Free Governance Critique Of The Walt Disney Case Study Sample
The Walt Disney Company is a United States top diversified mass media and global entertainment corporation. It is not only well known in the United States, but is also known in other countries across the borders and in foreign continents. The company’s head office is in Burbank, California (The Birth of Walt Disney World, 2009). The company operates in four segments: consumer products, studio entertainment, park and resorts, including media parks. Brothers Walt Disney and Roy Disney formed the company from a miniature cartoon studio in 1923. The Walt Disney suffered for several years due to futile creations, although the launch of “Mickey Mouse” led to its success. Mickey Mouse became the company’s mascot because of bringing increased success. In 1937, Disney produced Snow White and the Seven Dwarfs that later became one of the best films in the world. The company later established 160-acre theme park in Anaheim called Disneyland in 1955. Both Walt Disney and Roy Disney passed away in 1966 and 1971 in that order. Donn Tatum replaced Walt to become CEO. Other previous heads of the company include Card Walker and Ron Miller. Currently, Disney possesses more than 11 theme parks and about 44 hotels under Robert Iger as the chief executive officer. Unfortunately, The Walt Disney Company has faced several governance issues since its inception.
Hostile Working Environment
Hostile working setting was the first governance issue in the company. Problems started following the appointment of Michael Eisner. However, a remark by Stanley Gold (a board member) who proclaimed his dissatisfaction created issues at the company (Fred, 2013). Stewart (2005) claims that Stanley Gold and Roy Disney commenced a campaign dubbed “The Save Disney” when the board declined to sanction the re-appointment of Roy Disney. The board cited fixed age restrictions in the Corporate Governance Guidelines as the basis for their decision. Roy Disney viewed the refusal to re-appoint him as a war declaration (Stewart, 2005). Gold and Disney started the “The Save Disney” campaign to petition the stakeholders at the company to compel the resignation of Eisner.
However, the Walt Disney Company could have prevented the increased hostility between Eisner and other board members. For instance, the board members could have selected a family member as was the company’s norm. Eisner received much criticism because he was an outsider. Additionally, Eisner could have used the communication approach to form a relationship with the board members. Communication prevents issues that could derail a company’s success (Steiner and Steiner, 2009).
The board members handled the hostile working setting issue by failing to support the “Save Disney” campaign due to conflicts of interest. The conflicts of interest prevented them from ousting Eisner even though the decision suited them. Eisner and his friends benefited from executive compensations but they swiftly created many foes. He destroyed his relationship with Michael Ovitz, a prior Disney leader, who he employed and discharged after 16 months. He also terminated the services of other executives like Steve Jobs and Jeffrey Katzenberg. The “Save Disney” campaign succeeded as Eisner quit in 2003.
However, the board members at Walt Disney Company did not react properly to Eisner appointment. They could have supported Eisner appointment rather than voting for him because the law required them to. The fact that he became the head of the company showed his expertise that could have benefited the company in the future. Therefore, the board members also failed to perform its duties properly thus the problems at the company.
Poor Decision Making
The second governance issue included poor decision making. The issue of poor management started when the Walt Disney Company deserted its founding values (Stewart, 2005). The founding values included providing quality products to the public who would in return create more profits. Alternatively, Eisner created new values through his mission to make short-time profits (20% yearly growth). The need to make more profits forced the Walt Disney Company to go global. Nonetheless, the assumption that France and Japan would accept Mickey Mouse just like the American audience became the most expensive fault of the company. The company ventured into Japan by signing an accreditation agreement with the Oriental Land Company (a firm that possessed and controlled Tokyo Disney). The management then lost interest in the Tokyo Disney Park citing that it was very risky. Regrettably, the firm had miscalculated the park’s success. Shockingly, most Japanese supported the brand that remains success up to date. Several industries later declared Tokyo Disney the most explored theme or amusement park globally, surpassing the other parks.
Unfortunately, the Walt Disney Company also failed to take any equity stake from the venture and the Oriental Land Company. The Walt Disney Company lost many millions due to bad decisions. The company now earns 5% of revenues from souvenirs and food and 10% of admission proceeds only.
The Walt Disney Company started planning another foreign venture in France’s Marne-la-Vallee after a flourishing encounter in the highly multifaceted Japanese culture. The company made another huge mistake that caused it many millions. At the same time, the management invested $240 million company money into the venture and received concessions from the French administration through land and subsidized loans. At the same time, the French regime gave the European community al the control shares.
Management at The Walt Disney Company failed to consider the erosion of different cultures. According to Steiner and Steiner (2009), there exists great ambivalence regarding the influence of American cultural exports on new cultures. However, the French administration ordered the management to rename its exhibits to French in order to accommodate the locals. The company conceded and changed the Enchanted Castle ’,‘ the Dragon’s Lair and ‘the Swiss Family Treehouse’ to La Cabane des Robinson, La Taneire du Dragon, and Le Chateur de la Bell au Bois Dormant respectively. At the same time, Disney refused to alter some names (Main Street USA) claiming a loss in meaning after changing them to French.
The Walt Disney Company started Euro Disney in 1992 accruing a debt of about £2.3 billion the following year. The management decided to restructure, rebrand, and rename Disneyland Paris in order to recuperate from the downbeat involvement with Euro Disney. Unfortunately, the company became too optimistic that the whole world could accept the Disney idea but the concept led to the loss of many millions.
Nevertheless, Eisner could have prevented the issues caused by poor decisions by investing in R&D (research and development). He could have explored different cultures prior to venturing globally. His poor communication with other board members also prevented the inception of innovative ideas on how to venture into Europe and France. The company, however, responded to the issue by altering the initial names of some of the animated movies to fit into the French culture. The films included the Enchanted Castle ’, ‘the Dragon’s Lair and ‘the Swiss Family Treehouse’ that changed to La Cabane des Robinson, La Taneire du Dragon, and Le Chateur de la Bell au Bois Dormant respectively.
The Walt Disney Company’s response when dealing with other cultures especially the French culture was great. Although the company failed to succeed in France and Europe, it tried to fit into both cultures to accommodate Disney lovers. However, Eisner could have formulated different marketing techniques to increase awareness about the company’s products and services in both nations. Steiner and Steiner (2009) posit that advertisements mediums, radios, televisions, newspapers, and magazines reach a huge audience, and the Walt Disney Company could have benefited from them.
Walt Disney formed the Walt Disney Company with a passionate desire to establish enjoyable, harmless, and hygienic theme parks for children. He advocated safe environment during his frequent trips to Disney. His performance characterized the initial level of corporate culture (artifacts) (Steiner and Steiner, 2009). Stewart (2009) wrote that the parks remained clean while the cast members remained helpful, friendly, and clean-cut in their character and appearance. Park personnel genuinely devoted themselves to upholding Walt’s vision. Walt individually created the SOP (Standard Operating Procedures) principles on capacity, show, courtesy, and safety.
Unfortunately, issues regarding the company’s business ethics materialized when Eisner changed how the parks operated. He introduced the OHRC (Operational Hourly Ride Capacity) to accommodate additional guests. The OHRC then compromised the safety of children that Walt cultivated. Most parents were unable to take their children to Disney Land because of increased charges during Eisner’s tenure. These actions led to increased criticism from parents, stakeholders, board members, and employees.
However, Eisner could have prevented these issues by maintaining the initial business ethics formulated by Walt Disney. He could have known that people tend to fear change especially when no form of communication is introduced. Communication plays a major role in most companies because it creates peaceful and favorable working environments. Additionally, communication prevents criticism and industrial strikes. Therefore, Eisner could have consulted stakeholders, board members, and employees prior to changing the initial mission.
In conclusion, there are several systems and process to strength the future governance of the Walt Disney Company. The first approach is communication. Successful companies have established healthy relationships with stakeholders, board members, and employees through frequent communication. Communication also protects CEOs and managers from negative criticism in their respective companies. The second approach to strengthening future governance at the Walt Disney Company includes employee morale boosting. Employees are very important assets of any company. Working with disgruntled employees drives away customers’ and leads to increased losses. Therefore, it is important for the Walt Disney Company to devise ways to motivate employees either through perks, recognition, holidays or increased salaries and wages. Lastly, it is important to create realistic goals. Realistic goals are easier to meet and they do not crush with other cultures. Successful businesses establish realistic goals that are met even when operating globally. Therefore, management at Walt Disney should invest in research and development in order to understand other cultures and to allow smooth operations. These goals should also embrace other cultures to avoid backlash.
Fred, R. (2013). The Cohesion Case: Walt Disney Company: Strategic Management Concepts: A Competitive Advantage Approach. Boston: Pearson.
Steiner, J. & Steiner, G. A. (2009). Business, Government, and Society: A Managerial Perspective, Text and Cases. New York: McGraw-Hill/Irwin.
Stewart, J. B. (2005). Disney War. New York: Simon & Schuster.
The Birth of Walt Disney World. (2009). Orlando-Disney World. Retrieved March 19, 2015, from http://www.fodors.com/world/north-america/usa/florida/orlando-disney-world/