Disney Case

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  History, Drivers of Success and Performance of Disney In 1984 the Walt Disney Company had just transitioned from an era of management under the original founders and family. During the original founder’s time period, from the early 1920’s to the late 1970’s, Disney gained national and international brand recognition. However its financial performance had started to deteriorate in the late 70’s and early 80’s due to heavy costs of operation, high levels of investment and overwhelmed management. Causally, Michael Eisner was appointed Chairman and CEO in 1984 with a vision of “maximizing shareholder wealth” by an average ROE of 20% per year. He planned to “build the Disney brand while preserving the corporate values of quality, creativity, entrepreneurship, and teamwork” and he considered “managing creativity” to be Disney’s most distinctive driver of success. Eisner set out to revitalize its TV and movie business, maximize theme park profitability, expand into new businesses, regions and audiences and to increase the coordination among all the business segments. The increased coordination between business segments created corporate wide synergy that maximized revenues through cross-promotion efforts. During the 80s and early 90s, these diversification efforts by Disney and Eisner produced an average of 20% ROE. Unfortunately, Disney’s ROE has been steadily decreasing for the past half decade. As of 2000, Disney retained the top 24 grossing animated films of all time with combined unadjusted U.S. Revenue of $3.4 billion. The corporation leveraged the core competency of “managed creativity” and the production of animated films for cross-promotion in consumer products, home video and theme park segments. Disney “intended each new animated film to function as its own mini-industry”, which ultimately helped its theme parks to procure the top six spots out of 30 rivals in attendance sales while also maintaining the highest ticket price of

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