FIN 370's Strategic Initiative: The Walt Disney Company
Strategic Initiative: The Walt Disney Company
FIN/370
February 17, 2014
Strategic Initiative: The Walt Disney Company
The Walt Disney Company is a global brand recognized throughout the world. As part of an Oligopoly market structure the Walt Disney Company works tirelessly to maintain its reputation, integrity, and social responsibility to the communities of the world through quality entertainment and communication tools for the entire family. According to Disney, “Disney’s performance in fiscal 2013 reflects the impact of the company’s acquisitions and capital investments and long-term strategy focused on exceptional creativity, innovative use of technology and global growth.” The Walt Disney Company’s plans are a part of the company’s goals which is to be the world’s leader in entertainment and communication. In order for the Walt Disney Company to keep its influence in the world of entertainment and communication, the Disney Company has continually used its revenues and profits to grow its brand name and products around the world by introducing the different cultures of the world in one location. One example …show more content…
of the Disney Company strategic and financial planning initiative has been the success of the Walt Disney World Parks and Resorts in Orlando, Florida. The Walt Disney Company has also used diversity as a strategic tool by using innovative technology to stay ahead of the communication process with its customers. The advances in technology have played a major role in the success and prosperity of the Walt Disney Company along with Disney’s desire to bring entertainment to the people of the world. The Disney Company is represented through cable and satellite, television, film, the internet, broadcasting, video games and DVD, Radio Disney, and mobile applications, Disney Cruise Lines, and Hotels, retail shops, restaurants, the Disney Music Group and Publishing, and its most beloved and world renowned Disney characters that have grown from its humble beginnings at the original Disney studio and they continue to grow. The Walt Disney Company must also be aware of the changing environment, plan, and prepare for the competition it faces in a changing and advancing technological society. The company uses the Intellectual Property Protection Act to protect its brand and property to receive the company’s full rights, benefits, and profits belonging to the Walt Disney Company. Marketing and research is very important information for the Disney Company for advertising and introducing new products to the market because these types of strategies increase cost but the benefits should increase revenues and profits. When a global empire like the Disney Company does not predict or forecast what the market reactions will be towards its products and services, the financial consequences are significant, that is, the cost can be in the hundred million dollar range or even billions. Because so much of the Walt Disney Company’s success is through innovative technology, the cost to protect the company’s property, employees, and customers are enormous because of the digital environment of today. As the Disney Company continues to pursue and maintain its company’s mission and goals, its strategic plans in the short-term must relate to its short-term financial planning. For example, if the company decides to open a theme park in China, the working capital must produce the income needed to pay the bills. Thus, the long-term strategy should also reflect and support the financial plan using the income statement and balance sheet for paying off any financing and receiving a return on equity. Even though a company cannot control the weather, predict the fluctuations of currency or the breakdown of financial markets around the world, it is important to have cash reserves in the bank and marketable securities that can be converted into cash easily and quickly if the organization needs it. Employees are the most important part of the Disney Company capital and a healthy financial company will strategize and financially plan for the employees to have good benefits that support the company’s character and personality, a substantial cost. Like any successful global empire the Walt Disney Company must be led by an innovator, adaptable to change, inspired to please, guided by the most creative and skilled workers in their fields and most important, motivated to succeed beyond expectations. The Walt Disney strategy and initiative must be designed to overcome any obstacles that may arise in its path, and to do that the company must strategically plan to support and enhance its short-term and long-term financial planning by planning, leading, controlling, and monitoring the markets of the world. Walt Disney has ventured on a new and innovative enterprise, one that is expected to generate millions if not billions of more dollars; this venture began in April of 2011 and is expected to be completed in 2015. Expectations run high, but no doubt this new initiative was bound to affect costs in the Walt Disney Company. Money would have been spent on researching the locations for the resorts; Disney would have to be sure that a profit could be made wherever the resorts were located. Disney would have had to spend money in selecting the prime location which would give easy accessibility to potential guests. Disney would also have to spend on materials and constructing the buildings or theme parks planned to use in the resorts, of course a lot of spending would be put into the actual planning of the resort. Money would also have to be spent on purchasing the land and permits associated in buying land. There may be even more costs attached to purchasing certain rights in a foreign country. Obtaining certain licensing may also be a requirement. Another expense could entail marketing the new resort. Advertising of all phases would be in order which will increase the cost, new staff would have to be hired, and that would most certainly affect costs. The question of legal proceedings on entry to a new market would definitely be a factor to increase expenditure, not to mention taxes – those owed to the government and the cost incurred by the preparer of the returns. Undoubtedly expansion will increase both current and long term debt, but because Walt Disney has gained such a wealth of knowledge in the area of Finance there is no doubt that its new venture will be a resounding success both culturally and financially. The Disney Corporation initiative known as the Shanghai Disney Resort is potentially one of the most lucrative moves the Disney Corporation has ever endeavored to make. China boasts the world’s largest population count, clocking in around 1.354 billion. The population density of the country is roughly 363 people per square mile (World Population Statistics, 2013). These figures alone hold much promise if the initiative is deemed a success. Attracting a fourth of that number to the park would herald a sound return on the investment and risks taken for the Shanghai Disney Resort. The population density reduces the risk tremendously. According to the 2013 Disney annual report, “The Shanghai Disney Resort will be located on roughly 1,000 acres and will include the Shanghai Disneyland theme park; two themed hotels with a total of 1,220 rooms; a retail, dining and entertainment complex; and an outdoor recreational area” (The Walt Disney Company, 2014). The opportunity for a solid return on investment is present and progress is already well under way, with Shanghai Disney construction going “vertical” as the construction crews are presently occupied constructing buildings upwards. By attracting China to the magic of Disney World, The Walt Disney Company is making strides to at least triple its profits.
There are many risks associated with attempting to become the number one company in a variety of global markets. The first, Disney’s inability to cater one’s product to the origin countries specific likes and culture adequately. Disney is currently in the construction and development stage of a theme parked called Shanghai Disney Resort in China. This specific resort has consumed a very large amount of Disney’s financial and capital power in its construction and may be looked at as a risky endeavor. Disney has implemented different initiatives to increase the probability of success for this project as well as other international projects, which in itself have risked additional money (The Walt Disney Company, 2012). For example, Disney has launched a new Disney channel in Russia that will be provided to approximately 75% of the country free of charge. They did so in an attempt to further build their brand internationally with the hope of creating future investments possible. Should this channel or theme park be conceived poorly to appeal to the very different likes and cultures of the Russian and Chinese people, Disney would have wasted many years and hundreds of millions of dollars in doomed investments. A second risk to Disney’s enormous expansion is change in the United States and global economies. Increased energy costs have increased the consumer’s expenses associated with consuming Disney’s many products. Increased gas prices have increased a family’s expenses and reduced long distance road trips and airline flights to visit far away theme parks. Declining foreign economies may also result in reduced consumption of Disney products as a result of changes in the exchange rates. The same changes in exchange rates also have the potential to increase labor and supply costs reducing the revenue received from foreign markets.
In conclusion, the Walt Disney Company has taken the vision of Walt Disney, the founder of the Walt Disney Company and transformed the company into a global empire.
Through well thought strategic planning and financial planning, the Walt Disney Company continues to influence the people of the world with entertainment and communication. The success of Disney Land Park in Anaheim, California and Disney World in Orlando, Florida guided the Walt Disney Company with the vision to become the company it is today. Financial forecasting and financial analysis of previous initiatives along with marketing helped the Walt Disney Company to expand and introduce new initiatives. Successfully managing the company’s capital budgets, working capital and corporate risk have been crucial to the financial health of the Walt Disney Company we recognize
today.
References
Mayo, H. B. (2012). Basic finance: An introduction to financial institutions, investments, and
management (10th ed.). Mason, OH: South-Western.
The Walt Disney Company. (2012). Retrieved from http://thewaltdisneycompany.com/about-disney/business-ethics
The Walt Disney Company. (2014, January). Fiscal Year 2013 Annual Financial Report and Shareholder Letter. Retrieved from http://cdn.media.ir.thewaltdisneycompany.com/2013/annual/10kwrap-2013.pdf
Titman, S., Keown, A. J., & Martin, J. D. (2011). Financial management: Principles and
applications (11th ed.). Upper Saddle River, NJ: Pearson/Prentice Hall.
World Population Statistics. (2013, September 18). China Population 2013. Retrieved from http://www.worldpopulationstatistics.com/china-population-2013/
http://en.Shanghaidisney.com//enpress/company-informationfactsheet/
FIN/370
February 17, 2014
Strategic Initiative: The Walt Disney Company
The Walt Disney Company is a global brand recognized throughout the world. As part of an Oligopoly market structure the Walt Disney Company works tirelessly to maintain its reputation, integrity, and social responsibility to the communities of the world through quality entertainment and communication tools for the entire family. According to Disney, “Disney’s performance in fiscal 2013 reflects the impact of the company’s acquisitions and capital investments and long-term strategy focused on exceptional creativity, innovative use of technology and global growth.” The Walt Disney Company’s plans are a part of the company’s goals which is to be the world’s leader in entertainment and communication. In order for the Walt Disney Company to keep its influence in the world of entertainment and communication, the Disney Company has continually used its revenues and profits to grow its brand name and products around the world by introducing the different cultures of the world in one location. One example …show more content…
of the Disney Company strategic and financial planning initiative has been the success of the Walt Disney World Parks and Resorts in Orlando, Florida. The Walt Disney Company has also used diversity as a strategic tool by using innovative technology to stay ahead of the communication process with its customers. The advances in technology have played a major role in the success and prosperity of the Walt Disney Company along with Disney’s desire to bring entertainment to the people of the world. The Disney Company is represented through cable and satellite, television, film, the internet, broadcasting, video games and DVD, Radio Disney, and mobile applications, Disney Cruise Lines, and Hotels, retail shops, restaurants, the Disney Music Group and Publishing, and its most beloved and world renowned Disney characters that have grown from its humble beginnings at the original Disney studio and they continue to grow. The Walt Disney Company must also be aware of the changing environment, plan, and prepare for the competition it faces in a changing and advancing technological society. The company uses the Intellectual Property Protection Act to protect its brand and property to receive the company’s full rights, benefits, and profits belonging to the Walt Disney Company. Marketing and research is very important information for the Disney Company for advertising and introducing new products to the market because these types of strategies increase cost but the benefits should increase revenues and profits. When a global empire like the Disney Company does not predict or forecast what the market reactions will be towards its products and services, the financial consequences are significant, that is, the cost can be in the hundred million dollar range or even billions. Because so much of the Walt Disney Company’s success is through innovative technology, the cost to protect the company’s property, employees, and customers are enormous because of the digital environment of today. As the Disney Company continues to pursue and maintain its company’s mission and goals, its strategic plans in the short-term must relate to its short-term financial planning. For example, if the company decides to open a theme park in China, the working capital must produce the income needed to pay the bills. Thus, the long-term strategy should also reflect and support the financial plan using the income statement and balance sheet for paying off any financing and receiving a return on equity. Even though a company cannot control the weather, predict the fluctuations of currency or the breakdown of financial markets around the world, it is important to have cash reserves in the bank and marketable securities that can be converted into cash easily and quickly if the organization needs it. Employees are the most important part of the Disney Company capital and a healthy financial company will strategize and financially plan for the employees to have good benefits that support the company’s character and personality, a substantial cost. Like any successful global empire the Walt Disney Company must be led by an innovator, adaptable to change, inspired to please, guided by the most creative and skilled workers in their fields and most important, motivated to succeed beyond expectations. The Walt Disney strategy and initiative must be designed to overcome any obstacles that may arise in its path, and to do that the company must strategically plan to support and enhance its short-term and long-term financial planning by planning, leading, controlling, and monitoring the markets of the world. Walt Disney has ventured on a new and innovative enterprise, one that is expected to generate millions if not billions of more dollars; this venture began in April of 2011 and is expected to be completed in 2015. Expectations run high, but no doubt this new initiative was bound to affect costs in the Walt Disney Company. Money would have been spent on researching the locations for the resorts; Disney would have to be sure that a profit could be made wherever the resorts were located. Disney would have had to spend money in selecting the prime location which would give easy accessibility to potential guests. Disney would also have to spend on materials and constructing the buildings or theme parks planned to use in the resorts, of course a lot of spending would be put into the actual planning of the resort. Money would also have to be spent on purchasing the land and permits associated in buying land. There may be even more costs attached to purchasing certain rights in a foreign country. Obtaining certain licensing may also be a requirement. Another expense could entail marketing the new resort. Advertising of all phases would be in order which will increase the cost, new staff would have to be hired, and that would most certainly affect costs. The question of legal proceedings on entry to a new market would definitely be a factor to increase expenditure, not to mention taxes – those owed to the government and the cost incurred by the preparer of the returns. Undoubtedly expansion will increase both current and long term debt, but because Walt Disney has gained such a wealth of knowledge in the area of Finance there is no doubt that its new venture will be a resounding success both culturally and financially. The Disney Corporation initiative known as the Shanghai Disney Resort is potentially one of the most lucrative moves the Disney Corporation has ever endeavored to make. China boasts the world’s largest population count, clocking in around 1.354 billion. The population density of the country is roughly 363 people per square mile (World Population Statistics, 2013). These figures alone hold much promise if the initiative is deemed a success. Attracting a fourth of that number to the park would herald a sound return on the investment and risks taken for the Shanghai Disney Resort. The population density reduces the risk tremendously. According to the 2013 Disney annual report, “The Shanghai Disney Resort will be located on roughly 1,000 acres and will include the Shanghai Disneyland theme park; two themed hotels with a total of 1,220 rooms; a retail, dining and entertainment complex; and an outdoor recreational area” (The Walt Disney Company, 2014). The opportunity for a solid return on investment is present and progress is already well under way, with Shanghai Disney construction going “vertical” as the construction crews are presently occupied constructing buildings upwards. By attracting China to the magic of Disney World, The Walt Disney Company is making strides to at least triple its profits.
There are many risks associated with attempting to become the number one company in a variety of global markets. The first, Disney’s inability to cater one’s product to the origin countries specific likes and culture adequately. Disney is currently in the construction and development stage of a theme parked called Shanghai Disney Resort in China. This specific resort has consumed a very large amount of Disney’s financial and capital power in its construction and may be looked at as a risky endeavor. Disney has implemented different initiatives to increase the probability of success for this project as well as other international projects, which in itself have risked additional money (The Walt Disney Company, 2012). For example, Disney has launched a new Disney channel in Russia that will be provided to approximately 75% of the country free of charge. They did so in an attempt to further build their brand internationally with the hope of creating future investments possible. Should this channel or theme park be conceived poorly to appeal to the very different likes and cultures of the Russian and Chinese people, Disney would have wasted many years and hundreds of millions of dollars in doomed investments. A second risk to Disney’s enormous expansion is change in the United States and global economies. Increased energy costs have increased the consumer’s expenses associated with consuming Disney’s many products. Increased gas prices have increased a family’s expenses and reduced long distance road trips and airline flights to visit far away theme parks. Declining foreign economies may also result in reduced consumption of Disney products as a result of changes in the exchange rates. The same changes in exchange rates also have the potential to increase labor and supply costs reducing the revenue received from foreign markets.
In conclusion, the Walt Disney Company has taken the vision of Walt Disney, the founder of the Walt Disney Company and transformed the company into a global empire.
Through well thought strategic planning and financial planning, the Walt Disney Company continues to influence the people of the world with entertainment and communication. The success of Disney Land Park in Anaheim, California and Disney World in Orlando, Florida guided the Walt Disney Company with the vision to become the company it is today. Financial forecasting and financial analysis of previous initiatives along with marketing helped the Walt Disney Company to expand and introduce new initiatives. Successfully managing the company’s capital budgets, working capital and corporate risk have been crucial to the financial health of the Walt Disney Company we recognize
today.
References
Mayo, H. B. (2012). Basic finance: An introduction to financial institutions, investments, and
management (10th ed.). Mason, OH: South-Western.
The Walt Disney Company. (2012). Retrieved from http://thewaltdisneycompany.com/about-disney/business-ethics
The Walt Disney Company. (2014, January). Fiscal Year 2013 Annual Financial Report and Shareholder Letter. Retrieved from http://cdn.media.ir.thewaltdisneycompany.com/2013/annual/10kwrap-2013.pdf
Titman, S., Keown, A. J., & Martin, J. D. (2011). Financial management: Principles and
applications (11th ed.). Upper Saddle River, NJ: Pearson/Prentice Hall.
World Population Statistics. (2013, September 18). China Population 2013. Retrieved from http://www.worldpopulationstatistics.com/china-population-2013/
http://en.Shanghaidisney.com//enpress/company-informationfactsheet/