Walt Disney Co. The Entertainment King Case Solution

2. 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.

3. 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.

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)?

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.