Micheal Eisner had a very centralized management style and expected his managers to develop a five-year and ten year plans for their divisions to predict their future growth. Eisner followed the same strategies he followed in the 1980’s in 1990’s. He build Disney’s strengths in three areas of entertainment and recreation,motion pictures and video and consumer products. Entertainment & Recreation:
Top managers of Disney started enlarging the size and variety of its theme parks along with other properties though it increased operating costs significantly. Disney announced to open up a zoological park worth $500million. Moreover, they also tread on the path of revival of West42 and Street in New York. They embarked on the idea in order turn it into a huge entertainment complex. Studio Entertainment:
Disney continued to increase the number of movies they produced for distribution. They acquired a small company Miramax Pictures to produce high quality, adult-oriented pictures for about $60million.This helped to boost the revenues of its movie division throughout the next decade. They also thought of a great initiative of selling DVDs of its hit movies like The Lion King and Snow White that also contributed to the division’s profitability. However after the failure of Pocahontas and The Hunchbank of Notre Dame Disney announced that they would produce fewer movies in future and focus more on production of two successful kinds of movies (1) expensive blockbuster movies backed by advertising campaigns of $20milllion to $40 million that could generate $200million to $500million in theatre revenues worldwide and (2) inexpensive movies costing about $13million to $15million, backed by modest $3million to $5 million advertising budgets that could find niches and be profitable. Consumer Products:
Disney had 429 specialty Disney Stores worldwide. It expanded its consumer products empire rapidly. They also had a catalog mail-order business along with publishing business. Disney-Capital cities/ABC merger:
Disney purchased Capital Cities/ABC inc. for $19billion in 1995. ABC owned one of the three biggest television networks and had affiliations with television stations and network of hundreds of radio stations. After acquisition Disney redefined its main areas of business as creative content, theme parks and resorts, and media broadcasting. Through this Eisner hoped to create synergies to gain in the future like advertising about Disney in its own ACB network and rerunning programs on the Disney channel. Eisner argued that this would eventually reduce the advertising costs of Disney though critics questioned about the merger. Critics argued that Disney could have entered into a written contract instead of buying the company as a whole. They argued that the merger was unnecessary and may turn out to be unprofitable. This eventually happened when ABC experienced a drop in its viewing-customers due to the increasing popularity of Internet. Moreover, conflicts between the management of Disney and ABC arose. Micheal Eisner had a very centralized management style and expected his managers to develop a five-year and ten year plans for their divisions to predict their future growth. He then evaluated them on the basis of their success on reaching the goals. On the other hand, ABC had a different situation at hand. Since TV business is rapidly changing one ABC had to constantly innovate on the basis of how well their shows are received on a week-by-week or month-by month. Thus they had to plan on a one-year basis to predict their choices of next year. This is where conflicts...