Disney Case
Evan Garmon
MGT 491
Dr. Bartkoski
The Walt Disney Company: An Over Expanded Empire
The modern day entertainment empire that is the Walt Disney Company began in much simpler times with the vision and hard work of two brothers, Walt and Roy Disney. The then struggling brothers began by producing a short cartoon flick called Steamboat Willie with Walt’s creation, Mickey Mouse, as the main character. Overnight, Mickey’s success grew to an international level and the small company became a major full-length cartoon film leader. By the year 2000, Walt Disney Company controlled a multitude of business operations from radio broadcasting, cable television, theme parks and consumer product lines among many others. However, returns and growth began to dip lower and lower as the company expanded into these other lines to the point that the return on equity (R.O.E) went from 23% in 1995 to just 4% in 2000.
The primary issue facing Walt Disney Company in 2000 is the company’s immense size and amount of different business ventures it has delved into. To sustain a growth rate of 20%, Disney must continually defy the business cycle that places a company in one of four stages: start-up, growth, maturity, and decline. As apparent in the declining numbers from 1995 to 2000 it would appear as though the Walt Disney Company had begun to reach or surpass the maturity stage as competition squeezed profits. Further adding to the struggle, Disney employed nearly 110,000 people across the globe; a number that had increased almost 400% from just sixteen years prior. This form of business diversification has not always been an effective strategy when a company is looking to continuously increase shareholder value as Disney should be striving to attain.
Has the Walt Disney Company lost its original core competency of creative animation and instead diluted to a broader competency of entertainment? This question stemming from the primary issue at hand would suggest yes.
MGT 491
Dr. Bartkoski
The Walt Disney Company: An Over Expanded Empire
The modern day entertainment empire that is the Walt Disney Company began in much simpler times with the vision and hard work of two brothers, Walt and Roy Disney. The then struggling brothers began by producing a short cartoon flick called Steamboat Willie with Walt’s creation, Mickey Mouse, as the main character. Overnight, Mickey’s success grew to an international level and the small company became a major full-length cartoon film leader. By the year 2000, Walt Disney Company controlled a multitude of business operations from radio broadcasting, cable television, theme parks and consumer product lines among many others. However, returns and growth began to dip lower and lower as the company expanded into these other lines to the point that the return on equity (R.O.E) went from 23% in 1995 to just 4% in 2000.
The primary issue facing Walt Disney Company in 2000 is the company’s immense size and amount of different business ventures it has delved into. To sustain a growth rate of 20%, Disney must continually defy the business cycle that places a company in one of four stages: start-up, growth, maturity, and decline. As apparent in the declining numbers from 1995 to 2000 it would appear as though the Walt Disney Company had begun to reach or surpass the maturity stage as competition squeezed profits. Further adding to the struggle, Disney employed nearly 110,000 people across the globe; a number that had increased almost 400% from just sixteen years prior. This form of business diversification has not always been an effective strategy when a company is looking to continuously increase shareholder value as Disney should be striving to attain.
Has the Walt Disney Company lost its original core competency of creative animation and instead diluted to a broader competency of entertainment? This question stemming from the primary issue at hand would suggest yes.