaining customers and then gaining their brand loyalty.

COMPANY INFORMATIONThe Walt Disney Corporation is comprised of The Walt Disney Studios, its parks

and resorts, consumer products, and media networks (Disney Website). These four aspects have been able to provide entertainment to consumers throughout various media channels. All of these outlets fit into the Entertainment-Diversified industry in various ways. Each of these areas will be discussed briefly, and then described why they belong in this specific industry.

Walt Disney Studios is how The Walt Disney Corporation began. Walt Disney created the corporation’s first animated character, Mickey Mouse, and from there, the first animated film, Snow White and the Seven Dwarfs, was made. Walt Disney Studios includes Walt Disney Pictures, Touchstone Pictures and Miramax Films (Disney Website). These various film-producing companies are responsible for the creation of animated films such as Cinderella, Finding Nemo, Toy Story and Pirates of the Caribbean. Another area of Walt Disney Studios is Walt Disney Studios Home Entertainment. Through this outlet, customers are able to rent or purchase the Disney movies they see in the movie theater. Disney Theatrical Productions creates various musicals on Broadway and shows like Disney on Ice, where customers can watch their favorite characters in a show on a stage of ice. Finally the last aspect making up Walt Disney Studios are its three record labels, Walt Disney Records, Hollywood Records, and Lyric Street Records. These record labels make up the soundtracks from popular Disney films.

Walt Disney Studios can compete with other companies such as Warner Brothers and Sony Pictures, and hold their own against them. Walt Disney Studios brings something other than just films to the table. They bring creation and updated forms of technology to the big screen. When Walt Disney Studios acquired Pixar, the corporation was able to be one of the first to debut a new form of animation, making the Disney name stand out from others.

Disney’s parks and resorts are comprised of its theme parks and hotels across the globe including cruise ships and Disney clubs such as Disney Vacation Club, and Adventures by Disney (Disney Website). Most famous are Disney’s five theme parks in Anaheim, California; Lake Buena Vista, Florida; Tokyo, Japan; Paris, France; and Hong Kong, China. These global attractions make customers see the value of the corporation especially with “cast members” dedicated to customer service. These parks are said to be “Where Dreams Come True”. Disney’s Cruise Line gives their customers the chance to visit various locations around the world while still experiencing the Disney park feeling. The corporation’s Vacation Club, offers customers to become a member, then having the option of staying in Disney resorts, again receiving the excellent customer service from employees, without the theme park setting. Finally, Adventures by Disney provides

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worldwide travel including park visits and resort stays in the United States, France, and China.

The Walt Disney parks and resorts are one of a kind in the Entertainment-Diversified industry. There is no other park or resort similar to that of Walt Disney World within this industry. These parks and resorts make The Walt Disney Corporation different from most of the other companies by providing an experience to the corporation’s loyal customers. Because the corporation has made this experience available to people world wide, this sets the corporation ahead of the rest when it comes to pleasing its customers. No matter which park you visit, you will be assured to be greeted by every employee, or like Disney calls them “cast members”, and made sure that you have the best possible experience while in the park.

On a daily basis, it is likely you will see some kind of product with a popular Disney character on it. Disney Consumer Products helps make this possible. Disney Toys, Disney Apparel, Accessories and Footwear, Disney Food, Health and Beauty, Disney Home, and Disney Stationary are lines that make up Disney Consumer Products (Disney Website). The corporation also has Disney Publishing Worldwide, which publishes many books and magazines staring Disney characters. These publications are made available in 75 countries around the world (Disney Website). This is a great way to extend children’s favorite characters past the movies they are in, giving the customer an incentive to follow these characters further than just a movie. Finally if someone wants to purchase any of these Disney products, they can shop at The Disney Store or on disneystore.com (Disney Website). This chain has locations throughout the United States and in Europe. The Disney Store’s actual physical stores carry products but the selection of items is limited. By have the disneystore.com, customers are able to find many more items and purchase them online. The website allows the customer to shop by category, by character, and even create your own products (Disney Store Website).

Although most of The Walt Disney Corporation is based on providing services to its customers, it is nice for these people to actually be able to purchase an item or items from Disney. By selling apparel, toys, books, etc., the corporation again can stand out from the other companies in this industry.

The final area making up this large corporation is Media Networks. This area of the corporation is comprised of Disney-ABC Television Group, ESPN Inc., Walt Disney Internet Group, and ABC owned television stations (Disney Website). Within the Disney-ABC Television Group and ABC owned television stations, the company’s shows can be seen by millions of people. ESPN Inc., not only provides sports programming in the United States, but also internationally. ESPN Inc. also provides outlets through its radio station and magazine.

Within media networks, Disney can satisfy the needs of people who might not make it to one of their parks or resorts, or who might not be interested in seeing an animated movie. This is a good way for The Walt Disney Corporation to reach more people through different forms of media, and not solely base its customers on families and children.

The Walt Disney Corporation could most likely stand by itself and still produce high amounts of revenue and be a well-known corporation. However, the company is smart and knows the power of joining with other companies to gain an advantage of other companies within its industry.

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The Walt Disney Corporation has a synergistic strategic alliance with Kodak Films. In 2002 the two corporations signed a multi-year corporate alliance agreement. This means that Kodak is the official image sponsor of three of The Walt Disney Corporation’s parks, Disneyland, Walt Disney World, and Disneyland Resort Paris as well as its resorts and cruise lines (Business Wire). By doing this, both corporations can share resources and marketing capabilities. This action also means there would be an association with each other’s corporations.

COMPETITORS It is important to know whom your company is competing against regardless of

what industry you are in. A company needs to have competitor intelligence in order to understand the companies they are going up against. One way a company can gain competitor intelligence is to create a competitor analysis to compare things such as future objectives, current strategies, assumptions, and capabilities to their competitors. Also, it is important to realize where your industry stands in comparison to the industries it competes against. In this section there will be some discussion on the service industry and who they compete with, narrowing the scope down to the Entertainment-Diversified industry and who this industry competes with, who The Walt Disney Corporation is in competition with, and finally who Walt Disney’s direct competition is.

The service industry is made up of a wide range of industries whose main goal is satisfying customer’s needs through intangible means. Services are in competition with the large industries like healthcare. There is competition between these two areas because both are providing a means of intangible methods of satisfying customer needs. Although healthcare is focused directly at customer’s well-being and physical or mental health, the overall goal is to take care of its customers and provide them with excellent customer service. In a way, this is what the service industry does minus dealing with people’s health. Both industries want to please their customers and satisfy their needs through intangible means.

The Entertainment-Diversified industry is a service industry given that most of the companies are providing a wide range of intangible ways to satisfy needs of consumers through entertainment. Although The Walt Disney Corporation competes with larger corporations such as Time Warner and CBS in their specific industry, being part of the service industry may put them into competition with other service companies. Some of these could include apparel stores, general entertainment, and resorts and casinos (Yahoo Finance). The Walt Disney Corporation’s Disney Store could compete with other apparel stores that sell children’s clothes. Some competitors under the general entertainment industry include Carnival Cruise Lines, Six Flags Inc., and the corporation’s own Walt Disney Parks and Resorts (Yahoo Finance). Resorts and casinos have companies like Radisson Hotels and Resorts, which could compete with Disney’s hotels and resorts.

The Walt Disney Corporation leads in various areas making up the Entertainment-Diversified industry. Some of these categories include market capitalization and total revenue (Yahoo Finance), discussed earlier in the industry analysis. Although the company brings in a large amount of revenue, they are lagging in other areas of this industry such as net profit margin, long-term growth rate (5 years), and net profit margin.

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The Walt Disney Corporation’s top competitor, Time Warner, is not too far behind in the leading categories for this corporation.

Time Warner may be The Disney Corporations closest competitor. On their company website, Time Warner states the company is “a global leader in media and entertainment” (Time Warner Website). This corporation was founded in 1985 and is involved in publishing, television, and movie aspects. Companies that make up Time Warner include, Time Inc., Home Box Office (HBO), Turner Broadcasting, and Warner Bros. Entertainment. Time Inc. is involved in publishing and the have over 115 different magazine titles consisting of the popular Time, People, and Sports Illustrated. Home Box Office is made up of the top two premium pay television names, HBO and Cinemax. Turner Broadcasting focuses on cable television channels. Some of its well name channels are CNN, TNT, TBS, and The Cartoon Network. Finally the last most common company of the corporation is Warner Bros. Entertainment. This company is made up of Warner Bros. television, Warner Bros. animations, Warner Bros. studio facilities and New Line Cinema (Time Warner Website).

Time Warner is The Walt Disney Corporation’s closest competitor financially. Time Warner has a market cap of 35.06 billion dollars and in 2009, brought in 26.11 billion dollars in revenue. The Walt Disney Corporation and Time Warner are in competition because both companies are driven by similar motives. They both want to provide entertainment through similar channels like television and movies. The Walt Disney Corporation’s network channel ABC would be in competition with Time Warner’s CNN, TNT, TBS, and Cartoon Network. ABC and CNN would compete for local, nationwide, and global news. Because CNN is dedicated directly to news, they may have an advantage to those who are interested only in what is going on around the nation and world. ABC focuses more on local news based on different regions of the nation. The network’s news coverage is based more on those who want a quick update on what is going on around them. TNT and TBS offer television shows and movies, which ABC offers as well. Cartoon Network is one of the competitors for ABC or the cable networks, ABC Family and Disney Channel. These three networks would compete for children’s attention of cartoon shows mostly shown in the mornings throughout the week. Finally, both corporations make various films that could potentially target the same customers.

CBS Corporation is another competitor to The Walt Disney Corporation however; they are in the Broadcasting-TV industry. The CBS Corporation was founded in 1986 and covers various areas such as news, sports, entertainment, radio, and now film. CBS Entertainment consists of television show categories; primetime comedy and drama (Two and a Half Men, NCIS), late night (David Letterman), reality shows (Survivor), and game shows (CBS Corporation Website). CBS News includes the television shows 60 Minutes and The Early Show (CBS Corporation Website). CBS Sports televises National Football League (NFL) games as well as the championship at the end of the season. Other popular games include NCAA basketball games and two popular golf tournaments (The Masters and The PGA Championship) (CBS Corporation Website). The CW has popular television shows that target women between the ages of 18 and 34, showing programs like America’s Next Top Model, Gossip Girl and 90210 (CBS Corporation Website). CBS Radio consists of 130 stations that include news, talk, sports, and music. These stations can be heard on basic radio airwaves as well as online (CBS Corporation

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Website). As of 2007, CBS Corporation added another area to this dominating corporation, film.

CBS competes with The Walt Disney Corporation on the network television level. Both company’s networks are part of basic cable, meaning they are able to reach a large number of people. Both network channels compete in aspects including news, sports, daytime dramas, primetime dramas and comedies, and late night shows. CBS has a channel that runs weekly primetime shows catering to a specific age group of women. ABC Family has begun to air shows catering to teenagers and young adults such as Greek, The Secret Life of the American Teenager, and the new show Pretty Little Liars (ABC Family Website). These shows compete with The CW’s Gossip Girl and 90210. CBS and The Walt Disney Corporation both have radio stations however, the companies target different audiences, not putting them directly in competition with each other. The Walt Disney Corporation has made a large number of films and is reputable in this area. Since CBS has just found its way into the film industry and does not have strong backing yet, there is no real competition here.

Because The Walt Disney Corporation stretches over a wide range of areas such as television, movie, radio, consumer products, and parks and resorts, it is lumped into the Entertainment-Diversified industry. Later in this paper the challenges Walt Disney World is facing will be discussed, so the theme park’s competitors will be discussed briefly.

Universal Studios Orlando is Walt Disney World’s top competitor primarily due to the fact that they are both located so closely and offers similar services to customers. Universal Studios Orlando consists of two theme parks, Universal Studios and Universal’s Islands of Adventure, City Walk, and on-site hotels (Universal Studios Orlando Website). Universal Studios environment is based on Universal Pictures movies, similarly to that of Walt Disney World’s environment being based from Walt Disney films. Universal Pictures that are themed at Universal Studios include rides based on Back to the Future, Jaws, and Jurassic Park (Yahoo Finance) where Walt Disney films that inspired Walt Disney World rides include Pirates of the Caribbean, Dumbo, and Alice and Wonderland. Both Universal Studios and Walt Disney World cater to families and anyone who wants to express their inner child.

A second competitor would be Busch Gardens in Tampa Bay. Busch Gardens offers rides, animal attractions, shows, shopping, and dining (Busch Gardens Website). This park would be most closely to competing to Walt Disney World’s Animal Kingdom. Both offer experiences with animals as well as taking part in a safari. Busch Gardens would not compete with Walt Disney World as a whole because Busch Gardens is targeting those who are interested in seeing and learning about animals while set in a theme park atmosphere.

A final Walt Disney World competitor is Six Flags in Atlanta. There is the general Six Flag theme park as well as Six Flags White Water making up this location. This theme park is considered a competitor because they provide family, kid and thrill rides, entertainment, and overall their name is known around the country with eighteen other parks (Six Flags Website). This Six Flags is location is in Georgia however; this is the closest Six Flags to Walt Disney World. There is competition based on both parks basing attractions and rides from children’s movies and various children’s brands. Six

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Flags uses Looney Tunes and Thomas the Tank Engine characters (Six Flags Website) while Walt Disney World uses its popular Disney characters throughout the park.

The Walt Disney Corporation as a whole, compete with many companies. As long as the corporation can recognize these competitors and differentiate themselves from them, the corporation can stay ahead of the competition. It is important for The Walt Disney Corporation to analyze each competitor that has been discussed as well as those who are in other countries, competing against parks and resorts in France, Japan, and China. While learning about these competitors, the corporation has to take into account the various cultures and values because they will not be the same as that of the United States, but are important in understanding other country’s competitors.

NEW MARKET ENTRANTSIf a new company wanted to enter the Entertainment-Diversified industry, it

would be a difficult task. There would be barriers to entry because The Walt Disney Corporation and Time Warner are such large players in the industry, they have a fair amount of it dominated and they have been in the industry for a long period of time. In comparison to the corporations in this industry, The Walt Disney Corporation stands out. Their company is comprised of a wide range of areas that make up the industry such as television, film, and consumer products however; The Walt Disney Corporation has something the others do not, parks and hotels. The global theme parks and hotels generate a lot of revenue that help make the Disney name stand out.

A new company trying to enter this industry would need to have a differentiation strategy like The Walt Disney Corporation has. If a new company could find a way to gain customers that value something different that fit into this industry that the other competitors did not offer, they would gain an advantage.

Another way a new company can get past any barriers to entry would be through acquiring a company that may be established already, but not competing highly with the industry leaders. If a company wants to enter the Entertainment-Diversified industry, they could take over an existing company and use its company’s information or processes to make the acquired company different and stand out.

Over the recent years, there have been rumors stating that Six Flags was going to enter Florida, which in turn could pose as a possible new entrant and compete with Walt Disney World. Various rumors from 2008 were spread that Six Flags was going to take a large piece of property, known as the USA Flea Market in Florida and turn it into a new theme park (St. Petersburg Times). If Six Flags was or is considering this idea, they should go over the core competencies needed to satisfy customer needs that Walt Disney World is not already doing.

The Entertainment-Diversified industry makes up a good portion of the service industry as a whole. Without this industry, people would lose many of the methods of entertainment. People would not be able to view network channels providing news and television shows. Many large movie corporations would not produce movies for the big screen as well as people’s small screens. Millions would not hear music. Millions would not visit Parks and resorts, like at Walt Disney World. In this industry analysis different areas of the service industry as a whole were discussed, going into deeper detail about the Entertainment-Diversified industry, and then giving some information on The Walt Disney Corporation and Walt Disney World. First the

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industry size was discussed along with the geographic size of the industry. Then the products, or services where described. Because The Walt Disney Corporation is a in the service industry, that is the majority of what the product part of the analysis described. Supplier’s power and buyer’s power followed the product section. Target customers are important to an industry and a company needs to understand whom they are trying to sell their product or service to. Company information was re-discussed and related to the industry The Walt Disney Corporation is in. Competitors can be dangerous to a company who is struggling, but to a company like The Walt Disney Corporation, they can be beneficial. Either way, a company needs to understand who its competitors are and how to be greater than them. The last part of this industry analysis discussed how it could be difficult for a new entrant to come into the Entertainment-Diversified industry. With all of this information including that from the background of the company and discussing the business and corporate level strategy, a Company DNA analysis can be formed.

COMPANY CHALLENGES

The challenges that The Walt Disney Company faces have been separated by the environments which these individual issues originate. The Walt Disney Company is exposed to challenges on many fronts: the general environment, the industry environment, and in the internal environment. The general environment consists of the demographic segment, economic segment, sociocultural segment, political and legal segment, technological segment, and the global segment. The industry environment also poses some challenges to Disney, in the form of consistent rivalries with competitors and their threat of providing substitute products. Additional challenges that Disney faces come from the internal organization in the form of integration difficulties with its acquisitions. The challenges that lie ahead in the future for The Walt Disney Company require strategic and tactical attention to maintain the company’s position. This will ensure continued future growth for the company stakeholders.

CHALLENGES IN THE GENERAL ENVIRONMNET DEMOGRAPHIC SEGMENT CHALLENGE

The Walt Disney Company is continuously trying to satisfy its audience, whether it is in the parks or tuning into Disney programming around the world. Disney is especially interested in what kids care about, since children are the core demographic target market for every one of the business sub-categories of the firm. As a result of Disney being a global company and recognizable to the vast majority of the world’s population, with a large emphasis on the world’s children, this core group consists of a wide variety of ethnicities, geographic locations, and income distributions. Along with these children are the revenue-generating parents, the ones who hold the purse strings, and have the potential to impact Disney’s success. Through Disney providing value to the children, the parents will be more willing to help generate income for Disney. A challenge for Disney with this market segment of children, currently Generation Z (children born between 1995-2010), is this generation’s expectations to use highly

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sophisticated media and the “on demand” availability provided by an Internet and computer driven society. (NYTimes) Furthermore, shifts from television entertainment to Internet media will necessitate that Disney shift according to these technological demands of this market segment.

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A subsidiary of Disney, ABC.com has already begun streaming select television shows on its Internet media channel. By leveraging the capabilities of ABC.com’s information technology, Disney can develop its own media portal to channel on-demand content to fulfill this market need. Since ABC.com is directly related to Disney, no merger or acquisition is necessary to provide Disney with the technology or experience to build a web-accessible media-streaming portal. Further leveraging of the strategy that ABC.com uses, Disney could utilize the online media portal to advertise merchandise and drive traffic straight into the online shopping site. By continuing to fulfill the needs of this Generation Z market segment, Disney can position itself to stay ahead of other competitors in this arena, namely Cartoon Network (TimeWarner) and Nickelodeon (Viacom). While fulfilling the expectations of this segment, Disney stands to also capitalize on the revenue-generating opportunities that lie within providing and delivering content from its own web page.

ECONOMIC SEGMENT CHALLENGE

The current economic downturn poses significant challenges to the Walt Disney Company on many fronts. The earnings results for the fiscal year 2009 reports that earnings per share were $1.82, down from $2.28 for earnings per share in fiscal year 2008 (Disney Earnings Report). This represents a decrease in earnings per share of 20%. The business segments that were most affected by the economic issues of 2009 were the studio entertainment and the parks/recreation segments. The studio entertainment division experienced the worst results of all of Disney’s business segments, ending the 2009 fiscal year with an 84% drop in operating income. For the parks and recreation division in particular, the recession has played a powerful role in affecting the revenues and profits in this segment of Disney’s business. A major contributing factor to this was the impact the recession has on disposable incomes, which are the lifeblood of all of Disney’s Parks and Recreation businesses. A residual effect of these constraints on disposable spending was less attendance/bookings at Disney parks and resorts.

The 2009 fiscal year results show that operating income decreased 25% for this the Parks and Recreation segment. Attributed to this drop in operating income for P&R are: decreased guest spending at parks (ticket sales), decreased hotel bookings, and decreased merchandise spending. While these decreases in income pose economical challenges for Disney, the recession is negatively affecting all industries, especially those in the amusement/theme park industry. Even in light of all of these dismal performance results, Disney is optimistic when looking to the future of the company through the recession. Disney President and CEO Robert A. Iger reveal his optimism when discussing

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Disney’s 2009 financial results. “Although last year was a difficult one due in part to the weak global economy, I'm pleased with the way our businesses have responded to the downturn.  We've stayed focused on our long-term strategy, efficiently managed costs, and continued to invest in initiatives to deliver future growth. We also have adapted our organization to respond to and take advantage of the changes taking place in our businesses and will continue to do so as we position Disney to thrive for years to come." (ABC Money)

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The recession has varying negative impacts all businesses; some industry segments are more affected than others. Hardest hit for Disney are the theater box-office sales and the struggling attendance/revenue numbers at their parks. Since recessions have a direct impact on disposable incomes, Disney takes on increased risk in these markets during a recession. As we will see later, Disney is also faced with the challenge of adopting new technology to compete with consumer expectations. In a time of recession, costs for building and updating infrastructure can be below market value. While capital expenditures will further impact the bottom line, Disney’s ability to leverage low-cost building expenses can provide it the opportunity to grow at reduced cost. This strategy will allow them to build during slow times, so that when the economy turns around it will be on the forefront with cutting-edge attractions. The strategy to build, even when profits are decreasing, could allow Disney to capitalize on lower-cost labor that offers better than average quality.

SOCIOCULTURAL SEGMENT CHALLENGE

The variety of businesses and geographic areas that The Walt Disney Company operates in poses a challenge to their sociocultural segments of the business. A global business like Disney’s has a growing number of gender, ethnically, and culturally diverse workers that it must utilize effectively to get optimal productivity. In order to add improved performance with a diverse workforce, successful management of diversity issues is key. For Disney, there are an increasing number of lawsuits stemming from poor management of diversity issues. For example in 2008, Sukhbir Channa, a practicing Sikh and an employee at Walt Disney World, was told to shave by a manager. According to Mr. Channa, his Sikh faith required him to not shave his face and to also wear a turban. When Mr. Channa was told to shave, he refused and was consequently terminated shortly after his not complying to do so. In addition to his own manager requesting that he shave, a hiring manager at Disney reportedly stated directly to Mr. Channa that he “did not fit the Disney image.”(BusinessManagementDaily) While this matter has now been brought to the courts in Florida, where it now waits for trial or settlement, it highlights a challenge that Disney faces with regard to treating its employees without discrimination to their religious beliefs.

Waste generated by Disney is another significant challenge for the sociocultural segment of their business. The greening of business is not just a buzzword for contemporary appeal; it is a necessary strategy for a large company like Disney.

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According to a Corporate Responsibility Report released by Disney, their Parks and Recreation segment accounts for 91% of all of Disney’s greenhouse-gas emissions and 73% of their total electric usage (Orlando Sentinel). With increased scrutiny of carbon-generating companies and monitoring of waste, Disney is faced with the challenge of reducing its carbon footprint while limiting and controlling the impact of any additional costs to the end-consumer of products from these energy hungry segments.

The safety challenges that Walt Disney World faces are a critical challenge for the company. Since a pivotal dependence for Walt Disney World is entertainment coupled with the perceived safety of its attractions, the company must look after the well-being of park guests and employees with great importance and scrutiny. A major safety incident in 2009, a crash between two trains on the monorail system that provides park-wide transportation at Walt Disney World, claimed the life of a park employee (Daily Mail). Although the NTSB has not released a final report, evidence suggests that recession-driven cuts, declining safety standards, and inadequate training were contributing causes to the collision (Daily Disney). While this incident did not cause any great injury to park visitors, it highlights the safety challenges that Disney faces in its operation. Though many parts of Walt Disney World contain established attractions with clearly stated safety requirements, park visitors are very dependent on The Walt Disney Company to look after the safety of its attractions and to ensure the safety of park visitors. The challenge to ensure safety is arguably one of the most important challenges that The Walt Disney Company faces.

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With regard to the religious discrimination lawsuit that Disney is facing, the company must determine if it will comply fully with the Florida Civil Rights Act. According to the FCRA, Title VII says that it is illegal to discriminate based on a person’s religion in hiring, firing, promotion, pay, benefits, and other work conditions (Florida Senate). For Disney, a company who has generated hundreds of millions on the religion-influenced storylines of Pocahontas, Mulan, and Aladdin, their compliance with Florida Civil law will greatly reduce their exposure to risk from discrimination issues. Their attention to worker sensitivity is necessary on the whole corporate level; not only in Florida but also in all areas Disney has operations. For the greening of The Walt Disney Company’s business segments, especially at the Parks and Recreations segment, setting goals and milestones for greenhouse-production reduction and waste reduction would allow Disney to establish it owns goals to meeting the growing environmental need to reduce carbon emissions and waste. Venturing into more sustainable energy use and adopting the environmentally friendly decomposable products could assist Disney in meeting these reduction goals.

Providing complete safety to guests at Disney’s parks is a major challenge, but one that Disney should examine thoroughly and regularly. The monorail incident highlighted multiple areas of concern that Disney should address going forward. Proper maintenance procedures were not in place on the date of the monorail crash, which

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allowed a switching mechanism to permit two trains to share the same track. While the two trains shared the same track, they were operating in opposite directions and consequently collided. Another area of concern was the lack of an operator being present in a control tower, with the operator having taken a lunch break while the backup operator had previously called in sick. The absence of an operator at the control tower allowed the two trains to share the same track and would have been caught had there been adequate staffing at the tower. The last concern was the U.S. Occupational Safety and Health Administration’s finding that the electrician responsible for maintenance on the monorail system on the night of the incident was “over tasked,” due to recession-induced staff cuts (Daily Disney). Disney still faces a legal battle with respect to this incident, but the company can immediately enact changes to ensure that incidents like this do not occur again. Providing all staff with advanced safety training can bolster the current safety standard at Disney. For the most part, Disney is a remarkably safe company to work for and to visit as a customer. Incidents like this are rare, but stand to challenge the image of the business. Safety education and prevention will only stand to increase Disney’s safe image.

POLITICAL AND/OR LEGAL SEGMENT CHALLENGE

The political and legal segment delivers policies and philosophies that firms must carefully analyze. For Disney, this could not be any more obvious when it comes to their interactions with the government of China on its population. In 2009, Disney finalized plans to expand their international operations by opening a new theme park in Shanghai. After Chinese government approval of the plan, there was not an overwhelming outburst of excitement or much fanfare. This was due to the more than 2,000 households, which were slated for demolition to make way for Disney’s $3.5B project theme park (Washington Post). At issue was not the demolition of the residences, but the valuation attached to the structures. Many homeowners do not feel they are being fairly compensated by the Chinese government to surrender their homes. Since Disney is not directly in control of the evictions of homeowners in the Shanghai area, they are at a loss to negotiate with holdout homeowners, who have filed lawsuits to fight for compensation. But the end result is that homeowners are being relocated to make way for Disney’s Shangai theme park. This direct responsibility for displacing these individuals poses a challenge for Disney’s reputation in Shanghai, if not the whole planet. Since Disney also operates a park in Hong Kong, a hit to their reputation could have doubled negative repercussions than if they just operated a single park in the Asian market. While this challenge involves the implied partnership of the Chinese government, Disney can work with the displaced individuals directly to determine a positive result for all parties.

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While the Chinese government should be the primary party to compensating and relocating residents affected by Disney’s Shanghai expansion, Disney itself should be involved in the process to ensure that displaced persons are not exploited or unfairly affected. In the Shanghai expansion, nearly 95% of the residents who were displaced

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were relocated without any major legal issues. The remaining 5% could be provided additional compensation and accommodation, which would help to satisfy their needs and to maintain forward progress for Disney’s international theme park expansion. Project delays, due to pending litigation, would increase the project costs unnecessarily for Disney. At a current cost of $3.5B, additional costs would turn an already costly project into a potential loss leader. Through Disney’s intervention in the negotiations with remaining holdout residents, Disney could positively impact their reputation with the citizens of Shanghai and they would also be moving forward with their expansion strategy and preventing any further delay.  

TECHNOLOGICAL SEGMENT CHALLENGE

The technological changes occurring on a daily basis affect parts of any business. For Disney, technology has been an important player from the founding of the company. Technological diffusion that began with the telephone has transformed into the vast computer networks that exist today. Perpetual innovation continues to provide new information-intensive technologies that quickly replace previous innovations. Disney’s diverse business segments utilize many technologies, and have been a critical underlying tool for the company’s successes. As stated previously for challenges in the demographic segment, shifting from television to Internet-driven media is a challenge that Disney faces in their media networks segment. Disney faces technological challenges in its other businesses as well, particularly parks and resorts, studio entertainment, consumer products, and interactive media. Given the rapid speed of technological changes and of Disney’s current reliance on the use of technology, it is of great importance for Disney to keep pace with current technology. While technology is ever changing, so are the users. As we move through the younger generations, there is an increasing reliance on the use of technology to exist in society. While many boomers still refuse to adopt a cell phone, you will find that a large majority of Generation Z will own cell phones before they enter high school.

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The reliance on and importance of technology to Disney cannot be disputed. Their television shows and motion pictures depend greatly on cutting-edge animation, their parks and resorts utilize technology to wow guests, and their video games leverage the latest gaming systems and their functional capabilities to provide realistic experiences. By maintaining compliance with current technology and exploring new technologies, Disney can continue to exceed the expectations of customers and guests. Findings suggest that early adopters of technology often attain higher market shares and produce increased returns. An example of this, along with Disney’s monitoring and implementation of technology, is shown through their use of biometric finger scanning machines at their parks to better identify guests and to prevent fraud through tickets.

The deployment of the biometric scanning machines took place in 1996, well ahead of the widespread adoption of biometric finger reading technology. In fact, Disney

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was so innovative in the adoption of biometric finger reading technology that the United States Department of Defense contacted Disney to inquire on their utilization of the technology. (Carnegie Foundation) Disney’s findings and input assisted the DoD to help determine the usability of the technology on a massive scale, such as its use at Walt Disney World. By being on the forefront of biometric finger reading technology, Disney has the experience to assist the DoD, which employs over 3M employees on over 30M acres of land US (DoD). One way that Disney could continue to be on the forefront of technology is through the utilization of wireless technology and radio frequency identification (RFID). Use of these two technologies would expand the possibilities for Disney to continue delivering exciting products to its customers. More technology that Disney could leverage is smart phones, which have increased software-processing capabilities and are becoming more widespread in their deployment. In addition, smart phones can connect to the Internet and/or other wireless networks, which Disney could use to provide more interactivity to users and park guests. By using iPhones and Android based phones at their parks, Disney could connect to the estimated 42.7m smart phone users to provide enhanced features for guests (comScore). Further delivery of applications and media-rich content for smart phone users not visiting Disney parks could further expand their market reach.

GLOBAL SEGMENT CHALLENGE

Riding along with Disney’s foray into international parks are many global challenges that will force Disney to take its standardized products and modify them to provide an adequate level of local customization. But to what degree Disney can modify their iconic characters, without losing any of their standard allure, remains to be seen. Another global challenge posed to Disney is the globalization of their supply-chain, most notably for producing their merchandise. As with many companies producing high volumes of inexpensive goods, Disney has outsourced much of its production to Asia. Along with the lower costs of production have come increased pitfalls for Disney’s reputation. As of 2008, Disney had collected data on over 40,000 factories to track potentially systemic problems and to eliminate troublesome facilities from its supply chain (Reuters). Even with this extra diligence working to their favor, Disney has been subject to licensees subcontracting to “sweat-shops.” Workers in these sweat shops are subject to below-average working conditions, which can be a gross underestimation of the treatment these workers receive. Through licensees sub-contracting, Disney is exposed to risk of having their merchandise manufactured in factories where labor standards are not followed. Although Disney has implemented a “three strikes” rule to force its manufacturing affiliates to comply with labor standards, some affiliates have no choice but to increase worker utilization and cut wages, all in an effort to win the merchandise manufacturing contract from Disney. Most of the manufacturing contracts awarded to these Asian manufacturing companies are awarded solely on the cost related factors, namely who can produce the products for the lowest cost, best quality for that cost, and within a specific timeframe.

RECOMMENDATION

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For the international cultural assimilation of Disney’s characters, there are a few recommendations that are suggested. The essence of most of the characters should remain unchanged, since most of the characters hold some level of symbolic value to the people that see them and appreciate them. The core values of the characters should exude Disney’s core value of providing quality entertainment and enjoyment. Areas, which should be customized for international markets, are the ways the characters communicate with people in the international markets and the tailoring the experiences that they provide to be of adequate cultural significance. A very important aspect of customization is that changes be made to comply with cultural norms and accepted behaviors, with careful attention paid to ensure that characters do not transmit offensive ideas, behaviors, or language.

With regard to the challenge that Disney faces with its global supply chain and ensuring that merchandise is manufactured in compliance, they have much power in determining how to uphold standard labor practices. Rather than having manufacturing firms compete for contracts based on solely price, Disney should also look deeper into the company’s production facilities. This would allow Disney to ensure that low-cost bidders also comply with standard labor expectations. Furthermore, Disney could stipulate that contracts be fulfilled directly by the bidding manufacturer. This would prevent a contract from being resold or sub-contracted, since this would prevent Disney from inspecting the manufacturing facility to ensure compliance. These changes pose a possible increase in costs to Disney, which would probably be passed on to the consumer. More importantly, it would show that Disney is not ignoring its responsibility to ensure that companies producing products for Disney are holding up their end of the deal to produce products while abiding by standard labor practices.

CHALLENGES IN THE INTERNAL ENVIRONMENTACQUISITIONS- PIXAR & MARVEL CHALLENGE

The internal corporate businesses that comprise Disney have altered considerably over the past 4 years. Much of this change can be attributed to the aggressive acquisition strategies that Disney has taken over this time. With any acquisition strategy, there will be challenges imposed on the internal environment of the acquiring firm. Further challenges are created in the industry and general environments. It is important that none of these challenges that happen during acquisition are overlooked, and more important that Disney addresses them. The major acquisitions that Disney has made in the past 4 years include Pixar, an animation studio, and Marvel Entertainment, a comic book publisher and movie studio. In 2006, Disney announced that it was buying Pixar in a deal worth $7.4B (CNN Money). Cash and stock were the two financial mediums Disney used to tender the deal to acquire Pixar. The price Disney paid for Pixar was at a premium to what Pixar was valued at. This premium price shows that Disney was willing to pay extra to bring Pixar onboard.

The Pixar acquisition is considered to be a horizontal acquisition, even though they were a major supplier to Disney and could have been regarded as a vertical acquisition due to their position in the Disney supply chain. Prior to the acquisition,

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Disney and Pixar had partnered together to provide Pixar with Disney’s financial backing and strength in distribution. In 2004, it was announced that Pixar and Disney would not be renewing this partnership when it was due to expire in 2006 (People). The reasoning for the refusal to renew the contract was rumored to be related to a dispute between then CEO Michael Eisner and Pixar Chairman Steve Jobs. With Pixar seemingly able to jump ship to Viacom or Time Warner, major media competitors of Disney’s, the board of directors at Disney looked at Pixar like a competitor and decided that the cost of letting them join forces with these other media companies would be too great. The deal with Pixar allowed Disney to complement their core competencies; a worldwide company with a global audience was joining with arguably the industry leader in quality of computer-generated animation. Further reasoning for the acquisition can be shown looking at box office results for the two companies; Pixar had yet to have a flop with its 6 movies while Disney’s computer-generated animated movies had yet to attain anywhere near the gross sales that Pixar received (CNN Money). In the merger between Disney and Pixar came the gathering of Disney’s catalog of iconic characters, such as Mickey Mouse, Minnie Mouse, and Cinderella, and Pixar’s “Toy Story” and “Finding Nemo” characters.

Along with the merger came many risks that stand to damage the value created through the merger of the two companies. The challenges that Disney faces with the Pixar acquisition are: integration difficulties, inability to achieve synergy, and creating a new Disney that is too large. These risks are also a major contributing factor to the challenges created through the acquisition of Marvel Entertainment. In 2009, Disney acquired Marvel Entertainment for $4B in a deal for stock and cash (CNBC). Like the Pixar deal, Disney paid a premium to acquire Marvel Entertainment. The Marvel Entertainment acquisition brings an additional influx of animated characters to Disney’s catalog and an animation studio that rivaled that of Disney’s. Marvel has amassed a library of 5,000 characters, including some of the world’s best-known superheroes such as Spiderman, the X-Men, and Iron Man. Once again, the acquisition of Marvel, like Pixar, complements Disney’s business with a wealth of tangible resources (animation studios) and intangible resources (characters and storylines). For Marvel, its most valuable intangible asset is its brand name, known worldwide for its quality comic book publishing and exciting, unique superheroes. Yet, with all these benefits that can be attributed to acquisition by Disney, the aforementioned risks still exist. Disney must identify the integration difficulties, areas where synergy is not achieved, and ensuring that the merging of these companies does not create a new Disney that is too large.

RECOMMENDATION

The challenges that Disney faces with both the acquisition of Pixar and with Marvel Entertainment stems from three main areas: integration difficulties, inability to achieve synergy, and creation of a company that is too large. The following will look at each of these challenges individually and offer recommendations.

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INTEGRATION DIFFICULTIES CHALLENGE

The meshing of both Pixar and Marvel into Disney will have to consider the differences in management styles among the three individual companies. One impression of Disney is that their large management structure leads to less innovation. Pixar and Marvel are heavily innovative entities, with flexible and forgiving corporate management structures. By imposing changes to Pixar and Marvel’s management styles through their acquisition, Disney could negatively impact the value that gives to these companies.

RECOMMENDATION

By working to maintain the core management figures, Disney can alleviate this concern. In an effort to preserve the key personnel from these acquired firms, Disney can aim to at least maintain the innovation that they valued when merging with these firms. In addition to the preservation of management styles, Disney should consider maintaining significant funding of R&D budgets. This would signal a strong managerial commitment to innovation, a key factor to overall competitiveness in the innovative animation industry. This continued funding would lead to growth opportunities for Disney, with regard to their competitiveness in animated media. This is a large component of Disney’s future success with this acquisition. Assisting in the integration into Disney of Pixar and Marvel is the addition of key figures from Pixar and Marvel into The Walt Disney Company’s board of directors. These additions to the executive level will provide Disney with direct input from the principals of these acquired companies on the top-level decisions. Pixar and Marvel executives added to the Disney board will also provide a conduit that will allow Disney to be flexible and responsive to their respective capabilities. Since post-acquisition integration is the single most important part of shareholder value creation, it is critical to Disney’s success with these acquisitions that they act on these challenges to ensure effective working relationships between all employees at all levels of the company.

INABILITY TO ACHIEVE SYNERGIES CHALLEGNE

The merger of the animation studios of Pixar and Marvel into Disney will provide all three segments with a wealthy pool of ideas, characters, and storylines. Considering that each segment has unique ideas, characters, and stories of their own, the fact that they can combine all of these pieces together will allow for infinite possibilities. Yet there is some doubt as to whether the combinations of Pixar and Marvel with Disney will yield synergy between the three companies. Given the premiums Disney paid to make these acquisitions, there is a concern that the high transaction costs might have a negative impact on the synergy between the firms. While Disney stands to benefit from the wealth of business that Pixar and Marvel generate currently, there is much more future revenue at stake than just staying the course with current revenue streams.

RECOMMENDATION

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While it is difficult, if not impossible, to create synergy, Disney should measure the value between the companies to monitor synergistic opportunities. Given the depth of knowledge at Disney, Pixar, and Marvel, there is a very high potential for private synergies to occur. Not only would the shareholders benefit from the wealth gained through this synergy but also so would the customers.

COMPANY BECOMING TOO LARGE CHALLENGE

Prior to the acquisition of Pixar and Marvel, Disney was a very large company with global operations and in a variety of different industries. The additions of Pixar and Marvel only stand to increase the size and reach of The Walt Disney Company. This increased size, from large to huge, leads to increased risk to the synthesis of bureaucratic controls. Many large companies are characterized by rigid and standardized managerial behavior that forms within these giant entities. These types of rigid and standardized controls would have a detrimental effect on innovation and performance at The Walt Disney Company.

RECOMMENDATION

In order to prevent the bloating of Disney into a company that would have to resort to bureaucratic controls, it is recommended that when the risk of these controls arises that Disney enact a down scoping strategy to eliminate unrelated business. For instance, Disney is heavily involved in the real estate market in Florida. Given the current condition of real estate values, especially in supply-driven demand-deficient markets like Florida, Disney could spin-off its residential real estate investments to reduce the size of the company. It would appear that Disney’s motivation for these acquisitions was to bolster the value of the products it delivers and to follow a related constrained diversification strategy; there are side effects to their plan. Through consideration of the above recommendations, Disney stands to capitalize on acquiring Pixar and Marvel, and to continue to generate steady revenue flows.

TEAMING, LEADERSHIP, & COMMUNICATION

TEAMINGTeam 32 is comprised of ten hard working individuals under the leadership of Nishat

Jannah. The role of each team member had been clearly assigned during the first class meeting. Each individual’s role is listed below:

1. Nishat Jannah: Group Leader and Policy Maker, also the Classroom Facilitator.2. Stephen Silver: Communication Director and Status Report Creator.3. Renee Chritensen: Scribe, Technician, Designer, and final PowerPoint Creator.4. John Miller: Policy Committee member, Writer, Scribe, and Technician.5. Ashley Dordan: Manager and Writer.6. Vadim Zakharau: Classroom Facilitator and Presenter.

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7. Paola Castillo: Policy Committee member, Record Keeper, Chart Creator and Researcher.

8. Rie Sugiura: Story creator and Status Report Creator.9. Serena Wales Alvarez: Writer and Status Report Creator.10. Leon Chen: Record Keeper, Story Creator, Scribe, Researcher and Final

Reporter.

Each team member contributed and performed well during this semester. Nishat and Vadim are our classroom facilitators and presenters. They were prepared for each classroom presentation, which includes chapter summary, case analysis, special topic and classroom exercise. Even though sometimes Professor Meeks made comments and corrections about their class performance, it is still admirable that they put their effort into educating and engaging the whole class. Renee and John are our technicians. Serena, John, and Ashley are the writers, Leon and Paola are the researchers. Rie and Leon are the story creators. Everyone worked together as a whole team because of the excellent leadership and communication.

LEADERSHIPNishat is a great group leader at assigning jobs and directing team members. When

we had our first meeting on June 9th, Nishat took the responsibility as a leader and clearly assigned each team member to their jobs despite of the confusion we had for the first day of the class. It takes courage and judgment to be a leader of a group of people that you just met for a couple minutes. During the second class, which was online practice, Nishat assigned each group members to specific deliverable that we were supposed to complete and turn in at the end of class. She saved us time from avoiding duplicated work.

This is a short semester. However, Nishat has showed the qualities of being a great team leader. As a whole team, we appreciate her effort.

COMMUNICATIONJohn Miller set up a Google group for the whole team by the first day of class. Google

group is very helpful because every team member can upload his or her writings, PowerPoint files, documentations on Google group to be available to everyone. Moreover, each individual email and response of email that posted on Google group will be directed to everyone. The usage of Google group made it easy for team members to engage, track and be responsible for the team project.

Our communication Director is Stephen Silver. He has fully performed his role at informing each team member, updating information from Professor Meeks, and delivering our works to Professor Meeks.

In conclusion, team 32 performed well under the great leadership from Nishat and the communication method we had.

PEOPLE MANAGEMENT & ACCOUNTABILITY

Human resource management and accountability are both necessary for successful teamwork. Our team meets both criteria.

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The first thing that needs to be mentioned here is the group meeting. Since we have only 9 classes during this summer section, each class is valuable and weighted in putting group work together. None of our group members has ever missed any class or group meeting after the class. This is a fact that shown on group meeting record. Every team member respected each other and was engaged during the group meeting.

Nishat and Vadim usually spent a lot of time practicing the presentation. With the help from Renee and John, our technicians, each presentation flew well with the power points. Leon and Paola are the researchers. They started doing research right at the beginning of this semester and then provided detailed and reliable materials related to our project to the story creators and writers. Story creators created two sets of stories: one is the positive impact from Disney’s economic contribution and expansion; the other one is the negative impact from challenges and ethical issues. After receiving the research materials and stories, writers immediately divided the writing assignment into parts and started working. Every writer had their part ready before the deadlines. Nishat and Stephen, the group leader and communication director, kept tracking of each member’s work and monitored the team progress.

Overall, each team member is engaged in the group project. Everyone is respectful in working as a team. There isn’t any delay or incomplete work from anyone.

RESOURCE ALLOCATION & DEPLOYMENT

The main resources we have used in this group project are textbook, researches from online sources, published peer viewed journals and articles from library.

As the team researcher, Paola did research on overview of Disney, a concise articulation of the challenges facing the company, a list of realistic solutions (recommendations) for the company (a strategy). The other team researcher, Leon, did research on Disney corporate level strategy analysis; Disney SWOT analysis and industry analysis; executive summary for Disney; Disney case study that involves copyright; Case Study for Consumer behavior strategy, targeting strategy, product strategy, positioning strategy, channel strategy, pricing strategy, promotion strategy; and Disney’s challenges based on ethical issues.

Researches were delivered to story creators by week two. Rie and Leon created two sets of stories based on the materials they have. By the end of week 2, outlines of stories and materials had been passed to the writers.

Team writers are Serena, John and Ashley. They started writing right after they received the stories and materials. They divided the whole Disney report into three parts. Serena and Ashley were focusing on the positive impacts based on Disney’s economic contribution and business/corporate level analysis, while John was focusing on the challenges that posted to the company. They had lot materials, which needed to be tied to the textbook. They related the materials to the concepts from the book in the writing. After they finished each part, they put their parts together and made sure it flows as a group project.

John and Renee are our technicians. We appreciate the organized and appealing PowerPoint slides they created for the group presentation. Nishat and Vadim also participated in creating PowerPoint Slides.

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MEETING MANAGEMENT & RECORD KEEPING

Members for Group 32 were always present in the meetings. There was not a single meeting where one member was missing. This helped tremendously since every member was responsible, and knew that to make this project work they had to be present, alert, and paying attention to detail.

In our First meeting on June 7th, the first thing we did was got to know each other. After that, we had to decide on a company that we wanted to work with. This was easy enough, since all of us were open to new ideas, and to working together. Assigning roles was a little bit more challenging. We wanted to give each member a role that he or she was comfortable with, and that it suited them, so we could create an amazing project. After that, we really got into the exercise for that day, and little by little, we starting getting to know each other. Communication in the group was excellent, not only in the classroom, but outside as well. Meetings started being every week. As the meetings progressed, we got to see each other strengths and weaknesses. We started delivering each member assignments, and started to get along as a team.

In our second meeting on the 14th, we started talking about the 30-second presentations, since most of us were a little confused. We also discussed the class facilitation. It was coming up shortly, and we had to create an amazing class for our classmates. This meeting was all about assigning facilitation jobs, and discussing ideas on how to present them to the class. Every week, we started to talk more about the final project. Since it was three weeks away, we did not go straight to it, but took our time, and discussed a timetable so that everyone had his or her job done on time. This worked very well, since the project is supposed to be done in parts, and not at the last minute. I have to say that I got an amazing team, and everyone is always willing to work hard, and accept others’ ideas.

For out meeting on the 16th, researchers had to turn in the information about the company, so that story creators could start on the project, and then writers could begin writing. This was a good day, since everyone saw how the project was coming along, and that little by little, it was being done. Researchers showed everyone their research, and how it pertained to the company. We decided to divide the research into two parts: basic and strategies the company was using. This was very easy to assign, and both researchers got the information right.

Our meeting on the 21st, the story creators had to get together and discuss the progress of the story, and the overall paper. They talked to the writers, and it seemed the paper was coming along. We also discussed our team’s facilitation, with each of us giving out ideas on the exercise, special topic, and case analysis.

Overall, the meetings were a fantastic way of giving out ideas, suggestions and to talk to each other about the class and our doubts about it. We have a fantastic team, and it will show on the final project. The leader and manager of the team did amazing jobs putting us all together and getting everything in order. Every team member was always alert, and happy to help, which made the overall process easier and enjoyable for the team.

PROJECT MANAGEMENT

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Managing a ten-person team is not an easy task. Everyone has opinions, suggestions, and different ideas on how to do things. But the great thing about this team was that everyone was open to each other’s ideas. We all commented on how the project should be done, on when we had to turn in information, and on dates that the paper had to be finished. This allowed for less confusion, and to getting everything organized and on time.

Assigning roles to each member was a difficult task for the team. We had to find each other’s strengths and weaknesses, and with that, assign something that each of us was comfortable doing. This took some time at the beginning on the class. By the end of the first meeting, everyone was assigned a role. And it seemed that everyone was happy about what job they got. We could see that Nishat and Vadim are excellent talking in public, that’s why they were the ones in charge of the class facilitation. John, Serena and Ashley were also adamant about being writers. Paola, Rie, and Leon were the researchers, and Renee was in charge of power point presentations. Rie was a story creator along with Ashley and Leon. Finally, Stephen was the communications director.

Managing the project was a little different than doing the exercises. Because we had more time to prepare for the project, we took our time setting deadlines and due dates. Although four weeks is not a lot of time, it was enough for us to get research first, get the story creators to start the flow of the project and, then finally the writers to start the whole paper. Each of us, whether we were writers or not, had some writing to do for the final project. This made the writers’ job easier since they delegated some of the extra writing to researchers, story creators, etc.

Nishat, our leader, did an amazing job getting us together and responding any question we had about the project, and Ashley, our manager, kept reminders friendly without being too insistent or aggressive. Everyone helped out when the ideas needed more flow, or when the exercises needed to be more creative. As the project got nearer, we started assigning dates to get out part ready. We decided to have the project done one week before it was due, so that we had enough time to go through it and edit it. This suggestion was great since it allowed for everyone to go over the final project, and suggest what was missing or what needed to be changed.

Overall, management for the team was smooth and created a good environment to work in. This team created an amazing work atmosphere, and when anyone had a question, they were always there to help.

TECHNOLOGY CHOICES

Since the first day of class, Professor Meeks was very insistent on the fact that this was a group class, and that everyone had to work together, if not, the project would not come along. He really emphasized this on the first day of class. It wasn’t until the online exercise came along, that we really knew what he was talking about. Technology played a huge part in our class this summer. Communicating with ten people, and assigning jobs to each without being together physically, was a huge challenge. It creates a lot of confusion, and questions arise, that need to be answered quickly. The online exercise was the first challenge to work together electronically, and we did a great job. Everyone was online at 9:00 AM, and everyone was willing to help. This was only the beginning of the amount of work we had to do electronically.

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When we started planning the final project, John, one of our group members, subscribed us to Google Docs. Google Docs is a program with Google that lets all of the members in the group post forums, upload documents, edit documents, and all of the alerts or changes a group member does are all directed to your email account. This means that even if you do not log into Google Docs page, all messages and changes are sent to your email account. Even though it was somewhat frustrating getting about fifty emails everyday from Google Docs, it was worth it, because the final project was organized and ready on time. This program was one of the many ways technology was part of this summer class. Without Google Docs, the project would not have been as smooth as it went.

Overall, technology was present in each and every one of our classes, whether it was our 30-second presentations, to guiding the class in our class facilitation, to playing Jeopardy in the class exercise. All this would not have been possible without technology. Power Point was a huge part of this class, in every sense. Another huge factor of technology was communication itself. All the emails with our team members, or with the professor, were vital to the success of this class.

We, as Business Graduates, need to realize that technology is a huge part of our major. Business without technology does not exist anymore. Technology changes all the time and we have to keep up with it in order to be successful in our field. This class helped us realize that. Technology is the future, and we have to move along with it. The faster we understand this, the better for our careers.

DESCRIPTION OF THE PRSENTATION

Our 15-minute PowerPoint presentation is dedicated to Disney World Florida. The presenter of the group is Vadim Zakharau. Renee Christensen is helping him with the PowerPoint slides making sure that they are of a professional quality and have reasonable slide transitions and animations.

The presentation is based on the Disney World case analysis and includes the most important information about the company and the industry it operates in. We are going to present the diversified entertainment industry in which Disney operates and take a quick look at its competitors. These facts are extremely useful in understanding the broad nature of Disney’s business operations and clearly identify the particular place of Disney World Florida among other assets of the company. We are using smart art figures of Microsoft PowerPoint to present information vividly and show the interconnection of Disney’s operations. After an extensive group discussion, all members of our team have come to the conclusion that it is best to use white font for our PowerPoint slides as it will allow students to better comprehend our presentation consisting of approximately 40-50 slides.

A special attention in our presentation is given to Disney’s core competencies and competitive advantage deriving from them. This is exactly what Strategic Management course is all about and we want to make absolutely sure that all students in BUS 690 class have a perfect understanding of why Disney World Florida is successful and what it does to retain strategic competitiveness as pertaining to the future periods. We use timelines in our presentation to compare the company’s performance in different time frames. Renee made sure that slides covering these parts of the presentation are informative, yet simple

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enough and contributing to the best learning experience of our classmates. The purpose of this part of the presentation is to show how and why Disney is capable of earning above-average returns and remain the long-term market leader.

Another equally important part in our presentation is dedicated to the challenges faced by Disney World Florida. We present the results of extensive research of our team members about challenges and come up with our own recommendations and possible solutions to the business threats of Disney. It is of a paramount importance not to overwhelm the audience with data and get them involved and critically follow the slides. We stick to 7x7 rule and have an easy to comprehend information layout. In other words, we have decided that it is more beneficial to the audience to focus on the presenter instead of constantly be glued to the projector trying to finish reading the slide before it gets switched to the next one.

The videos are embedded it the beginning and it the end of the PowerPoint presentation. In the beginning, to gain the attention of the audience; in the end, in order to leave a positive and dynamic image of the presentation flow as well as to reassure the main points presented. Renee is running the computer and makes sure that everything goes error-free.

Concepts and definitions from the text are included in the presentation in order to show the command of the course material as well as to refresh the student’s knowledge. Q&A section is expected to engage students and give them a chance to clarify information received.

DESCRIPTION OF CLASSROOM FACILITATION

We, Team 32, had our first class facilitation on Wednesday, June 16th. Our team wasn’t the first one to facilitate and that is why we had a great example to build upon and plenty of critical thinking to do in order to provide the best possible learning environment for our classmates.

Our facilitation has started with a review of correct answers for the quiz and was followed by 30-sec PowerPoint presentations. We had dedicated one person, Renee Christensen, to run the computer to have a smooth flow of presenters and make sure that sudden technical issues don’t’ ruin students’ hard work. Some time has been devoted to classmates’ comments about what they thought was good and not so good about presentations: it has given Team A great opportunity for improvement as they were to present on the following class.

Next in our facilitation was chapter 4 summary. Presented by Vadim Zakharau, it was designed to highlight the most important terms and concepts. The first slide introduced a list of questions we wanted the audience to be able to answer after the class: such a technique was very effective as it helped our classmates to focus on most vital ideas and draw a mind-map for better comprehension. Each slide, basically, was a part of a bigger picture and, filled with specific examples, aided in providing great learning experience

Our special topic was about Hyundai Motor Company – currently the most profitable automaker in the world. The purpose of such a topic was to show a transition in the company’s business-level strategy as it was related to the material learned in chapter 4. Based on the information about the company provided to them, students were expected

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to conclude the type of a strategy used by Hyundai and justify their opinion. We have talked about the company’s core competencies, competitors, and differentiation points. Team 32 thinks that it was both creative and effective to do backwards analysis as we started from Hyundai’s current position in the market and looked back into the days when the automaker was associated with nothing else but low cost and poor performance.

Our case analysis topics, Wal-Mart and Jet Blue, have served their purpose in providing students with extensive business and corporate-level information and, most importantly, wisely guided classmates through the cases. Using a lot of PowerPoint slides, we have discussed companies’ strategies, competitors, markets, and challenges. However, much better job could have been done on deriving recommendations for the companies to follow if they want to improve their strategic competencies. Our first case analysis facilitation has left a lot of room for improvement in terms of engaging students in the critical thinking process. In our next facilitation we’ll need to focus more on getting information out of the audience rather than “freely” providing it.

We thought it was great that the game we have facilitated was based on team effort and was connected to the content of both chapters and cases. Matching knowledge received in class with real-world examples is the key technique students need to master in order to be successful professionals and wise critical thinkers. Dividing people in groups has created a kind of competitive spirit, which is parallel to constant competition in the marketplace.

In general, we think we were able to engage our classmates while providing them with the key points from the chapter and the cases. Our presenters were respectful and open to questions from the audience. Facilitation wise we had several weaknesses but we will do our best in order to eliminate them before our next classroom facilitation on Monday, June 28th.

Facilitation #2 Description To Be Added

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APPENDIX

CHAPTER 1: STRATEGIC MANAGEMENT & STRATEGIC COMPETITIVENESS

Stakeholders – Disney’s size and reach contribute to a large number of stakeholders, from many groups and of varying levels of influence.

Strategy – An integral strategy of Disney is their exploitation of synergy across its diverse business segments.

Above-average returns- Disney has received more in profits and/or revenue than its investment costs.

Risk- Disney had high risks before he had created and built Disneyland because there was a decline in amusements parks and had high costs. Furthermore, the project was to be the first of its kind deemed as Disneyland theme park.

Competitive Advantage- Disney had competitive advantage because he understood the corporate culture by incorporating synergies and diversification. This was needed to accomplish continued success.

Resources- Disney’s resources in studios, media and network, and resorts and theme parks throughout the world.

Vision- Disney’s vision to build another Disneyland in the East Coast of the country. His vision was to have another theme park be built in Orlando, Florida, which later became known as Walt Disney World theme park.

CHAPTER 2: THE EXTERNAL ENVIRONMENT: OPPORTUNITIES, THREATS, INDUSTRY, COMPETITION, & COMPETITION ANALYSIS

Barriers to Entry: It would be difficult for new market entrants to enter the Entertainment-Diversified industry, due to Walt Disney World and Time Warner having such a large dominance of the industry.

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Competitor Intelligence: A company needs this in order to understand and anticipate their competition.

Competitor Analysis: Companies need to have future objectives, a current strategy, review assumptions, and capabilities of their company and their competitors.

Core Competencies: If Six Flags is thinking of entering Florida, they need to have core competencies that Walt Disney World does not have in order to satisfy people’s unmet needs.

Industry Environment- Disney’s industry environment includes media, film, theme parks & resorts, television, and products.

Opportunity- Disney’s opportunity to see potential growth in the company in animation/studios in creating “Mickey Mouse.” Also Disney saw potential growth in Disneyland theme park(s) to enable children and adults to have fun together.

Threat- The onset of World War II posed as a threat to the industry environment and the business of Walt Disney.

CHAPTER 3: THE INTERNAL ORGANIZATION: RESOURCES, CAPABILITES, CORE COMPETENCIES, & COMPETITIVE ADVANTAGES

Intangible resources – The Disney brand name is an intangible resource, since it is deeply rooted in the company over a long period of time.

Tangible resources – Two major components of Disney include its production studios and theme parks.

Value – Given Disney’s growth and success, it can be stated that customers see value in the products and services that they are provided by the business.

Core competency- Disney’s capabilities to better serve its target market because it has great product differentiation and had incorporated synergies.

CHAPTER 4: BUSINESS-LEVEL STRATEGY

Basis for Customer Segmentation: This concept is important when deciding who a company should target, Disney has a wide range of customers that need to be segmented based on their needs.

Differentiation Strategy: If a new company wanted to enter the Entertainment-Diversified industry, they would need to come up with a way to differ from the existing competition.

Market Segmentation: This is the actual method a company would use to group its customer into appropriate groups.

Reach: In the Entertainment-Diversified industry, CBS and The Walt Disney Corporation are able to have a large population viewing their network and cable television shows.

Business-Level Strategy- Disney’s set of commitments and actions used for competitive advantages are superior control and leadership.

CHAPTER 5: COMPETITIVE RIVALRY & COMPETITIVE DYNAMICS

Competitors- Disney’s many competitors include CBS, Paramount Pictures, Universal Studios, and Six-Flags.

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Competitive rivalry- Universal Studios was one of their competitive rivalries in the early days because Disney had lost its rights to one of its Disney characters, “Oswald, the Lucky Rabbit.”

First-Mover- Disney was considered as a first-mover when he had ventured into theme parks, which later became known as Disneyland and Walt Disney World.

Quality- The Walt Disney Company strives to provide high quality in their products and services. They are determined to give the best to their consumers.

Primary activities- Disney had full control of its primary activities ranging from its creators, suppliers, and to its distributors.

CHAPTER 6: CORPORATE-LEVEL STRATEGY

Diversification- Disney had used diversification to create value by creating synergies with different businesses.

Acquisition – Through key acquisitions, Disney has positioned itself to be strategically competitive against its competitors.

Diversification – With its array of differing businesses, Disney utilizes a diversification strategy to increase the scope of the company.

Horizontal acquisition – When acquiring Pixar, Disney made a horizontal acquisition of Pixar since they stood to become a main competitor to Disney’s animation studios.

Integrating – When Disney acquired both Pixar and Marvel, the integrating of the companies is crucial to fostering future growth.

Integration difficulties – Differing corporate structures and organizational cultures are a few of the integration difficulties that come with combining companies through acquisition.

CHAPTER 7: ACQUISITION & RESTRUCTURING STRATEGIES

CHAPTER 8: INTERNATIONAL STRATEGY

Licensing- Disney licenses Disney characters to consumer manufactures, retailers, publishers, and distributors across the globe.

Economic risks- Due to the economic recession between 2007-2009, the Walt Disney Company has experienced a decline in profits and/or revenue.

CHAPTER 9: COOPERATIVE STRATEGY

CHAPTER 13: STRATEGIC ENTREPREURSHIP

Entrepreneurs- Walter Elias Disney or Walt Disney is considered an entrepreneur because he had underwent risks to developing the company, which had begun with opening the Disney Brothers Studios. Disney also saw entrepreneurial opportunity in opening the theme park, Disneyland.

Entrepreneurial mind-set- Walt Disney had sought continuous opportunities in expanding the Walt Disney Company. He had developed synergies with diverse

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businesses, which created diversification and value. This led to the continuing success of Walt Disney Company.

Imitation- Disney has competitors that have imitated many of their products and service to capture market share and/or consumers.

Innovation- Disney needs to seek ways to create never-before-seen products and/or services. Disney needs to keep in pace with this modern generation because innovation is key to success.

Invention- Disney had invented the popular cartoon character “Mickey Mouse,” which is one of his many Disney cartoon characters.

WORKS CITED AJUSTMENTS TO BE MADE

Walt Disney Company. 24 Jun. 2010. Encyclopedia. 25 Jun. 2010 <http://en.wikipedia.org/wiki/The_Walt_Disney_Company>.

Corporate Information. 1 Jan 2010. The Walt Disney Company. 25 Jun. 2010 <http://corporate.disney.go.com/corporate/overview.html>.

Company Overview. 1 Jan 2010. The Walt Disney Company. 25 Jun. 2010 <http://corporate.disney.go.com/corporate/overview.html>.

Disney’s Fun Facts. 1 Jan 2010. The Walt Disney Company. 25 Jun. 2010. <http://corporate.disney.go.com/environmentality/fun_facts.html>.

Kirkman, Christopher. “Strategy Analysis of The Walt Disney Company.” Berkeley Education. 29 Oct. 2001. 25 Jun. 2010 <http://faculty.haas.berkeley.edu/meghan/299/Case_analysis_Disney2.pdf>.

Disney Channel. 24 June. 2010. Encyclopedia. 25 Jun. 2010 <http://en.wikipedia.org/wiki/Disney_Channel>.

Disneyland. 24 June 2010. Encyclopedia. 25 Jun. 2010 < http://en.wikipedia.org/wiki/Disneyland>.

Walt Disney World. 24 Jun. 210 Encyclopedia. 25 Jun. 2010 <http://en.wikipedia.org/wiki/Walt_Disney_World_Resort>.

Oswald, The Lucky Rabbit. 1 Jan 2010. The Walt Disney Company. 25 Jun. 2010

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<http://disney.go.com/vault/archives/characters/oswald/oswald.html>.

Calderon, Juan; Delgado, Sergio; & Paiz, Juan. “Analysis of the Walt Disney Company. “ 3 Dec. 2001. 25 Jun. 2010 <http://web.mit.edu/wysockip/www/535/MIT2001/Disney.pdf>.

JOHN- Convert resources into MLA format

NYTimes - http://www.nytimes.com/2009/09/14/business/media/14disney.html?_r=1

Disney Earnings Report - http://corporate.disney.go.com/investors/quarterly_earnings/2009_q4.pdf

ABC Money - http://abcnews.go.com/Business/wireStory?id=9068264

Business Management Daily - http://www.businessmanagementdaily.com/articles/9408/1/Walt-Disney-World-dilemma-spotlights-religious-discrimination-issues/Page1.html#

Orlando Sentinel - http://articles.orlandosentinel.com/2009-03-10/news/dizgreenhouse10_1_emissions-disney-cruise-ships

Disney Corporate Responsibility Report - http://disney.go.com/crreport/home.html

DailyMail - http://www.dailymail.co.uk/news/worldnews/article-1197624/Monorail-crash-Disney-World-Orlando-kills-employee.html

Daily Disney - http://thedailydisney.com/blog/2010/02/disney-monorail-crash/

Florida Senate - http://www.flsenate.gov/Statutes/index.cfm?App_mode=Display_Statute&URL=Ch0760/ch0760.htm

Washington Post - http://www.washingtonpost.com/wp-dyn/content/article/2010/06/18/AR2010061805277.html

Carnegie Foundation - http://newsinitiative.org/story/2006/09/01/walt_disney_world_the_governments

US DoD - http://www.defense.gov/pubs/dod101/dod101.html

comScore - http://www.comscore.com/Press_Events/Press_Releases/2010/3/comScore_Reports_January_2010_U.S._Mobile_Subscriber_Market_Share

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Reuters - http://www.reuters.com/article/idUSSP16307520080212

CNN Money - http://money.cnn.com/2006/01/24/news/companies/disney_pixar_deal/

People - www.people.com/people/article/0,,627598,00.html

CNBC - http://www.cnbc.com/id/32655501/Disney_Marvel_Acquisition_Aftershocks

ASHLEY- Convert resources into MLA format

ABC:ABC. 25 June 2010. http://abc.go.com

ABC-Bay Area News: ABC KGO San Francisco. 26 June 2010. http://abclocal.go.com/kgo/index

ABC Family: ABC Family. 25 June 2010. http://www.abcfamily.go.com

Bush Gardens Website:Busch Gardens. 26 June 2010. http://www.buschgardens.com

Business Wire: Kodak and the walt disney company sign multi-year corporate alliance agreement. Business wire. 28 May 2002. accessed 25 June 2010. www.allbusiness.com/travel-hospitality-tourism/destinations/5888053-1.html

CBS: CBS. 26 June 2010. http://www.cbs.com

CBS Corporation: CBS Corporate. 26 June 2010. http://www.cbscorporation.com

The Conference Board Review: Kinni, Theodore. “What price magic?” The conference board review. N.D. accessed: 26 June 2010. http://www.tcbreview.com/soundings-sum09.php

Disney Website: Walt Disney Corporate. 25 June 2010. http://corporate.disney.go.com

Six Flags Website: Six Flags Georgia. 25 June 2010. http://www.investors.sixflags.com

St. Petersburg Times:

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Tillman, Jodie. “Rumor of six flags theme park flies around pasco again“. St. Petersburg Times. 30 Aug 2008. accessed 26 June 2010. http://www.tampabay.com/news/business/article790187.ece

Time Warner: Time Warner. 26 June 2010. http://www.timewarner.com/corp

Universal Orlando: Universal Orlando. 25 June 2010. http://www.universalorlando.com

Y Charts: Y charts. 29 June 2010. http://ycharts.com/industry/Entertainment%20-%20Diversified Disney Store: www.disneystore.com

Yahoo Finance: Yahoo Finance. 26 June 2010. www.biz.yahoo.com

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