Walt Disney Company Case Study

Walt Disney Company Case Study

PART I Why is Disney so successful

The success of Disney is a combination of creativity and innovations, and the managerial ability to identify and take advantage of every possible synergy.

Walter Disney was the entrepreneur who had the creative skills. Knowing his limitations, he let other people do what he couldn't do good enough himself. This is an important skill, as it leads to quality products being made. The step from making short cartoons to doing full length cartoons and later live-action movie production is quite natural. What is not that natural and straight forward, and at the same time significant to the success of Disney, is the way in which Disney started to integrate vertically when they created the Buena Vista Distribution. The vertical integration along with the horizontal diversification has allowed for the exceptional building and exploitation of the huge synergies that exists in Disney, and which has to be regarded as the main reason for the success of Disney.

One of the key factors of the successful diversification is the very strong branding of the name Disney. That the name was famous after the success in the early years made it among other things possible to go into the theme park industry. Evaluated isolated, the theme parks was a success. But when also accounting for the synergies created, the decision to go into this industry was a huge success. It has created a spiral of synergies, where the characters in the movies get more popular due to the parks, as well as the fact that when people are visiting the parks they get stimulated to buy the merchandise. This is just one example of the synergies that exist in Disney. When Michael Eisner took over control in Disney, he kept focusing on same corporate values as earlier, which are quality, creativity, entrepreneurialism and teamwork. These values have been preserved despite of the size of Disney, and are an important factor in sustaining and building the Disney brand.

PART II & III What interrelationships exist between the business & Create a map

of the interrelationships

In exhibit 3 we can see a presentation of the different business lines of Disney, and we believe that this can be used to describe the interrelationships between the businesses. All the different businesses are put together under one roof to promote the brand ?Disney?...

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PART VI Would it make sense to split up Disney

If it would be profitable to split up Disney means that the NPV of the company is higher split up than the company in going concern in its present state. Doing this calculation is a complicated issue, which is outside the scope of this study question. But based on the above answers it does not make sense to split up Disney. Doing this would be very value destructing because it would not be possible to take advantage of the synergies, as well as the fact that one of the worlds best branded names would be thrown away. If Disney at some point of time gets into financial problems the solution therefore will not be to split up the core of Disney. There are though businesses that can be sold away. Examples of this are the Disney Magic Cruise and the Anaheim sports teams, which are not in the core of Disney and could be sold without destroying brand value and synergy. Especially selling the cruise would release quit a lot of money, so we expect that this will be the first thing to be sold. It would also be possible to outsource the hotels and restaurants in the theme parks. But splitting up the core of Disney would not make any sense.