The History and Background of the Company
The Walt Disney Company is also known as the Disney Company. The company was founded in 1923. The initial Cartoon Studio became a leader in the industry of animation before expanding into the international and multifaceted mass media company that it is now. The current official name, Walt Disney Company, the company took it in 1986 and is now recognized as the biggest media conglomerate globally in relations to its total revenue (Vogel, 2018). Disney operates and owns cable and broadcast television networks, theatre divisions, merchandising, publishing, 14 amusement parks, and music division worldwide. The company has been a branch of the Dow Jones since 1991, and it's headquartered is in Burbank. The company is traded in the New York Stock Exchange.
Current Situation
The corporate performance index in the Past
The company has shown a slight growth over the last five years in revenue and net income as well as sustaining a net profit percentage that is stable. The company has a Debt to Total Capital ratio of 28%, which is less that the other years.
Delegate your assignment to our experts and they will do the rest.
Strategic Position
Mission statement: “The company mission statement is to be one of the leading providers and producers globally in information and entertainment. Using our brand's portfolio to make our services, contents and consumers products unique, we seek to create the most innovative, creative and profitable experiences.”
The current strategies of the company revolve around the motive to monetize and develop franchises as well as increase the international presence of the company. This is clearly illustrated in the company chain of excellence. The chain of excellence involves guest satisfaction, cast excellence, leadership excellence, and financial results.
Competition
The company competes in several segments of the industry though the advantage of having ESPN in its overall portfolio, it accounts for 50% of the Disney total profits.
The main competitors of the company are:
Time Warner Inc. - This is an international media corporation that is based in New York City. This the second largest media and entertainment conglomerate globally in terms of net revenue
Viacom Inc. (VIA) - The worldwide mass media cooperation focused on cinema and cable television. It the fourth largest entertainment and media conglomerate.
Twenty-First Century Fox- This is the international mass media and entertainment corporation formed after the split of News Corporation in 2013.
Comcast Corporation- This is big communication and mass media Company. It is the largest internet service provider and cable company within the United States of America.
CBS Corporation- This is focused on commercial broadcasting, television production, and publishing
Corporate Governance
The company defines its governance as being committed to practices and policies that enhance the independent and thoughtful representation of the interests of Shareholders.
Internal Analysis: Internal Environment
The primary target audiences of Disney Company are young children between four and fourteen years of age. This target audiences are considered to be primary since children are known to be the most loyal audiences to the brand and have the highest amount of influence on the decision making by parents. The United States has 95% of teen actively online in emerging markets globally, and this is the best opportunity for Disney Company to make maximum use of it (Peterson, & Fabozzi, 2018).
Annual Income Statement (values in 000's) Current ratio = Current Assets/ Current Liabilities
Current ratio= Current Assets/ Current liabilities = 4982500/168225000 = 94 %
Current ratio = Current Assets/ Current liabilities= 54 474 000/15889000 = 81 %
Current ratio = 48768000/ 16966000= 101 %
Current ratio = 43657000/16758000 = 103%
Cash ratio = Cash and cash equivalents/ Current liabilities = 4150000/49825000 = 21 %
Cash ratio = Cash and cash equivalents/ Current liabilities = 4017000/454474000 = 23 %
Cash ratio = Cash and cash equivalents/ Current liabilities= 4610000/48768000 = 27 %
Cash ratio = Cash and cash equivalents/ Current liabilities = 4269000/43657000 = 26 %
Financials
Revenue of $ 50,091 billion
The total revenue in the fourth quarter increased by 9% year on year
Gross profit of $ 10, 950 billon
Net margin of 17 %- More profitable than every competitor
Walt Disney Strengths
The brand of the company has been in operation for many years and is known worldwide as the family entertainment provider. It is the 12 th most valuable brands, and the consumer perception rank is at positon eight worldwide (Vogel, 2018). These rankings are because of best and efficient strategic acquisitions. The company acquired Pixar, Marvel entertainment and Lucas film and all the acquired companies have proven to be successful in regards to profit growth and revenue. Also, the company has the best free cash flows, along with the rating of the financial strength of A++. As a result, this allows the company to remain active and successful in the stock front.
Weaknesses
Big budget and High profile movie flops are disastrous for the potential growth of Disney. Typical examples not limited to The Lone Ranger, Mars Needs Moms, and John Carter cost the company millions of potential revenue. The operations in films account for 16% of the total revenue. Thus any film flops are a general weakness of Disney Company.
External Environment: Threats and Opportunities
Opportunities
The company is strong in the United States of America and has a base of a loyal fan. Thus the logical opportunity for the Disney growth is to develop and expand in foreign markets. The fast-growing consumer market globally is China with a growth rate of 10% throughout the last thirty years. The region of Asian- Pacific accounted for more than 50% the world’s television subscribers market share as of 2017 and is anticipated to continue with that growth trend (Vogel, 2018). This will show that Asia Pacific region and China are the biggest external opportunity for the company since Disney will be eager to enter and establishes itself in the new foreign markets
Social media and digital information in today’s world are still dominant. For people and businesses to remain relevant, the presence of online is a must, though for the presence to be efficient and effective it must be strong and powerful. The company has struggled to establish a strong and powerful online presence though if achieved it will be able to increase the reach of the brand already established.
Threats
The main revenue generator of Disney Company is cable television. The main threat is the possibility of drop-in cables fees from the main competitors of Disney since it will put pressure on the bottom line of the company because of pricing changes (Mannheim, 2017). This refers to sports programming specifically as ESPN dominates this specific segment which forces all the newcomers to reduce their fees to be picked up by the providers.
The rights to provide marquee sports are generally expensive and the fights to get these rights are extremely tough. High competition for these rights will skyrocket programming fees higher in the coming future that will be a threat to the profits. ESPN is known to be an automatic winner for the Disney Company, nevertheless, new competitors, despite how small and novice m should be considered as threats. ESPN, at present, competes mostly for viewers with Fox Sports and NBC Sports. This ruthless competition has the chance of pushing the costs of programming higher.
Conclusions and Recommendations
The current opportunities and strengths of Disney Company outweigh the company weaknesses and threats. Future suggestions are rooted in the company strengths or cable prowess and brand reputation. The company can obtain a struggling segment at the right time since more people are trending to alternative methods of media. Disney is in good shape and looks forward with small twerks that will be suitable for the company.
References
Mannheim, S. (2017). Walt Disney and the quest for community. Routledge.
Peterson, P. P., & Fabozzi, F. J. (2018). Analysis of financial statements (Vol. 54). John Wiley & Sons.
Vogel, H. L. (2017). Entertainment industry economics: A guide for financial analysis. Cambridge University Press.
