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Walt Disney Co. The Entertainment King Case Solution

Solution Id Length Case Author Case Publisher
1149 734 Words (3 Pages) Michael G. Rukstad, David J. Collis, Tyrrell Levine Harvard Business School : 701035
This solution includes: A Word File A Word File

Numerous factors are responsible for the success of Disney throughout the years. One of the most important ones is Disney’s strategy of diversification. During the years, it has diversified not only vertically but also horizontally. On one hand, it tried maintaining complete control over the entertainment industry by acquiring TV channels like ABC; on the other hand, it expanded itself into theme parks and hotels. Disney also has incorporated the strategy of creativity in its core principles. The culture of the company is such that it promotes creativity and a positive brand image. However, with its emphasis mainly on diversification, the company overlooked many other already existing successful projects. Motion pictures were neglected during this time period, and only sequels were made. This, accompanied by many other failures caused Disney’s profits and brand image o deteriorate.

Following questions are answered in this case study solution

  1. What accounted for Disney's performance through the late 1970s? How did Disney historically develop and deploy valuable resources?

  2. How was Michael Eisner able to increase net income in his first four years as CEO? What did he do to rejuvenate Disney?

  3. What specific challenges did Disney face at the end of 1990?

  4. Which is greater: the value of Pixar and Disney in an exclusive relationship or the sum of the value that each could independently generate (making deals with companies each chose to along the way)?

  5. If the value is greater in an exclusive relationship why ownership rather than contracting? What ongoing challenges do you perceive as likely?

Case Analysis for Walt Disney Co. The Entertainment King

How was Michael Eisner able to increase net income in his first four years as CEO? What did he do to rejuvenate Disney?

Eisner joined Walt Disney as CEO in 1984. Since profits of Disney were deteriorating during this time, Eisner took some immediate steps to maximize shareholders' profit and the company’s growth. For him, creativity was the most important aspect for growth. Therefore, he tried incorporating maximum creativity into the company’s budget. A large amount of effort was a pad in revitalizing movies and the animation sector. One of the major achievements of Eisner includes his strategy of synergizing all the divisions of Disney. Through this synergy, the company managed to increase its efficiency and save costs. During his time, Disney also managed to extend its boundaries geographically and gain access to many new markets for its movies, as well as, theme parks.

What specific challenges did Disney face at the end of 1990?

The death of Disney’s President in 1994 opened the gate for many new challenges for the company. Many higher executives resigned because of changed job descriptions by Eisner. While this issue caused management problems, the acquisition of a channel called ABC also proved out to be a major failure for Disney. Since both companies had very different origins, cultural clash emerged during the early years. This clash also led to the failure of Eisner’s synergy strategy. Many ABC executives believed that Disney was only using ABC for promoting its brand name and various other projects of Disney that have failed to create a mark on their own. Furthermore, before the merger, ABC had signed a deal with many of Disney’s competitors to promote their work. All these factors caused relations between the two to become more stringent; hence, Disney suffered from losses at the end of 1990.

Which is greater: the value of Pixar and Disney in an exclusive relationship or the sum of the value that each could independently generate (making deals with companies each chose to along the way)?

Under the given scenario, the best strategy for both Pixar and Disney is to maintain an exclusive relationship. While yes both companies have different cultures from each other, but both place creativity at the center of their organization’s core principles.

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