CASE - Making Magic Happen
Magic happens at the happiest place on earth. At least that's what the folks at the Walt Disney Company (Disney) work hard to make us believe. In fact, when Walt Disney, the company's founder and namesake, dedicated the original Disneyland on July 17, 1955, his first words were, "To all who come to this happy place, welcome." And that heartfelt "welcome" to guests, customers, and audiences encompasses its four major business units: studio entertainment, parks and resorts, consumer products, and media networks. The difficult business climate in 2008 and 2009 challenged Disney, as it did many other well-managed companies; however, CEO Bob Iger and his top management team conjured up their own magic and found ways to strategically maneuver the company to prosper despite the environmental uncertainties.
As the world's largest media conglomerate, Disney has had a long record of successes. From the High School Musical Hannah Montana, and Jonas Brothers phenomena to the ever-popular Mickey Mouse characters, the "Disney Difference" is noticeably apparent. What is the Disney Difference? It's "high-quality creative content, backed up by a clear strategy for maximizing that content's value across platforms and markets." From books, toys, and games to online media, soundtracks, and DVDs, Disney exploits its rich legacy of products through quality creative content and exceptional storytelling. Some of these products include, among many others, The Lion King, Toy Story, Snow White and the Seven Dwarfs, The Jungle Book, Cars, Disney-ABC Television, and ESPN programming. Although Disney is a U.S.-based company, its businesses span the globe, with operations in North America, Europe, Asia-Pacific, and Latin America. In Russia, a large untapped market, Disney is introducing a nationally broadcast version of the Disney Channel. The president of Walt Disney International says, "We believe there is vast growth to come out of this market, despite the near-term economic turmoil." The company's latest push, however, is China, where it's opened more than 20 English language instruction academies. English proficiency will be a plus for the opening sometime in 2015 or 2016 of the $4.4 billion Shanghai Disney Resort. Despite its magical touch on all these different products and markets, just a few short years ago, Disney wasn't such a happy place.
When Bob Iger was named CEO in 2005, analysts believed that the Disney brand had become outdated. The perception: too much Disney product in the marketplace lacking the quality people expected. Iger said, "That combination-lack of quality and too much product-was really deadly." At that time also, the Disney brand was more tied to its history than it was to being contemporary and innovative. And, there was this sense that Disney's target audience was young and that its products couldn't possibly be of interest to older kids. Iger, who views himself as the steward of the entire Disney brand, immediately recognized the importance of leveraging the company's vast media content on different platforms. His strategic approach-the Disney Difference-had been working well until the economy slowed. The decline in global consumer spending made 2008 and 2009 extremely tough years and 2010 a difficult one. Iger and his top management team will have to use all the strategic tools they have to guide the company and keep the magic coming. One additional future challenge is that Iger announced he will be stepping down as CEO in 2015.
Discussion Questions -
1. What is the Disney Difference, and how does it affect the company's corporate, competitive, and functional strategies?
2. What challenges do you think Disney might face in doing business in Russia? In China? How could Iger and his top management team best prepare for those challenges?
3. "The steward of the entire Disney brand." What do you think it means that Iger views himself as this? Is this part of being an effective strategic leader? Explain. How might it affect the company's strategy formulation, implementation, and evaluation?