Executive Summary: Going Below the Waterline for Strategic Change

This project is to better understand The Walt Disney Company’s business model of

perpetual organizational change and its great success. Disney, is one of the largest media and

entertainment conglomerates in the world. Founded on October 16, 1923 by brothers Walt

Disney and Roy Disney as the Disney Brothers Cartoon Studio, the company initially began its

quest for success through positive organizational change by reincorporating

as Walt Disney Productions in 1929. Walt Disney Productions established

itself as a leader in the in the American animation industry before

diversifying into live-action film production, television, and travel.

Taking on its current name in 1986, The Walt Disney Company expanded

its existing operations and also started divisions focused upon theatre,

radio, publishing, and online media. The Disney organization is

best known for the products of its film studio, the Walt

Disney Motion Pictures Group, today one of the largest and

best-known studios in Hollywood. Disney also owns and

operates the ABC broadcast television network; cable television

networks such as Disney Channel, ESPN, and ABC Family; publishing,

merchandising, and theatre divisions; and owns and licenses 11 theme parks around the world.

After the death of Walt Disney on December 15, 1966 there was great necessity for organizational

change and the business need to identify his successor. Eventually, Roy Disney became Chairmen

CEO and President of the Company.

During the past 15 years The Disney Company understanding trends and the need to

change or move forward toward the use of 3-D technologies adjusted management structure and

hired Robert A. Iger and made him President and CEO. On January 23, 2006, it was announced that

Disney would purchases Pixar in an all-stock transaction worth $7.4 billion. The deal was finalized

on May 5, and made CEO Steve Jobs Disney's largest individual shareholder at 7% and a Director

of the company.

During 2009, according to The Themed Entertainment Association, Walt Disney theme

parks dominate theme park attendance accounting for more than 65 million customers. Seeing

further need to grow and innovate through organizational change. The Disney Company acquired

Marvel Entertainment, Inc., in 2009 for $4.24 billion and Marvel has been a limited liability

company (LLC) ever since.

Understanding patterns and industry changes in the hospitality business, in October

2007, Disney announced plans to build a resort at Ko Olina Resort & Marina in Kapolei, Hawaii,

featuring both a hotel and Disney Vacation Club timeshare units. Scheduled to open in 2011, the

800-unit property will join the other resorts not associated with a theme park, such as Disney's

Hilton Head Island Resort in South Carolina.

In the future The Walt Disney Company has projects planned in

Asian and European venues, both Hong Kong Disneyland Resort and

Disneyland

Paris have room for future expansion. Additionally, in

November 2009, Disney received approval from the

Chinese government to build a Disneyland resort in the

Pudong district of Shanghai. The resort is expected

to open in 2014. In all cases of The Disney Company’s

practice of change for sake of positive growth has led

to organizational success. The acceleration of current and future employee

acceptance of expansion or development of new property or products is

paramount. Disney’s communication of the coming of future growth or

corporate expansion aids in accelerating employee acceptance of change.

Project Propose:

The purpose of this project is to better understand The

Walt Disney Company’s business model of perpetual

organizational change and its great success. Disney,

is one of the

largest media and entertainment

conglomerates in the world. Walt Disney

Productions established itself as a leader in

the American animation industry before diversifying taking on its current name

The Walt Disney Company expanded its existing operations and also started

divisions focused upon theatre, radio, publishing, and online media. In addition, it

has created new divisions of the company in order to market more mature

content than it typically associates with its flagship family-oriented brands.

Organization:The Disney organization is best known for the products of its film

studio, the Walt Disney Motion Pictures Group, today as one of the largest and

best-known studios in Hollywood. Disney also owns and operates the ABC

broadcast television network; cable television networks such as Disney

Channel, ESPN, and ABC Family; publishing, merchandising, and theatre

divisions; and owns and licenses 11 theme parks around the world. The

company has been a component of the Dow Jones Industrial Average since

May 6, 1991. An early and well-known cartoon creation of the company,

Mickey Mouse, is the official mascot of The Walt Disney Company.

Disney 2009 Internal Management Structure:

Key People

Robert Iger

(President & CEO)

John E. Pepper, Jr.

(Chairman)

Steve Jobs

(Shareholder & Board Member)

Anne Sweeney

(President, Disney-ABC Television Group; Co-Chair, Disney Media Networks)

Summarized Business Needs and Functional Requirements:

After the death of Walt Disney on December 15, 1966 there

was great business need to identify his successor. Eventually,

Roy Disney became Chairmen CEO and President of the

Company. One of his first acts was to rename Disney World as

"Walt Disney World," in honor of his brother and his vision.

On July 8, 2005, Walt Disney's nephew, Roy E. Disney out of

need and functional requirements returned to The Walt Disney Company as a consultant and with

the new title of Non Voting Director, Emeritus. Walt Disney Parks and Resorts celebrated the 50 th

Anniversary of Disneyland Park on July 17, and opened Hong Kong Disneyland on September 12. Walt

Disney Feature Animation released Chicken Little, the company's first film using 3-D animation. The

Disney Company understanding trends and the need to change or move forward toward the use of

3-D technologies adjusted management structure and hired Robert A. Iger replacing Michael D.

Eisner as CEO. Mr. Eisner also waived contractual rights and perks which included use of a corporate

jet and an office at the Burbank studio. Miramax co-founders Bob Weinstein and Harvy Weinstein

also departed the company to form their own studio. Aware that Disney's relationship with Pixar was

wearing thin, President and CEO Robert Iger began

negotiations with leadership of Pixar Animation Studios,

Steve Jobs and Ed Catmull, regarding possible merger. On

January 23, 2006, it was announced that Disney would purchase

Pixar in an all-stock transaction worth $7.4 billion. The deal was

finalized on May 5, and made CEO Steve Jobs Disney's largest individual

shareholder at 7% and a Director of the company.

Process Model:This portion of the project will examine the theme park industry in effort to measure

the impact of The Walt Disney Company on its business model. The project is being done so

future entrepreneurs will have a better understanding of this venture and its organization.

Amusement park and theme park are terms for a group of rides and other entertainment

attractions assembled for the purpose of entertaining a large

group of people. An amusement park is more

elaborate than a simple city park or playground,

usually providing attractions meant to cater

to children, teenagers, and adults.

A theme park is differentiated from an amusement park by its various 'lands' (sections)

devoted to telling a particular story. These lands are characterized by the idea that the immersive

environment they create contains architecture, landscaping, stores, rides, and even food that

support a specific theme. Visual intrusion from other 'lands', or from outside the park, are

considered undesirable. Non-theme amusement park rides will usually have little in terms of

theme or additional design elements. Also, a single themed attraction by itself

does not qualify an amusement park as a theme park. It takes a

multiplicity of elements in a common area to define a 'land', and

numerous lands to constitute a theme park. The original theme

park, and archetype of the designation is Disneyland in Anaheim,

California.

Performing Groups and Responsibilities:

There are many performing groups within the theme park

industry. Management is responsible overall decision making and there

Are many key internal groups that generate revenue. The Hospitality

Group is a primary producer of revenue through the sale of food

and drink to their patrons. Food is routinely sold through food

booths, push carts and indoor restaurants. The offerings vary as

widely as the parks themselves, and range from common fast food

items, like hamburgers, hot dogs, cotton candy, candy apples, donuts

and local street foods up to full-service gourmet dishes. Amusement

parks with exotic themes may include specialty items or

delicacies related to the park's theme.

The Bottom-line:

An industry’s bottom-line or revenues generated are very important to would be

entrepreneurs interested in getting involved or creating a new business or business model. The

improved global economy and the ongoing modernization and development of theme parks and

amusement parks drove the market to $26.8 billion in sales in 2009 at a 4.5% compound annual

growth rate. According to The Themed Entertainment Association, Walt Disney

theme parks dominate theme park attendance.

*Disney's California Adventure: 6.1 million +9.5%

*SeaWorld Orlando: 5.8 million -6.8%

*Universal Studios Florida: 5.4 million -12.0%

*Islands of Adventure: 4.5 million -13.8%

*Universal Studios Hollywood: 4.3 million -6.0%

*SeaWorld San Diego: 4.2 million -12.6%

*Busch Gardens Tampa: 4.1 million -12.3%

By attendance records these are the Top 10 United States theme parks for 2009:

*Walt Disney World's Magic Kingdom: 17.2 million

*Disneyland: 15.9 million +8.0%

*Epcot: 11.0 million +0.5%

Hindrances in Strategic Change:This area of the project will examine Marvel Entertainment Limited Liability

Company (LLC) and recent organizational strategic change and past hindrances

to change. Marvel’s management teams once felt that a merger or acquisition

of Marvel Entertainment would harm product quality and consumer satisfaction

due to lack of understanding industry and history. Never the less, on

December 31, 2009, The Disney Company acquired Marvel Entertainment, Inc.

for $4.24 billion and it has been a limited liability company (LLC), since then.

Disney has stated that their acquisition of the company will not affect Marvel's

products, neither will the nature of any Marvel characters be transformed.

Disney originally announced the acquisition deal on August 31, 2009, with

Marvel shareholders to receive $30 and about 0.745 Disney shares for each

share of Marvel they own. The acquisition of Marvel was finalized hours after the shareholder voted, giving Disney

full ownership of Marvel Entertainment.

Pros and Cons of Strategic Change:Pros: In 1989 Ronald Perelman's MacAndrews & Forbes Holdings group of companies bought the Marvel

Entertainment Group, the parent company of Marvel Comics, from New World

Entertainment for 82.5 million. "It is a mini-Disney in terms of intellectual property," said

Perelman. "Disney's got much more highly recognized characters and softer characters, whereas

our characters are termed action heroes. But at Marvel we are now in the business of the

creation and marketing of characters."

Boosted by a massive merchandising effort, an increase in Marvel comic

prices, and an overall boom in the comic book industry, Marvel's profits peaked.

Perelman later added the baseball card and basketball card companies Fleer Corporation and SkyBox International,

Italian sticker manufacturer Panini Group, and comic book publishers Welsh Publishing and Malibu Comics to

Marvel's holdings for a combined total of $700 million. Investors around the world recognized his efforts and

generated $80 million for Perelman when he issued Marvel‘s initial public offering. He later added a significant

stake in Toy Biz to Marvel's holdings.

Cons: Marvel's attempt to distribute its products directly led to a decrease in sales and aggravated

the losses which Marvel suffered when the comic book bubble[ popped, the 1994 Major League

Baseball strike massacred the profits of the Fleer division,[ and Panini was hobbled by poor

showings at the box office by Disney (Licensing Disney characters provided a major

source of revenue for Panini, so when the movies performed poorly Panini performed

poorly).[ A major bondholder, Carl Icahn, fought to take control of the company from

Perelman. Both men failed as Toy Biz owners Ike Perlmutter and Avi Arad snatched Marvel

from Perelman and Icahn in order to protect their own financial interests. Estimates of his

profit on the deal vary widely. Chuck Rozanski estimates that Perelman made $200–400 million

off Marvel; Forbes thinks he made nothing; and the judge in the Marvel bankruptcy trial estimated

he made $280 million plus various tax advantages.

In December 2003, Marvel Entertainment acquired Cover Concepts from Hearst Communications, Inc.

On March 15, 2007, Stan Lee Media filed a lawsuit against Marvel Entertainment for $5 billion, claiming that the

company is co-owner of the characters that Lee created for Marvel. Additional, a lawsuit over the Ghost Rider

Character ownership was filed On March 30, 2007 by Gary Friedrich and Gary Friedrich Enterprises, Inc.

The Organization and Analyzing Patterns:

From the very beginning in 1923, brothers Walt and Roy Disney analyzed

their industry, surroundings, market and patterns, and changed the name and goals

of Disney Brothers Cartoon Studio and reincorporated as Walt Disney Productions in

1929. Walt Disney Productions established itself as a leader in the American

animation industry before diversifying. Taking on its current name in 1986,

The Walt Disney Company expanded its existing operations and also started divisions

focused upon theatre, radio, publishing, and online media. In addition, it has created

new divisions of the company in order to market more mature content than it

typically associates with its flagship family-oriented brands. While Walt Disney

Productions continued to release family-friendly films such as Escape to Witch

Mountain (1975)and Freaky Friday (1976), the films did not fare as well at

the box office.

The animation studio, saw success with Robin Hood (1973), The Rescuers

(1977), and The Fox and the Hound (1981). Disney Productions continuing to analyze

patterns and inspired by the popularity of Star Wars, produced the science-fiction

adventure The Black Hole in 1979. The Black Hole was one of the first Disney releases

to carry a PG rating, the first being Take Down, also released in 1979. The releases of

these and other PG-rated Disney films such as Tron (1982) led Disney CEO Ron Miller

to create Touchstone Pictures as a brand for Disney to release more adult-oriented

material. In 1984 Touchstone released the comedy Splash, which was a box

office success.

Additionally, Disney returned to television in the 1970s with syndicated programming such as the anthology

series The Mouse Factory and a brief revival of the Mickey Mouse Club. In 1980, after seeing a consumer pattern for

purchasing video content, Disney launched Walt Disney Home Video to take advantage of the newly-emerging

videocassette market. On April 18, 1983, The Disney Channel debuted as a subscription-level channel on cable systems

nationwide, featuring its large library of classic films and TV series, along with original programming and family-friendly

third-party offerings.

Owning Patterns and Beliefs: Do they Help or Limit?

In the 1980’s despite the success of analyzing trends and patterns, and hitting home runs

with the Disney Channel and its new theme park creations, Walt Disney Productions was financially

vulnerable. Its film library was valuable, but offered few current successes, and its leadership team

was unable to keep up with other studios, particularly the works of Don Bluth, who left Disney in

1979.

In 1984, financier Saul Steinberg launched a hostile takeover attempt for Walt Disney Productions,

with the intent of selling off its various assets, but Disney successfully fought off the bid with the help

of friendly investors, and Sid Bass and Roy Disney's son Roy Edward Disney

brought in Michael Eisner and Jeffrey Katzenberg from Paramount Pictures and

Frank Wells from Warner Brothers Pictures to head up the company.

Today, after nearly a century of following and owning patterns and beliefs both internally and

externally The Walt Disney Company operates as four primary divisions: The Walt Disney Studios or

Studio Entertainment, which includes the company's film, recording label, and theatrical divisions; Parks

and Resorts, featuring the company's theme parks, cruise line, and

other travel-related assets; Disney Consumer Products, which

produces toys, clothing, and other merchandising based upon

Disney-owned properties, and Media Networks, which includes

the company's television and Internet operations.

Future Projects and Accelerating Employee Acceptance of Change:

With an eye on tomorrow The Walt Disney Company has projects planned in Asian and

European venues, both Hong Kong Disneyland Resort and Disneyland Paris

have room for future expansion. In July 2009 the Company was rumored to

have been approached by the executives of Dubailand to build a theme park

in their mega-resort, and in November 2009, Disney received approval from

the Chinese government to build a Disneyland resort in the Pudong district

of Shanghai. The resort is expected to open in 2014. In all cases the

acceleration of current and future employee acceptance of

expansion or development of new property is paramount. In great

part advanced official communication of the coming of future

growth or corporate expansion aids in accelerating employee acceptance of change.

Mindset Shift and Accelerating Strategic Change:

Past Chinese mindset has been changed through enhanced

Communications techniques and exhibited understanding of cultural

differences. Accelerating the acceptance of leaders and the local

community to open their doors to positively accept the Hong Kong

Disneyland expansion project. Rita Lau, the Secretary for Commerce

and Economic Development for Hong Kong, announced that the

expansion of Hong Kong Disneyland had been approved by the

Executive Council on June 30, 2009, and also approved by the

Legislative Council of Hong Kong on July 10, 2009. The park will

receive three new lands; Grizzly Trail, Mystic Point and Toy Story Land. Construction began in late 2009 and

will take 5 years to complete. The park will feature a total of seven themed lands after the completion of all

the new additions.

Implementing Strategic Change:Disney has made no announcements as of 2009 regarding plans for another American theme park but CEO Robert

Iger frequently has cited international expansion as one of the company's three strategic priorities. The only site that is

extremely short on land is Disneyland Resort in California. Although the company has acquired enough real estate to build a

potential third theme park on a former strawberry farm near the existing resort, Robert Iger has stated that the company's

focus in Anaheim is to improve its second park, Disney's California Adventure, before building a third.

The strawberry fields were purchased in 2004 for $99.9 million with a requirement to harvest through the rest the

season. The remainder of the original Disneyland parking lot, southeast of Disney's California Adventure, was designated as a

future growth space for the park. Since the park's opening in 2001, three small projects have been built into that space (A Bug's

Land, The Twilight Zone Tower of Terror, and a backstage warehouse) while a third, much larger project known as Cars Land is

currently being built. Also, in October 2007, Disney announced plans to build a resort at Ko Olina Resort & Marina in Kapolei,

Hawaii, featuring both a hotel and Disney Vacation Club timeshare units. Scheduled to open in 2011, the 800-unit property will

join the other resorts not associated with a theme park, such as Disney's Hilton Head Island Resort in South Carolina.

Conclusion:Organizations like The Walt Disney Company experience, change due to growth,

discovery of new technologies, and even the death of a founder. These firms have

come to understand that change can be both good and bad and

accepting of both with an eye on the ultimate goal for success

can be rewarding. Companies that seek to innovate and lead

their industries also lead and manage change from within with

great success. Companies like Disney that collect and analyze

diagnostic information and conduct ongoing intervention with

precision remain leaders in their industries. According to Delta

Market Research Incorporated, Disney Theme Parks have just announced a strategic rate

increase, attempting to ward off brand cheapening and to increase revenues. Organizations

like Marvel Entertainment LLC have found that the business environment can sometimes force

organizations to restructure and to become more

open to change. Past hindrances can give way to progress and the

survival of a brand via reengineering and acquisition of

convenience and profitability are inevitable, and

organizations that understand and analyze patterns and acting on

management beliefs based on trends in the marketplace have been a helpful

formula for success.

Firms like The Walt Disney Company change so much and

so efficiently via the processes of merger and acquisition

often finds the need for assisting members by clarifying

roles and aiding in employee development. Globally these

firms are faced with expansion and growth and positioning

themselves to strategically to benefit. These companies understand the importance of

communications and that recognizing and respecting local cultural differences serve to accelerate the

acceptance of change internally and externally. Organizations like Disney understand that growth in

the future is a complex issue that impacts diverse stakeholders. By 2009, The Walt Disney Company

had more than 150, 000 employees in its organization worldwide, annual revenues of more than $36

Billion and $63 Billion in total assets. Disney has proven that a perpetual organizational change

business model can be successful, and an organization can be a fearless innovator going below the

waterline for strategic change and making the art of change pay off.

References:

•Disney.com

•www.marvel.com

•www.wikipedia.org

•www.ask.com

•www.hollywoodreporter.com•PricewaterhouseCoopers' "Global Entertainment

and Media Outlook: 2005-2009."

•The Themed Entertainment Association

•Delta Market Research Incorporated