Ghemawat, Pankjaj and Jan Rivkin. 2010. “Choosing Corporate Scope,” Strategy and the Business Landscape (3rd ed.), Ch. 6, pp. 123 – 147.
Case: The Walt Disney Company: The Entertainment King, 9-701-035
Please read the book chapter by Ghemawat and Rivkin. Make sure you understand the “two tests” they are describing.
When reading the Disney case, please have the following questions in mind:
Why has Disney been successful for so long?
What did Michael Eisner do to rejuvenate Disney? Specifically, how did he increase net income in his first four years?
Has Disney diversified too far in recent years?
The success of Disney over the years can be attributed to the strong foundation and strategy established by the founder. The company focused on its strengths in developing children’s entertainment content. The company later diversified to other market segments, increasing its revenue streams. Michael Eisner joined the company in 1984, when the company was sluggish and facing challenges in finances. The company was on the verge of being sold when Sid Bass, an Oil Tycoon invested $365 million in the company. Eisner moved from Paramount pictures where he was the president and chief operating officer. On joining Disney, he worked as the chairman and chief operating officer of the company (Rukstad & Collis, 2009, p. 4). The company was well known for developing content that targets children. After he had joined the company, he made various changes to rejuvenate it. First, he stopped the movie projects Disney was working on at the time because they would not generate the required revenue…