1. How did Walt Disney build his empire? What was the pattern in his “stream of actions?”

2. What happened in the years between Walt Disney’s death and the arrival of Michael Eisner? Do a SWOT analysis of the company at the time Michael Eisner was taking over.

3. What were the changes in business-level strategy that Michael Eisner introduced into each of Disney’s principal lines of business? Why were they successful?

4. How did Eisner’s corporate-level strategy add value at the business level? What were these strategies and why were they so successful?

5. What do you think of Disney’s future prospects? Can Eisner maintain Disney’s growth at its current level? With Disney’s stock trading at its current level, would you buy stock in the company?

This is the first of two cases on Disney that describe the development of this well-known company. This case is about the way Michael Eisner and his management team changed the Walt Disney Company from an under-performing firm at serious risk of takeover by corporate raiders to the most profitable firm in the entertainment industry. It chronicles the way the Eisner management team changed Disney’s business- and corporate-level strategy to maximize the synergies between business units. It describes how they embarked on new business ventures that were also designed to exploit the strengths of Disney’s existing businesses. 

During the years from Walt Disney’s death in 1966, to Michael Eisner taking control in 1984, Disney languished. The top management team was simply marking time. They essentially did nothing new in the corporation, being content to manage the empire Walt Disney had created. As a result, the assets of the corporation were undervalued and the core strengths of the business were deteriorating because no one was using them, or they were used badly. Disney was not threatened from the outside, although other firms were taking advantage of the opportunities Disney was ignoring. The company was deteriorating from the inside because no one was willing to go out on a limb, assume Walt Disney’s crown, and take responsibility for the corporation, until Eisner arrived. The case is a classic account of how to pursue a strategy of related diversification in order to create value at the business level in Disney’s main lines of business.

First, the case describes the way in which Walt Disney developed his company’s principal lines of business. Second, it discusses Disney’s situation between Walt’s death and the arrival of Michael Eisner. Third, it discusses the way in which Eisner took the pieces of Disney’s business and created a cohesive corporate mission and strategy to turn the company around. Perhaps, above all, it demonstrates that to be strengths, a firm’s distinctive competences have to be used and exploited by a competent management team within the framework of a cohesive business and corporate strategy. All of the core Disney strengths were already in place when Eisner took over but it was the way he used them and developed a strategy to give vision to Disney’s mission that catapulted Disney to the top of the entertainment industry.