MODULE 2: CASE ANALYSIS

MICHAEL EISNER’S DISNEY

Written By Apuro, Alvin V.

Professorial Lecturer Dr. Roberto Gabiola

Subject BA245: Business Policy and

Strategic Management
Program Master of Business
Administration
 1. What is the main problem?

When Walt Disney died, he left his company at the pinnacle of its success
up to that date, and nobody emerged to wear his crown; nobody could provide
the creative vision to lead a company whose mission was to provide fun and
fantasy until Michael Eisner did. Though he does an excellent job managing the
Disney Company, there are still hindrances to massive turnarounds in the fortunes
of the corporation. How will the Disney Company hold onto its market-leading
position in its three principal business segments (1. Entertainment and
Recreation, 2. Motion Pictures and Home Videos, and 3. Consumer Products)?

2. How the problem brought about?

In 1966, Walt Disney died and he left the company experiencing record
revenues and profits. Disney was at its creative peak and forging ahead at full
steam on the many ideas generated by the creative genius. Walt’s brother Roy
took over the management of the company and supervised the building of the
Disney World. He purchased a huge track of land outside Orlando, Florida which
Walt Disney never liked the situation after the opening of Disneyland. As a result,
development around the park proceeded unchecked, and the surrounding area
became full of motels and hotels.

In the years from 1966 to 1984, when Michael Eisner took over, the
company seemed to be just spinning its wheels. He sat down with Frank Wells,
the person he had recruited to help him turn the Disney Company around, and
Roy Disney II, the nephew of the founder, who has been instrumental in Eisner’s
appointment, to plan Disney’s future.

The business segments were underperforming. Moreover, it was apparent

that while Disney was not taking advantage of the opportunities, other people
were. For every dollar Disney was collecting in revenues from its characters and
theme parks, those manufacturers who were licensing Disney’s products of those
hotel chains housing and feeding Disney customers at the theme parks, were
getting five. Eisner had to find the money to finance his expansion plans and
develop new business ventures.

BA 245: BUSINESS POLICY AND STRATEGIC

CASE ANALYSIS : IKEA
MANAGEMENT
 3. Recommendation/ Strategy to resolve the problem

Michael Eisner did not take long to realize that the problem was that potential
of these businesses was not being exploited. When, theme park tickets were actually
still quite inexpensive at the time, and Eisner realized that even by only raising prices
a small amount, revenue would increase in a big way with essentially small drop off
in the number of tickets sold. A really good strategy that can be applied when
needing cash for the expansion of business.

Having initiative and creative mind must be maximize to have competitive

advantage over the existing and emerging rivals. Like what happened in Orlando as
other entertainment companies opened attractions to capitalize on tourist’s presence.
For example, a major water park attraction, Wet and Wild and Sea World, opened,
which offered variety of water rides. Planned Typhoon Lagoon of Disney recapture
revenue to major success.

Continue to focus on what the market needs though market segmentation. By

dividing your target market into approachable groups, it will create subsets of a
market based on demographics, needs, priorities, common interests, and other
psychographic or behavioral criteria used to better understand the target audience.
Having Pleasure Island, which is a huge complex of shops, bars, restaurants, discos,
and nightclubs to attract the guests as additional site is a great idea.

Identifying and implementation of feasible business strategy must use to full

advantage. As Disney began to take all the food operations at the theme parks by not
wanting to get into the soft drink and photography business, Eisner was content to
make lucrative deals with Coca-Cola and Kodak as they would be the sole suppliers
of soft drinks and film products at Disney’s theme parks. Taking advantage of the
every opportunity. Like they do to get into hotel business and build luxury hotels to
meet its guests’ needs. If short of fund to expand, better to build a partnership that
expand the business without putting financial debt burden on the company.

As to consumer products division, get the best out of its brand image. It will
help the company to firmly keep in the mind of potential customers. If a customer's
happy with your products or services, a solid identity helps to build customer loyalty
across the business.

BA 245: BUSINESS POLICY AND STRATEGIC

CASE ANALYSIS : IKEA
MANAGEMENT
 The beginning of Eisner’s tenure and management at Disney are marked by
successful results, leading to profitability and prosperity of the company. Most of
the purchases and mergers also contributed to the growth of Disney’s influence.
Through consistency and continuous implementation of what force them to bounce
back from losses, Disney will continue to dominate and lead the market.

BA 245: BUSINESS POLICY AND STRATEGIC

CASE ANALYSIS : IKEA
MANAGEMENT