Corporate Strategic Case by Dwi Joko Pramudito WA Song Young Kang Walt Disney Company 1995-2009 Corporate Strategic Case by Dwi Joko Pramudito WA Song Young Kang

Disney Growing Entertainment Empire Michael Easner, Disney’s former CEO built Disney’s core strengths in the three areas of: Entertainment and recreation Motion pictures Video and consumer product

Entertainment and Recreation Disney’s top managers began by enlarging the size and variety of its theme parks and other entertainment properties In 1995, Disney announced it would build a $500 million zoological park at Orlando in addition to Disney World, EPCOT and Disney Another entertainment venture Disney finalized was a revitalization of West 42nd Street in New York

Studio Entertainment Through out 1990s, Walt Disney Pictures, Touchstone Pictures, Hollywood Pictures, and Buena Vista Pictures divisions continued to increase the number of movies they produced Disney acquired Miramax Pictures By late of 90’s, Disney’s studios division had run into hard times By 1995, Disney’s domestic home video division reach a phenomenal sales of $ 2 billion

Consumer Product By 1995, Disney had opened 429 specialty Disney Stores worldwide. Disney started a catalogue mail-order Disney’s publishing interests also increased sharply, publishing more than 500 million books a year

The Disney-Capital Cities/ABC Merger In 1995, Eisner announced that Disney would acquire Capital Cities/ABC for $19 billion ABC’s poor performance in the following year, brought its top management under intense scrutiny from Eisner Eisner had a very centralized management style and expected all his top manager to craft five years and ten years plans for their division At ABC, its executives used one year plan to guide their choices for the next year’s programming It became clear that there was conflict between Disney and ABC. In the fall 1995, ABC performance deteriorated

New Problem for Eisner and Disney The main reason for a major decrease in Disney’s performance was that Disney’s entertainment asset began to perform poorly Problem in Media Networks Problem in ABC continued to worsen in time By 2003, ESPN became a major contributor to Disney profit

New Problem for Eisner and Disney Problem in Studio Entertainment The profitability of Disney’s movies continued to fall: Disney studio found it impossible to create new blockbuster The shift to produce animated movies using computer- based digital technology Problem in Consumer Product Eisner bought two major sports team franchise ( Mighty Ducks & Anaheim Angels) DVD sales drop due to the lack of its new hit movies Eisner opened Disney Stores retail in 2000, and in 2003, Disney sold them to Children’s Place retail

New Problem for Eisner and Disney Problem in Theme Parks and Resort In the early 2000, Disney spent almost $5 billion to build new rides and modernize its Anaheim and Orlando properties External factor such as 9/11 attack and SARS epidemic in Asia occored

Bob Iger Takes Over (Sept 2005) A new decentralized approach Disney under Eisner was too tall and bureaucratic Iger dismantled Disney SPO The result was it quickly let managers of different business unit to generate and implement many new strategies

New initiatives since 2005 Media Networks The main source of revenue: Advertising revenues Distribution agreement with the major cable companies In 2007, Disney spin off ABC Radio Holding In 2009, Disney merged ABC entertainment and ABC Studios into ABC Entertainment Group Disney focused on the teen franchise to exploit commonalities between business unit

Studio Entertainment In 2006, Disney had a major success when it released High School Musical (HSM), followed by HSM 2 in 2007, and HSM 3 in 2008 Disney acquire Pixar Animation Studios Cost cutting by reducing number of movies produced each year, and unify several marketing and production division within its TV and film operation

Consumer Product Division Parks and Resorts Disney announced two major expansion would be made to its Walt Disney theme park in Florida In October 2007, Disney also announced a $1.1 billion, five year plan to overhaul its California Disneyland park Disney has also continued of opening new theme parks abroad in Hongkong, France, China Consumer Product Division Enter the videogame business In 2005, Disney acquire many video games developer Merchandise using Disney name

Internet Entertainment Disney would buy a 30% stake in Hulu.com In January 2009, Disney announced an agreement with Verizon wireless to catch Smartphone‘s user by offering Verizon’s V CAST video and mobile web customer full of a comprehensive portfolio of Disney news, entertainment, sports programming, including full-length episodes of ABC TV show, news, Disney Channel, and ESPN In 2007, Disney acquired Club penguin, one of the leading online virtual world for kids Iger believed that internet entertainment unit will enjoy the fastest growth during next five year.

Disney Future Prospect In 2007, Disney’s revenue were a record %35.5 billion, 5% hinger than 2006 In May 2009, Bob Iger admitted for the first time the shift of customer to use internet to access digital entertainment was beginning to impact the company’s business unit in important ways The recession had also led to a 45% fall in revenues from its park and resort unit

Suggestion As internet is becoming a new way on accessing digital entertainment, Disney should continue its expansion in internet entertainment unit Cross collaboration from videogame business and programs of TV or Movie to attract customer As the economic world is getting better, Disney should continue its strategy on theme park and resort to attract customer

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