Disney’s Performance Trends in 1983-2000s
Today’s entertainment industry offers a variety of choices for everyone: theme parks, animation, television, cartoons, and video streaming services. Walt Disney is one of the few companies seriously represented in these areas. The main events that characterize the development of Disney from 1983 to the 2000s are:
- 1983 – the Disney Channel launch and the new Disneyland’s opening in Japan.
- 1986 – The company was rebranded and changed from Walt Disney Productions to The Walt Disney Company.
- 1987 – An agreement is signed with the French government to open Europe’s first Disneyland.
- 1992 – The Mighty Ducks are released, and the rights to a new NHL club, The Mighty Ducks of Anaheim, are acquired.
- 1993 – Walt Disney takes over Miramax Films, a media company.
- 1997 – The Lion King debuts on Broadway, and Walt Disney acquires the rights to the California Angels baseball team.
- 2001 – the major Fox Family Network takeover for $3 billion (Feix and Feix 179).
Turnaround and Strategic Foundations
The corporation was facing its fourth straight year of diminishing net income when Michael Isner took over as president of Walt Disney Productions, and its stock price had dropped to levels that “predators” found to be appealing. Disney’s sales revenue increased from $1.66 billion to $3.75 billion, its net income increased from $98 million to $570 million, and its stock market value increased from $1.8 billion to $10.3 billion between 1984 and 1988 (Feix and Feix 2). No significant strategic changes were made during Isner’s first three years at the corporation, first as president and subsequently as chairman. The establishment of the Epcot Centre entertainment complex, the Tokyo Disneyland theme park in Japan, Touchstone Films, the Disney Channel, and the purchase of Arvida Corporation were all key strategic initiatives started by prior management for Disney.
Florida’s 28,000 acres owned by Disney were used for business purposes (Feix and Feix 173). Disney started constructing hotels, resorts, and homes on the land it owned in Florida with the aid of Arvida Corporation, a land development business it bought in 1984 (Feix and Feix 175). New rides were installed at the Epcot Centre Entertainment Centre, and a new Disney-MGM Studio Tour theme park was built. Disney expanded its business into other sectors, including resort maintenance, conventions, and housing.
Diversification Strategy and Business Expansion
Growth, risk mitigation, and profitability are the three basic objectives of diversification strategies. While expansion and risk management have traditionally been the main forces behind diversification, these factors only sometimes result in higher shareholder value. Walt Disney’s characters, the Disney emblem, the concept of morality, and the brand’s standing as a top provider of family entertainment tie all of Disney’s businesses together. Disney films and television programs, many of which are aired on the company’s cable channels, help to boost the number of people who visit the Disney theme parks, which in turn helps to raise sales of the company’s goods.
Walt Disney has broadened the scope of its enterprise to implement this diversification plan. The corporation has expanded beyond cartoons to establish amusement parks with rides, performances, cruises, resort management, property development, television programming, and retail sales by purchasing or developing essential strategic assets. Disney, for instance, has worked closely with the state of Florida to organize amusement parks, and its advertising agreements with McDonald’s and Mattel have aided in retail sales growth.
Challenges and Risks of Diversification
It should be noted that Walt Disney’s revenue and net operating income structures differ significantly. Revenues are the total of all sales-related income, and net operating income is the difference between revenues and operating expenses. A comparison of the organizational structures of these figures for Walt Disney. Thus, the diversification of services provided is not supported by the diversification of revenue sources. The turnover of funds and assets needs to catch up to many competitors, reducing Walt Disney’s mobility in executing its projects.
The research yields conflicting results on Walt Disney’s market potential. On the one hand, the business is a pioneer in the media and entertainment fields. The sector as a whole has tremendous potential, and there will always be new ways to increase revenue. Walt Disney is widely recognized in both established and emerging fields.
The business makes a sizable amount of money from its cable networks and the quickly expanding Disney+, its flagship video streaming service. Diversification offers the company valuable but also highly risky experience. It is and will always be a risky game. Therefore, managers who play it wisely must carefully check their cards. Only a knowledgeable person can correctly determine when to play their trump cards and when to hold them.
Specialized foreign enterprises are transformed into multisectoral complexes-conglomerates with a diversification strategy, and their constituent parts have no functional ties to one another. Diversification of production and entrepreneurial activity pursues various aims. It establishes the directions of economic restructuring to remove reproduction and resource redistribution inequities. Diversification boosts business stability, company value, and organizational efficiency, and occasionally allows for taking advantage of a good opportunity or changing an activity. The industries chosen for diversification must be attractive in terms of their structure, or may be able to provide such attractiveness.
Work Cited
Feix, Thorsten, and Thorsten Feix. “The Streaming Revolution in Global Media and the Dawn of an Epic Battle.” Valuing Digital Business Designs and Platforms: An Integrated Strategic and Financial Valuation Framework (2021): 173-224. Web.