Walt Disney Company : The Entertainment King

Strategy Formulation

GROUP- 5 Rahul Bafna – 04 MBA- DIV:A Vaibhav Gupta – 27 Akshay Johur – 33 Krishnan PS – 43 Akshaya – 50 Amogh Yadav – 63

The Disney Journey1927 – 1966:

◦The Walt Disney Era1967 – 1984:

◦Roy O. Disney & Roy E. Disney 1984 – 1993:

◦Michael Eisner1994 – 2000:

◦Michael Eisner: Rectification Measures

Situation Analysis – 1927 - 1966 The Entertainment Industry- Development phase

Disney- Initial phase- facing short-term cash crunches

Flat and nonhierarchical organization

Creativity and Quality- Driving forces for the success of the company

Company was scaling up and went public in 1940

World War II affected the production

Walt Disney’s Strategy (1927–1966)

Licensed Mickey Mouse to overcome cash crunches

Started developing full-length films to tap the future market

2 films per year + large number of shorts Special cartoons for government during World War A blend of Live Action with Animation Launch of Walt Disney Music Company Buena Vista Distribution comes into play Disneyland- The Entertainment Park Targeted not just the kids but also the adults

Situation Analysis – 1967 - 1984New Chairman- Roy .O Disney

Walt Disney World with 2 on-site resort hotels

Tokyo Disneyland was announced

Film output on declining

Financial performance was deteriorating

Sid Bas to the rescue

Roy Disney’s Strategy (1966–1984)Opened in-house travel company

Live shows to major cities

The Tokyo Disneyland to look just like its U.S. counterpart

Introduced a new label Touchstone, to target teen/adult market

New cable venture, The Disney Channel

Internal Situation Analysis 1984 - 1994

•On the helm of Takeover

•New management Team

•Declining Profits

•Emphasis on creativity

External Situation Analysis 1984 - 1994

Theme Parks •Maturity in US markets•Europe / Asia markets were booming

Sitcoms• Move from Family – oriented Sitcoms &

centered less on social issues• Focus on ‘acerbic takes on middle class’ &

on single adults ( e.g.. Sienfeld)

Animation •Beginning of Modern era of US animation referred to as the American Animation renaissance•Beginning of Outsourcing – lesser cost of Production

Competitors • Pixar• Dreamworks

Eisen’s Strategy (1984–1994)Separated Creative and Financial forces to

foster innovation.Instilled Disney’s culture in the EmployeesNetwork SyndicationFostering creative talentHigh risk taking – Venture capitalist approach

FinancialCorporate SponsorshipsCo-ordinated negotiated inter-divisional

transfer prices

Eisen’s Strategy (1984–1994) Established Different functional verticals

◦ Corporate Marketing Function

◦ Marketing calendar

◦ Disney film library

◦ In-house media buying group

Expanding into new businesses◦ ‘retail as entertainment’ concept

◦ Entered into the Book, Magazines and record publishing segment

◦ New channels of Distribution

Theme Park Strategies◦ Euro Disney – Very low cost of capital & higher profit margins

◦ Compromised with the French Govt. & its employees.

◦ Added attractions – Night life complex & Water based attractions.

Eisen’s Strategy (1984–1994)Risky Films – ventured into new segments of films

Cross Promotional Marketing strategies through ◦ Corporate Tie ups ◦ Retail◦ Expansion into other businesses◦ National Hockey League – Mighty Ducks◦ Broadway-bound Theatre production

Commitment to live Entertainment

Situation Analysis – Post 1994

•Lion King’s “roaring” success

•Euro Disney –back on track

•Demise of the President,Wells

•Katzenberg leaves Disney

•Merger with ABC

Impact of merger with ABCDebt ratio of 34% from earlier 20%

Culture clash

Change of ABC’s congenial

atmosphere

Growth declines and then stabilises

Eisen’s Strategy (Post 1994)Entry into movies having big name stars and

expensive special effectsExcellent prediction of market for DVD’sConverting Theme parks into destination

resortsForay into Internet and TVCost cutting planMaximizing corporate synergyCross promotionEntry into Restaurants, Cruise Ships,

Educational RetreatsMerging of touchstone with ABC

Impact of External factors on Strategy (Post 1994)Movie tie-ins revenues decreasingCulture clashMore focus on selling merchandise

of core charactersGong showEncouraging conflict between top

managementHigh attrition rateOne man show

Impact of Structure on Strategy

Signing of Hollywood’s best actors and directors Pursuing High quality Scripts from lesser known writers Reduction of time between releases Use of technology Increase in number of licenses to help recover costs Need for innovative attractions at the theme parks Special marketing function to handle company wide

marketing activities. Exploration of untapped businesses, regions and

audience. At Euro-Disneyland, making cultural allowances Purchase of NHL team Foray into DVD to have the first movers advantage and

compensate the high costs

Impact of Strategy on Company StructureRetails-as-entertainment concept at the Disney

storesVenture into books, magazine, recording labelsTapping of the Home Video market by

launching the video cassettes at affordable price.

Broadway versions of their critically acclaimed movies

Creation of synergy group to handle communication after the ABC merger

Shared office space in international marketStrategic Planning Unit – Gong Show to keep

the innovations going

Overall Strength And WeaknessStrengths

Eisner’s leadership Values of the company Disney’s Brand value—Mickey

mouse legacy Ability to venture into different

areas and make profits successfully-diversification

Global Standardization Target Audience- Everyone Constant Innovation Popular characters

Weaknesses Autocratic leadership Frequent change in top

management High sunk cost Excessive Research &

Development High Investment High Risk Factor Unprofitable or hasty acquisition Cultural Imperialism Media Network Competition Too Large Organization

Overall Opportunities And ThreatsOpportunities

Merchandise GLOCAL-Global Localization:

Think global, Act Local Characters of national or

regional appeal Cheaper alternatives to soft

toys Disney Music Channel Disney School of

Management/Training Institute Move into different segments Market development in

untapped countries. Online Websites Develop more attractions for

theme park

Threats More money focused thus

losing image a s a fun company Facing fierce competition from

Paramount Parks, Universal Studios and Six Flags Theme Parks.

Maintain product differentiation.

Searching, paying and retaining innovative people.

More of a one man show Competitors: National, Regional

& Global Highly Demanding in terms of

Sales, Creativity and Innovation Too Large Organization

Questions?