Case: HOW WALT DISNEY COMPANY SCRIPTS ITS OWN SUCCESS The record-breaking opening weekend for Disney's live-action/ digital Beauty and the Beast put the movie, starring Emma Watson, on track for becoming the company's latest box-office success, to the tune of an anticipated $1 billion in ticket sales worldwide. Though this "tale as old as time" has no sequels to count on, Disney planned to repeat the formula of remaking its beloved animated classics in the coming years, with digitally enhanced live-action versions of hits including Dumbo, The Lion King, Aladdin, Mulan, and Pinocchio all in progress. The company has honed to perfection its ability to appeal to "children from 6 to 60," as founder Walt Disney described his intended audience. Another of Walt Disney's successful strategies, according to Sean Bailey, president of Walt Disney Studios motion picture production, was to take "beautiful, timeless stories he knew had lasting relevance, and he then sort of applied the sensibilities of his times." The company has continued this strategy, even if it has occasionally meant creating a minor dust-up in overseas markets. Because the company refused to delete a few seconds of Beauty and the Beast in which a character is revealed to be gay, Russia limited viewers to those 16 and over, and the Malaysian government would not allow the film to be shown at all. The effect of these lost viewers was expected to be minimal for the $56 billion company, one of the largest in the entertainment industry. Walt Disney is not merely huge in terms of sales volume; it has four business divisions, engaged in nearly every kind of commercial entertainment. It all began with Walt Disney Studios, which today produces movies, music, and stage shows under the banners of Disney, Pixar, Marvel Studios, Lucasfilm, Touchstone Pictures, and Hollywood Records. The Media Networks group covers publishing, radio, and broadcast and cable television, including Disney/ABC Television and ESPN. The Parks and Resorts group encompasses 11 theme parks and 44 resorts around the world as well as a cruise line. Disney's Consumer Products and Interactive Media division offers entertainment on digital platforms, including console games and the Internet, and extends the business value of characters and story lines by operating Disney Stores and licensing its creations for use on toys, clothing, art objects, and a wide variety of other consumer goods. The man in charge of keeping the magic alive through activities carried out by more than 195,000 employees is Disney's chief executive officer, Robert Iger. Iger and his executive team must define an overall direction and goal for the company and keep an eye on how well each business group is contributing to achievement of that goal. Iger does this by spotting opportunities for growth in the industryhence the expansion into cable television and, more recently, into interactive entertainment and the revitalization of past movie hits. He also looks for characters and brands Disney can make more valuable because of its access to more channels. For example, Disney could afford to pay generously for Pixar and Marvel because those companies' characters generate sales in products as diverse as theme parks, video games, and sweatshirts. Another coup for Iger was the purchase of ESPN, the most valuable cable channel in terms of revenues. Iger meets weekly with the heads of the business units. Although he keeps an eye on the company's overall direction, he gives each unit's head wide latitude. As the Walt Disney Studios division embarks on a years-long effort to revitalize some of its classic animated features, Iger and the company's management team will be watching closely to see whether this strategy is as effective abroad as it may be at home, or whether new environmental analyses suggest other avenues for the film company to explore. Reportedly, Walt Disney Company's mission statement once was "Make people happy." The corporate website now offers a longer statement: "to be one of the world's leading producers and providers of entertainment and information, using its portfolio of brands to differentiate its content, services and consumer products." The statement adds, "The Company's primary financial goals are to maximize earnings and cash flow, and to allocate capital toward growth initiatives that will drive long-term shareholder value." In pursuit of this two-part objective, Disney has made decisions about its large portfolio of businesses. As it repositions itself for a global marketplace and a social, mobile Internet, it continues making strategic decisions about where to invest and what to divest. Disney's largest sources of revenues are cable networks and theme parks, with cable providing by far the greatest profits. ESPN alone delivers 45 percent of operating income. Recently, Disney entered into a media rights contract with the NFL and a deal to air NBA games on ESPN and ABC. The company has rolled out apps based on WatchESPN to let cable subscribers watch programming on mobile devices. In the theme park arena, profitability during a sluggish economy lets Disney build when construction costs are low, so it has renovated Disney California Adventure, expanded Hong Kong Disneyland, and added a cruise ship to its fleet. In June 2016, Disney opened a theme park in Shanghai, China. Disney Interactive is by far the smallest business unit in terms of revenues, and has not been profitable. Still, it matters because children are spending ever more time online, and winning the hearts of children has been the basis for the company's growth. Disney Interactive will continue to engage fans through mobile games like Frozen Free Fall and Disney Tsum Tsum, as well as connect with parents via Disney.com. Disney's movie studios, though a relatively small unit, are a core business. To increase the brand's appeal with teenage boys, this unit purchased Lucasfilm, producer of Star Wars. Disney also signed a deal giving Netflix the right to stream movies soon after release on DVD, when cable channels air movies. Dealing directly with Netflix signals that movie streaming is an important trend for Disney. And Disney created Keychest, which gives buyers of its DVDs and Blu-ray discs automatic access to streamed versions. China is a huge growth market, so Iger is heavily investing in a new theme park, Shanghai Disney. The venture is risky; Disney's resort in Hong Kong is just breaking even after a 2005 opening. But it offers access to a billion consumers, and the effort is supported by use of the Disney Channel to build consumer relationships in China and 166 other countries. Discussion Questions 1. How clear is Walt Disney Company's mission? How well does its strategy support the mission? (3 Marks) 2. In the BCG matrix, where would you place Disney's main businesses? How well is Disney matching its strategic moves to the businesses' positions in the matrix? Explain briefly (5 marks) 3. What are the ethical or social responsibility issues discussed in the case? (2 Marks) 4. Being A Unit Manager at any of Disney's main businesses (of your interest), you are required to indulge into following steps of strategic management process in order to enhance the business growth & performance