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SBUS40650 Strategic Service Performance Business Simulation Prof. Drs. R. Sybren Tijmstra Lars van der Meulen MBA

MSc. in Management 14th August, 2015 “We confirm that the work submitted here is entirely our own work, and that any work of others which is included has been properly referenced and acknowledged according to normal academic guidelines. All of the above line students have contributed in the preparation of this assignment.”

Team F1 Alex Daniel Debarun Das Megan Noone Brittany Wood Jane Lawrence Carlos Gutierrez

#10362191 #14203640 #14202914 #14202505 #14200448 #14200766

Excecutive Summary Disney is arguably the world’s most magical brand. Capturing children’s imaginations for decades, it is the 11th most valuable brand in the world, with an impressive $179 billion portfolio of Parks, Resorts, Cable Networks, Consumer Products and Studio Entertainment (Sylt, 2015). Although Disney dominates many of these aforementioned markets, this project will focus on one of their most profitable business unit; Studio Entertainment, within which lie the market segments of Marvel, Disneynature, Pixar and Disney Animation Studios. For each segment, revenue and cost reduction opportunities were first identified, along with the respective attractiveness of each market. Following this, customer sensitivities and Critical Success Factors (CSF’s) of each segment were identified as well as their competitors. A strategic positioning analysis was then conducted. The report recommends that managerial improvements are made through operational and cost focuses and continued investment in Critical Success factors (CSF’s) Strategic recommendations include an increased focus on Disneynature’s market share, improving stars through customer and cost focus, and maintain market share for cash cows. The report concludes with lessons learned from the simulation experience and limitations of the report. The Disney experience is more than just the magic, it is great business strategy, great management and great market performance.

CONTENTS INTRODUCTION 1 MARVEL 2 DISNEYNATURE 4 PIXAR 6 WALT DISNEY 8 RECOMMENDATIONS 10 CONCLUSION 11 REFERENCES 12 Company Overview 1

Figure 1: Disney's Market Share 1

Market Overview 1

Figure 2: Growth-Share Matrix 1

Revenue Opportunities Cost Reduction Opportunities Market Attractiveness Customer Sensitivities Critical Success Factors Competitors Figure 3: Marvel's Strategic Positioning

2 2 2 2 3 3 2

Revenue Opportunities Cost Reduction Opportunities Market Attractiveness Customer Sensitivities Critical Success Factors Competitors Figure 4: Disneynature's Strategic Positioning

Revenue Opportunities Cost Reduction Opportunities Market Attractiveness Customer Sensitivities Critical Success Factors Competitors Figure 5: Pixar's Strategic Positioning

4 4 4 4 4 5 5

6 6 6 6 7 7 7

Revenue Opportunities Cost Reduction Opportunities Market Attractiveness Customer Sensitivities Critical Success Factors Competitors Figure 6: Walt Disney Animations’ Strategic Positioning

8 8 8 8 9 9 9

Managerial 10

Simulation Lessons 11

Limitations of Report 11

Strategic 10

INTRODUCTION The Walt Disney Company’s most significant business unit: Studio Entertaintment.

Company Overview The Walt Disney Company has a vast and diversified portfolio comprising of many Strategic business units; Media Networks, Parks and Resorts, Consumer Products, Disney Interactive and Studio Entertainment. Disney has captured an impressive 47.15% of the Parks and Resorts Market Share, and their Consumer Products have 31.39%. Although Disney Interactive’s market share is quite low at 5%, their Media Networks have achieved just over a fifth of the market (21.57%). Disney’s studio entertainment 14% market share may seem underwhelming in this segment, but this figure masks an impressive business unit in the challenging and competitive market of cinema and entertainment (Figure 1).

Figure 1: Disney’s Market Share

Market Overview

(Statista, 2015).These are impressive figures given the elastic nature of the cinema ticket market that effects all of their studio segments (McKenzie, 2008). The four studio segments that will be discussed in this report are Marvel, Disneynature, Pixar and Disney Animation Studios. In of the BCG Growth Share Matrix (Ghemawat, 2002), Pixar and Marvel could be considered stars, as they have a high market share in a fast growing industry. Disneynature has not yet realised its potential and is still in its early stages, and so could be considered a question mark, and Disney Animation Studios has a high market share in a slow growing market, so it could be classed as a cash cow. This report endeavours to provide an analysis of each segment and assess both the managerial processes and strategies that they are employing, in the hope that this will cement and fortify Disney’s strong position in the Studio Entertainment market.

So far this year, over $8 billion cinema tickets have been sold worldwide, generating roughly 6,752,091,382 in ticket sales (The Numbers, 2015). February and April of this year were also the highest grossing months in cinema ticket sales of all-time (Screen Vision, 2015). Disney’s movie production earnings have risen 13% in the last year (Yu, 2015). They also had 3 films in the top ten highest earnings in 2015, outperforming all other studios (Motion Pictures Association of America, 2015). They hold the title of highest per film average revenue in the US

Figure 2: Growth Share Matrix. Source: Ghemawat, 2002

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Marvel is one of Disney’s most successful segments, responsible for such global blockbusters as “The Avengers” and “Guardians of The Evelendant omnis ab ium aut optatibus Galaxy”. Marvel’s target audience are 14-29 year old males (Reeves et nimpelis quid quunt rest, cus nest, ut lat odi al., 2014). dolorrum rerroressus modit explaut ut oditatin date in generating profit from paying tenured actors’ high Revenue consereptior serferit labwages. is remporu mquibus, its movies. This could be due to Robert Downy Jr. earns having ensembles casts rather $50 million for the avengers explaut dellumquis Opportunities than solo eiciisi superhero movies. compared to Chris Hemsworth From the many studios that Disney have acquired, Marvel Studios has been the largest, costing $4 billion in 2009 (Barnes and Cieply, 2009). Marvel Studios under the Disney franchise has made $7.1 billion worldwide from its movies alone (Ge, 2014). Marvel studios has contributed $1.7 Billion to the revenues of Studio Entertainment (Szalai, 2015). As such, it can be considered to be a “Star”, with both high growth as well as high s h a r e in the market, and thus, high future potential (Reeves et al., 2014). M a r v e l has been successful to

Revenue opportunities for Marvel are very small due to its already roaring success and continued significant revenue.

who only earned $1 million for both Avenger and Thor and Chris Evans who earned $200,000 (Baker-Whitelaw, 2014).

Cost Reduction Opportunities

Marvel Studios in future should consider paying all the cast equally when it comes to their fixed salary and compensate them for not paying higher by sharing a percentage of the profits their movies make.

Blockbuster film production costs are always high. Marvel’s current expenses are not readily available. However, “Guardian of the Galaxy”, which grossed $772.8 million worldwide in 2014, was claimed to be over budget by $232 million. The major expense was hiring 441 production staff from Britain who were paid approximately $21.5 million. Another

high

expense

is

Market Attractiveness Marvels success gained pace after the 2008 blockbuster “IronMan” set the path for future movies to thrive (Gibbs, 2014). As revenues are high for films produced by Marvel, and with consideration to film locations and labour employed, Marvel has a very large profit potential and it is expected to grow in the next five years. This is a very attractive market for future investors.

Customer Sensitivities

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Figure 3: Marvel’s Strategic Positionig. Source: Arthur D. Little.

Marvel Studio’s mission for success is to be attractive to its customers, to resonate and entertain, and continue to evolve into the future (Disney Careers, 2015). In order to do this, Marvel need to focus on increasing

quality in of screenplays and quality filming, which means quality skills employed. By having a star-studded cast and correct promotion of the films, Marvel’s marketing campaigns will attract viewers. Finally, in order to create excitement around the film while it is still in the cinemas, advertising will be important. Customer Sensitivities in prioritised order are:

Skills Investment Marketing Advertising

Critical Success Factors Based on the customer sensitivities discussed earlier, Marvel will have to make sure that these sensitivities are carefully analysed in the coming years to remain competitive. The success that Marvel has gained will need to continue to be translated into future applications through ensuring that the highest quality writers, actors and directors are employed. Marvel is already an established brand in the public’s eye and will need to monitor their brand and solidify it in the long-term through excellent marketing campaigns and social media awareness. Lastly, advertising through billboards and transport vehicles like buses/trains prior to the film’s release will keep Marvel fresh in the minds of viewers.

Top quality investment in people Monitoring & improvement of marketing campaigns Billboard and cinema ments

Competitors Disney’s Marvel Studios immediate competitors are 21st Century Fox, Sony and Warner Brothers. Box office ratings from last year profits for the Studios saw Sony with an enormous $8.06 billion, followed by Marvel with $1.7 billion , 21st Century Fox with $1.5 billion, and finally Warner Brothers with $1.3 billion (Szalai, 2015). Despite earning the second highest revenue, Marvel made only 2 movies, whereas the other studios had at least 4-5 hit movies released that year. Sony’s large profit is attributed to its other

movie genres, h o w e v e r their superhero films do not generate much profit (Statistic Brain, 2015). With Marvel’s elaborate list of movies lined up for the coming year as well as 4 movies with an assembled cast of high profile celebrities scheduled to release in the next 4 years might, this may put Marvel ahead of the pack (Fischer, 2014). However, Warner Brothers may pose a threat for Marvel with highly anticipated productions such as “Suicide Squad” (Fisher, 2014); attracting a large audience with anticipation may draw attention away from Marvel’s releases and decrease their profit potential.

Strategic Positioning Marvel’s strategic positioning, (see Figure 3) demonstrates that Marvel is the clear market leader in of attractiveness and competitive positioning. This is followed by Warner Brothers, 21st Century Fox and Sony, who, despite large company revenues, is the least attractive market for the production of superhero films.

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Established in 2008, Disneynature is Disney’s newest segment, positioned to provide children and teenagers with educational nature productions.

Revenue Opportunities Current revenue statistics and market share for Disneynature are unclear. However, Disneynature productions are some of the top grossing nature motion pictures (The Walt Disney Company, 2015). Earth, their first film release and highest profit earner, saw a worldwide gross profit of $109 million, and $32 million in the US (Box Office Mojo, 2015). Their latest release in 2014, Bears, only earned $18 million worldwide, $17million of which was domestic earnings. Despite the lack of information on its total revenue or market share, it can be assumed that this is a new market which has the potential to continue gaining revenue. This is mostly due to the demand for Consumer Responsibility by the public, the trend of conservation and respect to nature and Disney’s endeavour to employ more notable celebrity narrators, such as Tina Fey (Disney Nature, 2015).

Cost Reduction Opportunities

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It is difficult to gather information about costs and expenses for the current market, however, the budget for the first film produced, Earth, was reported to be about $30million. Cost reduction for this market

would lie in outsourcing different components of the production to a cheaper company, or even local companies in the country of filming. Disneynature was set up to not only excel in the nature documentary market, but also to have better presence in conservation efforts. A tree was planted for every movie-goer for the premier of Earth, which was a high cost for Disneynature but a gain in marketing and publicity for the film (The Walt Disney Company, 2012). A relocation of the headquarters might be a consideration for the company who operate in Paris, , (Disneynature, 2015) a very expensive city for labour and daily activities. The company produces two films a year and should costs exceed expected profit, cutting the production to one a year may prove an ideal strategic choice.

Market Attractiveness There is profit potential for this market despite not yet demonstrating major growth in its sector, as the latest films have not been earning as much as earlier films. In of Boston Consulting’s Group (BCG) Growth-Share Matrix, this segment could be identified as a potential “question mark” (Ghemawat, 2002), since it would be assumed to have low market share in the sector of nature documentaries, but potential for

profit due to customer demand, early revenues and a scope to cut costs with reorganisation of the company.

Customer Sensitivities The target market of this segment, while predominantly for children and teens with its G-rating, also contains nature documentary-lovers and those environmentally-aware (Barnes, 2009). As a result, customer focus for Disneynature lies in their mission, which is to “share a wide variety of wildlife stories on the big screen in order to engage, inspire, and entertain” (The Walt Disney Company, 2015). The films need to be educational (value add), high-quality in production (skills investment of employees), with recognisable celebrities involved to generate interest (marketing), and of a subject nature that is relevant for the viewer. Promoting the film prior to its release on social media is also important. In order of most important, the customer sensitivities are:

Value Added Marketing Skills Investment

Critical Success Factors Based on the above sensitivities, the main success

factors lie in ensuring the content of the productions are highly educational, inspirational and help make better understanding of the world around. It is essential that a proper marketing campaign is undertaken by Disneynature, especially in this new market, as they have strong competition. Ensuring that they reach the target market, especially children and teens who may not usually choose to see a documentary, is essential. Engagement on social media network as well as further promotional videos would help in this market. Finally, ensuring that the standard of the films are aligned with the high standard of Disney. This will mean quality footage, narrators, production, editing and sound. The CSFs for Disneynature are:

Figure 4: Disneynature’s Strategic Positionig. Source: Arthur D. Little.

Informative, educational, environmental content Strong consumer interest generated Quality of film production

Competitors Disneynature have two main competitors: National Geographic and BBC Earth. National Geographic’s March of the Penguins (2005) was the highest grossed nature documentary ever, with $127 million worldwide and $77 million in the US (Box Office Mojo, 2015). The company is also releasing films in 3D (National Geographic, 2015), which could be seen as a strategic ploy to gain competitive advantage.

growing, attractive market for this segment.

Strategic Positioning From the grid in Figure 4, we can see that Disneynature has the strongest competitive position. BBC Earth has a strong brand reputation, making it a moderately attractive market. Despite the highest grossing nature documentary, National Geographic’s growth slowed subsequently, but with releases in 3D recently, it could potentially make a further profit in this market.

BBC Earth’s “Planet Earth” topped sales for nature documentary in DVD sales of $3.2 million in 2007 (Arnold, 2007). BBC Earth’s film Deep Blue achieved success mostly in the UK, but with a worldwide gross of $19 million (Box Office Mojo, 2015). According to the online resource for box office grossing, out of the top ten titles, Disneynature produced six (Box Office Mojo, 2015), making it a

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Pixar was originally a competitor of Disney, until Disney acquired it in 2006 (NBC, 2006). Since then, it has experienced great success producing movies for children such as “Toy Story 3” and “Up”.

Revenue Opportunities Since it was founded, Pixar has been a market leader in quality animation feature films. Pixar has produced 15 movies which had a value of $9.23 billion worldwide and averaged $485 million for each film (The Number, 2015). This represents huge revenue opportunities considering the average cost or budget for the last 4 movies was $196 million, while the average revenues earned for the same 4 movies was $615.77 million.

While in the US, Pixar’s most lucrative region or market, average revenue of their four most recent movies is $257.3 million. This demonstrates the importance of the US market to Pixar and Disney, ing for about 42% of average annual revenue worldwide. Revenue growth however has fluctuated year on year depending on the movies that Pixar released during the year. Using the Boston Consulting Group’s Share Matrix as an indicator, we would define Disney’s Pixar studios as a star (Ghemawat, 2002). Pixar are among the market share leaders and their product is differentiated to others on quality (Reeves et al., 2014).

Cost Reduction Opportunities It is difficult to define the exact costs and expenses spent on each movie, but Disney of late, have been characterised by spending extortionately on producing their films, but this ‘tentpole’ strategy backfired on them with the release of John Carter, leading to a write down of $200 million, and The Lone Ranger, involving a write down of $190 million (Entertainement Weekly, 2015). But the same cannot be said for their Pixar segment as all 15 of their feature films have made substantial revenues.

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Significant operating expenses in this market include film cost amortisation, which can be

categorised into production costs and participations and residual expenses amortisation, distribution expenses and cost of sales (Market Realist, 2015). High costs are associated with film production and often linked with the film quality, but these two are not explicitly mutual. A more efficient staff might be able to produce the same movie for a reduced cost. Pixar needs to take a holistic approach to IT cost reduction by considering all sources of cost and analyse their drivers.

Market Attractiveness The studio animation market is a very attractive one, with huge revenues earned over recent years, for example Pixar ed worldwide revenues of $1.07 billion for the release of “Toy Story 3”. This equated to a gross income of $870 million in 2010. Because of the rapid advancements of technology pertinent to the production of animation, this industry is one of the fastest growing. The aggregated demand for animated entertainment has extended because of the increase in broadcasting hours by cable and increased attractiveness of the internet (Reeves et al., 2014).

Customer Sensitivities Customers are responsive to a plethora of sensitivities, but the magnitude or volatility differs

depending on the criteria. Advertising is in the form of online, social media and other traditional mediums. Value added means improvement in the quality of their productions, through better writers, actors, performers or staff. The final customer sensitivity is marketing which means knowing the target audience, what they want and then effective communication. This is something that Pixar have shown an abundance of already in their films. Customer sensitivities are ranked as:

Advertising Value Added Marketing

Critical Success Factors Based on the aforementioned customer sensitivities, Pixar Animation Studios could improve market share and profitability through greater efficiency and enhanced target marketing. This includes improving the quality of the production through increased expenditure on value added, such as writers, producers and actors. To ensure that Pixar stays relevant in the minds of the customer, advertising will create further awareness. Due to their strong brand reputation and their wealth of experience in animation, target marketing is more important than creating awareness. Advertising will reinforce brand recognition, while marketing will allow for the improvement, understanding and expansion of the potential customer base. CSFs are ranked as:

Improving Production Quality Enhanced Target Marketing Further Awareness

Competitors The three main competitors to Pixar are DreamWorks, Sony and Disney Animation. Sony animation is a sub section of the Sony Pictures Entertainment company, and since its founding in 2003 they have produced 10 feature films in the animation segment, and have grossed $2.223 billion worldwide (Statistic Brain, 2015. They have a gross margin of about 70.7%, which is very similar to Pixar’s gross margin of 68% (The Numbers, 2015). DreamWorks Animation is the biggest competitor to Pixar. Since it began, DreamWorks have grossed $13.272 billion worldwide, and their gross margin in this segment is 75% (NASDAQ, 2015). Disney Animation Studios would have posed a threat, but in 2006 Disney bought the much revered company. This was a shrewd decision by Disney as it allowed them to consolidate their dominant position in the market and gave them access to proprietary rendering technology that enhances the quality of the movies (CNN, 2015).

Strategic Positioning From Pixar’s strategic positioning (Figure 5), it is clear that they are in a strong competitive position which is closely shadowed by Dreamworks. Both these companies have moderate to high market attractiveness, while Sony lags behind in a defendable position. it is clear that experience and competency of Pixar and Dreamworks holds them above Sony in this market.

Figure 5: Pixar’s Strategic Positionig. Source: Arthur D. Little.

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Disney Animation Studios is the most iconic segment of Studio Entertainment, responsible for the classic productions such as “Snow White and the Seven Dwarves”, remaing one of the world’s largest animation producers, and with recent success of “Frozen” (Clarke, 2015).

Revenue Opportunities Walt Disney Animation Studios was founded in 1937 and have been realising large revenues since the release of Snow White. Earning $8million, it became the world’s highest grossing sound film of its time, and, adjusting for inflation, one of the highest earning films of all time (Box Office Mojo, 2015). Disney continues to excel in this market today, with last year’s “Frozen” earning over $1bn in ticket sales and the title of highest grossing animated film (Clarke, 2015). The animation market is estimated to be worth over $200 billion, and it is still growing (Animation Ireland, 2012). Thirteen large animation movies were released in 2014, which is an increase of seven from 2003 (Verrier, 2013). Some fear that the market is nearing saturation (Zahed, 2013), but as studios compete for audiences, Disney still remains one of the largest producers of animated films (Digest, 2011).

Cost Reduction Opportunities Disney Animated movies cost in the region of €100-200 million to produce (Digest, 2011). The company has helped reduce production costs as they gradually moved away from traditional 2D animation (with the exception of The Princess and the Frog), towards the more cost effective digital 2D, flash and cell action productions. Although technology such as this has reduced costs, strong scripts written by talented screenwriters will ultimately have a stronger impact on cost saving, and hold the key to success (Clarke, 2015).

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Pixar may also be crucial when it comes to reducing costs. Resource sharing is a long

term cost reduction strategy (Strategic Financial Advisory Committee UB, 2015). By acquiring Pixar, Disney not only gained a strong business unit, but also a wealth of knowledge, skills, technology and resources that can be availed of.

Market Attractiveness The animation market continues to be one of the strongest performers in the movie industry, reporting consistent profits margins (Zahed, 2013). In this mature market, Disney’s animation studio could be classified as a cash cow in BCG’s Growth Share Matrix. (Ghemawat, 2002). Despite the possibility of saturation as animated films numbers increase per annum, Frozen’s unprecedented profit margins show there is still huge potential profit in this industry. Another attraction of this industry is longevity (Animation Ireland, 2012). Programmes like The Mickey Mouse Club, that have not being produced for over 20 years, are still earning strong profit margins from merchandise and licensing, as characters are still well-loved, current and recognisable.

Customer Sensitivities Disney animation’s target audience was traditionally children, but now reports show that increasing numbers of 18-24 year olds are purchasing tickets for animated films (Hugel, 2013). Because of this, Disney has

focused on producing films with a wider appeal, tweaking and adapting customer sensitivities. Customer sensitivities in order of importance are:

Skills Investment Marketing Advertising

Critical Success Factors

Relatable Characters who Challenge Stereotypes Appealing Films that Generate “Buzz” Complex Story Themes with a Social Influence

Competitors Originally, Disney dominated the animation market, but now

Critical success factors for animated movies have changed and evolved over the years. However, recent studies show that story and social influence is very important, while films with complex story plots also outperform those with s i m p l e r storylines (Kaufman and Figure 6: Walt Disney Animation’ Strategic Positionig Simonton, 2014). Source: Arthur D. Little. Animated films also need to create interest and ‘buzz’ and persuade new viewers to buy tickets. This appeal has now extended beyond children to adults. This is naturally more achievable if the story has a unique selling point (Konnikova, 2015). The most critical success factor however in animated films, is the ability to identify with the characters while challenging stereotypes (Konnikova, 2015). The ranked CSF’s are:

its top competitors include Dreamworks, Universal, Sony, 20th Century Fox, Lionsgate Entertainment and Warner Bros. Dreamworks, who solely produce animation movies are regarded as one of Disney’s biggest rivals (Feinberg, 2013). Fox has also become an unlikely competitor with its Ice Age movies that earned $383.26 million worldwide (Statista, 2014).

But global competitors are becoming prevalent in the animated movie market, and although, they are not top competitors within the US market, they could threaten Disney elsewhere (Roxborough, 2015). Studio Ghibili who are often referred to as the Disney of Japan (Kenny, 2015) and Denstsu, have produced world class animated films such as the popular Spirited Away, that earned $275million worldwide, and yet, Disney have yet failed to explore this market.

Strategic Positioning Disney Animation Studio’s strategic positioning (Figure 6) show that they hold a strong position, with Dreamworks taking up a favourable position. Both these companies possess moderate/ high market attractiveness, while 20th Century Fox is moderately attractive. Studio Ghibli have the lowest attraction and weakest market position, but this is relative to these animation power houses.

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RECOMMENDATIONS Managerial Improvements

Strategic Improvements

1. Increase Market Share for Disneynature Disney is a company that relies heavily on for it to become a “Star” as a medium term structured processes and information technology. objective 1. Operational Focus

For that reason it is recommended that Disney:

Share processes and allow economies of scale in Pixar and Animation studios to reduce and increase capital to focus for new projects. IT Governance: Employ a framework that guarantees the correct use of IT which will eliminate bottlenecks, create a more efficient product development while focusing on the quality of the technological infrastructure.

2. Cost Focus Funding strategy: As Disney is a cash rich company that holds a lot of tangible assets,it would be advisable to utilise interest deduction (Investopedia, 2008). By borrowing funds they can realise the interest payments before taxation, thus lowering their tax bill and enhancing Disney’s Return on Capital Employed Tax Awareness: avail of tax schemes that are present in many different countries around the world. Disney have been proficient in this regard in the past with the Pirates of the Caribbean, where they were able to write off 20% of their production costs.

3. Continue Investing in CSFs During this report, the main success factors identified overall for the different business units were: Added value Marketing Quality Technology It is important for Disney to continue heavily investing in these areas. This will allow the company to continue attracting new customers, secure financial expansion, meet customer demands and expectations in quality and content, and reduce the competitive gap with their main competitors.

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Disneynature CSF’s include marketing, meaning that it is highly sensitive for customers. Applying a dedicated marketing campaign accompanied with an awareness programme in schools and universities is crucial. By looking into expanding into the education sector with a target audience of 5-15 year olds, more people will be involved and willing to enjoy Disneynature films.

2. Improve “Stars” by focusing on customer orientation and cost efficiency Cost efficiency: Vertical integration inside Pixar and shared processes and knowledge among other companies together with an effective IT Governance strategy. It could also investigate the possibility of lowering actors’ wages in Marvel studios to reduce filming costs. Customer orientation: Initiate a new advertising strategy programme to attract people from different ages to the animation movies as advertising is a high customer sensitivity. Marvel should extend their storylines and focus on assembled casts, learning from the success of the Avengers and Guardians of the Galaxy.

3. Ensure Market Share of “Cash Cows” is a long term strategy To do this, it is necessary to: Acquire competition or share ownership with competition. This has proven to be a very successful strategy in past mergers. Identify future trends in consumer behavior to identify new movie projects Continue working with sequels as previously discussed is a safe bet for the company Employ Total quality management to ensure process improvement by aiming in quality and consumer satisfaction Share a process framework with Pixar to allow synergy and cost reduction

CONCLUSION Disney has experienced phenomenal success. Studio Entertainment is a global unit with strong brand management, and due to their dedication to a kaizen approach, they are excelling in their endeavours to become market leaders across their segments.

Simulation Lessons 1. Identify Clear, Realistic, Strategic Goals for Market Share

competitive advantages, strategies, processes and business performance (Prasnikar et al., 2005). From our analysis, however, Disney have one of the strongest strategic positioning in every studio entertainment segment.

Strategic goals aid businesses to achieve their desired market share. Broadly speaking, Disney publicly have said their goal is to be “one of the world’s leading producers and providers of entertainment and information, using its portfolio of brands to differentiate its content, services and consumer products” (The Walt Disney Company, 2015). Financially, they seek to “maximise earnings and cash flow, and to allocate capital toward growth initiatives that will drive long-term shareholder value”. These goals may not be specific but they drive their market performance and competitive behaviour.

4. Divest in Low Market Attractiveness

2. Investment is Key

This report has been prepared with the Business Simulation experience in mind. Despite Disney publishing their financial records online, there was a limited amount of information available on specific market share for the four business segments. Therefore, this report required assumptions to be made based on revenues from profitable films produced by each studio.

In order to achieve success, adequate investment is important. During the simulation, we learned that the conservative approach is not always wise. While economising can sometimes be appropriate, for companies like Disney, their success was achieved through large investments in mergers, new technology and skills.

3. Consider using Benchmarking Benchmarking is defined as the process of devising business knowledge through the comparison and analysis of information from competitors in order to achieve quality decision-making (Prasnikar et al., 2005). Benchmarking can be performed with

Sometimes, instead of attempting to salvage market share, it is necessary to divest a business unit in order to invest in a more promising market. This would occur if it is neither part of the core business strategy, nor more valuable to the company with than without (Mankins et al., 2008). Since the segments discussed are not unattractive or no longer competitive, divesting a franchise is not applicable.

Limitations of Report

Due to the limiting nature of the information about Customer Sensitivities, CSFs, and the films produced, prioritisation of the important and pertinent factors was necessary to give an appropriate overview of the Walt Disney Company and their achievements in studio entertainment to date.

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