The Walt Disney Company Case Study

Introduction

Michael Eisner was attributed with the “great turnaround stories of the late twentieth century,” (Rukstad, 1). During his 15 years at Disney revenue increased by $23.35 billion and generated “a 27% annual total return to shareholders,” (Rukstad, 1). This success was attributed to Eisner’s “reputation for toughness,” (Rukstad, 1).

The story behind Walter Elias Disney is one filled with inspiration, continual risk taking, and grand vision and success beyond the general masses dreams. “…it was all started by a mouse,” - Walt Disney (as cited by Rukstad and Collis, 1).

Mickey Mouse was born out of the misfortune that happened to Walt Disney’s first success “Oswald, the Lucky Rabbit,” (Rukstad, 1-2). The copyrights to Oswald were that of the distributor and Walt could not take Oswald and create his own shorts with him (Rukstad, 2). As a result Walt made some changes to the appearance of the rabbit and Mickey Mouse was born, (Rukstad, 2).

Mickey Mouse initially was not a success with distributors. But when Walt Disney added synchronized sound, “something that had never been [done for] a cartoon” Mickey became a hit (Rukstad, 2). To increase cash flow Mickey Mouse was licensed out “for the cover of a pencil tablet,” (Rukstad, 2). To maintain brand equity though Mickey was only licensed to “the best of companies” only (Rukstad, 2).

In the beginning the company was run “as a flat, nonhierarchical organization [where] everyone…used first names and no one had titles,” (Rukstad, 2). According to Walt, “you don’t have to have a title,” and “if you’re important to the company, you’ll know it,” (Rukstad, 2). Furthermore, “teamwork, communication, and cooperation” were emphasized by Walt, (Rukstad, 2).

By the mid-1930’s Walt realized that in order to sustain the company that full-length feature films were made with the first one being Snow White and the Seven Dwarfs in 1937, (Rukstad, 2). This movie became the highest grossing film of all times and was re-released in 1944 to generate revenue during the war (Rukstad, 3). To save money in 1953 Disney created their own distribution company, Buena Vista Distribution. This led to a savings of “one-third of a film’s gross revenues,” (Rukstad, 2). Disney also founded their own Music Company and made films other than cartoon based films to retain and generate more income.

In 1955, Disneyland theme park was opened. It was the first of its kind where it was different than other parks that were “neither amusing nor clean, and offered nothing for Daddy,” (Rukstad, 3).

Why has Disney been successful for so long?

Disney has been successful for so long in part due to Walt Disney himself and his dedication to success, innovative creations, and by providing something new for the whole family. Walt was not the type to give up easily has he proved this when Oswald, the Lucky Rabbit was essentially stolen from him. He in turn created Mickey Mouse with synchronized sound. His innovative thinking, management and strategy is what made Disney a great success in its early years. In addition the magic of Disney due to the animation movies and especially the opening of Disneyland (and eventually Disney World) is a magic that is difficult to erase from the memories of the public. Their theme park and its incorporation of popular and classic films, I would say, has much to do with their long term success.

After his death due to bad management and lack of strategy, many sequel productions but no new real innovative introductions, Disney began to decline. Disney was almost sold until a grand investment of $365 million was made in 1984 by an oil tycoon Sid Bass, (Rukstad, 4). Michael Eisner was hired as the new CEO and what he brought to the table was great vision, dedication, management, and strategy. He saved Disney from failure.

During his time at Disney he retained the magic of Disney by producing more animated movies in a quicker turnaround time. Eisner and his team (especially Katzenberg) found ways to cut costs and increase profits. One way this was done was by creating their own distribution company and music company. This allowed them to retain much of the revenue that was lost when using outside companies to do the distribution or music related work.

Disney is still successful much in part due to their great movie releases (and re-releases), family fun memories courtesy of these movies in addition to time spent at Disney parks, and the great team that made it all possible. Their diversification in to related fields can also be attributed to Disney’s long lasting success. Such as the creation of Disney on Ice and the Disney Store where it feels like one is walking on to a magic stage.

What did Michael Eisner do to rejuvenate Disney?

Eisner, the “former president and chief operating officer of Paramount Pictures,” (Rukstad, 4), rejuvenated Disney by “revitalizing TV and movies”, “Maximizing theme park profitability”, “coordinating among businesses” and,