The WALT Disney Company, 19952005

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The WALT Disney Company, 1995-2005
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Building Blocks of Competitive Advantage

• Efficiency
• Alliances with Coca Cola and McDonalds
• Movies (limited to block busters and low budget)
• Economies of scale
• Innovation
• Talent and creativity (switching to digital
  animation)
• Pixar (5 Year Contract)
• Lost and Desperate House Wives (stealing market
  share from competitors)
• Publishes more than 500,000,000 Million books
  worldwide annually
• Quality
• Limit number of movies in order to maintain
  quality
• Major emphasis on quality guest services at
  resorts
• Focus on world-class creative content
• Customer Responsiveness
• Shift to digital animation from standard cartoons
• Massive expansion and diversification of theme
  parks
• Sports networks (ESPN), PG-13 movies (Pirates of
  the Caribbean)

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Business Level Strategy

• How does Disney compete?
• Differentiation
• Can charge premium prices (inelastic demand)
• Branding
• Loyalty / Recognition of quality
• Related Diversification
• Use leverage to enter new industries

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So what problems are we looking at?

• Unifying Management
• Board of Directors
• Weak
• Unwilling to scrutinize
• Too many personal relationships
• Salary
• 1 Billion salary, stock options other
• Micro-Management
• Investor relations
• Movements against Eisner

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Michael Eisner, CEO
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SWOT
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Situation Analysis

• Internal
• Lost Key employee (Frank Wells)
• Lost key developer (Jeffery katzenberg)
• Lost key movie producers (Weinstein Brothers)
• Eisners ego
• Corporate governance
• Board of Directors
• External
• Competition
• Economic factors
• Piracy
• Varying foreign consumer preferences

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Distinct Competencies

• Studio Entertainment
• Consumer Products
• Theme Parks and Resorts
• Media Networks

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Recommendations

• Consolidation
• Sell Unprofitable divisions
• Develop encryption to combat piracy
• Diverse BOD to more heavily scrutinize
• Executive pay
• More alliances
• Improve investor relations
• Focused effort to unify management
• Disperse profits to share holders Dividends
• Use specialized retailers as distribution
  channels (Toys R Us)

Implementation

• Remain focused on the long-term
• Preserve and foster quality and imagination