Disney Strategic Initiative Paper Tammy Adams, Kecia Darnell, Chelsea Hensley, Elizabeth Munns, and Zameika Williams University of Phoenix FIN 370 Professor Stephen Beadnell October 18, 2010 Strategic Initiative Paper Introduction This paper will address the strategic and financial planning associated with the operations of Disney. In addition, the paper will show the correlation between strategic and financial planning. The impact of the organization’s initiative costs, sales, and associated risks the organization encounters during the financial and strategic planning will be addressed. Thus, the financial planning process provides a tool for preparing for the future working-capital requirements of the firm. ” (Keown, 2005) The Walt Disney Company currently has many strategic plans in action; in 2005 the Company’s CEO, Robert Iger, ordered a restructuring of their Corporate Strategic Planning Division. The strategic planning department is now being incorporated into each of Disney’s four segments which include Studio Entertainment, Parks and Resorts, Consumer Products and Media Networks, as well as Disney’s International Organization.
They are also utilizing smaller groups focusing on developing Disney’s five year plan as well as acquisition opportunities, new technologies, and emerging businesses. “Strategic planning will continue to play an important role in identifying the opportunities and challenges presented to our company as we grow our leadership position as the most valuable entertainment brand in the world,” said Mr. Iger in his 2005 announcement of the restructuring project (News Release, para. 3).
Strategic planning for The Walt Disney Company (2005) has been “an essential catalyst to Disney’s growth by identifying new opportunities and expanding existing business” (News Release, para. 4). They are using this new structure to create efficiency, accountability, and empowerment in the ongoing efforts of each business unit leader to create new entertainment experiences which will ultimately generate more long-term value for shareholders (The Walt Disney Company, 2005). Their strategic planning procedures have worked for many years, and a restructuring brought more attention to an area of financial planning that is extremely important.
Disney’s efforts to stay at the head of the market have certainly proven to be effective as well as very beneficial. As a result of restructuring and creating multiple departments within Disney, the organization’s financial planning is efficient. The organization has identified financial goals, prioritized those goals, and developed a financial plan by using the legacy information to determine the organization’s financial forecast. The organization focuses on key relationships that will provide additional resources for the business, and create a positive profit.
The strategic planning division was dismantled to create a more efficient operation. The organization used vital information created by the strategic planning division to have a profitable future. “The strategic planning unit was fashioned by Mr. Eisner and others at Disney to create a dynamic tension between the units and the corporate suite. But as the business units grew over the years, the executives who ran them chafed under strategic planning’s oversight. ” (Holson, 2005) One particular area that Disney could potentially have an impact on Disney costs and sales is with online movie viewers.
With certain developments such as Netflix, movie watchers are able to stream movies from the comfort of their own home. While Disney previously established an agreement that entitled the Disney Company to licensing fees, those charges did not incorporate people that were able to access movies online. According to an online article entitled, Disney May Raise Costs for Netflix, 2010, Disney is concerned that they will miss out on significant licensing revenue as the number of Netflix subscribers that watch movies online through Netflix’s streaming service increases.
The situation between Disney and Netflix could lead to a direct impact on costs and sales for both Disney and Netflix. However, focusing primarily on the impact the Disney Company, the effects could be more drastic. One scenario is the parties do not reach an agreement in regard to the streaming fees Disney wants to charge Netflix and the companies discontinue business. Netflix will no longer provide Disney movies for rent, this could lead to a decrease in potential sales and free advertising for Disney.
It could be said that Netflix users will select from a the remainder of the selection of movies available, however, according to the article, the likelihood is that Netflix will negotiate with The Disney Company so there are no limitations put on the amount of streaming video Netflix can offer . This will actually increase the current acquisition costs for Netflix at an estimated incremental one percent acquisition cost. There will be a positive impact on sales for Disney due to the additional charges able to be acquired through attaching fees to the online streaming content.
As a result of restructuring and creating multiple departments within Disney, the organization’s financial planning is efficient. The organization has identified financial goals, prioritized those goals, and developed a financial plan by using the legacy information to determine the organization’s financial forecast. The organization focuses on key relationships that will provide additional resources for the business, and create a positive profit. The strategic planning division was dismantled to create a more efficient operation. The organization used vital information created by the strategic planning division to have a profitable future. The strategic planning unit was fashioned by Mr. Eisner and others at Disney to create a dynamic tension between the units and the corporate suite. But as the business units grew over the years, the executives who ran them chafed under strategic planning’s oversight. ” (Holson, 2005) The Walt Disney Company is the world’s largest media conglomerate, with assets encompassing movies, television, publishing, and theme parks, focusing on key relationships that will supply supplementary capital for the company, and generate a constructive income while combining it magic with Netflix’s and other upcoming companies.
The Walt Disney Company is the most victorious organizations in the practice of strategic planning. These organizations not only benefit from building and executing a plan, but they benefit form the thought process itself. A plan is a highway to success, and the planning process signifies organizational leadership and heightens the communication of significant company information.
Today’s unstable market demands that employees, work groups, and organizations have a comprehensible consideration of their roles, products and services the Walt Disney Company has to offer, as well as the processes the company use to find the way of opportunity to create an outcome-based organization culture. Combining Strategic planning, impact cost and sales, and the risks that come wit them The Disney Company has managed to stay on top building many hotels and resorts for families and those young at heart with the thrill of a lifetime with more to come. References
Disney may raise pricesfor netflix. 2010. retrieved October 16, 2010 from http://seekingalpha. com/article/186250-disney-may-raise-costs-for-netflix Holson, L. (2005, March 26). Disney Intends To Overhaul Planning Unit. New York Times, p. C2. Retrieved on October 16, 2010, from Apollo online library: EBSCO host database Keown, A. , Martin, J. , Petty, J. , Scott, D. (2005). Financial Management: Principles and Applications, Tenth Edition. Pearson Prentice Hall The Walt Disney Company. (2005). Disney Corporate. Retrieved on October 16, 2010, from http://corporate. disney. go. com database