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Disney Case Analysis

1129 words - 5 pages

Identify the Problem (Feel free to disagree/add and subtract.)

Disney, while broadly diversified –are lately using a method of acquisition – a capital intensive approach. As well, they are making large capital investments in their existing infrastructure. –Do they have the numbers to support this aggressive (and seemingly unfocused and thereby risky) approach- both in the long term (identity/ brand focus) and short term (cash). Is this a sustainable and strategic path to growth, or does this rush to capitalize on rapidly changing trends lead to oversaturation without developing existing core “money makers”? Is the happiest place on earth recession proof? How do they sustain interest and ...view middle of the document...

Disney continues plans to buy back shares -about $4 billion dollars’ worth. Shares in the company have risen almost 19% in the past year, largely on the expectation of the success of Disney’s big box office contenders this year and potential associated consumer products- the Avengers and Star Wars.

In terms of revenues – both first and second quarter results topped estimated forecasts, with second quarter results showing revenue increasing 7 % to 12.4 billion. This has been largely attributed to the success of Frozen and related merchandise, and increased visitation to (and spending within) its US parks.

However, not all units providing sufficient return. ESPN and other networks’ growth is decelerating.
And recently Disney’s Chief Financial officer James Rasulo recently stepped down despite being signed until 2018 -creating some buzz, but so far this hasn’t affected share pricing.

PESTLE (Feel free to add more ideas—I had trouble with a few because I found they overlapped a lot)

Political

The “up-coming” election could influence the economic environment and consumer spending (typically consumer spending has been shown to increase during election years- though researchers are unclear as to the exact reason).
Governments can intervene in trade in many ways: through international trade regulations through tariffs (taxes imposed on imports as a way to regulate imports and make a profit for their own governments). They may have import quotas or full- on trade embargos. Differing taxation rules also all need to be taken into consideration when operating in a global market. Additionally there good be restrictions on types of goods, even so far as content i.e. (ideologies represented in films by products etc)
-Disney would like to expand into emerging markets – of which there is often political unrest – an investment which can be risky.
-Also there may be Currency risks on return when foreign exchange is considered.
-Some governments have rules requiring international companies have a domestic partner to conduct business.

Economic
Being a global business, Disney is at the mercy of the global economy. Economists are pointing to signs of recession stemming from trade-reliant Asian economies and the sinking value of the Japanese Yen. Not only do economists view this a potential forecast of the upcoming global economy, but this is one of the very markets that Disney would like to expand into.

Further to this, prices of goods imported from China have fallen significantly. Economists point that for the individual consumer- this is good news, but...

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