Walt Disney Inc.
Brandy AndersonCody Bartos
Jessica EdmundsAmy SobolewskiKelly Stevenson
Ryan Vincent
HCRM 201November 6, 2000
Table of Contents
I. Introduction 2
II. History 3
III. Firm Identification 6
IV. Organizational Structure 7
V. Career Paths 10
VI. Target Market 11
VII. Retail Mix 12
VIII. Merchandising Channels and Procedures 14
IX. Store Design 15
X. Disney News 16
XI. The Future 19
XII. Conclusion 22
XIII. Reference List 23
1
Introduction
Disney is an enormous entertainment corporation that was built upon one man’s
vision and imagination, that man was Walt Disney. This corporation encompasses many
different entities of entertainment for people of all ages. It all began 75 years ago when
Walt Disney single-handedly developed his first animated feature film. From here it
blossomed into an empire of theme parks, vacation resorts, and merchandising channels.
Through this magical kingdom a sense of euphoria is created, allowing all that visit to
briefly return to childhood, a place where they can wish upon a star and have their
dreams come true.
Walt Disney’s wish for those who visit is stated on a plaque in Disney’s Town
Square. It reads as follows:
TO ALL WHO COME TO THIS HAPPY PLACE:
WELCOME.
DISNEYLAND IS YOUR LAND. HERE AGE
RELIVES FOND MEMORIES OF THE PAST…
AND HERE YOUTH SAVOR THE CHALLENGE
AND PROMISE OF THE FUTURE.
DISNEYLAND IS DEDICATED
TO THE IDEALS, THE DREAMS, AND THE HARD
FACTS THAT HAVE CREATED AMERICA…
WITH HOPE THAT IT WILL BE A SOURCE OF
JOY AND INSPIRATION TO ALL THE WORLD
JULY 17, 1955.
2
History
“May all your dreams come true!” Who was the creator of this unforgettable
phrase, Mickey Mouse, and won thirty Academy Awards? Who else, but the great Walt
Disney. Walt Disney was born in Chicago on December 15, 1901. Walter Elias Disney
was the fourth son of Elias Disney and Flora Call. Walter’s father was a farmer and his
mother was a schoolteacher.
Walt spent most of his childhood in Marceline, Montana. This is said to have
furnished the inspiration and model for the main streets of Disneyland. His family
moved to Kansas, and this is where young Walt began studying cartooning at a school
and ended up going to Kansas City Art Institute and School of Design.
Disney moved back to Chicago in 1917 and entered McKinley High. Here, he
made drawings for the school newspaper and took photographs. World War I interrupted
Walt’s schooling, because he had to participate as a truck driver in France and Germany,
for the American Red Cross.
In 1919, Walt returned to Kansas City. There he became an inker in commercial
art studios and a draftsman. He met U.B. Iwerks there. Disney and Iwerks started their
own small studio and made one and two minute animated advertising films on a second
hand motion camera. They also did a series of cartoon sketches called “Laugh O-Grams”
and seven-minute animated fairy tales. They called the fairytale Alice in Cartoon land.
A young, New York film distributor cheated the two of them, so they headed for Los
Angeles, to be with Walt’s brother, Roy.
Roy became their business manager. They invented a character, by the name of
Oswald the rabbit. The films were contracted for distribution at $1,500 dollars. This
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started their small enterprise. In 1927, Disney and Iwerks wanted to try a new character-
a happy, full of energy, and mischievous mouse, named Mickey. In 1928 Disney
produced Steamboat Willie. This cartoon was different then all the rest, because it had
sound! Next they created Minnie, who was Mickey Mouse’s girlfriend. She had a
personality and the voice like a human. Walt Disney was the voice of Mickey!
This then lead to the creation of Donald Duck, Pluto and Goofy in 1933. Roy
then franchised tie-in-sales with Donald Duck and Mickey with such things as: watches,
T-shirts, and stuff animals. This grabbed much more wealth for the Disney Company.
Walt Disney, still on the go, decided to make feature-length cartoons. His first was Snow
White and the Seven Dwarfs (1935), Pinocchio (1940), and Dumbo (1941).
Disney studios now decided to make a variety of entertainment films. Walt
Disney owns four motion-picture companies. Walt Disney Pictures, which is family
entertainment films. Then there is Touchstone Picture and Hollywood Pictures, which
produce films for adult audiences. Miramax Films created motion pictures by
independent filmmakers. The company also owns Walt Disney records, which does
recordings for children and The Disney Cable Television Channel for family
entertainment.
Meanwhile, back in the 1950’s, Walt Disney came up with an idea to build an
Amusement park near Los Angles. It opened up in 1955 and is the best-known purveyor
of child and adult entertainment in the 20th century. Then in 1971 Walt Disney World
along with the Magic Kingdom opened up near Orlando, Florida. Disney World also has
hotels, resort accommodations, and sports and other recreational facilities. The EPCOT
center was added in 1982, which stands for Experimental Prototype Community of
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Tomorrow. In 1989 Disney-MGM studies Theme Park, which has exhibits, shows and
movie studios. Tokyo Disneyland opened in 1983 but it is an unrelated Japanese
corporation with Walt Disney Company, which receives loyalties from that venture.
Euro Disneyland was completed in 1992, 20 miles west of Paris. The Disney
Corporation acquired Capital Cities/ABC Inc. in 1996, which owned the ABC television
network.
After Walt Disney’s death on December 15, 1966 the Disney Corporation
declined because they lost their chief innovator. They got new management in 1980.
Their animated films and motion pictures became most successful in the United States.
Touchstone Films produced films such as Splash (1984) and Pretty Women (1990). The
Disney Company produced The Little Mermaid (1989) and Toy Story (1995), which is the
first full-length animated cartoon.
Walt Disney’s humor, imagination and his gift for being attuned to the vagaries of
popular taste inspired him to develop well-loved amusement for “children of all ages”
throughout the world. He touched millions of dreamer’s hearts!
5
Firm Identification
The Walt Disney Company is a diversified worldwide entertainment company.
The company is broken up into many different groups. There is the media network,
which includes broadcasting and cable networks. Broadcasting which includes ABC
Television Network, ESPN and Toon Disney. The studio entertainment produces
animated pictures for theatrical, home videos and television markets. There is a theme
park and resort section. These include such things as Walt Disney World Resort in
Florida, Disneyland Park, the Disneyland Hotel and the Disneyland Pacific Hotel in
California. The Disney Store and Disney Interactive Software are in the consumer
product segment. Direct marketing and Internet have online activities that have to do
with consumer interest. The info seek corporation is now a wholly owned subsidiary of
the Disney company. Most of the business is done in the United States, Asia Pacific,
Europe, Latin America, Canada, and other countries. Media works had 32% of the fiscal
revenue in 1999. Studio entertainment was 28%, theme parks and resorts were 26%,
consumer products were 13%, and Internet and direct marketing was 1%.
In 1999 Sales were said to be $23,402,000,000 and Disney employed 120,000
people in the United States. As you can see there is so much more to Disney then we all
knew. The Disney Company has everything from the Disney Stores to the Disney Big
Red Boat Cruise!
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Organizational Structure
Disney consists of many different entities. These entities consist of the Company
itself, the amusement parks, and various stores. The Walt Disney company is the core of
Disney responsible for all the other industries. The Walt Disney company's
organizational structure is comprised of very important key people. These people are
essential for maintaining Disney's overall success. The firm's organizational structure
consists of first the chairman and CEO, Michael D. Eisner, then the VC; Chairman, Walt
Disney Feature Animation, Roy E. Disney, VC, Standford M. Litvack, The President and
COO, Robert A. Iger, and the SEVP and CFO, Thomas O. Staggs. This structure only
applies to the Walt Disney Company's Organizational Structure.
A major portion of the Disney Corporation is entertainment attractions such as
theme Parks. Disneyland was the first born on the Magic Kingdom. It opened in
Anaheim, California on July 17, 1995. This 45-acre park was created with the intention
of making the visitors feel like they were spending a day inside a cluster of Hollywood
films. The park was divided into smaller “worlds” including Frontier Land, Adventure
Land, Fantasy Land, and Tomorrow Land.
Disney World was the next park, which was opened in October of 1971. This
development located in Orlando, Florida included an amusement park, three hotels,
campgrounds, three golf courses, and a 7,500-acre wildlife preserve. The technology
used in planning this Magic Kingdom was incredible. The entire Kingdom was built on a
giant platform that allowed storage areas and service systems to be built beneath the
surface. This permitted tasks such as garbage disposal to be taken care of without a
garbage truck ever being seen on the streets on the park.
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EPCOT Center was the third park to emerge. This experimental Prototype
Community of Tomorrow opened October of 1982. The general theme for EPCOT is
“International”- bringing countries to us, also, towards the future, using new technology,
and developing solutions for the needs of people.
Within all these different theme parks exists an organizational culture within the
structure. "Organizational culture is the set of values, traditions, and customs in a firm
that guide employee behavior (303). " These amusement parks self-proclaim themselves
as the "Happiest place on the Earth." There is an emphasis put upon the employees to act
cheerful and smile and to focus on the customer's satisfaction. This happy go lucky
atmosphere is reflected through the company's organizational structure. The theme park's
structure consists of the general managers for specific areas of the park, ride operators,
sweepers, concession attendants which are referred to as hosts or hostesses. This
terminology of calling employees down lower in the firm's structure as hosts or hostesses
is to instill an attitude of job satisfaction amongst the employees. It is supposed to make
the employees feel important about their job, which will hopefully lead to the best
possible outcome of performing their job.
The Disney store is the last entity. The Disney Store's main objective is to apply
that same happy go lucky attitude in their stores as it is done in their amusement parks.
The employees are always smiling and happy and will do anything to make sure the
customer is satisfied. The store is a children’s delight representing a small little magical
wonderland filled with Disney toys and apparel. This atmosphere couldn't be created
without the employees themselves and the structure they are involved in. The Disney
Store's organizational structure consists of the General manager or store manager, then
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the assistant store manager of operations, and assistant store manger for human resources,
following with assistant store manager for selling and merchandise, next group sales
manger, sales mangers and last salespeople.
The next step of Disney development was to go abroad, first to Tokyo, Japan and
then to Europe. The “Imagineers” won’t stop there though. They will continue to create
and build, continually moving forward.
9
Career Paths
The Disney Company’s sheer size with all of held entities allows it to be very
large employer. It alone employs more than 120,000 employees and a one-year growth
of 2.6%. A wide variety of employment exists within each individual department and
division that make up the Disney organization. Opportunities exist in Disney Consumer
Products, Disneyland Resorts, Disney Regional Entertainment, Walt Disney Studios,
Walt Disney Feature Animation, Broadcasting, Entertainment Productions, and The
Disney Store.
The Disney Store with 600 stores nationwide employs 20,000 workers, who they
call their cast members. It prides itself in offering creative, fun, and imaginative
opportunities for potential employees. Opportunities exist in their field operations that
include positions such as store managers, district managers, and regional directors. Also
available are corporate headquarters positions that include, but are not limited to product
development, finance, information services, merchandising, distribution, and human
resources.
The Disney Company has a strong tie with college recruitment programs
throughout the United States and abroad. Participants spend a summer internship at a
Disney resort to learn valuable “real-world” information about the business is run.
Students spend an average of 10-15 hours a week on technical workshops. With the
opportunity of college credit available many students find this to be a rather rewarding
program.
10
Target Market
The Disney Company, in one form or another, can be found throughout many
American’s lives. If the number of people, who come in contact with its goods,
messages, values, and ideas can measure the Disney Company, it becomes clear that
Disney has enormous influence on the cultural life of the nation, especially with regard to
the culture of children. More than 200 million people a year watch a Disney film or
home video, 395 million watch a Disney TV show every week, 212 million listen to
Disney music, and more than 50 million go to one of the Disney theme parks every year.
This leads the Disney Company to have quite a large market segment to focus
their resources and retail mix. As apart of the entertainment industry Disney focuses on
popular culture. Unlike Time-Warner, Westinghouse, and other large corporations,
Disney is an icon of American culture and middle-class family values. It appeals to both
parental concerns and children’s fantasies while trying to transform every child into a
lifetime consumer of Disney products and ideas. The Disney Company has been able to
assert its authority as a permanent icon in many of children’s lives. Disney prides itself
in offering young people the promise of making their dreams come true through the
pleasures of wholesome entertainment.
Disney has designed itself to appeal to the imaginative senses of young children.
The wholesome family entertainment is graced by the parents of these children and is
seen as an opportunity to make their child happy. Disney’s target market is very broad
but can be narrowed down to the children of middle to upper income families. However,
it is not only limited to toys and movies for young children. Almost everyone would
enjoy a day at a Disney theme park or has watched a tv show or game on abc and espn.
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Retail Mix
A retail mix, as defined by our text, includes the factors used by a retailer to
satisfy customers needs and influence their purchase decisions; includes merchandise and
services offered, pricing, advertising, and promotions, store design and location, and
visual merchandising. Within this definition there are four “P’s”: product, price,
promotion, and place.
The variety of products that Disney offers is almost limitless. Their merchandise
includes infant, child, and adult size clothes, toys, games, movies, and collector’s items.
The table below lists some common products and their price.
CATEGORY ITEM PRICE
Adult Clothing Pooh Sweatshirt $28.00
Adult Clothing Mickey Swimsuit $48.00
Children’s Clothing Tigger Tennis Shoes $20.00
Children’s Sleepwear Snow White Sleep Gown $20.00
Infant Clothing Coverall’s $18.00
Infant Clothing Mickey Tee $12.00
Toys Thumper Stuffed Animal $28.00
Toys Disney Trivia Game $35.00
Entertainment Dinosaur Soundtrack CD $14.98
Entertainment A Bug’s Life Video $14.99
Collector’s Tinker Bell Plate $295.00
Collector’s Fantasia 2000 Snow Globe $95.00
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A promotion is any activity undertaken by a retailer to provide consumers with
information about the retailer’s store and it’s retail mix. One promotion that the Disney
Store uses is having a sale, where merchandise can be purchased at a discounted price.
Another way that Disney promotes itself is by making toy figurines for it’s newest
animated film available at fast food restaurants. This promotion is an excellent way of
reaching children by making the toy a free gift with the purchase of a kid’s meal.
Another way promotion that Disney uses is television advertisements. Each time Disney
creates a new animated film, a new children’s fad is born. (A fad is any product that
generates a lot of sales for a short period of time.) Any merchandise featuring the new
film’s characters becomes a very hot item. Therefore, by advertising the movies on
television, they are promoting all the items in their store that relate to that movie.
The last of the 4 “P’s” is place. The location of a retailer can be a primary factor
in regard to the success of that store. Disney Stores are typically located in shopping
malls, rather than as Free Standing Units. However, Disney merchandise can also be
purchased at Disney Theme Parks. The stores located within the theme parks are
normally in a strip-like format. There are usually concession stands, games, and other
attractions in between them. One common characteristic of all Disney Stores is that they
are located in high traffic areas, where they are available to a very large trade area.
Another place the Disney Store can be found is online. Their address is
http://disney.store.go.com. Merchandise from all of their categories can be purchased
from this site. The online store even has promotional sales to accommodate those “smart
shoppers.”
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Merchandising Channels/Procedures
The typical distribution channel has four steps: manufacturing, wholesaler,
retailer, and consumer. Disney Stores use what is called vertical integration in regard to
the organization of their distribution channels. This means that the firm conducts more
than one of these steps “under one roof.” Charlie Sampera, the vice president of
distribution, is quoted saying, “Bringing our operation under one roof was critical to our
strategy of significantly improving product flow, and customer service, while leveraging
our technology.”
This distribution center is located in Memphis, TN. It is massive in size, covering
653,000 square feet. Its 250 employees are capable of shipping 900,000 units per day to
505 stores throughout the United States, Canada, and Puerto Rico.
Technology has made the Disney Store extremely efficient. It has enabled the
distribution center to process enormous volumes of merchandise each day to provide each
store with exactly what it needs at the right time.
There is also a team of people in Glendale, California that control the inventory
for each retail store, along with the distribution center. This team determines all of the
store orders.
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Store Design
15
Disney News
In the past year Disney has been in the news for several reasons. The Disney
Corporation has been launching many new movies including “Toy Story 2” in November
of 1999. The CEO, Michael Eisner, has also declared that Disney is expanding the
Animal Kingdom into a ‘whole new area,’ as well as promoting a fun online learning
center for children. Disney revolves itself around entertainment for the whole family to
appreciate.
Last year around this time “Toy Story 2” was the main attraction being advertised
for Disney. The toys were back—at the movies—and at The Disney Store. On a daring
mission direct from Andy’s room, the beloved toys from Disney/Pixar’s “Toy Story 2”
infiltrated The Disney Store and were ready to provide hours of fun and entertainment for
boys and girls last holiday season.
“We were so inspired by ‘Toy Story 2’ that we’ve been on our own special
mission—to extend the movie experience beyond the theater and bring it into The Disney
Store,” said Doug Murphy, senior vice president and general manager of The Disney
Store-North America.
Themed store windows, signs and banners, special movie offers, a toy
demonstration station and cast members donning “Toy Story 2’ T-shirts were all part of
an in-store marketing campaign to support the much-anticipated Disney sequel and its
film merchandise.
Not to their surprise, the movie “Toy Story 2” did extremely well for Disney. All
the time and efforts put into the making and promoting this animated story were all
worthwhile.
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According to a May 15, 2000 Business Journal exclusive report, the Animal
Kingdom is about to get a little crazier. Walt Disney Co. CEO Michael Eisner confirmed
that a ‘whole new area’ currently is being designed for Walt Disney’s fourth theme park.
Eisner gave few details about the new section of the wildlife exhibit. Officials at Walt
Disney World will say only that the area has not yet been announced.
However, Eisner listed the Animal Kingdom expansion along with the Safari
Lodge and Pop Culture Hotel—both of which currently are under construction—as
examples of how Disney is not slowing down its capital spending in Orlando.
“We need more capacity and more rides,” the Disney chief said while in Orlando
to kick off the Millennium Dreamers event.
When formal announcement comes, it should put an end to persistent rumors
about what would come next for the Animal Kingdom—rumors that began almost as
soon as the park opened in 1998.
Since the Disney Online’s child population is skyrocketing, they wanted to
commit itself to ensuring safe, magical, imaginative online experiences for kids as they
headed back to school this year. According to Internet research firm CyberDialogue, the
number of children with Internet access from school will nearly triple to 46 million
within the next five years. In response, Disney Online, which produces the No. 1
entertainment site for kids and families (www.disney.com), today releases a series of
Web experiences including an all-new version of is online subscription service, Disney’s
Blast.
In October, Disney Online launched and exciting new version of its popular
subscription service, Disney’s Blast (www.disneyblast.com), focused on providing kids
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with a virtual world where learning is powered by imagination and exploration. Updated
with even more animation and sound, the latest update of Disney’s Blast offers kids over
100 exclusive “online attractions” that deliver educational value as well as endless hours
of fun.
The wealth of fun and imagination found on its year 2000 Back to School Web
site (www.disney.com/school) has Disney Online soaring to the top of its class. In
addition to a wide selection of games, printables, and contests themed for this special
time of year, the site features of a unique “Dress Your Pet Photo contest” that encourages
users to blend their television and online activities for a more dynamic entertainment
experience.
As you can see the news never stops for Disney. There are always new
happenings and current events to be publicized; whether it’s dealing with an upcoming
movie, an expansion of their theme parks, or helping parents educate their kids through
the Internet. Disney goes to all levels to be the best they can be and are sure to keep up
with new technology. Disney will go to extremes to continue entertaining the world by
unveiling new and exciting renovations.
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The Future
The company’s financial condition remains strong. The company believes that its
cash, other liquid assets, operating cash flows, access to equity capital markets and
borrowing capacity taken together provide adequate resources to fund ongoing operating
requirements and future capital expenditures related to the expansion of existing
businesses and development on new projects. Expansion of existing business includes
continued film and television production, design and development of theme park
attractions and resorts properties and expansion of the Disney Stores worldwide (Variety,
October 9, 2000).
Disney has struggled with its consumer products division in recent years because
of lower worldwide licensing revenue, higher costs, and slower sales at Disney Stores.
Walt Disney is going to invest over $300 million to revamp about 600 of its 740 stores
worldwide. The remaining 140 stores will be closed as their leases expire. The stores
account for 6% of the operating income of Disney Consumer Products Worldwide, while
licensing accounts for 70%, according to Merrill Lynch & Co. research. The store is
trying to go beyond the character-driven merchandise, to character free clothing with just
a Disney label on the collar or button. Disney’s retail sales rose to $75 billion, up from
about $13 billion today. They are not looking for a quick turnaround, but Consumer
Products should start to move in the right direction in 2001. “It was time for us to
change,” said Thomas Park, president of Disney Stores Worldwide. “The consumers’
tastes had changed, and we make these changes in tune with them” (www.disney.com)
The new stores are brighter, can display 40% more merchandise, and have
computer kiosks where customers can buy items not available in the store or find out
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about Disney Vacations. The stores are also more adaptable to change, allowing Disney
to focus more on holidays like Halloween. Burbank-based Disney plans to complete the
remodeling by the end of 2003. Park declined to say how much it costs to redesign a
store, but Merrill Lynch & Co. analyst Jessica Reif Cohen said it costs about $500.000.
The new stores are more efficient, require fewer employees, and are less costly than the
older versions. For example, the new lighting delivers 30%-40% more brightness for
87,000 less than the old lighting, Park said (Hollywood Reporter, October 5, 2000)
The forecast values for the company in sales in September 1997 were 22,473.000
and are expected to rise to 26,248.600 in September of 2001. The Net Income in
September 1997 was 1,966.000 and is expected to be 282.900 in September 2001. The
Long Term Dept in September 1997 was 8,205.000 and is expected to be 3,305.000 in
September 2001. The Net Worth in September 1997 was 17,285.000 in 1997, and is
expected to be 26,004.800 in September 2001. So on the average the company has a
good outlook in the future.
The Disney Company has two close competitors. Time Warner Inc. and Viacom.
Time Warner Inc. had annual sales of 28355, Disney had 24781, and Viacom had
14842.7 in 1995. The revenue share for Time Warner Inc. was 21.49, Disney had 18.78,
and Time Warner had 11.25. So the competitors are staying close to Disney and keeping
them on their toes.
Some people look at the Walt Disney Co.’s Internet subsidiary and see about $400
million in losses on a cash basis in 2000. Disney’s 72% stake in Go will rise along with
the stock price, which has been lingering just under its offering price at around $11 a
share. “The Go tracking stock represents a cash drain on Disney, which funds its $350
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million cash loss,” said David Londoner of ABN-AMRO. Adjusted for taxes and other
factors, Go represents a reduction in Disney’s fiscal 2000 earnings per share of about 12
cents per share, he said (Electronic Media, October 2, 2000).
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Conclusion
We have all learned so much about the wonderful world of Disney through
our presentation. Our idea was to talk about the Disney Store, when we found out that
Disney is so much more, it is an entire empire! Walt Disney was a wonderful inventor
who touched all of hearts, and even after he died Disney still continued to grow into
something even bigger. Which resulted in animated films and theme parks, hotels, cruise
lines, movie productions, and expanded itself worldwide. It seems as though the essence
of Disney will never die. It will remain in our lives forever and future generations to
follow.
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Maloney, D. (1999 December). The magical world of Disney distribution. Modern Materials Handling, 54, 32-34. Retrieved October 12, 2000, from the World Wide Web: http://etextb.ohiolink.edu/bin/gate.exe?f=fulltext&state=vk0qin.3.5.
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