Strategy Formation at Disney Under Michael Eisner Essay

Custom Student Mr. Teacher ENG 1001-04 9 January 2017

Strategy Formation at Disney Under Michael Eisner

Walt Disney was a real visionary in term of animations. He developed his capability to select new ways to invent special cartoons, with a “Disney’s prestige” that was going to be the most famous brand in terms of family entertainment. Since Walt Disney’s death in 1966, The Walt Disney Company had barely survived appropriation attempts by other corporations. Its shareholders Sid Bass and Roy E. Disney brought on Michael Eisner and Frank Wells to maximize the company’s assets. Disney Chairman and CEO Michael Eisner had a path of triumphs and challenges in the Company but in his last years as chairman and CEO two main problems prevail. First Disney’s standing for fragile authority and second, disputes among the top positions of the organization. Whereas it is challenging to determine which originated first, each of these disputes continued during his reign and his management style became a problem to Disney growth and by removing him from his power position was the only way to recover.

His management Style can be explained by the power school, which focuses on strategy formation as a process of negotiation between power positions within the company and/or between the company and its external stakeholders. Politics therefore became a synonym with the utilization of power in other than just simply economic ways. Two types of power describe Eisner strategy in Disney, Micro Power dealt with the politics within the organization and Macro Power referred to the use of power by the organization (Mintzberg 235). Strategy formation under Eisner was shaped by power and politics, the strategy that resulted from such a process became emergent throughout the whole company. Under Micro Power the strategy was his firm’s knowledge and his ability to grow by controlling the decision making process, which later led to direct confrontation between top rank positions. However, under Macro Power the company was promoting its own welfare by cooperating with other organizations, through the usage of strategic manoeuvring as well as collective strategies in various kinds of networks and alliances (Mintzberg 260).

Under Eisner’s reign, a burst of successful animation franchises were born such as The Little Mermaid, Aladdin, The Lion King to name a few, also the Disney theme parks experienced substantial expansions and stockholders were treated with a increasing stock value. During his 20 years as Disney employee, he faced significant experiences that shaped his personality as the leader he later became. In 1994 a helicopter crash cost Frank Wells his life leaving Eisner CEO and Chairman of the company. He started looking for a new replacement for Wells position, which led Jeffrey Katzenberg resignation when he wasn’t offer, Well’s position. In that same year Eisner faced health problem with his heart and ended with a bypass surgery. According to Eisner that was the best night’s sleep he had in a year (Eisner 18). After his surgery the search for Frank’s predecessor continued and after year of attempts Michael Ovitz took the role as President of Disney.

Eisner was finally able to focus on the creative process, or at least that is what he thought, Ovitz role gave more difficulties to Eisner than the solutions he wanted to encounter. Ovitz focused more on the company’s growth than the Disney cultural organization, which later led to confrontation and his dismissal from Disney presidency and the arrival of Bob Iger as the new president of Disney. One of the biggest triumphs of Eisner was the landing of the ABC network. Wanting to expand Disney audience and though increase Disney assets, his plans at the time were focused on the acquisition of a network. Various networks were in pursued such us CBS and Cap cities/ ABC, board members though felt that the acquisition of Cap Cities was the best choice.

The turn of events at the Herb Allen’s Conference in Sun Valley made the acquisition of ABC the next step on Eisner agenda. ABC’s relationship Disney has been in place for a while with when Leonard Goldenson back in 1953 invested sufficient money so that the “Disneyland” theme park could be terminated. With this relationship in place came efforts of cross-promotion, which led to countless meetings and negations within board members as of what would be the most beneficial option to Disney. Finally, in 1996 The Walt Disney Company acquired Capital Cities/ABC, and renamed the broadcasting group ABC, Inc. (Eisner 2 357-371). The acquisition of ABC increased Disney costumer audience putting them in a leading position in the entertainment industry.

The following years Disney experience successful acquisitions and rapid growth in its assets. Although with this period of success, Eisner became convince that he was the rightful heir to Walt Disney. Michael Eisner began making an array of changes to Disney’s governance structure and The Walt Disney Company had come under a severe examination for its governance practices. The Board of Directors were often criticized for a lack of independence and inside dominance.

Roy Disney, founder Walt Disney’s nephew, resigned as an executive from the Disney Company in 1977 due to disagreements with Eisner as well as a feeling that Disney creativity was beginning to vanish. However, he retained a seat on the board of directors but after acknowledging he was not going to be renominated to the Disney board he presented his resignation from the board in 1984. After Roy’s resignation his financial adviser Stanley Gold left the company as well. This was the beginning of a series of developments that led to the replacement of company president and CEO which was called as “save Disney” War period.

The war started when Roy E. Disney Stanley Gold called for Eisner’s replacement as both CEO and Chairman of the Board. The Disney war was fought for several years, employees felt that what once made Eisner a great leader was now acting as a disadvantage for the company. He was greatly criticized for not sealing the deal with Pixar and from there his management failure became more noticeable. His management failures describe in the Disney war text included the inability to delegate, a frequent mistrust of subordinates, impulsive and uncritical judgments, his pitting of one exercise against another among others (Eisner 2 532). Michael Eisner was blamed for his recent management failures, and as concern thoughts were increasing within the company, change had to be made.

The board was divided into two groups, those who supported Eisner and his actions and those who did not. The majority of the votes were against Eisner staying as both chairman and CEO of Walt Disney Company. After 20 years of managing the company, Eisner had to make a decision that would affect the world’s largest entertainment company as well as his own destiny in company. Eisner decided that for the sake of the company he would no longer be chairman of the board and he will only remain CEO of the company, Disney’s board then gave the chairmanship position to Mitchell.

However, the board did not immediately remove Eisner as chief executive. On March 13, 2005, Eisner announced that he would step down as CEO. On September Eisner resigned both as an executive and as a member of the board of directors, and his replacement was his longtime assistant, Robert Iger. (Eisner 2 532-534) When Eisner was brought in to lead The Walt Disney Company in the early 1980s, times were tough and some thought that new blood was needed. It was now his time to step down his reign and let Disney prosper under new authorities. His success is undeniable and he will always be a key factor on Disney growth and leading position.

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