Disney: A Wonderful World

1The “Wonderful World of Disney,” has been much written about, most people can reflect on the impact some product or aspect of Disney had on their childhood. “Make a Wish Foundation” seeks to honor a dying child’s final request by raising funds that will allow that child to visit Disneyland (Wasko, 2013). Behind this global corporation are strategies and value constraints that have generally worked well to increase revenue and profitability, though not always, especially so in the case of some of the overseas theme parks projects.

When Disney invests in theme parks, for example, it learns not only from what was done well, but what could have been done better. When Disney considered opening a new theme park outside Paris, it was determined to include within the park hotels – something that was neglected in the 1983 Tokyo theme park, much to the chagrin of management as they watched hotel entrepreneurs capitalizing on their newly built hotels near the Disney Tokyo theme park.

Less than 10 years after Tokyo, Disney opened “Euro Disney” outside Paris. Disney bought farmland for the new theme park and that is where the warning signs began. Effigies of Mickey and Minnie were hung on fence posts, indeed the French people with their unique culture were not at all enamored with this incursion, this interloper bearing contemporary Western entertainment that the French neither understood nor cared much for (Walker, Laurion, & Resler, 2013). Disney carefully crafted their global strategy, protecting corporate brand and values and essentially exporting the Disney theme park in situ without regard nor consideration for differing cultures, tastes and preferences.

Europeans found the Euro Disney food and hotels far too expensive. Euro Disney had to discontinue offering breakfasts because Europeans generally do not eat breakfast. The financial losses mounted to such an alarming level that the president was forced to structure a financial rescue plan to save the theme park from closing. The marketing plan, along with new strategy and tactics were developed to try to put things right. (Amine, 2011). The new strategy transitioned from global to transnational in terms of both “think” and “act” in accordance with the culture of the local market, not just the French, but Pan-European (Thompson, 2014). Disney remains intent on bringing their global brand to the entire world, but now makes room for local twists. Today, at France’s Epcot Center you can find not only French cuisine, but fine wines as well (“France Epcot,” n.d.), something that perhaps would cause Walt Disney to roll over in his grave.

Disney carefully chooses businesses to enter based upon their ability to cross-leverage each business in such a way that all or most of the Disney businesses will derive accretive benefit from each new project or acquisition. Disney invests in its own projects, parks and resorts for example, sometimes taking on other investment partners as is the case with their current project: Disney Shanghai (Disney is a 43% investor). Disney will acquire businesses to expand it global brand reach and footprint. An example of a recent acquisition was October 2012 when Disney acquired Lucasfilm, for which Disney paid $4 billion, half in cash, and half in stock. The “Star Wars” franchise alone was a top children’s brand that had generated over $4 billion in revenue for Lucasfilm (Mucha, 2012).

An alliance or partnership is a relationship between two or more entities to pursue a set of mutually agreed upon goals or to fulfill a critical business need while remaining independent organizations. Disney’s business growth is a function of organic growth of sustaining businesses (Disney’s theme parks in the United States), new projects (theme parks in other countries), acquisitions (studios such as Pixar and Lucasfilm) and many and various types of partnerships and alliances.

Hewlett-Packard and Disney maintain their long-standing alliance, beginning in 1938, when Disney bought several oscillators for their Fantasia sound design from HP founders Hewlett and Packard. Later, when Disney sought to develop a virtual attraction they referred to as “Mission: SPACE,” the so-called Disney Imagineers, along with the HP engineers, utilized HP architecture and HP computers to design Disney’s most advanced attraction (Je’ Czaja, n.d.).

While research has generally shown that alliances and partnerships often experience high failure rates (Kumar, 2012), Disney has been careful to keep these ventures within the industries they already perform well in, and to ensure the relationship will add to their competitive strength and market position overall.

Disney begins where its brand is most powerful – products for children. The five main Disney business groups all benefit from child-oriented investments:

  1. Studio entertainment (Pixar – Toy Story)
  2. Disney Consumer Products (Disney Stores – Woody)
  3. Walt Disney Parks and Resorts (Employee dressed as Woody, and Woody in various sizes in the park and resort stores)
  4. Disney Media Networks (Comic books featuring Woody via Marvel acquisition)
  5. Disney Interactive (LEGO is a licensee and has a Toy Story line of toys)

Disney cruise lines have imagery and characters from Toy Story’s Woody on their ships. Computer software, DVD’s, movie sequels, all leverage Toy Story and Woody. No Disney SBU is left out of the opportunity (Mashable, 2011).

The author examined the Disney “Nine-Cell Matrix,” (Thomson, 2014) as the various industries might be scored in terms of attractiveness and competitive strength/market position. The results show that the strongest Disney businesses are the studios and the theme parks / resorts. They generate by far the greatest amount of revenue and earnings, while some of the other businesses, while tangentially related and certainly can leverage the brand and the target markets (moms/children), they are either highly competitive (ESPN, media), or stray somewhat from core Disney competencies (Interactive, Playdom).


Table 1 Disney Nine-Cell Matrix (Thomson, 2014)



James Rasulo, the Chief Financial Officer of Disney for the past five years discussed Disney’s global growth strategy, Disney brands, and their content pipeline (May, 2014). Disney has grown from $1.4 billion in revenue in 1985 to $50 billion by 2014. Today Disney is a global company in television (e.g. ESPN), movies, theme parks and more. The Chief Executive Officer, Bob Iger, charts strategy with his leadership team consisting of 12 direct reports.

Mr. Iger’s strategy for picking films is done through top leadership decision-making. Following the film picks, the studios pick up the projects (Marvell, Disney Studio, Pixar) and determine the creative side, the content, when to release, how much to spend, as well as the particulars involved in promotion, distribution and timing.

Two major tenets of the Disney strategy emerge. The first, “authenticity,” and the second, “corporate citizenship.” Authenticity refers to the deeply held family values that were in place when Walt and Roy Disney in Los Angeles first started the company in 1923. More than 90 years later the firm emphasizes that films must be “aspirational.” Disney won’t make films that are violent, dark, disturbing or at odds with their core value.

As a corporate citizen, Disney is concerned about the emissions from their cruise ships. They are deeply involved in the labor standards and environmental footprint in all of their locations around the world. Disney recognizes that their core customers are mothers and children. To help with childhood obesity, Disney requires 85% of their food products advertised must be healthy (the remaining 15% are for snacks – birthday parties and celebrations). This decision was a costly one for Disney, but their values required it nonetheless.

The basic capital deployment and allocation strategy is as follows:

  • 60% Business and content growth
  • 20% Stock buybacks and dividends
  • 20% Acquisitions

The company extols creativity and technology through the creation and distribution of their products. Acquisitions have included Pixar, Lucas films and smaller companies in places like India. Disney is not interested in hoarding their cash; they prefer instead to utilize excess cash for stock buybacks and the payment of dividends to shareholders.

After more than a dozen new theme parks, Disney is adept at forecasting how much a new park will cost and when it will be completed. The challenge and the focus of financial resources go instead toward opening day. Did the theme park live up to pro-forma expectations? Shanghai is the latest theme park under construction (Barlas, 2014), and is on budget, and on time. Disney has committed $5 billion for its 43% ownership in the Shanghai theme park.

Since Disney utilizes partnerships as it grows, Netflix is one of the more recent. The reason for the Netflix investment (Pomerantz, 2012) is that the total available market for content and libraries could be greatly expanded. Acquisitions such as the Marvell (Bedigian, 2012) investment leverage one of two possible integration strategies. Disney studies the user interface to determine which strategy is best, whether the interface is primarily employees, or primarily customers. Disney’s preference is to leave the new acquisition intact, don’t suffocate the business from Disney corporate, simply leave it in place as is (Latif, Ilyas, Saeed, et al, 2014).

Contrast this first strategy to acquisitions that are best leveraged through the Disney brand. Cable, movie business exhibitors, and licensing, are all advantaged, both in terms of scale and in terms of the capital financing markets by integration into the global Disney brand and corporation.

Below is a list of Disney’s businesses (“Columbia Journalism Review,” 2013). There is one question that immediately pops out of such a long list. How does Disney manage all of its acquisitions, alliances, joint ventures, stock investments and partnerships? Though research has shown that over 50% of weaker “alliances” and “joint ventures” fail (Kaplan, Norton, & Rugelsjoen, 2010), the large majority of Disney business investments and partnerships have been highly successful:

  • Film and Theater
  • Disneynature
  • Disney Theatrical Productions
  • Touchstone Pictures
  • Marvel Entertainment
  • LucasFilm
  • Walt Disney Pictures
  • DisneyToon Studios
  • Walt Disney Animation Studios
  • Pixar Animation Studios
  • Walt Disney Studios Motion Pictures International (Distribution)
  • Walt Disney Studios Home Entertainment
  • Music
  • Disney Music Group
  • Hollywood Records
  • Walt Disney Records
  • Television
  • ABC-Owned Television Stations Group
  • WLS (Chicago, IL)
  • KFSN (Fresno, CA)
  • KTRK (Houston, TX)
  • KABC (Los Angeles, CA)
  • WABC (New York, NY)
  • WPVI (Philadelphia, PA)
  • WTVD (Raleigh-Durham, NC)
  • KGO (San Francisco, CA)
  • Disney ABC Television Group
  • ABC Television Network (ABC Daytime, ABC Entertainment, and ABC News)
  • ABC Family
  • ABC Studios
  • A&E Television Networks (50%)
  • The Biography Channel (50%)
  • Disney ABC Domestic Television
  • Disney ABC International Television
  • Disney-ABC-ESPN Television
  • Disney Channel Worldwide (Disney XD, Playhouse Disney, Jetix, and ABC Kids)
  • History (formerly The History Channel) (50%)
  • H2 (50%)
  • Hungama
  • Lifetime Entertainment Services (50%)
  • SOAPnet
  • Disney Junior (Flanders and the Netherlands)
  • ESPN, Inc. (80%)
  • ESPN (and ESPN.com and ESPN360.com)
  • ESPN2
  • ESPN 3D
  • ESPN Classic
  • ESPN Deportes
  • ESPN Enterprises
  • ESPN Interactive
  • ESPN International
  • ESPN Mobile Properties
  • ESPN on Demand
  • ESPN Regional Television
  • Longhorn Network
  • Radio
  • WDDY AM (Albany, NY)
  • WDWD AM (Atlanta, GA)
  • WMKI AM (Boston, MA)
  • WGFY AM (Charlotte, NC)
  • WRDZ AM (Chicago, IL)
  • WWMK AM (Cleveland, OH)
  • KMKI AM (Dallas-Fort Worth, TX)
  • KDDZ AM (Denver, CO)
  • WFDF AM (Detroit, MI)
  • KMIC AM (Houston, TX)
  • WRDZ FM (Indianapolis, IN)
  • KPHN AM (Kansas City, MO)
  • KDIS FM (Little Rock, AR)
  • KDIS AM (Los Angeles, CA)
  • WMYM AM (Miami, FL)
  • WKSH AM (Milwaukee, WI)
  • KDIZ AM (Minneapolis, MN)
  • WQEW AM (New York, NY)
  • WDYZ AM (Orlando, FL)
  • WWJZ AM (Philadelphia, PA)
  • KMIK AM (Phoenix, AZ)
  • KDZR AM (Portland, OR)
  • WDZY AM (Richmond, VA)
  • KIID AM (Sacramento, CA)
  • KWDZ AM (Salt Lake City, UT)
  • KRDY AM (San Antonio, TX)
  • KMKY AM (San Francisco, CA)
  • KKDZ AM (Seattle, WA)
  • WSDZ AM (St. Louis, MO)
  • WWMI AM (Tampa, FL)
  • ESPN Radio
  • WMVP (Chicago, IL)
  • KESN (Dallas-Fort Worth, TX)
  • KSPN (Los Angeles, CA)
  • WEPN (New York, NY)
  • WDDZ AM (Pittsburgh, PA)
  • Publishing
  • Hyperion Books
  • ABC Daytime Press
  • Hyperion
  • Jump At The Sun
  • Mirimax Books
  • Voice
  • Disney Publishing Worldwide
  • Disney Digital Books
  • Disney English
  • Disney Global Book Group
  • Global Children’s Magazines
  • S. Magazines
  • ESPN The Magazine (50% with Hearst)
  • ESPN Books
  • Parks and Resorts
  • Adventures by Disney
  • Disney Cruise Line
  • Disneyland Resort
  • Disneyland Resort Paris (51%)
  • Disney Vacation Club
  • Hong Kong Disneyland (48%)
  • Shanghai Disney Resort (43%)
  • Tokyo Disney Resort (Owned and operated the Oriental Land Company)
  • Walt Disney Imagineering
  • Walt Disney World Resort
  • Other
  • The Baby Einstein Company
  • Club Penguin
  • Disney Consumer Products
  • The Disney Store
  • Disney Apparel
  • Disney Accessories & Footwear
  • Disney Fashion & Home
  • Disney Food
  • Disney Health & Beauty
  • Disney Stationery
  • Disney Toys
  • Disney Interactive Media Group
  • Disney Interactive Studios
  • Disney Online (Disney.com)
  • Disney Online Studios
  • Disney Mobile
  • El Capitan Theatre
  • The Muppets Studio
  • Playdom
  • Rocket Pack
  • UTV Software Communications


The basic business management model has remained the same for 75 years, since Walt Disney inculcated values that were referred to as “The Disney Way.” Walt Disney firmly believed that these values could underpin and drive the success of any business, not just the entertainment business. None of the films, products or services could be attributed to amazingly good fortune; all were carefully considered innovation and creativity, with a dogged adherence to a set of beliefs that survived for more than seven decades. Walt Disney himself created his company university (Disney Institute) to teach his management techniques, and he invented the use of storyboards and his approach to project management and problem-solving tools. All of Mr. Disney’s concepts and approaches to management evolved from four basic concepts or drivers: “Dream, believe, dare and do;” and these four drove his entire value chain that continued for all this time, along with a central course which was to provide the very finest in family entertainment (Capodagli & Rockhurst University, 2007).

Disney has calculated that each theme park visitor, on average, will translate into $62,000 in revenue throughout that person’s lifetime. The revenue generated from the Disney Institute continues to grow and is able to charge new students $9,600 to attend. Though you do not often hear much about their management and customer-service consulting, at least not to the degree of a McKinsey or a Deloitte, corporate clients pay to attend the institute to learn how to apply Disney’s time-tested management techniques to their own companies. Disney has a saying: “Green side up,” essentially “all hands on deck.” This is the culture driving every employee to contribute to every business in some way, and to require the success of any given business through the leveraging of the other Disney businesses to their full extent possible (Gray, 2012).

Disney’s global brand is powerful, and its reputation as “family entertainment” makes their corporate social responsibilities program a relatively easy one for people to understand and embrace. Over half the Disney revenues comes from films and product licensing. The licensing relates to all of its film and product intellectual property, on a pro-forma financial basis this revenue drops through the income statement with very little cost (Latif, et al, 2014). The merchandise it sells is considered a “vertical extension” of the Disney brand and logo. The films spur demand for the consumer products and vice versa, in a brilliant interconnectedness of all of the Disney businesses. Disney retains and protects its “cultural objects,” leverages them throughout all of their businesses, and thereby retains its customers for generations. The globalization of everything Disney is not always viewed in a favorable light, as was the case with Euro Disney (later Disney Paris), viewed by the Europeans not as globalization but more as “Americanization” (Robbins, 2014).

In summary, the highly ethical family entertainment business that Walt Disney created 75 years ago retains the original values of the founder, and has become among the most recognizable global brands in the world. The organization and management structure requires every Disney business to look to and tap into the other Disney businesses to leverage further growth and profitability. The management team carefully chooses ventures such as the next films, before handing these decisions off to the studios and other businesses to productize and prosecute. In very few cases (e.g. Disney Paris) has the Disney brand been perceived in a negative light that created strategic and financial problems for Disney taking considerable time and effort to correct.









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