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 Journey
1927 – 1966:
◦ The Walt Disney Era
1967 – 1984:
◦ Roy O. Disney & Roy E. Disney
1984 – 1993:
◦ Michael Eisner
1994 – 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 - 1984
 New 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 Employees
Network Syndication
Fostering creative talent
High risk taking – Venture capitalist approach

Financial
Corporate Sponsorships
Co-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 ABC
Debt 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 effects
Excellent prediction of market for DVD’s
Converting Theme parks into destination resorts
Foray into Internet and TV
Cost cutting plan
Maximizing corporate synergy
Cross promotion
Entry into Restaurants, Cruise Ships, Educational
Retreats
Merging of touchstone with ABC
Impact of External factors on Strategy
(Post 1994)
Movie tie-ins revenues decreasing
Culture clash
More focus on selling merchandise of core
characters
Gong show
Encouraging conflict between top
management
High attrition rate
One 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 Structure
Retails-as-entertainment concept at the Disney stores
Venture into books, magazine, recording labels
Tapping 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 market
Strategic Planning Unit – Gong Show to keep the
innovations going
Overall Strength And Weakness
Strengths
 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 Threats
Opportunities
 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?