"What Would You Do?" Walt Disney Company (Burbank, California)

Over two decades, your predecessor and boss at the Walt Disney Company, Chief Executive Officer (CEO) Michael Eisner, accomplished a great deal, but his strong personality and critical management style created conflict with shareholders, creative partners, and board members, including Roy Disney, nephew of founder Walt Disney.

One of your first moves as Disney's new CEO was repairing relationships with Pixar Studios. Pixar's management argued that the company should have total financial and creative control over its films. When Disney CEO Michael Eisner disagreed, relations broke down, with Pixar seeking other partners. On becoming CEO, you approached Pixar to buy the company for $7 billion. More important than the price, however, was promising Pixar total creative control of its filmsandDisney's storied but a struggling animation unit.

Although Pixar and Disney animation thrived under the new arrangement, Disney still had a number of critical strategic problems to address. Disney was "too old" and suffering from brand fatigue as its classic but aging characters Mickey Mouse (created in 1928) and Winnie-the-Pooh (licensed by Disney in 1961) accounted for 80 percent of consumer sales. On the other hand, Disney was also "too young" and suffering from "age compression," meaning it appealed only to young children and not preteens, who gravitated to Nickelodeon, and certainly not to teens at all. Finally, despite its legendary animated films, over time Disney products had developed a reputation for low-quality production, poor acting, and weak scripts. With many of Disney's brands and products clearly suffering, you face a basic decision: Should Disney grows, stabilize, or retrench? If Disney should grow, where? Like Pixar, is another strategic acquisition necessary? If so, what company should it acquire? If stable, how do you improve quality to keep doing what Disney has been doing, but even better? Finally, retrenchment would mean shrinking Disney's size and scope. If you were to do this, what divisions would you shrink or sell?

Next, given the number of different entertainment areas that Disney has, what business is it really in? Is Disney a content business, creating characters and stories? Or is it a technology/distribution business that simply needs to find ways to buy content wherever it can, for example, by buying Pixar and then delivering that content in ways that customers want?

Finally, from a strategic perspective, how should Disney's different entertainment areas be managed? Should there be one grand strategy (i.e.,growth, stability, retrenchment) that every division follows, or should each division have a focused strategy for its own market and customers? Likewise, how much discretion should division managers have to set and execute their strategies, or should that be controlled and approved centrally by the strategic planning department at Disney headquarters?

If you were CEO at Disney, what would you do?

Question 1

Should Disney grow, stabilize, or retrench?Discuss how and why for your chose strategy.

Question 2

What business is Disney really in... Content...Technology/Distribution?How should these different areas be managed?