Walt Disney Company

Walt Disney Company

According to the 2011 annual ranking of America's largest Fortune 500 Companies, The Walt Disney Company, is ranked number sixty five and is the subject for review and analysis for investment recommendation (Money Magazine, 2012). Walt Disney Company is considered the leading family entertainment and media company with four distinct business segments. These business segments provide Walt Disney Company a diversified and international presence. A brief overview of each segment is listed below:

*The Walt Disney Studios - World-renowned animated features and live-action motion pictures that include, Pixar, Disney Animation, Touchstone Pictures, Home Entertainment, Theatrical Productions, Disney on Ice, Hollywood Records and Marvel.

*Parks and Resorts - Encompasses Disney Cruise Line, Vacation Club Resorts, Adventure locations which include their theme parks and guided tours.

*Disney Consumer Products - Merchandize ranging from apparel, toys, home décor and books and magazines to interactive games, foods and beverages, stationery, electronics and fine art.

*Media Networks - Media Networks comprise a vast array of broadcast, cable, radio, publishing and Internet businesses. Key areas are: ABC Television, Disney Channels, SOAPnet and ESPN Networks.

Walt Disney's President and CEO, Rober Igler states, "Since becoming President and CEO in 2005, I have focused on three strategic priorities: creating high-quality family content, making experiences more memorable and accessible through innovative technology, and growing internationally. In fiscal 2011, net income attributable to Disney was a record $4.8 billion, an increase of 21% over last year, and revenue was a record $40.9 billion, up 7% from last year. Diluted earnings per share increased by 24% to a record $2.52. I'm particularly gratified by our outstanding performance in fiscal 2011, given the challenging global economic environment" (Disney, 2011). It is clear that Walt Disney Company has the size, financial stability, diversification and international presence to be a major force in the entertainment industry short and long-term.

Economic Trends Influencing the Business

For an enterprise as large and complex as the Walt Disney Company, a wide range of factors could affect future performance. In addition, each business unit may have their own unique set of economic trends and factors that impact performance.

Global Economic Change

Decline in economic conditions around the world has reduced discretionary or attendance and spending at the parks and resorts, cost for advertising, spending on movie releases and purchasing of consumer products. (Disney, 2012) also states, "Recent instability in European economies presents risks of similar impacts in our European operations. Economic conditions can also impair the ability of those with whom we do business to satisfy their obligations to us. Changes in exchange rates for foreign currencies may reduce international demand for our products, increase our labor or supply costs in non-United States markets, or reduce the United States dollar value of revenue we receive from other markets"(p26).

Change in Demand for Entertainment

All entertainment company's face a significant challenge trying to figure out what the consumer wants. This changes frequently and is very hard to predict. (Disney, 2012) states, "Changes in public and consumer tastes and preferences for entertainment and consumer products could reduce demand for our entertainment offerings and products and adversely affect the profitability of any of our businesses"(p28). Walt Disney's key to their success over the years has been their ability to consistently create and distribute filmed entertainment, programming, electronic games, theme park attractions and travel experiences that meet the consumers' needs and ever changing preferences.

Technology Changes

Changes in technology could affect the demand for entertainment products or the cost to produce or distribute them. The media and internet play a significant role in their ability to compete. (Zacks, 2012) states, "New technologies affect the demand for products, the time and manner in which a consumer acquires and view entertainment products and the options available to advertisers for reaching their desired markets. For example, the success of Walt Disney Company offerings in the home entertainment market depends in part on consumer preferences with respect to home entertainment formats, including DVD players and personal video recorders, as well as the availability of alternative home entertainment offerings and technologies, including web-based delivery of entertainment offerings"(p3). (Zacks, 2012) states later, "Technological developments offer consumers an expanding array of entertainment options and delivery vehicles which may include options entertainment companies may not have fully developed"(p4).

Strategies the company has used or could use for adapting to changing markets

Walt Disney Company has made both short and long-term strategies to deal with the changing market factors. For a short-term strategy, Walt Disney invested into acquiring Pixar and Marvel to enhance their creative and technological innovation, as well as bring well known and branded characters to life with significant number of hit movies. They also redesigned some of their retail stores. (Disney, 2012) states, "We redesigned our Disney Stores, which have been transformed into an immersive, interactive experience with our cherished characters, classic stories and unmatched brands at new and renovated locations worldwide"(p4). Longer-term, Walt Disney continues to invest into park expansions and currently has initiatives expanding into Russia and China. In Russia, they launched a free-to-air Disney Channel that reaches 75% of the country's viewers. They are now focused on expanding into China. (Disney, 2012) states, "With more than 1.3 billion people, China is an important and growing market and an exciting opportunity for us"(p4).

Tactics the company has implemented to achieve their strategic goals

Goal 1: Creating High-Quality Family Content

Animation is the heart and soul of Disney and content development. (Zacks, 2012) states, "Since becoming part of the Company nearly six years ago, Pixar has greatly advanced Disney's animation studio with incredible creativity and technological innovation as well as bringing beloved new characters,