Walt Disney 5

Download Walt Disney 5

Post on 08-Apr-2015

282 views

Category:

Documents

0 download

Embed Size (px)

TRANSCRIPT

<ul><li><p>Core IdeologyCore Values:No cynicismCreativity, Dreams and ImaginationPreservation and control of the Disney MagicFanatical attention to consistency and detail</p><p> Core Purpose: To make people happy</p></li><li><p>The BeginningsFoundation1923 - Disney Brothers Studio founded by Walt and his older brother Roy Walt was creative force and Roy handled the moneyJourney1927 - Oswald , the Lucky Rabbit the first major hitWithin a year Walt was outmaneuvered by his distributorCompany CultureFlat , Nonhierarchical organizationEmphasis on Team Work , Communication and CooperationWorkers committed to the companyCompany always oriented to fostering an experience that families could enjoy together</p></li><li><p>Creation of Mickey MouseModified Oswalds ears and did some additional minor changes to rabbits appearanceAdded synchronized sound first of its kind in the cartoon industry1928 Released Steamboat WillieThe Company licensed Mickey mouse for the cover of pencil tablet.Won Six Academy awards and successfully introduced newcharacters such as Goofy and Donald Duck</p></li><li><p>Diversification to full length films1937- Snow white and the seven dwarfs releasedSet goals to release two feature films per year plus a large number of shorts1940- The company went public to finance the strategyThe company witnessed a downturn during The world war IIProduced training and educational cartoons for government such as How Disease Travels1944-Re-released Snow WhiteRe-issued cartoon classics to new generations of children</p></li><li><p>Post World War II1946- To tide through financial straits released the movie Song of the South-mixed live action with animation </p><p>Further diversified creating Walt Disney music Company to control Disneys music copyright1950- Disney came out with the first TV special , One hour in Wonderland and entered live-action movie production with the release of Treasure Land 1953-Created Buena Vista Distribution and ended 16 year old distribution agreement with RKO</p><p>Disney eliminated Distribution fees and avoided paying salaries by developing the studios own pool of talent</p></li><li><p>Era of Theme Parks Begun..1954-Disney expanded its television presence with the ABC-produced television program DisneylandDISNEYLANDOpened in 1955Built for the entire family including DADDYCost was minimized by corporate sponsorshipDisney licensed the food and merchandising concessions</p><p>Disneylands success put the company on solid financial footing1966-Walt Disney died</p></li><li><p>With the creative force gone1971 Opening of Walt Disney World, 1st year sales $139 million from 11 million visitors1976 - Tokyo Disneyland Opens Disney Receives 10% gate receipts, 5% other sales, on going consulting feesCreativity in film division stifled, more sequels rather than new productionsNew label introduced Touchstone targeting the teen/adult market</p></li><li><p>Deterioration in Financial performance Pressure to finish EPCOT, 1983 -New Cable venture The Disney Channel1984 -Roy E. Disney resigned from Board of DirectorsSteinberg and Irwin Jacobs made tender offers with the intention of selling off DisneyOil Tycoon invested $365 million, rescuing the company and reinstating Roy E. Disney on board</p></li><li><p>Eisners Turnaround1984 ( Oct ) -Eisner was appointed Disneys chairman and Chief Executive Officer &amp; Frank Wells appointed president and chief operating officerRoy E. Disney was appointed the vice-chairman &amp; Paramount executives Jeffery Katzenberg and Rich Frank were brought on-boardEisner was committed to maximizing the shareholder wealth through an annual growth target and return on stakeholder investment exceeding 20%</p><p>This was done keeping the values of the company intact, thus putting to rest concerns that the new managers would not understand or maintain them He deliberately fostered tensions between the creative and financial groups of Disney as each business developed its market position </p></li><li><p>The TV and Movie Division..1986 Disney Sunday Movie premired on ABC, demonstrate that Disney could be inventive and contemporary Disney then created a syndication operation to sell to independent TV stations some of the programming that it possessed over the last 30 yearsWhen Eisner and wells joined the management, Disney's movie division was at its lowest ,covering a mere 4% of the box office share in 1984During the next 4 years though 60% of the movies at the box office failed more than 80% of the movies produced by Disney were</p><p>successful . By 1988 Disney was the box office leader with a share of 19% and was producing 16-18 movies a year</p></li><li><p>The TV and Movie Division..Convinced the best Hollywood talent to sign multi-deal contracts &amp; emphasized on moderately budgeted films rather than blockbusters.The animation division was the most difficult to turn around ,the reason being that it took very long to produce animated moviesExpanded its animation staff and accelerated the movie production by releasing a movie every 12 to 18 months instead of every 4 to 5 years. They also invested heavily in to CAPS ,reducing the need for animators to draw every frame by hand.Took to licensing agreements of merchandise ( Roger Rabbit)</p></li><li><p>Cashing in on Theme Parks..Spent millions to update and expand by adding new attractionsAttendance building strategies designed to increase revenues included national television advertisements ,special events , retail tie-ins and media broadcast events Lifted restrictions on the number of visitors permitted into the park, kept it open on Mondays (closed earlier for maintenance) and raised ticket pricesThe Disney development center was developed to develop Disney's unused acreage which ranged from having a huge hotel expansion to a $375 million convention center</p></li><li><p>Co-ordination Among BusinessesWith rapid expansions in various units overlaps among them started to emerge. Disney employed negotiated internal transfer prices for any activity performed by one unit for another 1987-a corporate marketing function was installed to co ordinate and stimulate countrywide marketing activities, a marketing calendar for the next six months was released and a monthly meeting of 20 divisional heads was initiatedThe management jointly coordinated the major events of the year. The meetings of the divisional heads generated novel ideas</p><p>coordinated schedules and built commitment and excitement towards the years theme</p></li><li><p>Expansion Strategy (I)..Consumer products division: 1987 Disney Stores launched pioneering the retail-as-entertainment concept Entered into book, magazine and record publishingTheme Parks: 1992- Opening of Euro Disney It still did change its strategy to comply with the French sensibilities.At other parks they stepped up with their expansions and added attractions spending almost upto $1 billion in theme expansions over 1984-88</p></li><li><p>Expansion Strategy (II)..Movies Series of highly profitable and critically successful animated features eg: 1989-Little Mermaid, 1991- Beauty &amp; the Beast, 1992-Aladdin Hollywood Pictures 3rd studio under Disney 1993- Acquired Miramax Studio Increase in volume of Movie output- 68 films in 1994Home Video Buena Vista Home Video (BVHV) marketed videos at low prices to customers directly. They also made an acquisition of an NHL team and named them The Mighty Ducks and used the cross marketing opportunities that came along Unveiled its first Broadway-bound theatre production, which was a huge hit. They also made a deal to restore The New Amsterdam Theater in New York. Eisner thought of the theatre as a long-term stand alone business</p></li><li><p>Turmoil &amp; TransitionLion Ling breaks box office records -Revenue and merchandise sales &gt; $2 billionRefinancing of Euro Disney by European banks and Saudi princeDeath of Disney President Wells on April 4, 1994Katzenbergs desire to be the new Disney presidentKatzenbergs bid for a corporate role was rebuffed by Eisner and he left and founded DreamworksFollowed by a series of key executives leaving the company</p></li><li><p>ABC AcquisitionDisney bought ABC for $19 billion making it the largest entertainment company in the USABC included ABC Radio networks, 21 radio stations, ESPN and ESPN2, newspapers, periodicalsSkepticism in some relating to the dealCultural clash between executives in Disney and ABCABC executives unhappy with usage of ABC to cross promote Disney brandsDisneys termination of agreements which ABC had signed prior to acquisition </p></li><li><p>The Slump at the End of the CenturyFinancial performance began to deteriorate particularly in 1998, 1999.The broadcast &amp; cable operations and theme parks gave a boost in 2000Change of approach in live action movies, shift to big budget, star driven movies1999- several costly failures and increase in average budget to $55 millionRevenues from Home video division droppedStrategy to turn all parks into destination resortsUse of internet to provide news and entertainment contentShit Go.com portal in 2001</p></li><li><p>Managing the Slump..Club Disney, ESPN stores &amp; Fairchild publications were closedTried to create synergy between various businesses through the synergy boot campDivisions filed monthly operating reports in which they were expected to discuss new cross divisional projectsSought to generate greater international salesConsolidation of foreign offices under regional executives, creation of synergy through cross-promotionExpanded into cruise ships and educational retreats</p></li><li><p>Merged Touchstone Television into ABC-saved $50million/year.1999- reduced number of licensed products by half, more emphasis on products featuring its core charactersRetaining the Brand image and value became a challenge with the expanding business ( Ellen show, Miramax movie Priest )Emphasized on wholesome programming whereascompetitors gained momentum through contemporary shows</p></li><li><p>Managing Creativity..Gong Show- weekly meeting to brainstorm new ideasStrategic planners assigned to each business unitToo much conflict built in Disneys cultureMoney overruled the creative side which drove away talentEisners autocratic management styleWas Growth stifling creativity?Was there a change required in the management style and strategy?</p></li><li><p>PESTEL FRAMEWORKThe WaltDisney</p></li><li><p>Government StabilityBecause of World War II, 94% of disney work was associated with Govt works e.g Health films, propaganda films, How Disease travels for the arm ServicesForeign Trade RegulationsDid not have majority (51%) ownership of the business in project Euro Disney and same for china; Have low decision making power.Social Welfare policies.Political FactorsFinancial funding and support from Govt all across the globe e.g. Disneys Initial investment cost reduced to $200 million from $4.4 billion for theme park because of many incentives from the French Govt including Tax relaxation.</p></li><li><p>Persian Gulf War Travel Decreased Less footfallObjection from the Chinese Govt. to the movie Kundun</p><p>Continues</p></li><li><p>Money SupplyAfter merger with ABC, debt ratio increased from 20% to 34%InflationRising cost of programming especially in sports hurt their profitability e.g. In 1998 they paid $9 billion for the right to air NFL games High cost of producing animated films -&gt; Invested in CAPS.Started producing Low Budget Movies : Financial BoxDisposable IncomeEconomic Factor Per capita spending of people on Disney Products was less in Britain, France, Germany, Italy and Japan as compared to the US.eg 40 % in Europe and 80 % in Japan. It could easily recuperate from economic turmoil around the world</p></li><li><p>Population Demographics and ConsumerismHigh end collector items were included in merchandising store to cater to the Disney grown up fans.Emphasizes on complete Family entertainment.Variable Ticket pricing.Live action movies for contemporary audiences.Change from good script movies to Big name stars due to Growing impact of international audiences.Sociocultural FactorsLifestyle Changes Tackling Cultural differences : Availability of Wine in the restaurants of Euro Disney. according to French sensitivitiesObjection to Ellen Show</p></li><li><p>Objection to the Movies Priest and AladdinApologized publicly for the partial nudity in movie Splash(1984). So they started making R-rated movies.</p><p>Attitudes to workCulture Clashes between executives of ABC and Disney.Culture Clash due to shift from New York to L.A.Intra-company Power Politics. E.g 75 high-level executives left the company.Communication problem Led to Bureaucracy which was unlike their flat structure.Continues.</p></li><li><p>New developmentsInvested $30 million in a computer animated production system (CAPS)Combined Animation with Live Action.Internet1996:- Disney Began selling its products online1999:- Merged its Internet assets with search engine Infoseek.Introduced special Effects that transcends Language Barrier.Technological Factors</p><p>Speed of Technology TransferOld classic movies formatted from VCR to DVD.Technical advancements in the Theme Park</p></li><li><p>Animal right activist protested against treatment of animals at Animal Kingdom Theme Park.The Trains at Disneyland now run on biodiesel made with cooking oil from the resorts restaurants and hotels.In the 1960s, the company set aside nearly one-third of The Walt Disney World Resort property in Florida as a dedicated wildlife conservation area in perpetuity.In 1990s, the Walt Disney World Resort voluntarily began to reduce its reliance on pesticides and started work on an Integrated Pest Management (IPM) program that uses alternatives to harsh chemicals</p><p>Environmental Factors</p></li><li><p>Disney brothers lost Copyright of Oswald-The Lucky rabbit, to their distributors.Walt Disney Music copyright.LicensesMickey Mouse pencil TabletsMickey Mouse Comic strip, Comic Book and Doll.From the movie Who Framed Roger Rabbit onwards they started licensing all their characters for merchandising.</p><p>Legal Factors</p></li><li><p>Impact Matrix</p><p>Key Macro- InfluencesWalt DisneyPolitical4Economic5Socio cultural3Technological2Environmental1Legal2</p></li><li><p>*</p><p>FactorWeight for Importance StatusNature of Threat / Opportunity StatusStrengths and Weakness of the firm to address the issueRemarks , probable course of action, Retaliation and counter course of action Threat of New Entrants1-+++Supplier Bargaining Power2-++Buyer Bargaining Power3--+Threat of Substitute Product2-++Inter-firm Industry Rivalry3---+++</p></li><li><p>High Entrance Barriers</p><p>Disney has 80 years of existence and Strong financial footing</p><p>Difficult to develop brand recognition/identification, and product differentiation</p><p>Large Capital required </p><p>Diversified businesses, one can leverage on the other</p><p>Economies of scale acts as a barrier due to large fixed costs</p></li><li><p>Disney is not the market leader in certain areas like the Television industry. Faces Threat from entrants specializing in thesebusinesses </p></li><li><p>Differentiated and unique industry with High switching costs.</p><p>Disney is amongst the most important customer for many suppliers</p><p>Orders in large volumes, creates dependency</p><p>Self sufficient production schemes supplemented by licensing agreements</p><p>Formation of Strategic sourcing group to cut procurement costs.</p></li><li><p>La...</p></li></ul>