Walt Disney case study and executive summary

Disney

History of the Disney Corporation: The Early Years

Walter Elias Disney started his career as an animator and then an art director and story manager. Walt Disney lost the rights to "Oswald the Lucky Rabbit," a character he created, and he thereby set out to manage and control his own brand. Oswald the Lucky Rabbit became Mickey Mouse and the Disney empire began. By 1937, the Disney company had produced its first feature-length film, Snow White and the Seven Dwarfs. At this early stage in the company's evolution, Disney was a flat, nonhierarchical, and democratically run company with an emphasis on fun and creativity.

An astute businessman as much as a creative, Walt Disney developed and diversified throughout the middle of the 20th century. In the 1960s, Disney delved into live action films and television. The Mickey Mouse Club became a hallmark of the brand. In the mid-1950s, Disney opened its first theme park Disneyland in Anaheim, California. The theme park was run effectively, as Disney outsourced merchandising and food to cut costs.

Before Walk Disney's death in 1966, he had purchased land in Florida for the development of a second theme park. The ambitious project would not come to fruition until 1971, but it proved to be a roaring success. After his father's death, Roy Disney took over the company in 1967 and helped propel the company and diversify its interests further. Resort hotels, travel companies, and traveling shows like Disney on Ice became part of the company repertoire. In 1976, Tokyo Disneyland opened. Reacting to a decline in its animated film viewership, Disney also expanded into the realm of live action movies with the start of Touchstone productions.

The Eisner Years: Total Turnaround and Triumph

The 1980s were touch times for Disney. Hostile takeovers were immanent. Enter Eisner in 1984. Eisner transformed Disney from a flailing entertainment company to a global mega-corporation. Eisner as CEO, Wells as the President and COO of the company, and Roy Disney as the Vice President ushered in a new era for Disney. Brand building, and the creation of a new corporate culture were on the agenda. Profitability became the keywords for the company as Eisner sought to maximize shareholder wealth and meet annual targets for revenue growth and returns on stockholder equity. To solidify the new corporate culture, Eisner developed a corporate university at which employees had to dress up as Disney characters for a day.

Eisner diversified the company further and revitalized its failing film division. Touchstone made its first R-rated movie. Katzenberg led the film production division, and started to produce films on relatively low budgets that could reap the maximum profit possible. As a result, Disney was releasing 15-18 new films per year by 1988 up from two new films per year in 1984. Disney also invested in computer animation systems, and boosted investment in theme park attractions. Attendance-building strategies and clever marketing techniques helped boost theme park revenues. Under Eisner, Disney was effectively coordinating efforts among different divisions by negotiating internal transfer prices and encouraging synergy. Disney retail stores began in 1987, generating massive amounts of profit for the growing company. Revenues for Disney stores were twice the national average for retail stores. Disney also branched out into the recording industry and publishing, using their new investments as modes of distribution as well as profitable ends in themselves. In 1992, Euro Disney was built, and the company also made $1 billion investments into new theme park attractions in the United States including Pleasure Island and the Disney/MGM theme park in Orlando. In 1992, Disney made its first foray into sports franchising with the creation of a NHL expansion team, the Anaheim Mighty Ducks. Remarkably, the Mighty Ducks started as a fictional film team from a movie produced by Disney. In 1993, 80% of all NHL merchandise sold was for the Might Ducks.

Too Big for its Britches?

As if Disney was not becoming big enough, the company took its first steps towards being a genuine corporate behemoth. In 1995 Disney bought television network ABC. On paper, the investment seemed perfect, as ABC could be used as a distribution network. Purchased for $19 billion, it was the second largest acquisition in U.S. history. Disney was now the largest entertainment company in the States, with a worldwide distribution network including 224 ABC affiliates, 10 TV stations, 21 radio stations, ESPN and ESPN2, several newspapers and 100 periodicals