Walt Disney Company Headquarters, Burbank, California Over two decades, your pre
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Walt Disney Company Headquarters, Burbank, California Over two decades, your predecessor and boss, CEO Michael Eisner, accomplished much, starting the Disney Channel, the Disney Stores and Disneyland Paris, and acquiring ABC television, Starwave Web services (from Microsoft cofounder Paul Allan) and Infoseek (an early Web search engine). But his strong personality and critical management style created conflict with shareholders, creative partners and board members, including Roy Disney, nephew of founder Walt Disney One of your first moves as Disney's new CEO was to repair relationships with Pixar Studios and its then CEO Steve Jobs. Pixar produced computer-animated movies for Disney to distribute and market. Disney also had the right to produce sequels to Pixar Films, such as Toy Story, without Pixar's involvement. Jobs argued however, that Pixar should have total financial and creative control over its films. When Disney CEO Michael Eisner disagreed, relations broke down, with Pixar seeking other partners. On becoming CEO, you approached Jobs about Disney buying Pixar for $7 billion. More important than the price, however, was promising Jobs and Pixar's leadership, President Ed Catmull and creative guru John Lasseter, total creative control of Pixar's films and Disney's storied but struggling animation unit. Said Jobs, l wasn't sure l could get Ed and John to come to y unless they had that control Although Pixar and Disney animation thrived under the new arrangement, Disney still had a number critical strategic problems to address. Disney was 'too old' and suffering from brand fatigue as its classic but ageing characters, Mickey Mouse (created in 1928) and Winnie-the-Pooh (licensed by Disney in 1961) accounted for 80 per cent of consumer sales. On the other hand, Disney was also too young' and suffering from age compression', meaning it appealed only to young children and not preteens, who gravitated to Nickelodeon, and certainly not to teens at all. Finally, despite its legendary animated films, over time Disney products had developed a reputation for low-quality production, poor acting and weak scripts. Movies High School Musical 3: Senior Year, Beverly Hills Chihuahua, Bolt, Confessions of a Shopaholic, Race to Witch Mountain and Bedtime Stories disappointed audiences and failed to meet financial goals. As you told your board of directors, 'It's not the marketplace: it's our slate [of TV shows and movies] With many of Disney's brands and products clearly suffering, you face a basic decision: Should Disney grow, stabilise or retrench? Disney is an entertainment conglomerate with Walt Disney Studios (films), parks and resorts (including Disney Cruise lines and vacations), consumer products (i.e. toys, clothing, books magazines and merchandise) and media networks such as TV (ABC, ESPN, Disney Channels and ABC Family), radio and the Disney Interactive Media Group (online, mobile, and video games and products). Further, in 2009 Disney acquired Marvel Entertainment (including the Avengers franchises) and in 2012 it acquired Lucasfilm (Star Wars and Indiana Jones franchises)Explanation / Answer
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The main objective of any growth strategy is to improve revenues, profits, market share or the number of offices, locations or stores where the firm is operating. The external growth can be obtained by merging or acquiring the other firms in the similar of differentiated business line. In fact, by having the expansion in the existing business or developing the new businesses, the firm can aim to grow internally.
On the other hand, the main aim of stability strategy is to maintain the prevailing operations of the company and in fact improving on that. This strategy is mainly adopted by the firm to improve the manner in which the products are sold and customers are served.
The focus in case of retrenchment strategy is on turning around the pathetic performance of the firm by decreasing the size of scope of the operations or by shutting down the additional sites or locations of the business. Making significant cost reductions; laying off employees; closing poorly performing stores, offices, or manufacturing plants; or closing or selling entire lines of products or services are the main steps in this. Once this is done, the next stage is to recover. It mainly includes the strategic actions which are taken by him in response to a growth strategy.
In the case, the company’s position was not stable due to diminished income. The revenue of Disney film dropped by 12% having a loss of $12 million after earning the profit of $97millon, the decrease in operating income was seen up to 34% as the number of viewers dropped by 9.7% in the age group of 18-49 years. The decision has to be taken by the CEO to adopt one of the above-stated strategies. In the case, retrenchment strategy can be implemented by CEO. As there are number of products in Disney despite having undesirable output leading to loses, and reduced revenues. The focus should be on poor performing products which are hampering the performance of the firm, they should be shut down.
In order to reduce costs, the company can think of buyouts the executives, merger of different department such as the menu planning departments at Disney Land in California and the menu planning department at Disney World in Florida, into one department to serve both parks at one time
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