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Strategic Management At The Walt Disney Company

4341 words - 18 pages

Identify an episode of strategic change for an organisation of your own choice. How appropriate was the approach to strategic change given the issues faced by the organisation? Critically evaluate the effectiveness of the strategic leadership during the change process. Identify the impact of the change episode upon the key resources and core competencies of your organisation.

This paper will analyse a recent period of strategic change at The Walt Disney Company which began in 2005 with the appointment of current CEO Robert Iger. The company began to experience halted growth during the late 1990s. The former CEO Michael Eisner had been successful himself in the late 1980s in changing the ...view middle of the document...

Financially, Iger managed to steadily increase share prices from a 2005 average of $25 to an average of around $34 in 2007 (Barnes, 2010). Despite a global recession which halted consumption of products and visits to its theme parks, the company has seemingly recovered its low of $15 in 2009 with its share prices reaching almost $38 as of May 2010. As I will explain however, the strategic change at Disney has not only provided short-term profits, it has put the company in a position in which it can sustain its competitive advantage in the long-term due to the changes in the structure and underlying culture of the organisation.
Beginning with the pre-2005 context of Disney’s business environment I will show why Eisner’s autocratic style of management was impeding the necessary changes the company needed to survive in light of the issues facing the company. Following on from this analysis I can assess the process of change which the company undertook relating to relevant theories in the strategic change literature. This will allow me to evaluate the effectiveness of the leadership during this process and show how CEO Iger was central to the changes which took place, again in accordance with strategic leadership theories. Finally I will attempt to identify how Disney has harnessed its key resources and core competencies throughout the process of strategic change to give itself a healthy, competitive advantage in the long-term.
The issues faced by Disney starting in the late 1990s were a mix of external and internal triggers for change; market changes, competitors, technology, political and cultural. Market changes included a general profit decline in all of Disney’s business apart from its theme parks. Home-video sales were dropping as consumers’ shelves were already saturated with Disney content, as classic titles were constantly re-released to try and milk profits out of them without. The economic downturn in Asia at the time helped to decline revenues in merchandising and licensing and sales in Disney stores worldwide also dropped due to stale product lines, (Gunther, 1999). Disney had competitors challenging each of its main businesses; Universal had a popular theme park in Florida, DreamWorks, Fox and Warner were also producing animated features which contested Disney’s stranglehold on the animated film industry and the company’s television cartoon channel was ranked third behind Nickelodeon and Cartoon Network. Gunther (1999) sheds light on the interesting problem of “age compression” which Disney faces, the fact that kids are growing up faster; 9-10 year olds are now emulating older teenagers. These new wave of kids feel that Disney is “too good” for them as they attempt to rebel against their parents. Nickelodeon and Cartoon Network were able to exploit this weakness by creating contemporary characters, not mythical, traditional characters from storybooks – but ones which were relevant to kids. As theme park attendance was doing well,...

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