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The Walt Disney Company:The Entertainment King

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Introduction

The Walt Disney Company: The Entertainment King Case Analysis The Walt Disney Company is one of the largest media and entertainment corporations in the world. Disney is able to create sustainable profits due to its heterogeneity, inimitability, co-specialization and immense foresight. It also successfully uses synergy to create value across its many business units. After its founder Walter Disney's death, the company started to lose its ground and performance declined. Michael Eisner became CEO in 1984, and his strategy of expansion and diversification successfully rejuvenated Disney. Over the past 15 years, Disney seemed to be growing for the sake of growth and many problems aroused. It is important for Disney to refocus on its corporate value, and manage its brand, creativity and synergies. Disney's Success in Creating Sustainable Profits The Walt Disney Company had begun as a small animating company and grew into a multinational organization with undeniable profits. Though the company had its down years in its history, it has continued its miracle in success. Disney has long been regarded as a great example of sustainable profits. There are four main criteria for sustainable profits: heterogeneity, inimitability, co-specialization and immense foresight. Unlike other companies, Walt Disney Company's products are heterogeneous, and it has a unique strategy of entertaining the whole family, instead of solely targeting either children or adults. ...read more.

Middle

There were several hostile takeover attempts with the intention to sell of the separate assets of Disney. In 1984, Michael Eisner was named Disney's chairman and chief executive officer. He wanted to maximize shareholder equity through an annual revenue growth target and return on shareholder equity over 20%. He successfully rejuvenated the Disney brand while maintaining the corporate values of quality, creativity, entrepreneurialism, and teamwork. From 1984 to 1987, Eisner did several specific things to rejuvenate Disney. Eisner educated the Disney culture to the new managers through a three-day training program at Disney's corporate university. He believed that "managing creativity" is Disney's most unique corporate skill. Therefore, he encouraged creativity, and spending was approved in order to achieve creativity. One of Eisner's priorities was to rejuvenate Disney's TV and movie business. Disney once again started producing shows for network television, and sold some of its TV programming to independent TV stations. Eisner believed that the shows "helped to demonstrate that Disney could be inventive and contemporary". As for the movie division, Eisner increased film production by releasing 15 to 18 new films per year, from two new releases in 1984. Eisner managed movie budgets and encouraged creativity at the same time by ensuring that the creative talents operated near the target budgets. ...read more.

Conclusion

In order to create synergy, divisions were force to find ways to work with one another. However, it became increasingly difficult to create effective synergy in such a large corporation. Therefore, Disney should continue to implement Disney Dimensions to create synergy in the company. The synergy boot camp can increase loyalty and devotion by allowing managers to identify with the company and eliminate culture clashes through bond building. Synergy will increase revenue by allowing cross-promotion which is a necessary part of any future expansions. Over the years, Disney seemed to be growing for the sake of growth. However, steps have been taken to cut back on operations and refocusing Disney's original values and position. Businesses that did not offer healthy returns were eliminated, and "non-strategic" assets were sold. For example, Disney reduced its licensed products by half while concentrating on products featuring its main characters. Disney should continue to grow as long as the growth is in line with Disney's corporate position and value. One way for Disney to grow is to expand abroad. For example, the plan to build a theme park in Hong Kong can create a huge market for Disney products in Asia by familiarizing people with the Disney brand and characters. In addition, technology is growing at a fast pace, it is necessary for Disney to recognize new technology trends and develop plans to minimize the risks associated with technology. ...read more.

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