Disney Production

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Graduate School of BusinessMBA Program

Comprehensive Exam

“ Disney Production”

Name: Mohamed Ali MOUSSA

Program: MBAMajor: Marketing.Eam !ate: "# A$ril% &''(



In the direction of solving this case and providing myrecommendations I follow the following outline:

I. Introduction:In which a general historical overview will be done regarding

Walt Productions as well as brief of problem identification.

II. Step 1: Environmental Scanning This step will cover monitoring, evaluating, and disseminatingof info from internal & external environments to ey peoplewithin WDP !Walt Productions"

III. Step 2: Strategy Formulation This step covers the developing of long#range plans foreffective management of environmental $pportunities and Threats, in light of corporate %trengths and Weanesses. romthese developed alternatives, the best one should beselected.

IV. Step 3: Strategy ImplementationPutting strategies and policies, that are generated anddeveloped in the previous step, into actions

V. Step4: Evaluation and ontrol This step covers the monitoring of WDP activities andevaluating them with respect to the desired performance and

results.

VI. Step!: Feed"ac# and learning Proce$$

VII. onclu$ion and recommendation$.'fter showing the analysis, from WP point of view, I(ll providemy recommendation as reflected from my own opinion.In this part I(ll give more descriptive problem definition, thencritici)e the situation and put my recommendations



I. Introduction

Walt *isney, the poor young boy but the very innovative, hascreated the idea to enter the gate of the business world. +e decided todo a series about a mouse. 'lthough it was very difficult to wor at theearly beginning, however it became one of the biggest companies inthe entertainment world.

Walt *isney, his brother oy and another guy, -b Iwers, werethe founders of this great giant.

%tarting with the very low techniues and financial resources todevelop their early cartoon movies early /011s and ending with W*W!Walt *isney World" at cost of 2311 million, WP was growing too

dramatically. Their maret and financial positions were strong enoughto be as a power of a country.

Their reached their pea during the period between /034 and/051. +owever by losing their main competitive advantage6creativity, they started to decline.

The main problem they faced is sliding of their earnings.

The point was in the change of %anagement P&ilo$op&y. 'e$terday( top management was focusing on good management as a

tool to apply innovative ideas in order to attract people. )oday( topmanagement is suelching creativity6 the main ey competitiveadvantage and maret leadership motivator.



II. Step 1: Environmental Scanning

In this step all the ma7or affecting factors, 8xternal and internal,will be assessed

'. E*ternal Factor$.

The external factors are important in order to assess the degreeof environmental uncertainty.

8xternal factors are usually categori)ed as, factors of SocialEnvironment varia"le$ and factors of )a$# environmentvaria"le$.

i. Social environment (PEST)

• Political#9egal orces:a. The world war affecting the money supply to the

W*P since it was impounded abroad.

• 8conomic orces:a. 'fter the great recession, in the /01s, it

became more promising due to the bettereconomic situation.

b. ;ad weather in harsh winters affects thepurchase power, especially in *isney lands,since people will not prefer to go to open parsin winters.

• %ocio#cultural orces:a. ' demographic change6 the percentage of target

segment age !under /<" has reduced from/=.>? in /031s to /.3? in /0=1s.

b. @aret has been changed6 the target segmentbecame tending more towards moresophisticated points and contain more sexy andviolent materials

• Technological orces:

a. The advancement in the technology improvingthe production and management processes.

b. Patent protection increased and technologyhelped to put a barriers for intellectual and tradestealing.

ii. Task environment:

• +$ing ,Porter-$ competitive indu$try analy$i$

a. Threats of new entrance: it is very high since thehuge amount of financial and capital resources



that a new business unit could need to compete,directly or indirectly, with WDP.

b. ivalry among existing irm: although theindustry is consolidated, rivalry is high due tothe high diversification in sorts of

entertainments. %ome of them are suiting muchmore the maret changes. 's an exampleA@etro Bolden @ayerC.

c. Threats of substitute products and services :changing of WDP is very difficult right now,although I do believe it is a must.

d. ;argaining power of ;uyers : it is very low aswell.

e. ;argaining Power of %upplier : it is low since W*Pnot depends on very sophisticated suppliers anddo a lot of wor in house.

f. elative power of other %taeholder : it seemedto be high.

• )ype o/ Indu$try: W*P is represented as ADonsolidated industryC. 's

it might be noticed, the entertainment industry isdominated by large firms. Eo place for small businessunits, due to the high cost and entrance barrier.

• Strategic type:

'ctually W*P followed 2 di//erent types ofstrategies in two different eras. 0e/ore 1 era, W*Pwas Pro$pector since it was focus on productinnovations and broad products./ter 1 era, W*P was De/ender or reactor since itwas trying only to improve the efficiency of their productsor suffering from lac of consistency between strategy,culture, and maret changes.

iii. Anal!ing e"ternal #actors (E$AS)

The EFS %ummary Table is shown in the next page:



0. Internal Factor$.

• Identifying core competencies: W*P has some corecompetencie$:o Innovation

o Bood experience of the type of wor.o +igh businesslie and competent stuff.

•

esource#based approach to organi)ation analysis!V5I6"o Value: W*P used to have a competitive

advantage value of AInnovation$C. +owever,recently, W*P started to lose it. W*P also has goodcapital a$$et$.

o 5arene$$: innovation and good capital assets are

rare.o Imita"ility: innovation is difficult to imitate and

good capital assets is not easily found.o 6rgani7ation: it used to be very reflective to

these resources. ecently, it is not.

• Falue chain analysis:

's it was mentioned in the article, W*P movedvertically along the value chain. They had built theirown distributors. They also built their fabrication.

• $rgani)ational structures:o W*P started with the very $imple $tructure, few

people own the business and do every thing them

selves. 'fter a while it followed /unctional$tructure, in which there were many functionalentities. 't the final stage, W*P, opened newdivisions !e.g. TF, *isney lands, W*W" and evolvedand grew to Divi$ional Structure.

• Dorporate culture. The ma7or characteristics of W*P corporate culture:

• @anicured lawns and ethereal is conveying a

campuslie atmosphere in W*P.

•@en had to have their hair cut above their earsand collars with clean shaven.



• Women have to be natural without emphasi)edor noticeable mae#up or wears.

• Eo eat, drin, smoe, curse, or chewing gumwhile woring with public.

• 8mployee should eep the uite and nice smileand pleasure.

• W*P used to train their employees in a very

good manner before they become in touch withthe customers.

• @areting %ituation:o Segment: the main segment for W*P was the

younger people !under /<". The sub segmentsinclude the parents as well.

o Product li/e cycle: W*P(s products !TF, Pars" areat the end of the ,gro8t& p&a$e and will start toAdeclineC if W*P will not change their strategy. Inmy opinion the W*W is in its ,gro8t& p&a$e.

o %ar#et mi*: for product$( W*P is focus on the

good uality and good brand name. or Place itwas very concentrated, specially regarding thepars, if they succeeded with the mini#*isney it willbe good. or promotion it needs an aggressiveadvertising and promotion campaigns.

• financial situation : according to the /inancial ratio$ that are shown in the following page, here is somenotices:o 56I is declined more than / third.

o $perating Profit @argin show some increase.o 56E show increase which another good sign.o EPS and urrent ratio$ declined by almost 1?

which is bad signs.



• naly7ing internal /actor$ 9IFS

The EFS %ummary Table is shown:



III. Step %: Strateg $ormulation

. %i$$ion.-nfortunately there is no stated mission statement in thegiven article.

0. 6";ective$ < =oal$i. &eneral 'orporate *ectives

• Primary 6";ective$: is to provide the a goodentertainment service for the primary target !younger"as well as the secondary one !Parents"

• Secondary 6";ective$: to have the good sin formillion of dollars.

• 6";ective$ v$. time &ori7on: the ob7ectives were verylong term ob7ectives. +owever, W*P did not go with avery important step6 which is verifying these long termob7ectives with the maret changes.

i. +arketing *ectives

• 'pply 'nsoff(s matrix of products vs @aret, we will findthat W*P used A*iversificationsC

. Situational analy$i$:i. S$AS from the previous I'% and 8'% tables, we

can create the %'% table as shown in the next page:

D. Strategie$

i. 'orporate Strateg

• Directional Strategy

o =ro8t& $trategie$

W*P wored in the growth strategy in its bothdirections6

oncentration by vertical integration goingboth forward and bacward in the value chain by



having its own distributors as well as somemanufacturing.

Diver$i/ication concentric or relatedentertainments sorts.

• Port/olio Strategy: it is woring in the entertainmentindustry.

• Parenting Strategy: W*P is the owning parents for allother sub#units6 movie industry, Pars, W*W, and theremains.

ii. ,usiness Strateg.

• ompetitive Strategie$ !Porter"o W*P used the ADi//erentiation Strategie$ by

its uniue innovative ideas. It also wored to,/ocu$ on certain demographic segment!younger"

o ompetitive tactic$: 't the /ir$t era, W*P was

following 6//en$ive starting from A=uerrillaWar/areC and ending with ,Frontal $$ault. ;ytime it changed to ,De/en$ive tactics.

• ooperative Strategie$: as it is not so clear in the

given article, W*P did not have any alliances orcollusion.

iii. $unctional Strateg.

• Identi/ying core competencie$: as shown before, thecore competency for W*P was ,innovation.

• Sourcing deci$ion6 W*P tended to not outsource itsactivities, on contrary they made vertical integration.

• %ar#eting $trategie$: briefing of used maretingstrategies is as follows:o Falue Positioning G value disciplines: they used

more for more strategy !more value for moremoney"

o PushG pull strategy: they followed Push strategy

relying on promotions rather than advertisements!Pull".

o They used %im pricing strategy to Asim the

reamC.

o They used value#pricing rather than cost#orientedor maret#oriented techniues.



8. Policie$: the broad guideline was AThe Wonderful World of*isneyC. The ey word is Wonderful and World to point tothe amusing entertainment services as well as its verywide diversifications.

IF. Step -: Strateg Implementation.

'. W&o implement $trategy: %tarted by the persons,Walt, his ;rother and Iwers. 'nd ended by aymonWatsom, chairman, and oland @iller as a presedent.

• W&at mu$t "e done0. >o8 are $trategie$ to "e implemented? 6rgani7ing

/or action$

• 'ction plan: there were many action plans:

a. In providing the /st movies:b. In building *isneyland:

• @ae designs.

• 9ending money to continue planning.

• 'lternative places.

• Dhoosing the proper place.

• inancing the operations.a. In building W*W

• ;uilding AHesterday DityC

• ;uilding ATomorrow DityC

• *esigns• 9ands purchasing

• inancing.

F. Step : Evaluation and 'ontrol

. Per/ormance evaluationiv. Primar +easures o# 'orporate Per#ormance:

• Traditional financial measures: e.g. 56I reduced "ymore t&an 3@ a$ $&o8n previou$ly in t&e/inancial ratio$.

• 0alanced Scorecard

• 9earning and growth of the employees seemedto be $.

• Internal process: is not totally $, since it do

not permit the innovative ideas to show#up.

• Dustomer: W*P focused on customersatisfaction through high uality only. It did not

run with the new maret needs.• inancial: is not so good and declining.



v. Primar +easures o# Divisional and $unctionalPer#ormance.

• -se benchmaring with the previous history of W*P wefound that the performance is declining.

/I. Step 0: $eedack and learning processIn this step we should outline the ma7or learned lessons:In my opinion, W*P should learn the following, a$ a &ig&er levelpoint$:

• Eot allow other competitors, even indirect ones, to beprofit from its activities as happened with *isneyland.

• ey competitive advantages !innovation" should bealways aliened with the ob7ectives of the company.

• -se of all the resources efficiently.

/II. 'onclusion and ecommendations.i. Prolem De#inition

W*P is facing a declining earning and losing there oldposition in the maret.

ii. 'onclusion:

• W*P passed by > eras6 before /051, in which itwas booming so fast and after /051 where itstarted to face earnings decline.

• Dompany diversified their business.

• *uring the /st era, innovation was the eyDompetitive advantage

• *uring >nd era, the company started not to relystrongly on its main competitive advantage

!innovation".• inancial situation started to decline.

• It is needed to recommend solutions.

iii. 'riticism:

• $b7ectives were %@'T, Proactive, but

unfortunately did not consider competitiveadvantage

• Donflict between the new strategy and thecorporate culture.

iv. ecommendations:



In my opinion W*P need to wor in > directions:

• S&ort run Direction : in which W*P might:a. eview its policies and processes to open

the door for internal and externalinnovative ideas as a lot of companies

did.b. Dhange the top management in order to

get fresh blood.c. 5etrenc& some of the activities as TF

business unit and 7ust focus on movieproduction.

d. 5etrenc& also the distributors and worwith high and well nown distributors.

e. Bo for very strong and comprehensiveadvertisements and other mareting

tools.f. e#conduct the mission and ob7ectivesvery clearly to all the staeholders.

• Aong run Direction:

a. ollow growth strategy by diversificationthrough alliances which might improvetheir situation and might be better thanvertical growth.

b. Wor with the mini#*isney.c. ulfill the change in mareting needs by

providing new products that mach theseneeds

d. Put many segments, instead of only >,and fulfill deferent products for eachsegment.

Disney Production

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