The Walt Disney Comapanie Case Study PDF

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Case Study: The Walt Disney Company: The Entertainment King 1. Why has Disney been successful for so long? Disney realized early that their core business, the studio entertainment, would not achieve long-term, great success. This realization led Disney to pursue a strategy based on a vision: Growth and diversification. Disney pursues this growth and diversification with 3 dimensions: horizontal and geographic expansion and vertical integration. Disney was able to generate value through this different integration of the "right businesses". These different businesses created synergies between each other, and Disney knew how to use the synergies between the different related and unrelated businesses. A large part of Disney's success has been due to the vertical integration of its businesses. For example, through the acquisition of ABC, Disney was able to deliver its own film production directly to the end customer (cinema and television). This is an example that shows very well how quickly Disney succeeded in expanding the distribution level for its products. Opening up new markets requires courage and a willingness to take risks. Disney was always aware that mistakes are part of the game, so the management was always willing to take risks and to enter uncertain markets, for example the market for live action movies. This is certainly another point that has contributed to the company's success. Because these markets also create synergies and thus contribute to Disney's success. 2. What did Michael Eisner do to rejuvenate Disney? Specifically, how did he increase net income in his first four years? How about the next 4 years? Are either / both strategies sustainable? Why or why not? Eisner initially focused on the shareholders. His aim was to maximize shareholder assets. This was to be achieved by an annual sales growth target and a return on equity for shareholders. Eisner's expectations were high as the return on equity was above 20%. As a first step, it was important that he was able to establish the "Disney" brand while being faithful to the principles and values of the company. For example, to ensure that Disney's key values were preserved, it was mandatory for all new employees to take part in a culture course. In Eisner's view, Disney's most important skill was "managing creativity”. He deliberately fostered tensions between departments and provoked public debate because he was sure that this was how the best ideas would be generated. After this initial phase, Eisner realized that while it is important to stay faithful to the company's history, it is also important to change your markets and take new opportunities, because only then can Disney move forward.

Not all of his new, sometimes daring, ideas were well received by employees and customers, but through this new energy he was able to open up new markets, win new customers and thus further advance the company and achieve its goals. For a new orientation and further development of the products and offers to be successfully received by customers, it is important that the brand itself is known and established and that customers have already established a relationship with the brand. Therefore it needs both, first the existing and establish, and then it is important to develop further to be successful in the long run. 3. Has Disney diversified too far in recent years? What businesses would you divest and why? If you were looking to acquire businesses, which ones would you look to acquire and why. Disney has not diversified too much in recent years. In fact, without such strong diversification, Disney would not have had such growth. Through the resulting synergies, Disney has been able to establish itself in areas that would otherwise not have been possible and creates barriers to entry through this broad diversification. In addition, Eisner would not have been able to achieve its goal of "maximizing shareholder value" without this degree of diversification. The problem is not that Disney has diversified too far, but that it has partly diversified into the wrong areas. Financial problems arise from entering markets where synergies can't be developed and used. Therefore, it is important that as soon as it is recognized that certain companies do not generate healthy returns, they are eliminated, as was done with the closure of the shopping mall chain "Club Disney". In addition, investments that do not generate any strategic value should be eliminated as well, which has already been done well by Fairchild Publication, for example. In addition, Disney can expand its diversification by acquiring further companies, thus creating additional synergies. In today's age of technology and digitalization, it may be advisable to expand its position in this area and create additional synergies here, which create a high value. Because Disney is already owned by ABC, it is advisable to take over other (network)-technology companies. 4. (in sum): What is Walt Disney’s corporate strategy? What are the key elements in implementing this strategy? What can be learned regarding creating value from the Disney case-in-point? Disney's corporate strategy is primarily characterized by the broad diversification achieved through horizontal and geographic expansion and vertical integration. This enables Disney to create synergies with related and unrelated businesses that create great value. In addition to the created synergies, other key elements are central to the company's success, such as brand image, promotion of creativity and stable management. Due to Disney we can see that by combining different decisions, e.g. regarding "which

company, how many companies, which portfolio, how many activities" etc. are crucial for long-term success....