We are applying a 9-step assessment process for analyzing the Walt Disney Company. 1) analysis of fundamentals

We are applying a 9-step assessment process for analyzing the Walt Disney Company.

1) analysis of fundamentals: goals, strategy, market, competitive technology, regulatory and operating characteristics.
2) revenue outlook
3) investments to support the business unit strategies
4) future profitability and competitive performance
5) future external financing needs
6) access to target sources of external finance
7) viability of the 3-5 year plan
8) stress test under scenarios of adversity
9) current finance plan
Unfortunately – I am lost on how to even approach this. If you can point me in the right direction for each step – or the charts or tables I should create.

Expert Answer

Ans. (1)

– Walt Disney CO’s current goals are to reduce their impact on the nature and how much fuel and waste they use and produce. They are currently trying to use less and produce less waste to better the environment. The company is mostly focusing on family, the community, and inspiring children to help around the community. Past goals for the Walt Disney was that he wanted to open an affordable good experience for children and parents to create memories. Disney has pursued energy efficiency upgrades and

programs for a long time. Energy efficiency projects offer opportunities for financial savings in addition to environmental benefits.

– Strategy behind Disney’s lasting success

The image depicts Disney’s core business as grounded in films, with a portfolio of entertainment assets that are supported by and also reinforce the movies.

For example, raw materials from the films were fed directly to Disney’s publications, which in turn did direct advertising for Disney’s movies and theme parks. Meanwhile, the parks provided sales outlet for Disney merchandise.

While the strategy has likely evolved over the years , the philosophy seems consistent with the company’s operations today. Each of Disney’s extensions work together as a whole, fueled by the original content from Disney movies.

– Competitive Analysis

The three main direct competitors of Walt Disney in terms of worldwide attendance are Universal Studios Theme Parks & Resorts, Six Flags Inc. and SeaWorld Parks & Entertainment. In 2012, Disney’s theme parks hosted almost 126.5 million guests (+4.9% compared to 2011), making it the world’s most visited theme park. In comparison, 34.5 million people visited the Universal Parks (ranked number three globally) which are located in Florida, California, Japan and Singapore. It revenues amounted 2012 to $2,085 million (Comcast, 2013, p.60), which represents only 14.8% of Disney’s revenues from its parks. At the same time, Six Flags’ 18 regional theme parks in North-America were visited by 25.7 million guests and gained revenues of $1,070 million (Six Flags Entertainment Corporation, 2013). Moreover, SeaWorld was visited by 24.3 million guests in 2012 .

All the parks offer an entertainment program, even though they position themselves differently. Disneyland and SeaWorld basically focus on kids and tweens, but who are dependent on its parents to take them there. Both parks are built to have a great time with the whole family, even though Disneyland focuses on creating a place “where dreams come true” (Disneyland Resorts, 2013) and SeaWorld Parks & Entertainment focuses more on the educational aspect of learning something about the sea life (SeaWorld Parks & Entertainment, 2013.) and so uses a differentiation strategy. But both parks target the young audience and their parents, so the rivalry between them with regard to the target audience is very high. Merely the branding of SeaWorld and its marketing activities are not as powerful as Disney’s. So despite having a relatively high awareness in terms of its brand name, SeaWorld is not that strong in creating an emotional relationship with its customers and thus has a lower brand equity than Disney. SeaWorld also frequently offers discounts and coupons to create interest and giving customers a ‘reason why’ to visit the park which also shows the rather low customer loyalty (as they are not able to charge a price premium). Furthermore, they have a very low breadth of product line compared to Disney as they do not offer anything besides their parks (only 3 parks in the whole U.S.) and as they do not have diverse kind of parks, they have no deepness in their product line and so cannot serve different customer preferences.

– Walt Disney regulatory and operating characteristics:

• Epcot — A sort of “permanent World’s Fair”, Epcot is dedicated to both international culture and technological innovation. World Showcase takes you on a trip around the world as you visit themed pavilions filled with the art, architecture, people, and products of eleven different countries.

• Disney’s Hollywood Studios — This park represents the “Hollywood that never was,” with attractions themed around movies and television. You’ll find a variety of live shows and attractions based on Disney and Lucasfilm productions.

• Disney’s Animal Kingdom — Something of a mix between a zoo and a theme park, Animal Kingdom features naturalistic live animal exhibits alongside more traditional Disney amusement rides.

• Disney Springs — For more “grown-up” activities, Disney Springs has shopping, nightclubs, restaurants, and unique entertainment. This is where the most action is after dark. Disney Springs is divided into three sections. Marketplace has several shopping and eating establishments and is tailored towards a family setting. Pleasure Island is a more adult oriented section, with upscale restaurants and even a cigar bar.

Principles of Walt Disney

• Provide a promise, not a product: The legend goes that Walt Disney was sitting on a bench watching his daughters ride a carousel when he came up with the concept for Disney World. He noticed amusement parks and state fairs were always littered and poorly organized, and the employees were generally rude and resentful.

His wife once asked, “Why do you want to build an amusement park? They’re so dirty.” To which Walt replied, “That’s the point. Mine won’t be.” From day one, Disney has focused on “the experience” as a key component to increasing the value of its parks.

• Always exceed customers’ expectations: One of the reasons the Disney tradition stands the test of time is that Walt Disney was more critical of his creations than anyone else could ever possibly be. He was a relentless perfectionist with a keen eye for detail, often forcing projects to go over budget and past deadline because he wasn’t satisfied with the finished product.

• Pursue your passion, and the money will follow: Walt Disney went bankrupt more than once, leveraging everything he had in terms of assets in order to build his studio, his films and his dreams. The more profit one project yielded, the bigger the next would be. His vision was constantly growing, and he used whatever capital he had to allow that vision to evolve. His films and theme parks were labors of love, built to revolutionize an industry, rather than maximize profits.

• Stay true to your company’s mission and values: Walt Disney was famous for saying, “I hope that we never lose sight of one thing — that it was all started by a mouse.”

Decades later, Mickey Mouse is still the crown jewel of the Disney franchise, representing all the good will and imagination Disney represents. He’s also a constant reminder that the company has strong roots and it embraces American values.

• Differentiate your offer: Every facet of Disney’s operation is unique. Employees are called “associates,” visitors are called “guests,” creative designers are called “Imagineers.” And that’s just the beginning. The experience of being at a Disney theme park or staying at a Disney resort is all about creating a dream vacation — one where the attention to detail and personal service is just as memorable as the attractions themselves.

• Lead by example and delegate: Walt Disney was the artist who originally sketched Mickey Mouse, as well as several of the other iconic Disney characters. He even voiced several characters and provided the inspiration for a lot Disney’s animated classics. But as he built a studio and then an empire, he hired reliable men and women who understood his vision and trusted them to translate that vision to others.

2). Revenue outlook –

As of Sep 13, 2017, the consensus forecast amongst 31 polled investment analysts covering Walt Disney Co advises that the company will outperform the market. This has been the consensus forecast since the sentiment of investment analysts improved on May 11, 2010. The previous consensus forecast advised investors to hold their position in Walt Disney Co.

• Share price forecast

The 27 analysts offering 12 month price targets for Walt Disney Co have a median target of 115.00, with a high estimate of 130.00 and a low estimate of 78.00. The median estimate represents a 16.73% increase from the last price of 98.52.

• Dividends

In 2016, Walt Disney Co reported a dividend of 1.42 USD, which represents a 21.55% decrease from last year. The 17 analysts covering the company expect dividends of 1.61 USD for the upcoming fiscal year, an increase of 13.38%.

• Earnings history & estimates

On Aug 08, 2017, Walt Disney Co reported 3rd quarter 2017 earnings of 1.58 per share. This result was in line with the consensus of the 27 analysts following the company and under-performed last year’s 3rd quarter results by 2.47%.

The next earnings announcement is expected on Nov 08, 2017.

Walt Disney Co reported annual 2016 earnings of 5.72 per share on Nov 10, 2016.

The next earnings announcement from Walt Disney Co is expected the week of Nov 08, 2017.

• Revenue history & estimates

The Walt Disney Company had 3rd quarter 2017 revenues of 14.24bn. This missed the 14.42bn consensus estimate of the 25 analysts following the company. This was 0.27% below the prior year’s 3rd quarter results.

The Walt Disney Company had revenues for the full year 2016 of 55.63bn. This was 6.04% above the prior year’s results.

(3). Walt Disney ventures to help the specialty unit methodologies:

Disney has put resources into its Parks and Resorts business in the course of the most recent couple of years, and collecting the profits from those speculations will be the driver for the following three to five years. It expects the new Avatar Land and MyMagic+ activities to be two genuine drivers for Walt Disney World going ahead. Similarly as Cars Land saw a recreation center wide advantage regarding volume and length of stay, Avatar Land will assume a comparative part in Disney’s Animal Kingdom, as the recreation center will be changed over into an entire day encounter that stretches out into the night, and the organization hopes to see a positive effect from the general volume and length of remain. It has likewise contributed to make the greatest shopping town it has in Walt Disney World, called Disney Springs, which is required to be finished in 2016. The present territory will be practically multiplied to incorporate 150 shopping, eating, and amusement settings, highlighting a portion of the world’s most notable brands and eateries. The finish of Shanghai Disneyland, which is normal in 2015, will be a development driver going ahead.

Regarding studio diversion and the procedure with Marvel, Disney expects film industry accomplishment with continuations of The Avengers, and furthermore spin-offs including the individual characters from the motion picture. Motion pictures, for example, Iron Man 3, Thor 2, and the up and coming Captain America: The Winter Soldier and sci-fi hero film Guardians of the Galaxy will fuel development for the studio up until the point when the primary Star Wars motion picture in 2015 and past that also. Aside from these motion pictures from Marvel, Maleficent (featuring Angelina Jolie) and Tomorrowland (which will discharge this year), and another continuation for Pirates of the Caribbean in 2015 are relied upon to profit the media monster. Disney’s vivified motion picture Frozen, which discharged amid Thanksgiving, has outperformed the $500 million check in worldwide film industry deals, and experts anticipate that the motion picture deals will lift Disney’s 1Q 2014 income. Disney finished the year with Saving Mr. Banks, the story behind one of its most cherished works of art, Mary Poppins, featuring Tom Hanks as Walt Disney.

Disney’s Consumer Products fragment is relied upon to profit by the Star Wars motion picture establishment and Marvel. Disney Junior, where it has put naturally in a considerable measure of extraordinary substance, will see Doc McStuffins, Sofia the First, and furthermore Frozen to drive development in this fragment.

The Disney Infinity computer game from Disney Interactive is relied upon to drive deals in the Christmas season. Among the new character increases to the diversion’s mark Toy Box mode for the Christmas season are Rapunzel (from Tangled), Wreck-It Ralph and Vanellope (from Wreck-It Ralph), and Anna and Elsa (from Frozen).

Disney said on its profit call that it has about $300 million development in income from the continuation of new activities. It saw superior to expected comes back from its new activities in 2013 and will keep on seeing the same in 2014, yet it doesn’t anticipate that the development direction will be as high as it trusted. The speculations that organization has made both as far as acquisitions and natural development is relied upon to keep on delivering expanded investor esteem within a reasonable time-frame.

(4). Future benefit and focused execution:

The main impetus behind Disney’s amusement stop benefits is its scale. Saying that Disney runs the world’s busiest amusement parks doesn’t do equity to its status. In absolute they pulled in 132.5 million visitors a year ago as indicated by the 2013 worldwide attractions participation report created by industry screens AECOM Economics and the Themed Entertainment Association (TEA). The aggregate was more than twofold the 59.8 million who went by Disney’s nearest match, British business Merlin which runs the Legoland and Sea Life parks.

Disney’s other significant rival, Universal Studios, is third in the worldwide participation rankings yet has a small amount of its guest numbers. A year ago Universal pulled in 36.4 million visitors which may seem like a great deal at the same time, to place it in context, it is quite recently under twofold the 18.6 million who went to Disney’s children’s story roused Magic Kingdom in Florida making it the world’s most prominent stop.

Contrasting the outcomes with its rivals, Walt Disney Co detailed Total Revenue diminish in the 2 quarter 2017 year on year by – 0.27 %, in spite of income increment by the greater part of its rivals of 20.1 %, recorded in a similar quarter.

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