Walt Disnay Case Analysis

History, Development and Growth of the company

The Walt Disney Company is one of the largest media and entertainment corporations in the world. Founded on October 16, 1923 by brothers Walt and Roy Disney as a small animation studio, it has become one of the biggest Hollywood studios, and owner of eleven theme parks and several television networks.

Nature of internal environment

Strategy in the beginning of 1990 was to build Disney’s core strengths in the three areas of entertainment and recreation, motion pictures, video and consumers products in order to increase the value of the Disney’s franchises and brand name.

Eisner has hands-on management style which has proved to be not the best one in many cases. There have been several internal “fights” leading to the leaving of several notable executives in the company.

Strength

- World known, valuable brand name. Its position among the top brands has been very stable over the years.

Weakness

- Low cost strategy in movie making was based mainly on remuneration of actors. Therefore, by increasing honorees it disappeared.

- Disney’s management team, specifically Eisner, several times has showed that he does not take into account local specifics or needs. There have been many failures because of his decisions or management approach:

o Entertainment park failure in France – wrong location (climate issues), too high prices (compared to Orlando)

o Merger with ABC, when Eisner could not pieņemt ABC corporate management approach thus ABC top managers left the company. He could not understand the difference between movie business and changing environment of broadcasting business

o His relationships with Pixar CEO were not promising although the very successful contract (generating 40% of revenues) is going to expire.

o Unsuccessful investment in sport’s teams, again because of not knowing how to manage this business.

o Failure in retail business of consumer product division because of the premium prices Disney wanted to charge.

- The company could not generate benefit from the merger with ABC, I would say mostly because of Eisner’s management style.

- Poor strategic decision making, no clear strategy.

- Expiring contract with Pixar, which generates 40% of revenues and has been very successful contract for Disney.

Nature of external environment/Industries

Entertainment and Recreation

There are five Disney Resorts offering variety of attractions – Disneyland Resort, Walt Disney World Resort, Tokyo Disney Resort, Disneyland Paris Resort, and Hong Kong Disneyland Resort. In 1995 there was a decision to build new unique zoo – Wild Animal Kingdom - as a theme park of Walt Disney World Resort.

Movies

The major success in 90’s was Lion King movie. Its success was extended also into home entertainment and consumer products division. Nevertheless, further years proved that it is not that easy to repeat success each year. Therefore there were hard times also for Movie division mainly because of producing too many movies during one year.

Home videos & Consumer Products

I would say that this division is very dependant on the operations of Movies division. Because, if there is a very successful movie (like Lion King) sales of home entertainment products and consumer products increase or even boom accordingly.

After acquisition of Capital Cities/ABC – American Television Network in 1995, Disney redefined its three main areas of business forming – creative content, theme parks and resorts and broadcasting.

The company was influenced badly in the early 2000s when there was overall recession. Also tragedy on 11th September reduced number of travelers, thus resulting in lower number of visitors in its theme parks and resorts

Threat

- Ex-employee Katzenberg together with several more ex-employees of Disney and S. Spielberg formed Dream Works having target to compete with Disney.

- Increasing popularity of Internet as a media resource and developing cable television