Innovation at Disney

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  • Topic: Walt Disney, Innovation, Mickey Mouse
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Manchester Business School
Global MBA program
July 2011 Brazil intake

MBSW60517 PERSONAL, PROFESSIONAL AND CAREER DEVELOPMENT

Assignment Reference PDFULL/July11/2/Group

Assignment 2:
Case study of successful and innovative team:
“Walt Disney and his nine old men”

Group Brazil A2:
Maria Elisa Tourinho 8269358
Miguel Bichara 8269356
Jeremy Lovelace 8275943
Mikko Vehanen 8269381

Date: December 17, 2012

Introduction Walt Disney Company and Founding Team

Walt Disney Company is the largest media conglomerate in the world in terms of revenue. Its annual revenue in 2011 was approximately 40 billion USD with an operating income of approximately 5 billion USD (see Picture 1). As can be seen the company has had stable financial results with operating profit constantly above 10% of income.

Picture 1. Walt Disney Company’s financial results 2007–2011 (Disney Annual Report 2011)
[pic]

Company history and the ‘Nine old men’

The company was founded in 1923 by Walt Disney and his older brother Roy Disney. As the company entered the 1930s, the driving force behind the companies innovative animations and corporate growth was the dream team of “Walt Disney and His Nine Old Men”, the expert animators, who worked alongside with Ub Iwerks (creator of Mickey Mouse) and Roy (CEO and financial brain of the operation).. This team worked together right through until the late 60s and 70s, and its inevitable dissolution, as members retired and passed away was perhaps one of the causes of the franchises struggles in the 70s and 80s.

The company has had five distinct phases in its development to becoming the entity that we see today. First, the creation of the company in the 1920s, followed by the company becoming a leader in the American animation industry during 1930s-1950s. Then there was the diversification from animation industry into television and theme parks in 1960s followed by the challenging years that came after founding core team dies in 1970s/1980s. The most recent stage has been the companies evolution into a profitable media conglomerate.

The Walt Disney Company is now divided into five business segments: - media networks (e.g. television)
- parks/resorts
- studio entertainment (e.g. film and animation production, distribution of films) - consumer products (e.g. licensing characters from films., children’s books) - interactive media (e.g. games, online advertising)

Media networks and park/resorts account for approximately 75% of revenue and for about 85-90% of operating income. Picture 2 shows revenue and operating income by business segment in 2009-2011.

Picture 2. Revenue and operating income during 2009 -2011 in billion USD (Disney Annual Report 2011).

[pic]

Disney continues to strive for innovation in its business and has been recognized during the last 10 years several times as the most innovative company in media and entertainment sector. The Innovation Leaders analysis[1] elected Disney as the most innovative in the media and entertainment sector in 2001, 2002, 2003, 2008, 2009 and 2010. The criteria used are, among others: organizational culture and structure, strategic focus on innovation and its role in driving corporate growth, number of new product launches and success ratios, growth in revenues, profits and market capitalization, average revenue and margin per product/customer, investment in innovation-related activities (R&D, marketing…), brand value as well as patents and trademarks. The need for innovation in Disney business is great, as demand for their products is based on the experience that people have with Disney products. This requires the company to bring new experiences for customers in entertainment theme parks as well as in films and television programs.

Disney is considered a company with strong culture (Buchanan and Huczynski, 2010) where employees accept and have strong emotional attachment...
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