Magic Kingdom

Organizational Behaviour

Final Exam - Magic Kingdom

Prepared by Mr.Brooks

Magic Kingdom

About Walt Disney

The Walt Disney Company was founded in 1923 and is one of the largest media and entertainment corporations in the world. The Disney Corporation is dedicated to bringing animated movies (e.g. Sleeping Beauty) into people's homes with the main objective of putting a smile on everyone's face. Though both the information age and technology trends will reshape Disney's business model, both will never reshape Disney's impact on our lives.

Disney has been known to create cutting edge animations and products for decades. Disney was the first to create animated movies in sound as well as in 3D. The company also creates cutting edge consumer products such as computer games, the Dream Desk PC, and even a Disney mobile family plan. Walt Disney loved animation and valued perfection more than profit.

Walt Disney is a diversified worldwide entertainment company. It has operations in four business segments: media networks, studio entertainment, parks and resorts and consumer products.

In media networks, the company operates the ABC Television Network and 10 owned-television stations and the ABC Radio Networks and 71 owned-radio stations. Primary cable/satellite programming services, which operate through consolidated subsidiary companies, are the ESPN-branded networks, Disney Channel, International Disney Channel, SOAPnet, Toon Disney, ABC Family Channel and JETIX channels in Europe and Latin America. Other programming services that operate through joint ventures include A&E Television Networks, Lifetime Entertainment Services and E! Entertainment Television. In addition, the company operates ABC, ESPN and Disney-branded Internet Website businesses.

In the parks and resorts segment, the company owns and operates the Walt Disney World Resort in Florida and the Disneyland Resort in California. Outside US, The company also had a presence in Japan, where it earns royalties on revenues generated by the Tokyo Disneyland Resort, and owned 41% equity investment in Euro Disney, Paris. In addition, The company also manages and has a 43% equity interest in Hong Kong Disneyland.

In the studio entertainment segment, the company produces and acquires live action and animated motion pictures for worldwide distribution to the theatrical, home entertainment and television markets. The company distributes these products through its own distribution and marketing companies in the US and foreign markets primarily under the Walt Disney Pictures, Touchstone Pictures, Miramax and Dimension banners. The company also produces stage plays and musical recordings.

In the consumer products segment, the company licenses the name Walt Disney, as well as the company's characters, and visual and literary properties, to various manufacturers, retailers, show promoters and publishers throughout the world. The company also engages in direct retail distribution principally through the Disney Stores. The company produces books and magazines for the general public, computer software products for the entertainment market, as well as film, video and computer software products for the educational marketplace. The company's direct marketing business operates the Disney Catalog, which markets Disney-themed merchandise through the direct mail channel. Catalog offerings include merchandise developed exclusively for the Disney Catalog and DisneyDirect.com, which is an Internet shopping site, as well as other internal Disney businesses and Disney licensees

Questions

1. Why do you think that the Disney organization, once a highly successful and growing organization became stagnant after the death of its founder Walt Disney? Describe as many reasons as possible.

Answer:

The company became stagnant is because of the following factors:

* Very large work force - In 1991, the company has 58,000 employees. This fact represents possible communications problems, and a high bureaucracy level within the corporation. By diversifying into more businesses and niches, the company's work force will grow even larger, and the organizational structure has to be able to support an expansion of the work-force.

* High overhead expenses - Large overhead costs are usually direct effects of a large work-force and a large number of fixed assets.

* Corporate-level strategy - Disney's corporate level strategy is based on a horizontal and decentralized and informal management approach. Ideas are born from within the departments and are worked-up throughout the relatively low hierarchy, where the final decisions are made. The management focuses on group creativity and in team-work. A large emphasis is placed on employee participation, especially on the most talented employees. Furthermore, the company is frequently refreshing its top management with new executives. "Top-flight" managers from the entertainment and the financial business bring with them new ideas and concepts which can be applied in the Disney Company. There is however a significant increase in expense attached to luring the very best to join the company. This increase in expense is directly related to special perk-packages, higher bonuses and escalated salaries that are offered to the top-executives.

* Frequent change in top-management - The fact that the company very frequently changes its corporate officers makes the corporate structure even more complicated. There are many positive things that accompany changes, but change is also associated with resistance, and large expenses.

* Over saturated markets - As the supply of services and products in the entertainment industry is starting to saturate the markets, competition will be more intense, and only the most powerful companies will be able to survive. Disney has leveraged this risk to a certain extent as it has diversified and globalize its operations, but still, the company is in the service/entertainment business. Some of its operations, such as the Network-television division may not be able to handle the pressure from the Cable-giants such as Turner Broadcasting Systems (TBS).

* Politics and economic aspects from a global perspective - World politics and the state of the global economies are related to the market capacity. In 1991, the sales revenue of Disney