UNIVERSITI TEKNOLOGI MARA (UiTM) CAWANGAN MELAKA

KAMPUS BANDARAYA

SEMESTER 2 SESI II 2020/2021

MAC 2021 – OGOS 2021

STRATEGIC MANAGEMENT (MGT657)

FACULTY OF BUSINESS AND MANAGEMENT

GROUP ASSIGNMENT : CASE STUDY - WALT DISNEY

LECTURER : SIR MUHAMMAD FAIRUZ BIN JAMIL

CLASS : M1BA2424D

GROUP MEMBERS :

NAMES ID MATRIC

NURANNISAH BINTI MAHMOR 2020988641

NUR SUAIDAH BINTI RAHIMEE 2020970243

PUTERI NINA FARHANA BINTI MIOR 2020983179

ZORAINI

FIFYDANI MISHAFIRA BINTI 2020980889

SHAHAIRUL

ACKNOWLEDGEMENT
 In preparation of our assignment, we had to take the help and guidance of some respected
persons, who deserve my deepest gratitude. As the completion of this assignment gave us much
pleasure, we would like to show our gratitude to Sir Muhammad Fairuz Jamil, our lecturer for
the subject Strategic Management (MGT657) for giving us a good guidelines for assignment
throughout numerous consultations. Secondly, we would also like to thank our parents and
friends who helped us a lot in finalizing this assignment within the limited time frame. We would
also like to expand our gratitude to all those who have directly and indirectly guided us in
writing this assignment.

TABLE OF CONTENT

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 CONTENT PAGE
ACKNOWLEDGEMENT 2
TABLE OF CONTENT 3
EXECUTIVE SUMMARY 4
BACKGROUND OF THE CASE STUDY ;
Walt Disney Company 5
VISION AND MISSION 6

ORGANIZATIONAL STRUCTURE 7

THE MAIN BUSINESS OFFERED BY

COMPANY 8

SWOT ANALYSIS 10

SWOT MATRIX 15

EXTERNAL FACTOR EVALUATION 17

(EFE)
INTERNAL FACTOR EVALUATION (IFE) 19

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EXECUTIVE SUMMARY

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 BACKGROUND OF THE CASE STUDY; Walt Disney Company

Walt Disney and his brother Roy founded the Disney Brothers Cartoon Studio in
Hollywood, California on October 16, 1923. The Walt Disney Company, now known as the Walt
Disney Studios, has had a massive impact on the entertainment industry and is now one of the
world's major media conglomerates. A talented artist from a young age, Walt Disney drew
cartoons for various publications and became interested in cel animation while working for the
Kansas City Film Ad Company. After his Laugh-O-Gram Studio went bankrupt in 1923, Walt
moved to Los Angeles, where Roy was recovering from tuberculosis. While there, he finally sold
a short film produced by Laugh-O-Gram which is Alice’s Wonderland and signed a contract to
make six more such films. In order to produce the series, the brothers founded their company and
persuaded both Virginia Davis, who played Alice, and their collaborator Ub Iwerks to join them
in Hollywood. Disney began to work on his most renowned creation after the success of the
Alice Comedies and a series centered on a character dubbed Oswald the Lucky Rabbit. Next,
Mickey Mouse was first presented to the public with the release of Steamboat Willie in 1928.
The character would go on to become one of, if not the most, well-known cartoon characters of
all time.

The success of the Mickey Mouse persuaded Walt Disney that his studio could make a
feature film, which he did in 1934. Snow White and the Seven Dwarfs, nicknamed "Disney's
Folly" by some, went 400 percent over budget and required almost 300 animators, illustrators,
and assistants, yet it was a great hit when it was released shortly before Christmas 1937. The
Walt Disney Company has since released a slew of pioneering and critically acclaimed films.
Since 1955, it has grown into a holding company for a variety of media and entertainment
holdings, developing theme parks throughout the world and purchasing dozens of businesses in
the 1990s and 2000s. ABC, ESPN, Pixar, Marvel Studios, and Lucasfilm are currently owned
and operated by Disney. What began as a small group of animators making short children's
cartoons has grown into one of the world's most recognizable brands. Original Disney cartoons
and feature films are among the most popular and enduring works in the American film canon.

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 VISION AND MISSION

Disney’s vision on the year 2013 is “to make people happy”

NEW VISION

“To be one of the world’s leading producers and providers of entertainment and information.”

NEW MISSION

‘To entertain, inform, and inspire people around the globe through the power of unparalleled
storytelling, reflecting the iconic brands, creative minds and innovative technologies that make
ours the world’s premier entertainment company.”

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 ORGANIZATIONAL STRUCTURE

The organizational structure of the Walt Disney Company is a horizontal structure.

Departmentalization, or the division of the organization into subunits, is the foundation of a
horizontal structure (Bateman & Snell, 2011). The Walt Disney Company features a
multidivisional (M-form) cooperative organizational structure that concentrates on business type.
In diversified businesses, a multidivisional or M-form organizational structure is prevalent.
Disney implements the cooperative M-form business structure in this company study scenario.
Constrained diversity is a feature of the cooperative M-form. Interdivisional benefits, for
example, are a top focus in diversifying the business and adopting The Walt Disney Company's
generic competitive advantage strategy and aggressive growth methods. In addition, the
company's corporate headquarters has a strong centralization strategy that involves functional
groups. In the worldwide mass media, entertainment, and amusement park industries, such
centralization is a structural component that enables strong management control over varied
expansion. Interactive media, studio entertainment, consumer products, parks and resorts, and
media networks are the five main segments of the Disney Company. This divisional strategy is
demonstrated by the grouping of departments by product. Although each product is closely
related to the others because they are all about entertainment in some way, they each have their
own descriptions

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 THE MAIN BUSINESS OFFERED BY COMPANY

1) Media Networks

Disney owns and manages the ABC Television Network, which covers 99 percent of all
households in the United States. ABC-owned Television Station Group, ABC Studios, Disney
Channels Worldwide, ABC Family, SOAPnet, Disney ABC Domestic Television, Disney Media
Distribution, and Radio Disney Network are all part of this division. More than 220 affiliate
stations are part of the ABC Television Network across the USA. The Disney Channel is a
network of 94 children's and family entertainment channels available in 169 countries and 34
languages throughout the world. ABC Family is a mix of television shows and films. From
daytime and primetime operas to reality shows and movies, SOAPnet controls character-driven
soapy drama. Disney Media Distribution is a multiplatform multinational distributor of branded
and non-branded content. Radio Disney is available in more than 40 U.S markets, and available
on satellite radio, mobile apps and the web.

2) Parks and Resorts

Disneyland Resorts in California, Tokyo Disney Resort, Disneyland Resort Paris, Hong Kong
Disneyland, Walt Disney World Resort in Florida, and other Disney parks and resorts are among
the company's ten divisions. Disneyland Resort Paris is 51 percent Disney-owned, and Hong
Kong Disneyland is 47 percent Disney-owned. Disney's newest theme park will open in
Shanghai's Pudong district.

3) Studio Entertainment

Live-action and animated films, direct-to-video programming, musical albums, and live-stage
plays are all produced by Disney. Theatrical Market, Home Entertainment Market, Television
Market, Disney Music Group, and Disney Theatrical Productions are the names of the companies
that distribute Disney films. Disney has also given third-party companies the rights to make and

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distribute feature films like The Fantastic Four and X-Men. On these films, Disney receives a
licensing fee, while the third-party studio bears the cost of production and distribution. In
addition, Disney's studio entertainment SBU, which includes Marvel, Pixar, and others, has a
wide business line.

4) Consumer Product

Disney's consumer products division collaborates with licensees, manufacturers, publishers, and
retailers throughout the world to create, market, and sell a wide range of items based on new and
old Disney characters. Disney's products include character items, licensing, books, and
periodicals, as well as The Disney Store. In mid-2011, Disney produced a new toy line based on
Pirates of the Caribbean: On Stranger Tides that recreated the film's fantasy, action, and
adventure. Based on retail sales, Disney is the world's largest licensor of character-based items
and manufacturer and distributor of children's film-related products.

5) Interactive Media

Disney’s interactive media segment creates and delivers games and media for smartphones, and
tablets. In January 2013, Disney Interactive Games' Avalanche Software unveiled the Toy Box
cross platform game as "Disney Infinity" based on the Toy Story 3 game's "Toy Box" mode
crossed with a toy line. Also in January, Disney Interactive announced the closure of Junction
Point Studios.

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 SWOT ANALYSIS

 STRENGTHS

The Walt Disney Company has a very strong brand image and is loved all over the world. In
2021, it ranked fourth in the Fortune magazine's "World's Most Admired Companies" (Fortune,
2021) ranking. In fact, it is one of the top ten companies on the wealth list in recent years. Disney
has a diversified business portfolio, including parks, studio entertainment, television, music,
movies, consumer products and video games. Walt Disney has also created a dependable
distribution network over the years that can reach the majority of its potential market. Not only
that, The company's movie selection, as well as corresponding merchandise and amusement park
services, continues to expand throughout time.

The Disney streaming service has been a huge success (The Economist, 2020). Disney has a
strong and stable financial position, which helps it successfully launch and complete new
projects and generate returns on capital expenditures. The company's financial strength stems
from its diverse business portfolio. Walt Disney has high free cash flow, which allows the
corporation to invest in new ventures. Stoll (2021) reported that the company's total revenue in
fiscal year 2020 was $65.39 billion and currently Disney is known as the world's largest
entertainment conglomerate.

Disney has a highly skilled workforce and has invested heavily in training and development.
Successful training and learning program have resulted in a highly competent workforce. Most
of his employees think that working for him is their dream job and feel that they live in a fairy
tale. This makes them very loyal and motivated to perform better. Disney is very committed to
fulfilling its social responsibilities. It prides itself on providing a safe and fun experience for
adults and children. They are also very committed to some important issues, such as human
rights, waste reduction and protection of water resources.

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  WEAKNESSES

Weakness is the next issue to be addressed in the Walt Disney Company SWOT analysis. Of
course, the Walt Disney experience is quite expensive. Therefore, it is not accessible to
everyone. This has led consumers to find cheaper alternative forms of entertainment for their
families. This is due to high demand around the world. Everyone is willing to go there to gain
experience and have fun. Each day, Disney world limits people who can enter the place to avoid
crowded and avoid the rides for having long lines.

Next, new characters and stories are missing. This can give a competitor a good opportunity to
capture some of the company's market share by introducing new and different roles. The Walt
Disney Company has been criticized many times for various issues in the past. Frontier topics of
controversy include stereotypes about non-white characters, prejudice, the inclusion of animals
in theme parks, and allegations of plagiarism. These disputes have damaged the reputation of the
brand. Due to the global lockdown, most of Disney's parks and entertainment venues will be
closed in 2020. This caused the company to lose a lot of revenue and a large number of
employees. For many people, being fired is not a loss of livelihood, but a loss of dreams (BBC,
2020).

Moreover, Walt Disney has a high cost of production because to fulfill demand around the
world, they expand their business to more countries. It costs a lot to build more theme parks,
resorts, interactive media and many more in other countries. Hence, it also required a different
exchange rate for each country. The rides for theme parks need to have maintenance regularly in
order to maintain the security and safety. New rides also need to be maintained because many
people use the rides. When a lot of people use the rides, the paint will fade and repairs need to be
made which results in a high cost of production.

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  OPPORTUNITIES

Due to its global reputation, Disney has the opportunity to expand to more countries.
Consideration should be given to creating virtual theme parks and entertainment experiences that
fit the new normal trend under current global constraints. Currently, Disney plans to expand their
opportunity in China, India, Brazil and other parts of the world. In order to have a successful
plan, they are consistently engaged in conversations with many different people in the market
who are interested in having Disneyland in their market. Based on the theme parks that they built
before, they seem to have different themes for it such as fairy tales.

Disney should take advantage of increased streaming media activities and consider more
options to increase revenue and that is why they started to restructure their entertainment and
media divisions. Walt Disney will have a single organization after centralizing their media
business. They are in charge of content distribution, Disney+ and ad sales. Due to the outbreak,
movie theaters can’t continue their business and they depend on Disney+ to revive the business.
Many theatrical releases need to push back the release because of the pandemic. Disney+ helps
the company to gain back their revenue and get a lot of anticipation and audiences.

Similarly, new trends in consumer behavior give them the opportunity to generate new sources
of income and risk creating new products. Consumer behavior has changed from time to time, it
is difficult to satisfy all of them. Disney has to give great outcomes with the majority trend of
consumer behavior in order to attract more people to come to Disneyland, watch the news movie
release and more. Disney takes this opportunity not just to generate income but also to maintain
their company in the current existing market. Creating a new product may have a high risk of
rejection by the consumer, but to make their company relevant in the future, it requires a lot of
new products to offer.

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  THREATS

Threats are the latest topic discussed in the Walt Disney Company's SWOT analysis. New and
cheaper products and entertainment offered by competitors may result in loss of corporate
revenue. Fox, Sony, AMC Network, Time Warner Inc. and other competitors will keep on
competing with Disney. Walt Disney needs to make more innovation and creativity in order to
grow their businesses. For instance, Disney introduced new technology to produce products,
such as producing movies which have international Market standards. Disney should overcome
their limitations and improvise more in their products so that they can create more success in the
business as compared to their competitors.

In addition, new technologies created by competition may pose a serious threat to the company.
Disney’s main competitors of different sizes in various markets are CBS, Sony, Comcast, Time
Warner, Fox, AMC Networks, Universal Studios, Cedar Show, Six Flags, and DC. It’s hard for
Walt Disney to come up with new technology as a whole because of their different divisions.
The technologies are growing rapidly such as using technological devices in order to fulfill the
requirements for advertising and entertainment. These technologies are chosen by the customers
because they want the best experience and easy access. Their competitors also have started using
the new technologies to keep up with the trend.

The current global economic situation has caused many people to lose their jobs and income.
Therefore, they will not consider spending on non-essential entertainment products and forms.
Since The Walt Disney Company operates in many countries, it is vulnerable to currency
fluctuations. This pandemic really affects them as they need to close most of their business in
order to follow the protocol given by the government to avoid the spread of the virus. Their park
and resort. Disney had to lay off most of their employees to avoid losses and save their business.
Since the start of COVID19, the management team has had a hard time sustaining the business
by cutting expenses, modified their operations in order to run efficiently.

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 Strengths (S) Weakness (W)

➢ Diversified business portfolio ➢ Quite expensive

➢ Strong and stable financial position ➢ New characters and stories are
➢ Highly skilled workforce missing
➢ High cost of production

Opportunity (O) Threats (T)

➢ Opportunity to expand to more ➢ Competitors

countries. ➢ New technologies
➢ Increased streaming media activities ➢ Global economic
➢ New trends in consumer behavior

SWOT MATRIX

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 STRENGTH (S) WEAKNESSES (W)

1. Diversified business 1. Quite expensive

portfolio 2. New characters and
2. Strong and stable stories are missing
financial position 3. High cost of
3. Highly skilled production
workforce
OPPORTUNITIES (O) SO STRATEGIES WO STRATEGIES

1. Expand to more 1. Diversified business 1. The price is quite

countries portfolio can expand expensive so that we
2. Increased streaming business to other can increase
countries. streaming media
media activities
2. Strong and stable activities.
3. New trends in financial position will 2. Required high cost of
help to increase production to expand
consumer behavior.
streaming media business to other
activities countries

THREATS (T) ST STRATEGIES WT STRATEGIES

1. Competitors 1. Strong and stable 1. The expensive price is

financial position can caused by adapting
2. New technologies
effort firm to use the the new technologies
3. Global economic new technologies for for the business.
business
2. Diversified business 2. Our existing
portfolio can outstand characters and stories
company among cannot imitate by the
competitors. competitors

SO strategies are strategies that use their resources of internal strengths to capitalize on their
external opportunities. The first strategy is a diversified business portfolio can expand

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business to other countries. Disney plays a strong presence in the entertainment industry and
they do not only own studio entertainment but there are several other businesses including parks,
television, music, movies, consumer products and video games. As for example, because of the
universal themes in its entertainment shows that transcend language and culture, Disney reaches
a truly worldwide audience. It has also opened 11 theme parks throughout the world to raise
brand awareness and expand into new markets.

The second strategy is a strong and stable financial position will help to increase streaming
media activities. Walt Disney owns an excellent financial position and has aided in its
expansion and it has significant free cash flow, which allows the corporation to develop into new
ventures. Due to its strength in terms of financial, the company can increase and focus on the
streaming side of the business, such as Disney+, which has been a positive component towards
their company performance. They can take advantage of the quarantine as a result of this, which
is also a major element in the rise of streaming activities around the world.

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 EXTERNAL FACTOR EVALUATION (EFE)

Key External Factors Weight Rating Weighted

Score
Opportunities

1. Growth through further diversification  0.12 4 0.48

2. Increase Media Networks/Broadcasting 0.15 3 0.45

market share
3. International growth/New markets 0.12 4 0.48

4. Changes in technology and consumer 0.15 3 0.45

consumption
Threats

1. Economic recession 0.12 4 0.48

2. Changes in technology and consumer 0.15 3 0.45

consumption
3. Intellectual property 0.1 2 0.2

4. Uncontrollable changes in travel and tourism 0.09 2 0.18

TOTAL SCORE 1.00 3.17

Disney’s External Factor Evaluation (EFE) table above, reveals that the organization operates
within an incredibly complex environment, yet, it has a lot of opportunities. Opportunities for
Walt Disney are to increase media networks and new markets. They expand their business to
more countries, and this received response shows that it is superior which is a good response
towards our international growth. Next, increased media networks received above average
response for the rating. Walt Disney used these media networks to promote and market their
business with different divisions.

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The major threats that Walt Disney needs to comprehend are economic recession and changes in
technology. During the pandemic, many companies cannot survive to continue their business.
This economic recession occurs to the whole world and affects most of the business including
Walt Disney. This shows a great response based on the rating given is 4, which is the response is
superior. Besides that, changes in technology are also a threat to the company because they need
to keep up with the new trends and technologies. In order to not be left behind, Walt Disney try
hard to follow the current technologies despite their business with different divisions. The rating
given for the response is above average for these threats. The total weighted score is 3.17

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 INTERNAL FACTOR EVALUATION (IFE)

Internal factor Weight Rating Weighted score

Strength
S1 Diversified
business 0.04 3 0.12
portfolio

S2 Strong and
stable financial 0.15 3 0.45
position
S3 Highly skilled
workforce 0.03 3 0.09

S4 One of the
most 0.03 2 0.06
recognizable
entertainment
company in the
world

S5 Disney is the
largest 0.15 4 0.6
worldwide
licensor of
character-based
merchandise and
producer of
children's film-
related products
based on retail
sales

S6 Total
consolidated 0.1 3 0.3
revenues and
operating income
increased in

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 2012 and 2011

Weakness
W1 Quite
expensive 0.1 3 0.3

W2 New
characters and 0.05 2 0.1
stories are
missing

W3 High cost of
production 0.2 4 0.8

W4 Disney has
such a diversify 0.15 3 0.45
product range
that it can reduce
efficiency and
lead to a lack of
strategic focus

Total score 1.0 3.27

Based on the Disney’s Internal Factor Evaluation (IFE) table above, the total score for internal factor
is 3.27 out of 5. The number has showed the moderate performance for the internal strategy in the
company. To analyze, The Walt Disney Company as largest worldwide licensor of character-based
merchandise and producer of children's film-related products based on retail sales which has
recorded the higher score in the strength while the new characters and stories are missing has
stated the lowest score for this weakness table. To sum up, one of the strengths is that it is one of
the most recognizable entertainment companies in the world’. They should continue to advertise
heavily, and remodel and keep up with all of the parks so it remains attractive to the customers.
Also, offering different method to attract customer and enhance interesting content that follow
the trend especially during the economic downturn such as covid-19.

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While for the weaknesses, The Walt Disney Company should overcome the critical weakness
such as decrease the cost of entertainment production. If it gives impact on the business, they
could search for any approaches to reduce back on those expenses or ways to enhance
advertising that could promote the entertainment. Other than that, The Walt Disney Company
also should focus more on the new characters and stories that are missing. If the company does
not make any improvement in this segment it will makes customer no longer have interested in
experiencing the same product that has been known. For this reason, they should be more
creative and come out with new idea by following the new trends.

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