The Walt Disney Company Research report of

Lee Yeon Kyung

Instructor name

Special Problems (BUS 300)

9 May 2013

2

Table of Contents

1. Vision and Goal .................................................................................................... 1

2. Business segments and Services ......................................................................... 1

3. Business Services ................................................................................................. 2

4. Countries of Operation ....................................................................................... 2

5. Strategy ................................................................................................................ 4

6. Finance ................................................................................................................. 5

7. Board Organization, Organizational chart and corporate citizenship ........... 7

8. Market Strategy ................................................................................................... 9

9. Sustainability ...................................................................................................... 10

10. Reason why I want to apply for the Disney professional internship ......... 11

1

The Walt Disney Company is the public company which was founded by Walt and Roy Disney

in 1923 at Los Angeles, California, the United States. It’s headquarter is the Walt Disney Studios

which is located in Burbank, California. It is a diversified international family entertainment and

media enterprise which is in Entertainment–diversified market with five business segments:

media networks, parks and resorts, studio entertainment, consumer products and interactive

media.

1. Vision and goal

1) Vision: to deliver, with integrity, the most consistently exceptional entertainment

experiences for people of all ages and interests.

2) Goal: to achieve exceptional performance by embedding corporate citizenship into all of

decisions and actions guided by three core principles.

Act and create in an ethical manner and consider the consequences of our decisions on

people and the planet

Champion the happiness and well-being of kids and families in our endeavors

Inspire kids, parents, employees and communities to make a lasting, positive change in

the world

2. Business segments and Services

1) Media Network

Media Network segment of Disney is composed of broadcast, cable, radio, publishing, and

digital businesses across two divisions – the Disney/ABC Television Group and ESPN Inc. The

Disney/ABC Television Group is offering entertainment and news by its own channels. ESPN,

which is the worldwide leader in sports media, is providing broad range of television, digital,

print, and radio outlets.

2) Parks and Resorts

Walt Disney Parks and Resorts (WDP&R) is one of the world’s leading providers of travel and

leisure experiences using storytelling and immersive live experiences. WDP&R includes the

Disney Cruise Line with its four ships – the Disney Magic, Disney Wonder, Disney Dream, and

Disney Fantasy. They offer unforgettable vacation experiences for guests around the world.

3) The Walt Disney studios

The Walt Disney Studios was founded when The Walt Disney Company was built. They bring

quality movies, music, and stage plays to audiences throughout the world. There are Walt Disney

2

Animation Studios, Pixar Animation Studios, Disney nature, Marvel Studios, Touchstone

Pictures, and DreamWorks Studios under The Walt Disney Studios. They also provide creative

contents across multiple platforms, including original music and soundtracks from The Disney

Music Group and stage productions from The Disney Theatrical Group.

4) Disney Consumer Products

Disney Consumer Products (DCP) extends the Disney brand to merchandise ranging from

apparel, toys, home décor, and books and magazines to foods and beverages, stationery,

electronics, and fine art. Their business activities are accomplished through a franchise-based

licensing organization focused on strategic brand priorities. Moreover, they publish children’s

book and magazines throughout the world.

3. Business Services

Disney offers Business to Business services and operates studios

1) Business to Business: The Disney Interactive Media Group offers the advertising on

Disney’s websites and The Disney Travel Agents helps travel agents and their clients to plan for

Disney vacations. Disney Meetings and Conventions offers meeting and conventions to all

groups who need to plan the occasion from Disney World Resort and Disneyland Resort.

Moreover, Disney Institute has been offering business program for companies to develop

themselves for over fifteen years.

2) Studio Operation: The Walt Disney Studios includes seven soundstages ranging from

11,000 to 32,000 square feet, costume, transportation, sign graphics, and craft service support.

Moreover, The Prospect Studio offers full service of production and is equipped with six

soundstages ranging from 4,400 to 21,000 square feet, one insert stage, and a rehearsal hall.

Disney also has Golden Oak Ranch studio and KABC7 Studio B for motion pictures, television,

commercials, music videos, and photography.

4. Countries of operation

Disney plays a role as the world’s leadier in high quality family entertainment. They have five

world-class vacaion destinations with 11 theme parks and 43 resorts in North America, Europe,

and Asia. Moreover, they operate in more than 40 countries with approximately 149,000

employees and cast members around the world.

3

1) North America: USA, Canada

USA: The headquarter which is located in Burbank, California is a leading diversifed

internationaal family entertainment and media enterprise. Moreover, it has the

Disneyland parks are located in Anaheim, California and Lake Buena Vista, Florida.

Canada: Disney has been entering business in Canada for more than 70 years. Disney in

Canada is involved in diverse business areas with The Walt Disney Studios, Disney

Consumer Products, Parks and Resorts, Media Networks, and Disney interactive Media

Group. Disney-branded TV channels are on the television and wide range of products are

sold at mass-market retailer and in Disney stores.

2) Latin America: Mexico, Venezuela, Brazil, Chile, Argentina

3) Europe, Middle east and Africa: Europe(Finland, Sweden, Norway, Ireland, United

Kingdom, Denmark, Belgium, Netherland, Germany, Czech Republic, Poland, Luxemburg,

France, Switzerland, Austria, Hungary, Italy, Portugal, Spain, Greece), South Africa, Middle

east(Turkey, Israel, United Arab Emirates)

United Kingdom: Disney has operated in UK more than 75 years. London is the regional

headquarters for Disney in Europe, the Middle East, and Africa (EMEA). Children and

families experience Disney in TV channels, Stores, on stages.

France: Disney has operated in France for more than 75 years and Disneyland Paris is

Europe’s number one tourist destination. It celebrated its 20th

anniversary in April 2012.

Disney has been experienced by French people through TV channels, magazines, and

stores.

4) Russia: Disney has been established CIS LLC on April 2006. It is engaged in media, studio

entertainment, and consumer products business. It has been contributing to the development of

the tourism industry working closely with Disneyland Resort Paris.

5) Asia pacific: South Korea, China, India, South East Asia, Australia, New Zealand

China: Disney has present in China since 1930’s and they started building a Shanghai

Disney Resort on April 2011 which aims to finish its construction on 2015. Hong Kong

Disneyland Resort, which is its first theme park, celebrated its 5th

anniversary in 2010

and continues to expand more theme lands. Also, China is a huge market for Disney

English business also. More than one million English language learning books were sold

and Disney Channel contents reached 530 million views through over 40 major cable TV

channels.

6) Japan: Disney established a local subsidiary in Japan in 1959. In April 2004, it integrated all

local subsidiaries and affiliates and renamed itself The Walt Disney Company (Japan) Ltd.

4

Today, WDCJ is operating five core segments - Media Networks, Parks Resorts, Studio

Entertainment, Consumer Products, and Interactive Media.

5. Strategy

1) Partnership

Disney’s Strategic Sourcing and Procurement Organization works with their business units and

suppliers across the world. They provide opportunities for suppliers to be a partner with Disney

and provide goods and services. This partnership helps Disney to create the beneficial

relationship with their supplier. Disney requests ten qualifications to be a partner which are

pricing, quality, on-time delivery, excellent communication, integrity, technical competence,

environmental protection, compliance with their standards, financial stability, and willingness to

share business risks with them.

2) Creative Strategy

Disney is known as a creative innovator in the entertainment industry, and there were specific

elements in the way they organized creative works that tended to guarantee outcomes. Walt

Disney, who is the founder of the Walt Disney Company, organized three rooms which had

different functions:

Dreamers (“Want to”): People for whom all things are possible

Realists (“How to”): People who sort things out

Critics (“Chance to”): People who pick up on the bits that don’t fit

Ideas were first created in the dreamer’s room and passed to realists and critic’s room. After

that, it is returned to dreamer’s room again. This cycle always involved the three rooms.

Table1

Disney’s creative strategy

Dreamer Realist Critic

Dominant question What? How? Why?

Representational preference Vision Action Logic

Approach Toward Toward Away

Time frame Long term Short term Long/Short

Time orientation Future Present Past/Future

Reference Internal-Self External-Env. External-Others

Comparison Match Match Mismatch

3) Reaching Global Markets

Disney’s strategies for reaching global markets include foreign outsourcing, licensing, and

direct investment. Their focus for global strategies was to establish the foundations for long-term

growth in the emerging markets of Latin America, Russia, India and China.

5

Foreign Outsourcing: Due to the higher wage in the United States, Disney adopted the

strategy of foreign outsourcing to reduce the cost of production. The main factories are

located in Asian countries especially in China and they distribute to all stores over the

world.

Licensing: In order to have their products available worldwide, they opened Disney

Stores outside of the United States and authorized licensees to resell their products.

Direct Investment: They opened Disney Stores around the world, as well as amusement

parks and resorts. Today, they have direct investment stores in five different countries.

Moreover, they have amusement parks and resorts in United States, France, Tokyo, Hong

Kong and an upcoming one in Shanghai.

6. Finances

1) Selected finance data

Table2

Selected finance data of Disney (2012)

(In millions)

2012 2011 2010

Statement of income

Revenues $ 42,278 $ 40,893 $ 38,063

Net income 6,173 5,258 4,313

Net income attributable to Disney 5, 682 4,807 3,963

Per common share

Earnings per share attributable to Disney

Diluted $ 3.13 $ 2.52 $ 2.03

Basic 3.17 2.56 2.07

Dividends 0.60 0.40 0.35

Balance sheets

Total assets $ 74,898 $ 72,124 $ 69,206

Long-term obligations 17,876 17,717 16,234

Disney shareholders’ equity 39,759 37,385 37,519

Statement of cash flows

Cash provided (used) by:

Operating activities $ 7,966 $ 6,994 $ 6,578

Investing activities (4,759) (3,286) (4,523)

Financing activities (2,985) (3,233) (2,663)

6

2) Stock Price and the number of share purchased

Table3

Stock price and the number of share purchased of Disney (2012)

Sales Price

High Low

2012

4th

Quarter $ 53.40 $ 46.85

3rd

Quarter 48.95 40.88

2nd

Quarter 44.50 37.94

1st Quarter 37.80 28.19

2011

4th

Quarter $ 40.97 $ 29.05

3rd

Quarter 44.13 37.19

2nd

Quarter 44.34 37.62

1st Quarter 38.00 33.08

- Total Number of Shares Purchased: 19,313,117

- Average Price Paid per Share: $ 50.95

3) Competitor and Industry Comparison

Table4

Disney’s competitor and industry comparison (2012)

DIS NWS TWX Industry

Market Capital 111.70B 72.55B 55.78B 264.35M

Employees 166,000 48,000 34,000 744.00

Quarterly Revue Growth 0.05 0.05 -0.00 0.13

Revenue 42.84B 34.33B 28.73B 277.83M

Gross Margin 0.21 0.38 0.45 0.38

EBITDA 10.90B 6.86B 7.28B 15.60M

Operating Margin 0.21 0.17 0.22 0.05

Net Income 5.60B 4.00B 3.00B N/A

EPS 3.10 1.67 3.09 0.01

P/E 19.96 18.71 19.31 20.12

PEG (5 year expected) 1.44 N/A 1.29 1.18

P/S 2.61 2.12 1.93 1.42

NWS = News Corp.

TWX = Time Warner Inc.

Industry = Entertainment - Diversified

7

7. Board Organization, Organizational chart and corporate citizenship

1) Board organization

The Disney Company believes that corporate citizenship is central to the business and brings

long-term value to shareholders.

Fig. 1 Disney’s Board Organization

Each function including community engagement, strategic philanthropy, environment and

conversation, and international labor standards have dedicated to develop strategy, manage

compliance, and oversee stakeholder engagement. The Insight and Integration Team analyzes

emerging issues, trends, and policy for the company.

The Board of Directors monitors trends in governance practices to assure the representation of

shareholder interests. The Board has established committees–the Audit Committee, the

Compensation Committee and the Governance, and Nominating Committee–to assist in the

execution of the Board’s responsibilities.

2) Organizational chart

Creative organizational chart

Disney’s organizational chart is popular for its creativity. It is based on the process of

story flow–from ideas to the final release of the film. We can follow the track of their

story making process by looking arrows from the top to the bottom.

In the chart, all divisions are classified as the production and the management, and all

positions in the chart are supporting the work flow. Walt Disney Studios put out this

organizational chart five years after its foundation to explain how the company works and

how creative stories are made by them.

CEO(Chief Executive Officer) – Robert A. Iger

CFO(Chief Financial Officer) – James A. Rasulo

SVP(Senior Vice Present), Corporate Citizenship – Leslie Goodman

Community

Engagement

Strategic

Philanthropy

Environment

and

Conservation

International

Labor

Standards

Insight & Integration

8

Fig.2 Disney’s creative organizational chart

Multidivisional Structure

Disney has the multidivisional structure, which is organized of groups of related

businesses with divisions that are responsible for the strategy of a coherent group of

businesses or market.

Fig. 3 Disney’s organizational chart

President

and CEO

Studio

Entertain

ment

Park and

Resorts

Consumer

Products

Media Internet Internatio

nal

Corporate

Responsibi

lity

Functional

areas e.g.

finances,

marketing

Functional

areas e.g.

finances,

marketing

Functional

areas e.g.

finances,

marketing

Functional

areas e.g.

finances,

marketing

Functional

areas e.g.

finances,

marketing

Functional

areas e.g.

finances,

marketing

Functional

areas e.g.

finances,

marketing

9

3) Business and ethics standards

Business standards and ethics training: Disney provides its own learning management

system known as Disney Development Connection to their employees and cast members.

They let all of their employees and cast members have knowledge and training to act

ethically and legally, in compliance with the Company’s Standards of Business Conduct.

Hiring and Human Resources: They provide equal opportunity for all employees and

applicants for employment without regard to race, religion, color, sex, sexual orientation,

national origin, age, marital status, covered veteran status, mental or physical disability,

pregnancy, or any other basis prohibited by state or federal law. Moreover, they train

their employees and cast members to fulfill their business goals consistent with their

culture and values.

8. Marketing Strategy

The Walt Disney Company’s marketing strategy takes into consideration the following

characteristics: Sell more to existing customers, expand their market place, continuous

promotion, tracking business, and always improve or add to existing products. They always

modify, expand, and create new ways to bring their customer to magic making their experience

never be the same.

(1) Product Strategy

Disney products offer well known high quality by the worldwide known brand. They also

customize their products with specific characteristics of the company, which demarcates and

differentiates their products from others. They continually improve their products and service

offerings and constantly update and modernize their ride so as to please regular customer while

attracting new ones.

(2) Price Strategy

They don’t have low price strategy. However, it is considered to be fare taking into

consideration the quality compared to other goods and services.

(3) Place/Distribution Strategy

Disney has its products distributed all over the world, and keeps seeking an expansion of the

market. Moreover, they position their main attractions in places with a high flux of people, so

more people can be familiar with the brand.

(4) Promotion and advertising Strategy

Disney is famous for continuous advertisement and various kinds of promotions. Especially,

continuous advertisement helped making people keep the company at all times. Disney's

ownership of media networks such as "ABC," "Disney Channel," and "ESPN" were effective for

10

television advertising, as well as radio commercials, print, and outdoor advertising. Moreover,

internet has been the main means of advertising recently. Disney is taking actions to digitalize their

contents and to offer the online interaction that develops customer loyalty, as children have more access

to the network with the new technology. They aim to reach a broader market at a lower cost.

9. Sustainability

1) Nature Conservation

Disney is actively involved in protecting habitats around the world. They provide the financial

support to animals and conservation projects through the Disney Worldwide Conservation Fund,

protect ecosystems with nonprofit organizations, and create opportunities for children and

families to discover experience and support nature.

Fig. 4 Disney Worldwide Conservation Fund Contributions

2) Environment

Disney is reducing its environmental impact through various projects. They have goals

throughout six environmental areas. They set long-term goals and targets for each area and report

them every year. They also have climate Solutions Fund to achieve the goal of “zero net direct

greenhouse gas emissions”. Since 2009, Disney has invested $15.5 million globally.

Table 5

Disney’s environmental sustainability activities

Section Long-Term Goals Targets

Climate

and energy

Achieve zero net direct greenhouse

gas emissions

Achieve 50% of long-term goal

through a combination of reductions,

efficiencies and offsets by 2012

11

Waste Send zero waste to landfill Decrease solid waste to landfill to 50%

of 2008 baseline by 2013

Ecosystems Have a net positive impact on

ecosystems

Develop and integrated approach to

design, engineering, and habitat

protection for all new construction

projects by 2010

Water Minimize water use By the end of 2012, Water

Conservation Plans will be adopted to

identify areas for water conservation

improvement

Product

footprint

Minimize product footprint Develop a product footprint target

Education

and action

Inform, empower and activate

employees, business partners and

consumers to take positive action for

the environment

3) Community

Disney has community projects including corporate giving support, employee volunteerism, and

inspiring communities as community sustainability work. Moreover, they have MWBE

(Minority and Women Business Enterprises) which is an important part of its sourcing and

procurement activities which is actively seeking minority owned firms in the process. The

MWBE program has enhanced value received from the supply by identifying, developing, and

referring qualified minority owned businesses.

10. Reason why I want to apply for the Disney professional internship

I had grown up with many cartoons and animations when I was young. Disney stories and

characters were famous even when I was a little kid. I knew most of the characters but I don’t

think I was a big fan of that, because Japanese animations were more famous in Korea at that

time. The time when I started watching Disney movies is, surprisingly, just a year ago after I

came to America. I was really surprised that most of college students have watched almost all of

Disney movies and are still watching them. Many friends of mine here are huge fan of Disney,

and they even memorize lines and songs of movies because they’ve watched them so many times.

I thought animations are for just kids, but it was still really fun for me to watch many movies.

Many stories in Disney are loved by all people over the world and they are remade in many ways

like products and performances. I think beloved stories have that much power in the

entertainment market. I wanted to learn and know how they create such stories despite of cultural

differences, and their strategy formation and implementation. I want to work in a field of

international entertainment business such as exporting and importing movies and performances,

so I thought it would be really helpful for me to learn in the company which is the most creative

and which has the broadest entertainment business over the world.

12

References

"2010 Corporate Citizenship Report". The Walt Disney Company. Web. Retrieved 20 Apr

2013.

Csikszentmihalyi, M Creativity: flow and the psychology of discovery and invention.

Harper Collins, 1996. Print.

Delphine, Hirasuna. "Walt Disne'ys Creative Organizational Chart." @Issue: the online

journal of business and design 07, Aug 2010. Web. Retrieved 5 May. 2013.

<http://www.atissuejournal.com/2009/08/07/walt-disney’s-creative-organization-chart>

Dilts, R. B. Strategies of genius: volume 1 Aristotle, Sherlock Holmes, Walt Disney,

Wolfgang Amadeus Mozart. Meta Publications, 1994. Print.

Dilts, R. B. Tools for dreamers: strategies for creativity and the structure of innovation.

Meta Publications, 1991. Print.

Drew, Abbie. Starting a Business. 5 Secrets to Walt Disney World's Success. Web.

Retrieved 30 Apr 2013. <http://demc.com/artman/publish/article_130.shtml>

"Fiscal Year 2012 Annual Financial Report And Shareholder Letter.". The Walt Disney

Company. Web. Retrieved 20 Apr 2013.

Nugget, Tom. (n.d.). The University of Chicago. Marketing Disney's mighty mouse. Web.

Retrieved May 5 2013. <http://www.uchicago.edu/features/20090817_rasulo>

The Walt Disney Company website. Web. Retrieved 27 Apr 2013.

<http://thewaltdisneycompany.com/>

Vower, D. (n.d.). “Strategies for Reaching Global Markets: Licensing”. Idea Marketers.

Web. Retrieved 5 May 2013.

<http://www.ideamarketers.com/?articleid=1211892&CFID=39870490&CFTOKEN=32

609700>

13

“Walt Disney International.” Disney: Corporate. Web. Retrieved 5 May 2013.

<http://corporate.disney.go.com/investors/annual_reports/2009/keyBusinesses/waltDisne

yInternational.html>

Yahoo Finance. Web. Retrieved 25 Apr 2013.

<http://finance.yahoo.com/q/co?s=DIS+Competitors>