Disney made a “right-mix“ business model only in the beginning as far as it gave a stable financial support, even if certain sphere of its business did not run successfully. Such focusing on certain sphere put the company on solid financial footing. However, after a certain period, it would be true to say that launching a new branch of its business, Disney was incurring heavy costs on it that significantly effected other spheres, even during acquisition of ABC that was no longer economical arrangement. Moreover, investing on new venture, for example, the Disney Channel, negatively affected film division performances. Eisner encouraged expensive and innovative ideas and made creative efforts in the concept-generation phase. On the other hand, all businesses were expected to have the potential for long-run profitability. Eisner believed that launching a new business might help to demonstrate that Disney could be inventive and contemporary. But by inventing a new business Disney risked alienating its core audience with the film. As a result, certain division such as animation was slower to turn around. Meanwhile, Disney expanded its staff and accelerated production that led to the top earning and additional profits from the merchandize, rapid revenue and profit growth. …show more content…
Moreover, management of all business units was not structured and clearly coordinated. Conflicts among division executives were needed to be resolved quickly and get on with their jobs. As a result, Eisner conducted a major review of capital spending with an eye toward eliminating businesses that could not show a healthy return and selling non-strategical assets.
Meanwhile, inventing corporate synergy group with representatives in each business unit solved such problems. They had realised its purpose and boosted revenues. Synergy affected the scope of Disney’s business geographically, horizontally and vertically and, more importantly, its costs within its limits. Moreover, entering new businesses led the Disney to damage its brand. Disney had a strategic planning unit as a financial check on Disney’s various divisions.
We are agree with some observers that worried that the Disney became too large to accommodate Eisner’s management style and that Disney was putting too much emphasis on controlling costs and thus driving away its creative talent. It would be effective to mix all business as far as it does not negatively affect its main feature (creation talent). Once it does, the company should go back to its core business and manage its activities in such way that the main feature will stay the same. 2. Geographical scope, vertical, horizontal structure affected cost structure heavily. Tradeoffs between growth strategy and operating effectiveness should have been maintained by management. Disney core competencies have been deteriorated as a result of