The Walt Disney Company

Introduction

The Walt Disney Company: The Entertainment King is a case study about the success of the company when Walter (Walt) Disney was alive, how the company declined after his death, and then how the company was able to rebound under Michael Eisner. In 1923, Disney Brothers Studio was founded by Walt and his brother Roy Disney. Walt created his first successful character, Oswald, in 1927; however, he was devastated when he found that he was outmaneuvered by his distributor and did not own the copyright. With modification to the Oswald character, Mickey Mouse was born in 1928 and became a major hit in the US and abroad. The brothers quickly entered into licensing agreements, full-length feature films, live action movie production, DisneyLand was constructed, and expanded their television presence. Upon the death of Walt Disney in 1966, he was succeeded by his brother Roy; who lived long enough to see the 1971 opening of Walt Disney World. After about 15 years, the earnings of Disney became stagnate and there were attempts at a hostile takeover. The company was rescued and Michael Eisner took the reigns as Disney’s chairman and CEO in 1984, and ended the hostile takeover attempts. Eisner was able to turn the company around, Disney’s revenues soared, and its competitive advantage was increased.

Key Problems in the Case

As Eisner assumed control of Disney, management’s top priorities were to revitalize TV and movies; maximize theme park profitability; better coordinate among businesses; and expand into new businesses, regions and audiences. Prior to Eisner assuming control of Disney, the organization was focused on building a theme park and lost its innovation in the other business units. The creativity in the film department was lost and the amount of films being produced declined significantly. The organization expanded into many different business areas and in the process seemed to lose control of the brand. The organization also had many business units that many did not interact well with each other. However, as Eisner attempted to make changes and improve the company, management was faced with a few key issues. These issues were in managing synergy, managing the brand and managing creativity.

Managing Synergy

In 1995, Disney purchased Capcities/ABC so that they would own their own programming distribution channel. It would help the organization to cut costs and improve its efficiency; however, it was difficult for Disney to create synergy through vertical integration. The culture of both organizations