Analysis of The Walt Disney Company - Case Study Example

Sur The Walt Disney Company Try to picture a world without the Walt Disney Company, a world without the company’s magic and dream. It sucks, doesn’t it? From a humble background, the company has transformed the entertainment industry into what we see today. The company began as a cartoon studio in the 1920s but has since grown to a global corporation and become the world’s second largest media conglomerates in terms of revenue (Disney). None the less, the Company has pioneered the fields of animation, and discovered new and better ways of teaching and educating both the young and the old. Therefore, as a result of its tremendous achievements and success, the company qualifies to be a major interest of study and thus this paper gives detailed information of the company. Background Information The Walt Disney Company, simply known as Disney, was founded by Walt and Roy Disney on October 16th, 1923 (Disney). The two set up the company in their uncle’s garage in Los Angeles before moving to their studio facility on Hyperion Avenue (Silver Lake District) in 1926. At its inception, the company was known as the Disney Brothers Cartoon Studios (Disney). However, in 1986 the company’s name was changed to “The Walt Disney Company”. After its formation, the company faced a lot of challenges and almost closed down. For example, in the late 1920s the company almost sank due to pitfalls in distribution rights but was saved by the creation of Mickey Mouse. In addition, the World War II and the takeover attempts in the 1970s and 1980s also affected the operations of the company, but eventually recovered (Sanders). In spite of the challenges that the company faced during it early stages of creation, it was able to produce several movies and animated films that enabled it to become one of the best media conglomerates in the United States of America. For example, in 1932 the company’s animated cartoon, The Silly Symphony, won the company its first academy award for best cartoons. Other films produced by the company include the Snow White and the Seven Dwarfs, Treasure Island, and Cinderella among others (Disney). Although there are many challenges in the industry, ever since it was created, Walt Disney Company, has been able to overcome its challenges and become a global corporation. The company has been able to survive challenges ranging from management, financial and competition from others to emerge the best since its time. Under its new name, the company established itself as the leading American animation company in the United States of America, but as it expanded it diversified into live-action film production, travel, theater, online media, radio, publishing and television (Sanders). Furthermore, the company has since developed new divisions and subsidiaries so as to market more mature content other than what it used to do. This has thus enabled it to become a diversified worldwide entertainment company. The Company’s Divisions and Subsidiaries Currently, the Walt Disney Company operates in five primary segments: Media Networks, parks and resort, consumer product, studio entertainment and interactive media. Media networks: Under this division the company operates its television network (ABC television network) and internet. Parks and resort: Through this division the company operates its cruise line (the Disney cruise line), theme parks (Disneyland and Disney California adventure) and other travel related assets such as the resorts or hotels. Interactive media: Through this division the company develops and delivers its branded products such as games across interactive media platforms. Consumer products: This division is responsible for producing clothing, toys and other merchandising based on properties owned by Disney. Studio entertainment: This division is responsible for the company’s recording label, films and theater. Assets of the Company The company has an incredible array of assets worth USD 69.206 billion. The assets include parks, resorts, property, inventories, television costs, buildings and equipment, land, and receivable among others. The company’s parks and resorts are located in various countries including the US, Tokyo, Paris, Hong Kong among others (The Walt Disney Company, 79). Financial Analysis Over the last six years, Walt Disney’s financial performance has remained impressive. The company’s revenues have continued to grow steadily both in total and by sector. In 2010, the company’s revenues totaled about 38,064 million US dollars a steady rise from the revenue earned in 2006 which stood at about 33,747 million US dollars (Corporate Disney par 1). The operating income for the media networks, interactive media, consumer products and studio entertainment sectors have continuously been on the decline in the last five years. The company’s shareholders have something to smile about as each year, their earnings per share have been increasing marginally. In 2010, the shareholders received about 2.03 US dollars per share, up from 1.60 US dollars per share in 2006 (Corporate Disney par 1). The company has also managed to maintain a steady amount of free cash flow over the past five years. Generally, from the information provided above, it is beyond doubt that Walt Disney as a company has a stable financial base and is profit making. Figure one below highlights the company’s financial performance over the last couple of years. Fig 1. Walt Disney Financial Performance Courtesy of Walt Disney Rarely do potential employees wish to join companies that make losses. In any case, when the dream companies are loss-making, the motivation for joining the company is to help revitalize the company through personal contribution. Walt Disney offers a stable working environment considering that it is profit making and has a long history of success in the market. The company is known to provide a number of benefits to its employees including paid leaves, medical cover and a number of performance based benefits. Every year, the company has vacancies to fill as a result of growth and to fill posts that remain vacant when some employees get promotions. The job opportunities in the company are quite varied and include practically every business field, with a focus on media productions. Figure 2 below shows, the company’s performance in the stock market. Fig 2: Walt Disney performance in New York Stock market, 2011 Strength and weaknesses The main strength of Disney Company is its resources, low cost-strategy and experience in the industry. The company’s strong and well known brand name that it has developed over the years has enabled it to stand out in the business. In addition, the Company’s ability to diversify its operations and products has also enabled it to evade the declining sales in product line. As earlier said, besides animation, the Company has engaged itself in home videos, radio broadcasting, theme park and network television. Furthermore, it has also effectively diversified its operations throughout the world, that is, from USA to other parts of the world. In terms of resources, the main strength of the company is its human resources and financial stability. According to recent studies, Disney’s employees are extremely innovative. They have been able to come up with several box-office productions and thus enable the company to survive it today’s competitive business environment. The low cost strategy of the company has also been of great benefit. It has enables the company to control its costs and still produce goods and services of high quality. Just as other corporations, Disney also has its weaknesses. The main weaknesses of Disney Company include: regular change in top-management, huge number of employees, and high operating expenses. At the end of 2010, the company had about 149,000 employees (The Walt Disney Company, 63). This high number of employees has led to communications problems and a high level of bureaucracy within the company. On the other hand, the frequent changes in the top management also complicate the company structure. Although changes bring about positive things, they are often associated with resistance and huge expenses. Finally, the high over-head expenses which are as a result of the high number of employees hinder the company’s future financial abilities. Criticism Although the company has received a lot of praises for its achievements and successes, it has also received some criticisms. Disney has been criticized for producing some animated films with sexual references hidden in them. For example, The Little Mermaid of 1989, Aladdin of 1992 and The Lion King produced in 1994 are among the films that have been criticized. Some of the company’s films have also been opposed by some religious welfare for going against their beliefs. For example, The Priest (1994) and Dogma (1999) were vehemently opposed by the catholic league. Furthermore, the company has also been accused of violating human rights due to its poor working conditions. Conclusion Walt Disney has a long history of growth and success. The company has a stable financial base and is a leader in the entertainment market. The organization’s products are bought and used in almost all countries of the world. Its employment practices are generally favorable to employees. Although it has been criticized for producing unfavorable content in certain cases, the company enjoys widespread favor among the general population. The company has several employment opportunities with provisions for growth once one is employed. The organization’s management focuses to a substantial level on the welfare of employees, providing them with several benefits. Beyond doubt, Walt Disney is a favorable employment choice. Work Cited The Walt Disney Company. Fiscal Year 2010 Annual Financial Report and Shareholder Letter. California: the Walt Disney Company, 2011. Disney. Company History. 2011. 30 November, 2011. Web .http://corporate.disney.go.com/corporate/complete_history_1.html Sanders, Adrien-Luc. The Walt Disney Company. About.com Guide. 2011. 30 November, 2011. Web. http://animation.about.com/od/industryprofiles/p/waltdisney.html Corporate Disney. Summary Financial Highlights. 2011. 30 November, 2011. Web. http://corporate.disney.go.com/investors/annual_reports/2010/financials_highlights.html Read More