THE TOY STORY
Two
to three times monthly a group of Disney cast members from different factions
of the conglomerate gather for brainstorming sessions lasting 2 or 3 days. The
cast members are personally chosen by Chris Heatherly, 34 and Len Mazzocco, 53;
a duo paired by top executives in June 2006. These think tanks are carefully
structured to bring employees together under one umbrella and manifest
relationships that are creative and innovative in nature. These forums for an
open exchange of ideas have led to a market leading toy division that revamps
its product lines every six months. This has turned out to be a remarkably well
run performance process that has doubled revenue since June 2006 and it is no
accident. THE WONDERFUL WORLD OF DISNEY
The
planning of this creative process is well thought out and executed. Having
participants from all the various sectors of the Walt Disney Company casting
pool to choose from is a competitive advantage Disney has over all other media
companies; from artist to theme park cast members and everything in between
that can be imagined. After selecting group members, schedule conflicts must be
resolved and location must be decided. The syncing of everyone’s schedule is no
small undertaking; transport and lodging must be aligned with the groups travel
schedules. Conference room locations have to be chosen and all parties need
proper directions and times of the forty to sixty minute brainstorming
sessions. Management also implements various ice-breaking meet and greet
techniques so that there is an opportunity for the group to get familiarized with
one another. The organization of all these activities is meticulous; package materials
are distributed to all individuals with travel information, airport
transportation, lodging, resort check-in and luggage handling followed by a bit
of down time to adjust and unwind. A second itinerary is now distributed to all
individuals with group meeting places and time information, local activities
and attractions for enjoying their personal time. The ice breakers that get the
ball rolling so to speak are management leading employees by initiating
communication with one another. Encouraging participants to think outside the
box without the pressures of deadlines helps prevent groupthink. The employees
are separated into smaller groups to create a sense of comfort so that
non-creative workers would not be intimidated when grouped with a Disney
veteran who might have various specialty skill sets. Each group is equipped
with an artist, empowering their creative juices and giving visualization to
the concepts and ideas being developed. Employees feel valued when equipped
with the tools to realize the tasks their presented with. Having an artist at
their disposal is a signal from management that their belief and confidence in
their abilities are sincere.
YOU WIN SOME YOU LOSE SOME
Not every idea makes it to the assembly line. After each of session Heatherly and Mazzocco expect to have fifty new product ideas. These concepts are recalled and refined a second and third time during future think-tank getaways. The third process is a fully fledged prototype. Again, achieving prototype status is no guarantee that the toy will be placed in mass production. This is management practicing the control principle. Weeding out the less practical and choosing the most potentially profitable creations to be manufactured and distributed. This extensive creation process is responsible for half of their product line. (Joseph, 2009)
2009, CEO Bob Iger hired a new chairman to head Disney
Studios, Rich Ross (Finke, 2009). Less than a month into his new position Ross
proceeded to overhaul Disney Studios letting go and replacing many veteran
executives who were considered safe in their jobs. This brazen restructuring
was controversial and broad as over twenty studio employees were fired. Iger co-signed
the shake-ups and had some key strategic planning revisions that were to be
implemented immediately. For instance, the CEO believed the ninety day period
traditional movies waited before being made available to DVD was too long. At
the Walt Disney Company, house cleaning is a form of controlling. Executives
are responsible and accountable for the increases or decreases in revenues on
their watch. Ross knew this; after all he was replacing a four decade long
employee of Disney in Dick Cook. Rich Ross had a difficult time adjusting to
the movie business division; hiring MT Carney to head Marketing only to fire Carney shortly
afterwards. He had rousing success in television but it did not translate into
his new position. Experience became a weakness internally and posed external
threats as competitors gained advantage with stability. Too many rookie
executives filling too many important positions led to reduced profits.
Eventually, someone has to fall on their sword. Such was the case 4/20/12, when
Rich Ross resigned as Disney Studios Chairman (Reporter, 2012). The irony of
this event was that the historical $200 million write off Disney made for “John
Carter” and had Ross reaching for the pen to ink a resignation letter; was a
project green lit by his predecessor Cook. To toss salt into the wounds two
weeks later Marvel Studios, a fantastic acquisition of Igers’ that is paying
immediate dividends, set the all time box office opening weekend record in Hollywood land, with the Avengers (CNN Wire, 2012). Regardless of who Okays what
project or how successful and distinguished a resume, management is judged by
their latest results or lack thereof.
THE CRUISE SHIP FLEET
Nowhere
is planning more prevalent than in its theme parks management and Disney Cruiseline
operations. March 31st 2012, Disney Fantasy set sail. After ten
years of not introducing a cruise ship, Disney is christening two in two years,
increasing their number of maximum passengers by 150% (Garcia, 2012). These two
magnificent floating cities did not just pop up from the under of the sea like
the lost city of Atlantis. It takes more than pixie dust sprinkled over the
Jolly Roger to create traveling theme parks. Disney's initial two vessel fleet
have turned out to be sailing cash registers and they acted on all the analysis
gained from massive databases holding the secret keys to Disney success. Top
tier executives scan over generated reports and create future outlooks that no
other entity on earth is privy to. The Magic and the Wonder were in some years
out performing the Disneyland Resort in California. Overall the ships returns
were exceeding those of any other theme park investments that the company has
made recently. They were able to recognize a strength internally and an
opportunity externally. The Disney brand marketed to an under-served segmentation
that was willing to pay premiums above the standard industry fares because of a
deep emotional connection the Disney brand has to families. They are a
corporate leader when it comes to socio-responsibility and cultural awareness.
FLOATING CASH REGISTERS
Management
allocated the necessary finances for construction of the Dream and the Fantasy
to a tune surpassing $1.8 billion. While the global economy was going to hell
in a hand basket, Disney executives planned and organized the expansion of
their fleet. Goldman Sachs annalists’ predicted on the Dreams maiden voyage
that year over year revenues would reach $1 billion once the Fantasy was fully
operational (Garcia, 2011). Of course, Disney already has knowledge of the
prepaid bookings, customer spending habits, eating habits etc. that’s the
secret. Dressing this up with descriptions of van glorious water coasters,
shows, excursions, dinning etc. is unnecessary. One fact sums up the quality
experience a passenger is exposed to when sailing the friendly seas with
Disney; prior to achieving the ultimate American Idol stardom, Jennifer Hudson
was a cast member performing on the Wonder (Golden, 2011). Hello!
DISNEY THEME PARKS
Where as
Disney Cruise line operates on a differentiation strategy (D.S); Disney theme
parks practice price differentiation combined with D.S. They are constantly
balancing the scales of marketing and price points strategies in order to
attract as many guests as possible from different consumer segments while
maximizing profits. The theme parks most recent expansions are great examples
of “How star managers realize grand design”. (Power Point 6-1)
Just as
the global financial crisis was dawning on October 17th 2007, The
Walt Disney Company (WDC) announced a billion dollar expansion of the lack
luster performing Disney’s California Adventure (DCA). A complete renovation of
an underachieving asset is a risky endeavor considering the slowing economy and
the February lawsuit against the city of Anaheim that was thrown out by Judge
Stephan J. Sunvold a month before the announcement (McKibben, 2007). Instead of
folding up the mouse ears tent, CEO Iger implemented a strategic positioning
initiative with reinvestment and modernization of current assets to achieve a
sustainable competitive advantage by preserving what is distinctive about the
company. The objective is to create a multi-day experience for all age groups,
genders and cultures.
THE CALIFORNIA ADVENTURE
Changing direction following the suit dismissal and considering altering the dynamics and appearance of DCA are all procedural protocols Disney undertakes when scanning the environment. New innovations and creative freedom is a staple signature of the media giant. The addition of Cars land, opening June 25, 2012 and the strategic partnerships with James Cameron’s Light storm Entertainment, Fox Filmed Entertainment and Lucas Films, invigorate the consumer with confidence that fresh innovative experiences like Avatar and the new Star Tours attractions is just the next big thing of endless big things to come (Block, 2012).
DCA is
not the only theme park undergoing major renovations. In the south east coast
region of the United States, the flagship Walt Disney World Resort is currently
expanding the Fantasyland area of the Magic Kingdom (MK) theme park. There was an
exclusive soft opening in March. Expansion will continue and officially open to
the public in stages thru 2014. A new value priced resort themed on the “Art of
Animation” opens in sections beginning May31st, 2012. With expansion increasing
guest capacity at the MK, new lodging will be needed to satisfy demand. The WDW
resort also opened a fifteen story extension to the Contemporary Resort named
the Bay Lake Tower (BLT) in 2009. The
BLT was the second resort opened that year, proceeded by the Animal Kingdom
Lodge Villas. Both resort expansions were done for the Disney Vacation Club
(DVC), a subsidiary that offers pseudo timeshares to Disney enthusiasts. In
2010 the house of mouse unveiled the plans for Disney’s Golden Oak; a
residential resort community for those who want year round access to the magic.
Disney subcontracted the construction of these luxury homes to various reputable
designers and then stamped a “
” on the
finished product; and people are willing to pay premiums for the privilege to reside
there. That is brand leverage and a competitive advantage that no other media
company has the luxury of. One of the worlds’ most visited tourist destinations
has been vigorously reinvesting, expanding and modernizing its’ assets during a
global recession and it speaks volumes about the direction of the U.S economy.
DISNEYLAND PARIS
April
1992 EuroDisney opened in Marne La-Vallee, France was not received with opened
arms. The people of Europe did not want some carbon copy of American culture
forced on them; they can travel to DCA or WDW for that. They wanted a unique
European experience influenced by regional culture yet still authentic Disney.
Reimaging the resort to appeal to a broader European population took years of
scanning the socio-environment and adjusting accordingly; most notably the name
change from EuroDisney to Disneyland Paris (DLP) to establish a connection
between the theme parks and La Ville-Lumiere. Editing the dining menus’ resort
wide were necessary changes as well because the French cuisine alternatives in
nearby Paris were more desirable and the people of the regions palates were too
refined to settle for processed American comfort food. The cultural adaptations
made to improve the ambiance and scenery consisted of character favorites
refashioned in traditional garbs of Europe’s’ past and present. This diligence
and commitment was rewarded in 2011 when DLP surpassed the Eiffel Tower as the
most visited tourist site of Europe. DLP has seen attendance balloon to 15.6
million guests and 724.3 million Euros’ in revenues. Visitors from the United
Kingdom, Spain and France were willing to pay higher entrance fees, premiums on
merchandise, room rates and food. All while central banks and international
monetary fund’s scramble to rescue governments on the brink of bankruptcy.
Perhaps, Philippe Gas, the CEO of EuroDisney should be given the reigns over
the fiscal policies of the EU. He had to take defensive measures in order to
turn around a non profitable division while conservatively applying growth
strategies for renovation and expansion. The up and down flow of information
within the DLP bureaucracy enabled top tier executives to receive valuable data
from front line managers who had firsthand knowledge of the guests wants and
needs. Highlighting the positive and making the necessary corrections when call
for. This year DLP celebrates its’ 20th anniversary and the cranes
in the sky above the Magic Kingdom signal new innovations for a nouveau siècle. Risky investment in the a future riddled with calls for
austerity measures. The adapting cycle is perpetual; nowhere more visible than
at Walt Disney Theme parks and people around the world to visit the happiest
place on earth.
DISNEYLAND HONG KONG
That includes the People’s Republic of China, Hong Kong and the land of the Rising Sun. Disneyland Hong Kong (DLHK) is an interesting example of the intricacies’ related to management and the mandatory maneuvering that occurs when partnering with a government. Many concessions were made in order to gain a footprint in Hong Kong’s consumer market. Not realizing the potential Disney first had for DLHK added to the stalemates over funding and expansion have more than likely doomed the smallest of all Disney theme park resort (Cochran, 2009). In 2014 Disney will premier an enormous theme park in Shanghai; more than five times that of its’ Hong Kong sister. If the culture miscues that plagued DLHK surface in Shanghai, there will be heads mounted. A $4.4 billion risk that there will not be cheaper imitation attractions popping up around the city like what occurred in HK leeching revenues from their coffers. The Chinese government is fickle and made Disney agree in principle that their Magic Kingdom would be distinctively different than that of her counterparts in the west (Barboza, 2011). Collaboration with local employees, foreign governments and contrasting social norms are potential barriers that need to be hurdled with utmost delegacy, precision and cohesiveness. The Walt Disney Company hires managers and manifests leaders.
May 8th, 2012, on an earnings call to address the
newly released second quarter results and speak on the outlook of the media
giant, CEO Robert Iger glowed. Informing the public of an 18% per share
earnings increase over the 2011 comparably adjusted results is always welcomed
news. He spoke of goals and objectives in regards to the merchandise based on
the Avengers and reconfirmed projected release dates for Disney/Pixar/Marvel
Studio films. The boys and girls in the toy division will have more than a few
pow-wows discussing Marvel Heroes products and the first female hero to garner
top billing in a Pixar film. (Iger, 2012)
There
were many positive aspects of this call to get excited about beyond toys,
movies and theme parks. The Disney Secret is in its metrics matrix. If the
consumer confidence index is the greatest indicator of economic health, than
Disney earnings is the barometer by which it is calculated. Perhaps it is time
to consider the current economic climate and employment opportunities will not
reach levels prior to the depression. 19th century education,
training and job development has left 21st century citizens ill
prepared for the impact of technology on the global labor force. There are
people thriving in this new century job market or so says the Q2 Disney
performance.
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