The Walt Disney Company - Executive Summary

The purpose of this report is to analyze The Walt Disney Company, and their core business unit Walt Disney Pictures, with regards to get a status of their performance. Furthermore it looks at the strategies within the companies and how their execution of the strategies have worked and matched the industry situation.

To analyse the situation, a SWOT analysis have been performed to unveil their competitive position and their strategies on both global, corporate and business unit level have been described and placed into context of the factors normally known from the PEST analysis. In addition to this, then a general analysis of the industry has been made, also containing some factors from the PEST analysis.

The company’s overall performance is positive, with a 2004-2005 growth of 3,9 percent, and average operating margins on 9.6 percent, which is 3.5 points over industry average. The large historic brand portfolio is a significant strength that supplies revenues even when newer productions are failing.

The corporate entity of Studio Entertainment has not contributed positively to the overall growth performance in 2004-2005. A setback of 69% in operating income should be considered a strong signal that the entity needs to restructure their strategies. Especially the lack of ability to produce new hits has finally come in to display, with a decline of DVD sales of previous productions being the main reason for the setback.

A big change in the industry, and causing Studio Entertainment to fail, has been the transition from 2D to 3D animation. The Walt Disney Company have so far kept their stand on creating 2D animation, and this have partly created this lack of having successful productions. Hopefully the acquisition of Pixar, the 3D animation studio, will help to stop this negative trend.

The lack of ability to transit in to the world of 3D animation could very well be a result of an underlying issue; the company’s lack ability to reinvent itself and be agile towards new technologies and trends.

A general recommendation for the company would be to keep an open mind to try new areas and technologies. Incorporate and R&D for new concepts and test new technologies. Their current agility let them lack a truly successful Disney production in a decade, with the acquisition of Pixar as the end of the decade.

A larger focus on their core productions, the animation movies, should make it easy for The Walt Disney Company to return to their once glorious status as McDonalds of the film animation industry. Especially their large and credible brand power can help them to return to the right track.

 

Details will come later...