Disney’s Parks and Resorts Strategic Management

Disney’s Parks and Resorts Strategic Management

Walt Disney Company is one of the leading providers and producers of information and entertainment in the world (“The Walt Disney Company”, 2016). Along with its subsidiaries, Walt Disney is a diversified company that mainly operates in the Canada and the United States. Through its various brands, the company differentiates its services, content, as well as customer products, and seeks to create the most innovative, creative, and lucrative entertainment experiences (“The Walt Disney Company”, 2016). The Disney’s parks and resorts division operates Florida’s Walt Disney World Resort, California’s Disneyland Resort, and a lot more. This paper seeks to analyze the primary financial ratios of Disney for the fiscal year 2015.

The case of Disney is applicable to  southwest Airlines which has been able overcome major hurdles in its journey to being one of the biggest and well renowned LCC (low cost carrier) in the US and consequently and by extension the world over. Comparative analysis of Disney and Southwest Airlines portrays successes that can be attributed to many factors which includes among others the strategic management techniques used, their company mission and vision (Rao et.al, 2015).

The vision of Disney is to offer a unique entertainment experience to the world (Dow,2010). Such a vision has seen it embrace innovations that translate to higher revenues. An overview of its financial ratios analysis shows positive prospects for the firm. Southwest airline coincidentally share common vision although on the transport industry. It is imperative to note that the closely related vision statements place Southwest Airlines at strategic level with Disney.

The mission of Disney explores its technological input, quality human capital and financial investment to provide desirable services to the consumers. Its global image is a basis of strategic management comparison with Southwest Airline. In that regard, Southwest Airline reflect similar standard of competitive strategy by meeting the diverse needs of the customers.

Walt Disney’s current ratio in 2015 was 0.95. This signifies that Disney may likely experience difficulty in fulfilling its present obligations. When current ratio is low in value, this does not imply a crucial issue (Downes,et al,2007). If the company would have excellent long-term projections, it may possibly lend from those forecasts to comply with its present obligations. Walt Disney’s quick ratio in 2015 was 0.87 (“Walt Disney Company Yahoo! Finance”, 2016). This value signifies that Disney has no capacity to completely pay back the liabilities that it currently has. Comparing the long-term debt to total assets ratio of Disney from 2014 to 2015, it may imply that the company continues to be greatly dependent on its debt to expand their businesses (Dow, 2010). The approach of Southwest Airlines on this perspective exhibit strategic thinking. This can be proved by the company’s approach of   ensuring that the employees are included in the running of the company by putting in place a profit sharing mechanism (Susan and Nicas, 2015). The employees are allocated 25% of the share invested in the company’s stocks. This help in balancing debtors and ratios for the security of the firm.

Walt Disney’s debt-to-equity ratio in 2015 was 0.43. When this ratio is high, it implies that the organization has aggressively financed its expansion and development through acquiring debts (David, 2003). This can lead to volatile earnings due to added interest expense. Inventory turnover is a measurement of how quickly a company turns over its stock within a year.  Disney’s inventory turnover last year was 5.74 (“Walt Disney Company Yahoo! Finance”, 2016). Some lessons can be learnt on Southwest Airline by Disney on this aspect (Paik, 2010). The airline has adopted modesty in its inflight services by ensuring that no meals are served in the flights but only light snacks are served in its place. This has enabled the flight company to cut on overhead costs which could have resulted from provision of in-flight meals.

Asset Turnover measures how rapidly an organization turns over its assets through deals. In 2015, Disney’s asset turnover in 2015 was 0.17. Organizations with low net revenues have a tendency to have high resource turnover, while those with high net revenues have low resource turnover. Organizations in the retail business have a tendency to have a high turnover proportion. Then again, Disney had a gross margin of 43.43% (“Walt Disney Company Yahoo! Finance”, 2016). This signifies a strong competitive advantage. A positive gross benefit is just the initial step for an organization to make a net benefit (David, 2003). The gross benefit should be sufficiently enormous to likewise cover related work, equipment, rental, showcasing/promoting, innovative work and a great deal of different expenses in offering the items (Banton Adjunct Faculty/Consultant, 2009). Such a financial investment in Disney’s value creation process is likened to Southwest Airline. In its desire to achieve the best in the industry, southwest airlines have been ensuring that the recruitment exercise only strives to capture the best. This has been ensured by pegging the applicants’ qualification at 3% of the whole population of applicants. In respect of Southwest Airline’s approach, Disney show close strategy as the airline which adopted the acquisition of the competitors through buyouts. For instance in May 2011 the company purchased AirTran Holdings. This the parent company to AirTran Airways one of the many low cost air carriers. This has therefore effectively helped stem the competition by reducing the competitors in the market. This technique has also enabled the company to increase its revenue as a result in the increase of planes serving its various routes. Its customers are also better served as there are more planes flying in and out with time (Susan and Nicas, 2015).

In 2015, Disney’s operating margin was 26.17%. This is a positive sign since it just demonstrates that the organization is growing. The organization’s arrival on resources was 12.92%. Return on assets also demonstrates how well an organization uses what it needs in order to produce profit. ROAs can fluctuate radically crosswise over commercial ventures (David, 2003). Hence, return on assets should not be utilized to analyze organizations in various commercial ventures. Return on equity of Walt Disney in 2015 was 26.04% while its earning per share without non-repeating things for the period of twelve months (TTM) was $5.36.

Analyzing Disney’s financial ratios in 2015, it can be concluded that Disney has to double its efforts to pay back its debts and increase its inventory turnover ratio in order to generate greater profits and increased in current ratio. The company has to engage in aggressive marketing and promotions as well as more activities that can entice more individuals to visit them and avail of their products and services. The strategic approaches of Disney are relevant to case of Southwest Airlines hence the comparative analysis.

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