Business & Cultural Strategy of Walt Disney

REPORT SUBJECT: STRATEGY AND CULTURE OF THE WALT DISNEY COMPANY BY: SARAH PETER BACKGROUND For more than eight decades, the name Walt Disney has been paramount in the industry of family entertainment. From humble beginnings as a cartoon studio in the 1920s to today's global corporation, The Walt Disney Company continues to proudly provide quality entertainment for every member of the family, across America and around the world. Originally known as the Disney Brothers Cartoon Studio, with Walt Disney and his brother Roy as equal partners, the company soon changed its name, to the Walt Disney Studio, at Roy's suggestion. Young arrived in California in the summer of 1923 with dreams and determination. He had made a short film in Kansas City about a little girl in a cartoon world, called Alice's Wonderland, and he planned to use it as his â€Å"pilot† film to sell a series of these Alice Comedies to a distributor. On October 16, 1923, a New York distributor, M. J. Winkler, contracted to release the Alice Comedies, and this date became the formal beginning of The Walt Disney Company. Section 1: External Environment a)The examples of factors that have effected the way it has behaved are as follows. Social: The Walt Disney Company fostered the spirit of creativity, innovation and excellence that continues to underlie all of the company’s success. It believes that quality entertainment is for all members of the family across America and around the world. It gives a chance for the whole family to sit together and have a good time. Technological: Silent cartoons were produced in as early as 192 7. He introduced the first film with synchronized sound – The Jazz Singer. This was a huge success and later implied on Mickey Mouse, Silly Symphonies, Steamboat Willie, etc. Mickey Mouse became an immediate sensation instantly. In partnership with Pixar Animation, the company released the first computer-animated feature film, Toy Story. This was followed by a series of highly successful Disney/Pixar collaborations, A bug's life, Toy Story 2, Monsters, Inc. , Finding Nemo and The Incredibles. Economic: These movies were released in the theaters and people enjoyed watching them with their kids at a normal rate. These movies were not charged any differently than the Hollywood Classics. Political: During the war, Walt Disney made two films about South America, Saludos Amigos and The Three Caballeros, at the request of the State Department. The studio also concentrated on producing propaganda and training films for the military. When the war ended, it was difficult for the Disney Studio to regain its pre-war footing. With the advent of World War II, the company lost access to most of its foreign markets. The studio was also at some financial risk. Legal Factors: Within a year of its existence, Walt made 26 Oswald cartoons, but when he tried to get some additional money from Winkler for a second year of the cartoons, he found out that the distributor had gone behind his back and signed up almost all of his animators, hoping to make the Oswald cartoons in his own studio for less money without Walt. Since the distributor owned the rights to Oswald, there was nothing Walt could do. It was a painful lesson for the young cartoon producer. From then on, he learned that he owned everything he made. Later Walt with his chief animator Ub Iwerks, designed a mouse whom his wife named Mickey, and a star was born. (b)The relationship between the Walt Disney Company and the environment according to SWOT analysis is as follows: The Walt Disney Company’s Strengths 1. The Walt Disney Company is the second largest media and Entertainment Corporation in the world, after Time Warner, according to Forbes. 2. Diversified Entertainment Company. 3. It owns media networks as well as parks and resorts. 4. It makes movies and markets consumer products. 5. Developed a very strong and well known â€Å"brand-name and image† over many years. 6. Disney Land is the top rated destination for vacation. The Walt Disney Company’s Weaknesses 1. The idea of Disney’s frequent change in top management. 2. Broader product portfolio gains many different niches and gives them a bigger image, but it also means that there are going to be that many more workers. This means greater possibilities for miscommunication and a high chance for a bureaucracy in the company. As of September 2007, there were 130, 000 people working for Disney in some way or another. 3. According to many, the Hong Kong Disney Land Resort has yet to live up to the expectations of Disney’s resorts and parks. The $1. 8 billion theme park has only 16 attractions, only one of which is a classic Disney thrill ride (Space Mountain), compared to 52 at Disneyland Resort Paris. A recent study of Hong Kong Polytechnic University showed that 70% of the local residents had a negative opinion of Hong Kong Disneyland Resort. The Walt Disney Company’s Opp ortunities The markets of today are becoming more versatile to outsourcing and globalization and The Walt Disney Company is revealing this by (i) expanding outside of the United States and offering theme parks in France, Japan and China. ii) Another expansion opportunity from U. S. soil was mentioned earlier regarding the Disney Cruise Line, a service well placed and growing in popularity. The Walt Disney Company’s Threats 1. In Disney’s case their theme parks must meet the safety regulations of the countries in which they operate in order to stay in business and maintain their international status. 2. In the entertainment and theme park industry there are many competitors, such as Paramount Parks, Universal Studios and Six Flags Theme Parks. However, there are many other less visible competitors that one might not naturally think of when assessing the competitive market in which Disney deals. For example, there are hundreds of water parks and various funplexes that can also be considered as cheaper or more valuable competition for Disney. Competition, in any form, can diminish Disney’s market share in the entertainment industry. (c ) Guidelines for SWOT ANALYSIS for Walt Disney 1. Keep it simple 2. Focus on your organization. 3. Look for patterns. 4. Look for action that can be taken within a year. 5. Don't get lost in the future. 6. Be rooted in the now. Section 2: Organisational Culture (a)Organizational Culture of the Walt Disney Company The Walt Disney Company has a culture based on high-quality products, optimism for the future, great storytelling, an emphasis on family entertainment and great talent, passion and dedication from the Cast Members. A good example of shared values is Walt and Roy together with their chief and loyal animator Ub Iwerks, Walt created Mortimer Mouse, which was renamed Mickey Mouse by his wife. The first cartoon with synchronized sound was released at the Colony Theater in New York, November 18, 1928. Walt Disney won its first Academy Award for Best Cartoon in 1932 and continued to be honored with an Oscar every year for a decade. Disney appeals to our childhood. They will always be favored by kids and will surely keep a preferred spot in the minds of adults. If only they live up to meet our expectations, to visualize our common fantasies. Disney could survive on the â€Å"classics† if it needed to. They get a new audience every day. But where has the imagination gone that prevents us adding some value. Today Disney is milking their theme park business–to the detriment of their brand. There is no argument that Disney is a pop culture icon in the U. S. However, the substance is not there. The rides, with a few exceptions, are dated and boring. It is not into reinvesting into their theme park business to keep it on top. (b) Create (Adhocracy) Culture The Walt Disney Company has a Create (Adhocracy) Culture. This culture has a dynamic, entrepreneurial, and creative place to work. Innovation and risk-taking are embraced by employees and leaders. A commitment to experimentation and thinking differently are what unify the organization. They strive to be on the leading edge. The long-term emphasis is on growth and acquiring new resources. Success means gaining unique and new products or services. Being an industry leader is important. Individual initiative and freedom are encouraged. The Walt Disney Company has all the characteristics of a Creative Culture. The mission of The Walt Disney Company is to be one of the world's leading producers and providers of entertainment and information. They seek to develop the most creative, innovative and profitable entertainment experiences and related products in the world. The Walt Disney Company believes that it has to stay one step ahead of the competition to be the most innovative and creative animator. (c ) Organizational Culture and Organizational behavior of The Walt Disney Company. The Organizational Culture of The Walt Disney Company is a Create (Adhocracy) Culture. This culture invites and appreciates new, creative, innovative and exciting ideas. Walt and Roy believed that he had to stay one step ahead of the competition in order to be the most innovative and creative animator of all times. They have a high standard of entertainment and have made people believe that animation and cartoons are not only for children but for adults as well. The implementation of these stimulating ideas with the advantage of latest technological devices and techniques and training their employees is the organizational behavior of the company. Disney has constructed its own University that employees must attend and complete before ever being allowed to work at a Disney Theme Park. Disney University believes â€Å"The front line is the bottom line,† and, â€Å"It’s 10 percent product and 90 percent service,†. d ) Compete (Market)† Culture Using a different culture like that of a â€Å"Compete (Market)† Culture in which job completion is main objective of the company and employees are competitive and goal-oriented, a different approach would be established by the leaders who will be demanding, hard-driving, and productive. The emphasis on winning unifies the o rganization. Reputation and success are common concerns. Long-term focus is on competitive action and achievement of measurable goals and targets. Success means market share and penetration. Competitive pricing and market leadership are important. This type of organisational culture would demand a tough and strict environment where openness and creativity is limited or not required. It would have a â€Å"do as said† attitude with acute strictness and constrictiveness. All the ideas would be commanded by the producer and the animators would follow as instructed without being allowed to interrupt or magnify their imagination. This would be unsuitable environment for Walt Disney as Disney is all about magic, imagination and dreams. Section 3: Business Strategy (a) Four Types of Strategies Price Leadership – through dominating the industry – others follow your price lead †¢Global – seeking to expand global operations. †¢Reengineering – thinking outside the box – looking at new ways of doing things to leverage the organisation’s performance. †¢Contraction/Expansion – focus on what you are good at (core competencies) or seek to expand into a range of markets. (b) The Walt Disney Strategy The Walt Disney Company has adopted the strategy of Expanding. Since its start in 1923, Walt and his brother worked out their best to present and invent the best animations ever. The Walt Disney Company is in business to (i) produce entertaining theatrical productions that are family oriented and family friendly (ii) to create products and toys that will promote their theatrical productions that are both entertaining and safe for children (iii) to entertain families who are looking for a fun, interactive and safe vacation spot both with resorts and parks, and also cruise lines (iv) keeping their name reputable and substantial in a growing business. Benefits 1. Disney Land is Europe’s Top Destination for vacation. 2. Extremely popular among children and adults. 3. It is a global leader in the industry of entertainment. Walt Disney Company was ranked 8th in the Top 100 Global Brands ranking of the BusinessWeek Magazine and Interbrand, a branding consultancy, in 2006. 4. Exposure and variety of entertainment packages to fans by opening Resorts, launching Cruise Lines and Disney Lands in Tampa, Hong Kong and Paris, result, increased capital flow and no advertisement required. ( c ) Comparison Disney Company worked on the Strategy of Expansion but now they work on something more of a combination of Reengineering and Expansion after the launch of many quality competitors in market. The Disney Land especially in Hong Kong is not enjoyed by the fans as the entertainment essentials are limited as compared to the other destinations and are very dated. The Walt Disney Company is now working to expand itself by figuring out new ways of attraction and alluring to fans by opening Cruise Lines and Resorts and Fun Houses throughout their Disney Land. (d ) Factors to Consider to change Strategy 1. Quality is imperative than quantity. 2. Dated entertainment ideas and facilities should be updated to the demands of the new generation while keeping the classic touch polished. 3. Innovative marketing, strategic investment and financial discipline should be developed to keep pace in entertainment market. 4. The Walt Disney Company had to analysis its management and employees to determine where they stood as they were losing fans and had market value. 5. Competitors like Universal Studios, Paramount Pictures have worldwide successful theme parks and funplexes. To triumph over them Disney Land had to study its new fans and keep its signature. (e ) Business Strategy and Strategic Choice The type of Business the Walt Disney Company wanted to have depended upon the Business Strategy it approached. It did quite well in the beginning and won Oscar awards and achieved the most out of the market. The Brand was the most popular and demanded and nailed its name in the industry. But as time passed and new generation emerged, a new taste came into existence and therefore things had to be renewed and improved. Earlier Disney was the only animation company but, as time passed and quality competitors surfaced, larger competition and criticizers appeared. The Walt Disney Company had opened remarkable entertainment property which encouraged fans to meet and enjoy their childhood favorite character. But the strategy they adopted was not enough for to attract the new graphics and 3D oriented generation. Therefore they had to opt for the Strategic Choice of the market and indulge in the dept of entertainment with time. They are still the leaders as they chose the right action at the right time. (f) The Key Issues The Walt Disney Company should keep in account to manage its Business Strategy are: †¢Latest approach of entertainment. †¢Should make Sci fi Movies with a more realistic approach. †¢Educational Films to be produced as well. †¢Disney Land worldwide should be upgraded. Employee Satisfaction is a must and Management should take account of each department. †¢Quality should be maintained. †¢Competitors and Internal weaknesses are studied. Section 4: Change (a)Change of Strategy The Strategy of the Walt Disney Company had to change overtime due the increasing demand of hi-tech technology, graphics and updated modes of entertainment. The competitors rooted to attract people with the latest knowledge and entertainment techniques. Despite winning Oscars and being branded as the finest animator, Disney overlooked the need of freshness and contemporariness. No doubt, Disney was experimenting and innovating but, using the same old but famous characters. People wanted a new character and novel themes. There Parks were attracting new crowd but couldn’t bring back the old ones. These factors intimidated Disney and it had to think over its strategy. (b)Social Responsibility The urge to make people happy is stated to be the Social Responsibility of the Walt Disney Company. The main objective and goal of Disney is to impart happiness, enchantment and amusement to people. They have been very successful so far but, as times changed and new generations emerged, they had to think over their product. Disney opened many resorts, hotels, cruise liners, but couldn’t attract the old customers. It made them happy but couldn’t keep them loyal. Getting to the root cause of this they realized that their amenities were dated and needed rejuvenation with tools of technology, graphics, new characters, new stories, new modes of entertainment in the theme parks, Disney TV channels, sports and news channels, in short, a new approach to the new generation. (c ) Role of Management To Changes As already mentioned there is a strategic change in the company and some new operations are introduced. The Management already has a very good policy of providing necessary training to its employees. They can further inform their employees about the market situation. It can make the staff understand the importance and need of the new operations and changes and insist why it needs the best from their employees. It can provide customer service training and motivate them to produce the best out of their service and compete with the growing competition. (d ) Advice to The Walt Disney Company To analyze a change in situation the management should keep itself updated about the market situation. It should not just look into the expansion of the Business but also keep an eye on the changing market industry and new requirements of the fans. It should study the developments of its competitors. There would be resistance to the changing market but to overcome this resistance, it can hold meetings and make its staff and managers realize the substance and requirement of the changes by providing detailed and proper explanation. Better knowledge of the market and motivation to achieve the target can help overcome the resistance to change. Reference