Walt Disney Company.

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Walt Disney Company is famed for its creativity, strong global brand, and uncanny ability to take service and experience businesses to higher levels. In the early 1990s, then-CEO Michael Eisner looked to the fast-food industry as a way to draw additional attention to the Disney presence outside of its theme parks - its retail chain was highly successful and growing rapidly. A fast-food restaurant made sense from Eisner’s perspective since Disney’s theme parks had already mastered rapid, high-volume food preparation, and, despite somewhat undistinguished food and high prices (or perhaps because of), all its in-park restaurants were extremely profitable. From this inspiration, Mickey’s Kitchen was launched. The first two locations were opened in California and in a suburb of Chicago, adjacent to existing Disney stores. Menu items included healthy, child-oriented fare like Jumbo Dumbo burgers and even a meatless Mickey Burger. Eisner thought that locating each restaurant next to existing Disney stores was sure to increase foot traffic through both venues. Less than two years later Disney closed down the California and Chicago stores and shuttered further expansion plans. Eisner cited overwhelming competition from McDonalds and general oversaturation in the fast-food industry as the primary reasons for closing down the failing Mickey’s Kitchen.

[a] Based on your own knowledge of Disney and the information provided in the scenario, does Disney appear to create value in its businesses primarily through a cost-leadership or through a differentiation strategy?

Cost leadership strategy means selling the goods at the cheapest price in the market. The logic of the cost leadership strategy approach is driven by volume and market share where more sales than any other competitors lead to greater profitability. Essential to this generic competitive strategy is efficiency and the ability to keep costs to a minimum. Organizations that achieve the greatest possible...
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