Team Swag

Team Members:

Jamie Raney

Brittany Agnihotri

Paul Hong

Brandon Ho

Domonic Enriquez

Carolyn Bianco

Due Date: March 5, 2012

Sect. #21/ Alice Cheng

Table of Contents

Pg. 1

Executive Summary …………………………………………………………………………pg.3

Product Extension……………………………………………………………………………pg.4

Strategic Analysis……………………………………………………………………………pgs.5

Production Analysis………………………………………………………………………….pg.7

Financial Analysis……………………………………………………………………………pg.8

Marketing Analysis…………………………………………………………………………..pg.8

Management Strategy………………………………………………………………………..pg.10

Organizational Strategy……………………………………………………………………...pg.11

Bibliography…………………………………………………………………………………pg.13

Appendix…………………………………………………………………………………….pg.14

Executive Summary

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The exclusive “Dash Pass” is an annual pass that not only provides free admission year

round, but it also gives the visitor of Disneyland the ability to avoid the major lines in the

amusement park, granting them instant access to the most popular rides. The main objective of

this product extension is to give the visitors of Disneyland more options in order to avoid the

overcrowded lines. Since Disneyland is a world-renown and a very popular amusement park,

people come from all over the world to experience the magic of Disney. Although the

overcrowded and long lines for rides are signs that Disneyland is prosperous, these factors also

cause a sometimes uncomfortable environment for visitors. The new Dash Pass add-on will give

consumers an additional option to the annual pass. For each one of the 12 most popular rides,

there will be a separate line for people with the all exclusive Dash Pass. Through this line,

customers can simply scan their pass under a scanner at the entrance of each ride, and will be

granted instant access to the Disneyland ride.

In order to implement this product extension effectively, the total cost will amount to

$1,035,000. This includes scanners, training workers, maintenance, and installation. Although

this amount is relatively large, it will not greatly affect the net income of Disneyland. This add-

on to the annual pass will quickly begin to produce more profit for Disneyland. The Dash Pass is

$599, so it will be targeted towards wealthy families and individuals who desire the ultimate

experience of avoiding the long and tedious lines of Disneyland. By charging this price,

Disneyland will quickly re-gain the expenses of installing the Dash Pass and begin to make profit

very quickly.

Product Extension

Company: Disneyland

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Industry: Amusement Parks

Product Extension: Purchasable Fast Passes

Company Info:

The Walt Disney Company was founded in 1923 and is based in Burbank, California. For more than eight decades, the name Walt Disney has been preeminent in the field of family entertainment. From humble beginnings as a cartoon studio in the 1920s to today’s global corporation, The Walt Disney Company continues to proudly provide quality entertainment for every member of the family across America and around the world. The company’s Parks and Resorts segment owns and operates the Walt Disney World Resort in Florida that includes theme parks; resort hotels; a retail, dining, and entertainment complex; a sports complex; conference centers; campgrounds; water parks; and other recreational facilities, as well as the Disneyland Resort in California. This segment also manages and markets the Disney Vacation Club, Disney Cruise Line, the Adventures by Disney, and mixed-use Disney Resort and Spa in Hawaii; manages Disneyland Paris and Hong Kong Disneyland Resort; and licenses the operations of the Tokyo Disneyland Resort in Japan.

Benefits of Product Extension to Company:

An extension of Disneyland’s fast pass program would greatly increase the business at Disneyland. By incorporating an add-on unlimited fast pass, The Dash Pass, program to the Annual Passports, more tickets would be purchased for the low cost of production of the passes. The unlimited fast pass option, however, would only be available to the more expensive annual passes, the premium and deluxe passes. By having the unlimited fast pass add-on, compared to the free, current fast passes that can only be used every three hours, this would persuade consumers to purchase the more expensive annual passes with the benefit of using the unlimited fast pass all day long during their visit. By shortening waiting times for popular attractions for a majority of guests, this feature would continue to prove that Disneyland truly is “the happiest place on earth.”

Strategic Analysis

SWOT Analysis:

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Strengths: Disneyland is a very well-known and well publicized amusement park. The name

“Disney” has been established since the 1950’s as being a family oriented park. As a result from

these attractive attributes of Disneyland, the amusement park is now world renown. Thanks to

the marketing techniques of Disney, it would be fairly cheap and easy to market this new

Disneyland add-on annual pass, the “Dash Pass”. Through television, radio, magazines, and

internet, the addition to the annual pass could be easily marketed to the public with nearly no

additional costs than what Disneyland already is paying to advertise. The annual net income of

the Disneyland company is around 5 million dollars, which provides opportunity to be able to

market the new pass without any financial risk. Disneyland is known to provide a clean, orderly

environment which appeals to all ages and families. This attractive image helps to reassure

customers that they will be in good hands when purchasing this full-packaged pass and that

everything will run smoothly.

Weaknesses: Although Disney has the funds to market the Dash Pass, the expenses of

manufacturing and installing the bar code scanners at each ride is very high, around $200,000.

In order to install the scanner, there will not only be the expense of paying workers’ wages and

training of around $5,000, but there will also have to be areas blocked off for construction that

may look unappealing to visitors. The installation also might be time consuming

Opportunities: By creating this product extension, there will be more options for the consumers.

This pass will be available for everyone, all year round. With this pass, the overcrowding of lines

will subside creating a more pleasant environment for all. This product extension will greatly

benefit the company’s reputation by creating the idea that the consumer can have it all; that the

possibilities are endless. With the Dash Pass, Disney has the opportunity to eliminate the

negative aspect of Disneyland; the overcrowded lines. Not only can the consumer purchase an

annual pass that includes add-ons such as free parking, the Dash Pass is the ultimate annual pass

add-on that allows Disneyland visitors to virtually never have to wait in a line for the most

desired rides. It shows that Disney is always thinking of ways to enrich the experience of their

visitors.

Threats: Threats include other amusement parks, the economy, and the general public’s living

standards. Other amusements parks such as Six Flags and Knott’s Berry Farm are threats because

they also can develop their own unlimited passes that provide immediate first-in-line access.

Pg. 5

Also, the new Disney pass is very expensive, making the economy a threat. When the economy

is not doing well, such as a recession, people are less likely to desire a high priced pass. The

living standard of consumers is also a threat. Many families are very busy and do not have the

time or money to use a pass such as this.

With this product extension, Disneyland Company will become more competitive in the marketplace. Luckily, the revenue that will be made immediately once these installments are finished will quickly make up for the investment costs of making the Dash Pass possible. The construction zones can be hidden from visitors with the use of bushes or decorative walls and will not take away from the overall magic of Disneyland. The product will produce more options for the consumers that other competitors, other amusement parks, do not offer. People will chose to buy this pass because it provides every demand the consumer could ask for. Although the listed threats are realistic, the Dash Pass will be able to overcome them because it is targeted for a specific group of individuals. It is targeted for the wealthy families who have time and money available to spend at Disneyland. Although there are families or individuals that feel this pass is too expensive or unnecessary, this pass is intended to reach out to the 10% of people who desire this option. Disneyland will counter the threat of other amusement parks because no other amusement park in the nation has the reputation and magic of Disneyland. Even in a recession, people still come to Disneyland and buy expensive annual passes. After the expense of installing the scanners, Disneyland will quickly begin to make revenue from the selling of passes. After all, Disneyland is the happiest place on earth.

Production Analysis

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Disneyland’s Dash Pass is an extension to the usual Disneyland Annual Passes. This

product is limited to the original 4 resorts located in California, Paris, Hong Kong, Tokyo, as

well as Disney World located in Florida. A new add on option will be added to the Annual

Passes, so that customers will have the option of the Dash Pass, which will allow them faster

access to rides, or to simply stick with the regular Annual Passes. The Dash Pass gives the

consumer an additional option. At the ticket booth, cast member’s use a card-printing machine

located in all eight ticket stands to print out the annual pass on the spot. Construction permits

will be required in order for the scanners to be placed at each of the 12 rides. There will be

machines that scan your Dash Pass allocated at every ride entrance that allows fast pass use,

since fast passes are only available for selected rides. The new Annual Fast Passes will be

produced with special bar codes that will be printed onto the physical pass, required to scan at

the entrance to each ride, in order to show authenticity of fast pass holders. Since there are a total

of 12 rides that enable fast pass use, a total of 24 workers will be required to maintain these

machines. These workers will be current employees who are specially trained to handle these

Dash Pass scans, to ensure validity. Two workers will be posted at each ride; one worker being

the one to supervise lines for the regular pass entries, and the other will be the one in charge of

Dash Pass care and customer service.

These processes will be synergetic with existing processes because Disney already has a

system for contracting outsourced labor to construction companies to build their parks and

resorts. This same process can be used to construct the fast pass scanning machines.

Much care will be taken into the production of this new pass, which will hopefully speed

up movement in lines, and ensure customer satisfaction.

Pg. 7

Financial Analysis

In order to institute the Dash Pass, Disneyland must allocate a budget of $1,327,000 for the entire project to run smoothly. Most of the money must be borrowed directly from the Disney Company but will be paid back with in the first few years. The budget must cover the cost of the scanners, at the entrances of the rides, the cost of personal, their training to deal with the visitors, as well as the cost of installation and maintenance, as well as, advertisement, to promote the new pass.

Returns and Ratios Within the first year, the return on sales will not be large due to the tremendous costs the initial year to start the use of the passes. However, as the years progress with the los cost of production and higher cost of the pass, the returns will cover repaying the budget cost of implementing the pass. The minimal cost of the Dash pass is $50 and the cost of producing one pass would approximately be $5 which would make the overall profit from making the Dash Pass around $40. This added into the profit from selling a typical Annual Pass will cover the cost within the first year. Costs, such as Advertisement and Maintenance, will end up being reoccurring costs that will be taken out of the overall profit for each year. When calculating the business ratios for the product we see that the company is able to pay off short term debt with a ratio 1.283, from the current assets ($9,545,000) and Current Liabilities ($7,483,000). The Debt-to-Equity ratio the current liabilities are not fully paid off through the Stockholder equity but also their retained earnings. Thus, if Disneyland sells at least 33,175 passes, they would breakeven; however, ideally there would be more profit coming from general sales of the entire Annual Passes. Thus Returns from the first year will be low and then, roughly estimating, the dash pass will cover at least half of the yearly debts from maintenance and advertisement, and then the rest would be profit to Disneyland. The other half of the debt would be covered by Annual Pass profits.

FiguresScanners………………………………… $80,000

Training:………………………………… $ 5,000

Maintenance:………………………… $ 30,000

Installation:……………………………. $120,000

Advertisement:……………………… $1,200,000

Total= $1,327,000

Pg. 8

Current Ratio

Current Assets/ Current Liabilities

$9,545,000/$7,438,000=1.283

Debt-to-Equity Ratio

Current Liabilities/ Stockholder Equity

$7,438,000/$2,267,000=3.281

Marketing AnalysisProduct:The product that Team Swag will be selling is a convenience product that is an add-on to Disneyland’s Premium and Deluxe Annual Passports called the “Dash Pass”. The Dash Pass will give pass-holders unlimited access to the front of the line for popular attractions. This product is simply an add-on to existing passport cards, which requires no manufacturing of a new physical product. Scanners for the most popular rides at Disneyland with the longest rides, however, will have to be installed to read the barcodes on the back of these passport cards as the barcodes will be encoded differently if a pass-holder bought the Dash Pass. This product will be offered year-round just as the annual passes normally are.Pricing: Our product will be priced at $50.00 and will only be available to the two most expensive types of annual passes, the Premium Annual Passports and the Deluxe Annual Passports only. Pricing may change yearly if the price of Annual Passports changes as well. This product will be sold as single units.Distribution:Disney currently has an existing system for distributing Annual Passports that will be used for our product. Our product can be bought online and at the theme park where customers will then take their receipts into a gift shop to get their picture taken and a physical card given to them. All records of sales will be stored in an online database. Promotion:With our product we are targeting those who can afford purchasing the pricier Annual Passports and have the leisure time to attended Disneyland regularly. More specifically, we are targeting wealthy individuals and wealthy families. These forms of advertising will be in form of radio commercials, TV commercials, billboards and online ads. Ads on local radio stations such as Radio Disney, KROQ 106.7, KOLA 99.9 will also be utilized as these stations target children, young individuals (ages 18-34) and older individuals (ages 40+). TV commercials will run our ads as well on channels like ABC, CBS, NBC, FOX, and the Disney Channel during daytime slots and evening slots when most people are home and are able to watch TV. These ads again will only be aired to those who live in Southern California since our product is only for the Disneyland theme park in Anaheim, California. TV commercials will cost about $200,000 for a 30 second commercial. Radio ads will cost about $4000 a week on a top performing station. Billboards will cost about $2000 a month and online ads will cost about $300 a month.

Marketing Budget:According to the financial analysis we will have $1.2 million to spend on advertising.

TV Commercials ($200,000/per spot) Online ads ($300/month) Radio ads ($4000/week) Billboards ($2000/month)

Pg. 9

Management Strategy

The mission of Disneyland is to be the nation’s leading theme park, by providing entertainment to people of all ages. In addition, Disneyland seeks to be the most inventive and original theme park today. Disneyland originally started off as a theatrical company but as years passed, the theme park’s company culture has been modified to suit the interest of its customers. With innovative games, products, and rides added constantly throughout the years, Disneyland’s company culture aims to attract new customers, while bringing old customers back.

While Disneyland has been extremely effective in pleasing its customers, long lines have been a constant problem at the theme park and implementing the “Dash Pass” at every ride would greatly resolve this problem. In accordance with the Annual Passports page on the Disneyland Resorts website, the premium annual passport at Disneyland costs $499. This is the most expensive pass available at the park. Customers who are avid fans of the theme park purchase the majority of these passes because of the high costs. Adding another $100 for the “Dash Pass” to this annual pass would mark the premium pass up to $599. This all-inclusive pass would include 365 days of admission into the park, dining and merchandise discounts, admission to both parks, hotel and tour discounts, free parking, and a spot at the front of the line for every single ride available at both parks. Although the prices would be steep compared to the earlier prices, consumers who are dedicated fans of Disneyland and have the time and money to spend would most likely purchase the tickets. No other annual pass offers what the “Dash Pass” does, so this new add on to the annual pass would likely attract customers into buying the more expensive pass, thus generating more revenue for the park. Although some may argue that too many people will buy the premium pass with the “Dash Pass” add-on, only a small amount of customers are willing to spend close to $600 for a pass. With this new addition, “Dash Pass” lines would always be short enough for customers to enjoy their visit and at the same time Disneyland will continue to make profit.

According to the Walt Disney Company Website, listed on the Management Team page, the executive that would be managing this “Dash Pass” would be President and Chief Executive Officer of Walt Disney, Robert A. Iger. President of Disney Consumer Products, Bob Chapek and Chairman of Walt Disney Parks and Resorts, Thomas O. Staggs would also assist in managing this product. If any problems arose between management, additional management would not be needed as Iger, who is the Chief Executive Officer of Disney would overlook every process involved with the “Dash Pass” discussions. All management decisions for the new pass would be handled in the state of California.

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Organizational Strategy Disneyland was founded by Walt Disney, who visualized creating a place that parents

and their children could enjoy. The initial idea for Disneyland was that it would be a place people could go to experience different types of worlds that contain wonderment, adventure, and fantasy. The success of Disney has spread worldwide in the form of movies, television shows, retail, and prosperous branches, such as Disneyworld located in Orlando, Florida. It was originally intended to take up eight acres of land and be located next to Burbank Studios; however, it was soon realized that eight acres would be too small, so Walt collaborated with the Stanford Research Institute and acquired 160 acres of land for his project. This land was located in Anaheim, California because Walt felt that the park should be located in Los Angeles and easily accessible by the freeway. Disneyland was constructed in 1954 and made public in 1955. Disneyland was divided into five separate worlds pertaining to fantasy and wonderment, such as “Adventureland”. Some of his ideas, such as “Fantasyland” worked and some, such as “Tomorrowland” did not. Today Disneyland has different sectors, such as “California Adventure” and a water park. Overtime, Disneyland has been modified. For example, it now has extremely thrilling and fast roller coasters and rides that generally pertain to certain age groups. There is also a hotel and different types of access passes, which generate a high amount of revenue. With the tagline that describes it as being “The happiest place on Earth,” Disneyland has prospered since its establishment.

Disneyland is divided into five different business sectors, which are Studio Entertainment, Parks and Resorts, Media Networks, Interactive Media, and Consumer Products. All of these sectors provide Disney with different ways of generating revenue. Disney has also recently purchased a comic book company for 4 billion dollars using cash and stock, which acts as another venue for developing a considerable amount of revenue. In order to maximize the value of their output, Disney has begun allocating their product through the use of video-on-demand and shows formatted for iPods.

New Employees

Top Management: The President, who is responsible for developing Disney’s mission of creating the Dash

Pass. They complete this mission by planning and determining the firm’s strategy. This position is already occupied.

Middle Management:The Managers, who are essential components for maintaining the structure and

efficiency of the Dash Pass system. There are four managerial positions, which can be allocated to new employees or existing employees who deserve a promotion/higher pay. The four positions are Financial Manager, Operations Manager, Marketing Manager, and Administrative Manager.

First-Line Management:The Supervisors, who are responsible for coordinating and supervising the activities of

operating employees. They will spend most of their time motivating the operating employees and solving day-to-day problems. Existing employees, who demonstrate their potential, will be promoted into management through this position.

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Organizational Structure: The organizational structure of implicating the new and improved Dash Pass would

require additional employees, such as:-A manager : 4 needed to manage the coordinator, maintenance crew, and outside

resources. -A supervisor : 2-3 needed to control the amount of passes being sold (not too many

people can have this pass since it will cause the lines to be too long, thus resulting in the loss of value of the pass).

-A maintenance crew : a group of 20 needed to preserve, fix, or tend to the machines that accept the Dash Passes in the front of the lines.

-Outside resources: 15-20 needed to act as substitutes if the machines malfunction. They will check and verify the passes presented to them by the consumers.

Employee Motivation and Discipline

It will be stressed to the managers that their jobs are crucial in maintaining the order of the Dash Pass system. For example, the administrative manager must make sure that the maintenance crew is checking the machines daily and that employees belonging to outside resources are notified to manage the Dash Pass lanes if the machines are to malfunction. By making the significance of the managerial positions clear to the managers, managers will be motivated to take their job seriously and maintain the order of the Dash Pass system and the employees. The managers will use the same motivational techniques, as well as positive reinforcement on the maintenance crew, outside resources, and supervisors. For good work, all employees may receive raises to their fixed salaries. They will be paid for the training process they will be required to go through, as well as the time they put in for work. Workers will also have benefits and worker’s compensation. The disciplinary system for workers will have different levels that depend on how many times they have been disciplined and/or what they are being disciplined for. The basic form of discipline is reprimand, which is followed by higher forms of discipline, such as suspension, demotion, and being let go.

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"Tickets & Packages | Tickets & Reservations | Disneyland Resort." Disneyland Resort | Welcome to the Magic. N.p., n.d. Web. 1 Mar. 2012. <http://disneyland.disney.go.com/tickets/>.

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Appendix

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DisneylandFor the Year Ending December 31, 2012

Statement of Cash FlowsCASH FLOWS FROM OPERATING ACTIVITIES

Net Income $ 3,700,000Depreciation (200,000)Wages (1,488,000)Taxes (134,000)Other (188,000)

Net Cash Provided By Operating Activities $ 1,690,000CASH FLOWS FROM INVESTING ACTIVITIES

Purchase Equipment $ (40,000)Net Cash Provided By Investing Activities $ (40,000)CASH FLOWS FROM FINANCING ACTIVITIES

Paid long-term note payable $ (235,000)Issue New Shares of Stock 1,128,000

Net Cash Provided by Financing Activities 893,000

Net Increase (decrease) in Cash and Cash Equivalents 2,543,000Cash and Cash Equivalents at Beginning of Period 3,185,000Cash and Cash Equivalents at End of Period

$ 5,728,000

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