Walt Disney Case
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1. Disneys long-term success is rooted in the strong innovative foundation established by its creator Walt Disney. Through the years Disney has carefully crafted consumers perceptions of what Disney, its affiliates, and its characters all represent. Disney has garnered a highly esteemed reputation through this effort as consumers have realized anything associated with the Disney name is near guaranteed to be of quality. This has driven a very wide value gap which Disney has reaped the profits from since its inception in 1927. Walt Disney crafted his companies image around the cartoons he created produced of present day cultural icons like Mickey Mouse, Daffy Duck, and Goofy. The brand image of these cartoons are not as volatile as that of a true celebrity because they are on paper and not prone to spontaneous tarnishings of their image and thus have stood the test of time. At first the innovating power of Walt Disney was the source of the value gap Disney was driving and later Disney continued its success under Michael Eisner through corporate synergy which ensured employees knew how to communicate, perceive, and enrich the future of Disney. Like many great innovating companies of the recent past, Disneys empire expanded through the years to encompass numerous fields and reached its consumers through a multitude of avenues such as film, TV, amusement parks etc. Through these avenues Disney further demonstrated to customers that they were a multi-faceted force that provided quality to consumers at numerous levels.

2. When Michael Eisner took over as Disneys CEO in 1984, Disney was still struggling to find its way without their original creator Walt Disney who passed away in 1966. Disney was continuing to reap the benefits of a major pre-planned Walt Disney project with Walt Disney World. Eisner knew that innovation had fallen flat within this time and Disney was incurring heavy costs creating the EPCOT center. Eisner implemented an expansion goal aiming to maximize shareholder wealth by attempting to return at least 20% on stockholder equity. There was a caveat to this growth, Eisner wanted to maintain Disneys respected quality, creativity, entrepreneurship, and teamwork. A corporate synergy strategy helped facilitate this process. Eisner created a new training program emphasizing to instill pride in Disneys rich history and characters with its current employee base. Furthermore, Eisners expansion plan capitalized on value Disney hadnt previously acknowledged. Eisner lifted Disney Worlds capacity restrictions allowing for more customers to be in the park at any given time, he opened the park on Mondays, which had never been done, and he also raised ticket prices. Consumers spent an increasing amount of money because of these strategic moves. The rise seen during Eisners first 4 years in net income is a direct result of his aggressive expansion plan.

3. We can consider that Walt Disney preferred vertical integration but how well did it actually work for him. For example, many of Walt Disneys products were books, magazines, VHS, audio and computer software. These were inputs that were produced and were sold in stores simultaneously owned by Disney. The acquisition of ABC can also be considered as an expression of this strategy of vertical integration, to the extent that it was a way for Walt Disney to diffuse some of its programs on its own.

The ABC question in July 1995, was one of the largest in U.S. History
The acquisition made Disney the largest entertainment company in the U.S. and provided it with worldwide distribution outlets for its creative content.

The deal also transformed Disney from a company with a 20% debt ratio to one with a 34% debt ratio ($12.5 billion) after the takeover.
Purchase price was estimated to be 22 times the earnings for a company in 1995, and Hollywood and Wall street believed that Disney would be to immature to handle a network television business

Stating “it is difficult to create synergy though vertical integration”
It turns out that Hollywood and Wall Street were right. The ABC acquisition was a little more then Disney could handle, at least at first. In the article it states that a year after the merger, there were press reports of a culture clash between executives at ABC and Disney. “Insiders say Disneys micro-management has left many at ABC unhappy and anxious,” wrote one Wall Street Journal reporter.

Not only were the two companies struggling to connect on similar ideas, ABC also was making its own deals with Disneys rivals before the merger to develop programming. “ABC and DreamWorks, for example, had agreed to finance jointly the cost of developing new TV shows. “We needed access to production talent,” said one ABC executive of the deal.” Disney quickly told ABC that these arrangements were no long economical after their merger. And because Disney owned the production studio, they were terminated the agreement that ABC and DreamWorks made.

Disneys financial performance began to deteriorate – particularly in 1998 and 1999
Disneys board of directors voted to cut Eisners bonus from $9.9 million in 1997 to $5 million in 1998 and to $0 the following year.
What surprised the analyst though, was in year 2000, Disney was already making it turnaround. ABC had falling to the number three rated network during the course of the merger, but in year 2000 ABC rose to the top due to hit new show, Who Wants To Be a Millionaire.

Broadcasted three times a week and raised the rating of the shows after the aired.
Exhibit 9 shows the increases of these other shows
Now that Disney has been able to maintain is position throughout the year 2000, their next strategies is make their theme parks known as destination resorts and continue to diversify their company.

4. Disney operates under a corporate strategy of differentiation. They are not focused on having low costs or being a cost leader but they do differentiate their products.

The article stated that Michael Eisner believed that Disneys ability to manage their creativity was its most distinctive skill, which allows them to become more differentiated and not cost oriented. It also said that they were willing to spend money to allow creativity to be achieved.

Disney is a highly diversified company with several distinct divisions.
Disney has four main type of divisions in its corporate strategy.
Television

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Disneys Long-Term Success And Creator Walt Disney. (July 21, 2021). Retrieved from https://www.freeessays.education/disneys-long-term-success-and-creator-walt-disney-essay/