SWOT analysis at the time Eisner was taking over

Michael Eisner

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Institution

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Walt Disney: Case Study

  1. SWOT analysis at the time Eisner was taking over

Strengths

At the time Eisner was taking over Walt Disney, the company already had a popular brand. Before his death, Walt Disney had managed to create a strong brand that is highly known. Through creativity and innovation, Walt left a company that offered quality products that created a popular brand across nations. The company’s logo was also famous across the world. The entry into the home video market was another strength of the company. The video sales were massive increasing the revenues. Additionally, the company had available capital useful for financing new projects.

Weaknesses

After the death of Walt, the company’s movie operations started suffering due to lack of creative and quality projects and scripts leading to conflicts between stockholders and managers. The second weakness is that the top executives lacked a good strategy to exploit the company’s resources. The leadership failed to follow the vision of the predecessors. The third weakness was a high operating cost which made it challenging to boost the income. For example, Disney Channel used high start-up costs yet it could lose over $10 million annually.

Opportunities

At the time Eisner was taking over Disney, the company had various opportunities. First was the use of entertainment and recreation to improve the revenues. Resources such shopping centers, theme parks, hotel businesses, golf courses, and conference centers had great potential in enhancing the revenues. The second opportunity was in motion pictures and television which offered great potential in enhancing revenues. Third, Disney had an opportunity to enhance revenues through the consumer products division.

Threat

The competition was a great threat to the company. For instance, Disney had to compete with Typhoon Lagoon, and the Universal tour in the theme park industry. The expansion of Disney into hotels brought up competition against major hotels especially in demand for hotel rooms. Second lack of vision was a threat to realizing the company’s mission. Third, reducing net profits was a threat to the sustainability of the company.

  • Changes in business-level strategy that Michael Eisner introduced

In entertainment and recreation, Eisner changed the food concession business. Previously, food concessions at Disneyland and Disney World were licensed to other companies. The companies provided the food and paid Disney a certain percentage. Eisner realized that this led to the loss of revenues. After the agreements expired he took over food operations at theme parks with a goal of increasing the operating profits. The second business-level strategy was improving the package that the company was offering to the guests. After offering over 8 hours of entertainment, Eisner realized that the company needed to offer a full package which could ensure that guests lived in Disney, ate, slept, and breathed Disney. This was implemented by the development of hotels and convection facilities around Disney. Guests enjoyed different kind of experiences increasing occupancy rate.

Additionally, Eisner focussed on providing high quality customer service. Recruits are put at a program where they learn the organizational culture of the company including its history, mission, and its emphasis in maximizing the satisfaction of its guests. This ensured that Disney guests always get the best treatment or service considering that over 70% aree repeat visitors. The strategy helped in maintaining and attracting more guests leading to an enhance revenue. Eisner’s business-level strategies were effective because the company started gaining more profits. The net profit increased to $703.3 million from $97.8 million. The strategies were successful because Eisner and Wells discovered the issue that was affecting Disney’s performance which was a failure to exploit the potential of the business. Additionally, a clearly defined strategy in exploiting Disney’s resources led to the success of the strategies.

  • Strategies in the animated film sector

While working at ABC as the head of children’s entertainment, Eisner understood that family entertainment had new definitions and Disney had to embrace that to add value. First he used Katzenberg to identify the right scripts. This added value in the quality given to consumers. Second, to reduce the fear of failure and burden of the animated films sector, Eisner focussed on raising money to finance movie production. The strategy involved selling some partnerships to investors then the money would be used to finance the movies. The investors would then receive a certain percentage from the revenues raised. The strategy helped in raising the finances.

Eisner then focussed on attracting talents and stars leading to a reduction of production costs. The next strategy was distribution strategies of the movies to videocassette and television sales. The strategy increased the number of movies sold increasing the revenues. Additionally, Eisner brought back Sunday movie that took advantage of the company’s animation skills making Disney Channel more popular. The strategies very successful because Eisner had sufficient experience with the needs of the consumers. Additionally, Katzenberg helped with his creativity and commitment towards the success. The established base of the company also helped towards the success of the strategies.

  • Disney’s future prospects

Eisner could have experienced challenges in maintaining the growth at the level that he established. Some issues such as increased competition, criticism associated with addiction, global recession, and changing consumer tastes have potential in affecting the operations adopted by Disney. For instance, a change in consumer taste would lead to falling in demand of Disney’s productions. The increased competition means that the quality standards are getting higher. This requires the company to be more creative, failure to which its projects will be unsuccessful. In case of economic crisis, consumers would only be able to take care of their basic needs. People would limit spending on leisure activities and Disney would have challenges increasing its sales. Therefore, Eisner would have challenges maintaining the growth.

Reference

Jones, G. (2009). Case 26: Michael Eisner’s Walt Disney Company, pp. 362-377.