Business Case Analysis Essay
hani4300
ffffffff.pptxBusiness Case Presentation
MGT 431-P Tu/Th 4pm
Presentation Outline
Recent Corporate Event Background
Vision/Mission
Stakeholder Analysis
Issues Statements/Management Question
Strategic Management Analysis (Model Application)
Identification & Evaluation of Alternatives
Recommended Alternative/Implementation
Case Background
Walt Disney Company brings in a new CEO Bob Iger in 2005
Disney’s cruise ship fantasy 1 billion dollars
Losing money on Disney’s interactive division
Buying Marvel and Pixar
ESPN role in Disney
Shanghai Disney Resort joint venture between Disney and Shanghai Shendi Group
Iger steps down from CEO
Reingold, J., & Adamo, M. (2012). The Fun King. Fortune, 165(7), 166-174.
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Mission Statement
Disney’s mission is to lead the world in entertainment by creating an experience our consumers will never forget. Disney continues to create new ideas to capture a once in lifetime experiences for consumers while maximizing profitability.
Vision/ Purpose Statement
Disney is considered one of the largest entrainment companies that uses the newest innovations of technology to creating a quality product. Disney focuses on making fairytales a reality for all consumers across the world. Walt Disney is considered diverse using multiple products in our strategic plan capture the inner child of all consumers.
Stakeholders on Savage Model
| Potential for Threat | |||
| HIGH | LOW | ||
| Potential for Cooperation | HIGH | MIXED BLESSING Board of Directors Foreign Governments | SUPPORTIVE Employees Investors Customers |
| LOW | NONSUPPORTIVE Competitors | MARGINAL Subsidiaries |
Bob Iger
Beginning in the SUPPORTIVE quadrant, we have employees, customers, and investors. Their desire for employment and ROI will keep them generally high on the potential for cooperation and unlikely to be a high-level threat. The customers help provide the revenue and while they could stop buying merchandise or tickets, it’s unlikely.
In the MARGINAL quadrant, there are the subsidiaries. Subsidiaries possess their own cultures and have generally left along and it’s unlikely that they would easily cooperate with large changes to the current structure. Given that they are allowed to focus largely on their own success, they are also unlikely to be a threat to the organization.
In the NON-SUPPORTIVE category, we have competitors who have virtually no chance o cooperation and pose a high threat to Disney. Perhaps there is not one competitor who can challenge Disney in every sector of their businesses, but there are a variety of competitors competing with Disney in a multitude of arenas.
In the MIXED BLESSING category, we have the board of directors and foreign governments. The board of directors could block any move they deem to be not in line with their vision of the company. They could also facilitate significant moves. Foreign governments present a significant opportunity for expanded business; however, they could also block possible business ventures or, as in the case of China, take over the operation since they have majority ownership of the venture in their borders.
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Unmet Stakeholder Expectations
Board of Directors, Employees, Investors, Subsidiaries, and Foreign Governments
Uncertainty of long-term leadership
Investors, Board of Directors
China investment
The uncertainty regarding long-term leadership is likely to cause some stress in a variety of areas. Employees are unsure of their job security and investors do not know the long-term plans for the organization, which makes it difficult to view Disney as a long-term investment. The board of directors require more situational awareness of the leadership future so that they can more adequately plan for the succession and provide some guidance to potential investors. Foreign governments may hesitate on allowing Disney into their country if there is no long-term leadership plan in place. Investors and the board of directors may also be a bit nervous due to the China investment for two reasons. First, the break-even point took longer than expected to arrive which may impact how strong the company is perceived to be. Two, both may be a bit nervous with a foreign government, particularly one as controlling as China, having majority ownership of one of their business ventures.
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Issue Statement
1. No long-term leadership plan.
2. Multitude of cultures under the Disney umbrella.
3. Stability of International Operations.
As mentioned in previous slides, there is currently no long-term leadership plan in place which can be unsettling for nearly all parties involved. Competitors could potentially cash in on this uncertainty.
The wide array of cultures of the Disney umbrella could become virtually unmanageable over time, especially if a mis-step is taken with regard to organizational leadership.
An additional issue is the stability of international operations given how long it took the Chinese venture to break-even and the fact that it is a venture with the Chinese holding majority ownership.
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Management Question
How does Disney replace Bob Iger and maintain stability of international operations and the wide array of cultures currently under The Walt Disney Company umbrella?
Organizational Culture Analysis
(I) Initial
(C) Current
Future
(PA) Possibility A
(PB) Possibility B
(PC) Possibility C
| Networked | Communal |
| Fragmented | Mercenary |
Low Sociability
High Sociability
Low Solidarity
High Solidarity
PC
I
PB
C
PA
At inception, the culture at The Walt Disney Company was Communal as noted in the chart (I). Essentially every employee was on the same boat and rowing in the same acquisition. However, as mergers & acquisitions occurred under Iger, subordinate organizations were allowed to maintain their leadership and the associated culture which shifted the overall culture to Networked (C). While they still operate under the broad Disney umbrella, the sociability has dropped. As the organization looks for new leadership, there are really 5 things that could happen. First, the organization remains the exact same. This is unlikely as any shift in leadership alters the dynamics of the organization and even the slightest change can have a ripple effect across the cultures. Second, the organization could also theoretically move back to Communal; however, given the freedom the subordinate companies currently have to operate, it’s highly unlikely that they would be willing to accept such a drastic measure. This leaves us with the three potential scenarios with regard to the shift in organizational leadership.
Under the first possibility (PA), the organization becomes more networked as more acquisitions are made and allowed to maintain their respective subcultures within the Disney culture. This would require strong leadership to ensure that the organization remains in balance. This could generally be maintained if the right person from within the organization was selected to take Iger’s place.
The second possibility (PB) is the backlash that could occur if the incoming leader attempts to push the Disney culture onto subordinates. The idea of a unifying culture may be appealing, but the impact of that change could have a very negative overall effect which could result in harming not only the Disney brand name, but the production of the subordinate organizations.
The final possibility (PC) is another potential backlash to forcing cultures on subordinate companies. They may sacrifice their own cultures for the Disney culture, but in the process their ties to the Disney executives are frayed. While they adhere to the regulations, they may cease to deliver top of the line products that Disney has come to expect.
In summary, the incoming leader of the organization must be strong enough to guide the behemoth that Disney has become while at the same time granting the subordinate companies the latitude to maintain their subcultures so long as they do not shift to become countercultures in the organization.
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Rushiun Liou (RL) - Bravo! You have applied the org. cultural analysis well. In your note, you mentioned the sociability has dropped, which is probably a typo. As indicated in your chart, you identified the current organizational culture as networked culture, which suggests a decrease in solidity, rather than sociability.
Identify & Evaluate Alternatives
Bob Iger Stays
Disney Exec
Subsidiary Exec
Outsider in Charge
Pros
Maintain status quo
Maintain established relationships
Reduce chances of employee conflict as they compete for his position
Cons
New eyes bring new ideas
Iger could get burned out and lose his edge
Iger would likely be unhappy to be there
Alternative 1 Analysis Bob Iger Stays
The first alternative for the case would be if Bob Iger stayed in his current position and continued to lead Disney toward future success. He has shown incredible success and instincts during his tenure with Disney, and it would absolutely be in Disney’s best interest for Iger to stay on with the company. With the risk of employees battling for his position, or having to bring in someone from the outside to fill his position, keeping Iger in his position would eliminate the risk for those situations. He has spent years developing and nurturing business relationships and has developed a strong reputation, one which his successor might have to work hard to build. As great a thing as Iger staying with Disney could be, there are downsides to him remaining. If one person stays in a situation for too long, there is always the possibility of that individual running out of new ideas and the company reaching a stagnate place. New people bring in new ideas and can bring wonderful success to companies, including potentially Disney. Also, with Iger making it clear he is ready to leave, putting him in a position where he needed to stay could breed resentment and frustration with his position and he could likely lose his edge, leading Disney down a path that could lead to failure.
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Pros
Familiarity with the company
New ideas brought to the table
Already loyal to Disney
Cons
Competition between employees
Resentment from those who are not chosen
Might fight too hard to be just like Iger
Alternative 2 Analysis Hiring a current Disney Exec
The second alternative is hiring a current Disney executive to replace Iger. Someone who is already with the company would likely already have a strong loyalty to Disney, and will already know the ropes of the company. They are more likely to be familiar with how companies like Pixar and ESPN run, under the Disney umbrella, but very much their own companies in terms of operations, and are more likely to respect that arrangement. New eyes will bring new ideas to the table, but you run the risk of someone who is already engrained in Disney, and is familiar with Iger, might try too hard to be Iger. This could lead to making poor decisions because they are not leading the company down a path that they truly feel is best, and instead essentially asking “What would Iger do?” Additionally, hiring from within the company could lead to fierce competition amongst employees, and is likely to breed resentment between those who are not selected, causing a fracture in the culture and compromising what makes Disney so great.
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Pros
Would allow subsidiaries to exist as is
New ideas to the table
Familiarity with current employees and important individuals outside of the company
Cons
Not familiar with running a company as large as all of Disney
Not familiar with other subsidiaries
No resort/theme park experience
Alternative 3 Analysis Subdsidiary Exec
The third alternative is to hire an executive from one of the subsidiaries, such as Pixar or ESPN. This presents multiple pros and cons. On the positive side, you would be getting someone who would have an understanding and respect for how the subsidiaries operate in relation to Disney and would likely not try to alter that relationship. This is particularly important for Pixar, who did not want to be overly “Disney” and has brought huge success for Disney operating as they always did. As with any new hire, you are bringing new ideas in to the mix, but they may not be quite as familiar with Iger since they did not work with him on a daily basis. Because of this, they would be less likely to try to be Iger, which would likely be a good thing. Someone trying too hard to fill someone elses shoes would likely not make for a successful situation. As a subsidiary who likely has been a part of some Disney meetings and operations, they would be able to assimilate easier than someone who is coming in from the outside. Particularly amongst the execs, there is likely to already be developed relationships and loyalty towards Disney, and they will typically have already developed relationships with important individuals outside of Disney. The downside to hiring someone from one of the subsidiaries is that they are more familiar with how a smaller group, under a bigger umbrella, is run. ESPN would be run very differently than how Disney is run. Disney’s reach is so far extended, and someone who has worked closely with only one branch will not be as familiar with the other branches, including the other subsidiaries, and Disney resorts and theme parks.
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Pros
No employee conflict over position
Different experience brought to the table
New contacts and opportunities
Cons
No company loyalty
Current execs may resent a new person hired over someone already in the position
No familiarity with how the company is run
Alternative 4 Analysis Hire Outside
The fourth and final alternative is to hire someone from outside the company to take over for Iger. As with all of the other alternatives, this presents its own unique set of pros and cons. Hiring from the outside would eliminate the internal competition over the position, it could also breed a large amount of resentment towards the new individual from the current execs who feel that someone who is already a part of Disney should be in that role. A new person will bring new ideas to the table that someone within the system may not have thought of, and will likely have different contacts who are able to present Disney with new opportunities that someone currently in the company might not have access to. Unfortunately, hiring from the outside also means that you are getting someone who is unlikely to have a strong sense of company loyalty and will take time to develop that. They also will not have any existing knowledge of how Disney is run and might struggle with respecting the relationship between Disney and its subsidiaries.
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Recommended Alternative
Hiring a subsidiary exec
Working knowledge of Disney
Respect for subsidiary relationships
Least likely to cause upset amongst current Disney employees
Less likely to try to duplicate Iger
Though there are four strong alternatives, hiring one of the subsidiary executives to succeed Bob Iger would likely offer the greatest chance of success. Hiring a Pixar executive, for instance, would give Disney someone who already has strong allegiance to the company, and would not try to alter how its subsidiaries operate underneath the protective umbrella of Disney. Since you are not pulling from the immediate Disney executive pool, there is a lesser chance that there will be a fracturing of employee relationships, as they will feel they have someone who already is familiar with basic operations, but that someone they work next to was not chosen over them. A subsidiary executive would also have knowledge of Iger’s vision and how he operated the company, but due to the fact that the subsidiaries operated differently from its parent company, they would be less likely to try to duplicate what Iger did for the company, which would be a difficult task for someone who is not Iger.
The right individual from under the Disney umbrella would respect the Disney culture as well as the variety of subcultures layered within. These individuals would also likely be transformational leaders as they have made their organizations successful enough to be targeted by Disney for acquisition. It’s unlikely that Disney would acquire an organization and maintain their leadership status quo if the leader dwelled in a transactional or, worse yet, Laissez-faire style. Finally, given that this individual has negotiated with Disney in the past for various reasons, they are more apt to understand what encompasses a collaborative approach and thus, would be able to apply it going forward. While this new CEO won’t be a clone of Iger, they will likely be able to apply some of his qualities with the efficacy necessary to keep Disney a leader in the market.
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Implementation & Timeline
Potential Issues
No suitable successor
Iger stays on
Successor refuses
Conflict
| Interview Subordinates | 360-degree Assessment | Right/Left Seat Ride | Observation |
0 mos.
Start Search
3 mos.
Select Finalists
9 mos.
Announce Successor
12 mos.
Formal Handover
18 mos.
New CEO Re-evaluated
Based on the alternative selected, we recommend an 18 month transition window. The announcement of this course of action would begin the search. Over the next three months, subordinate executives will be interviewed for Mr. Iger’s position. At the end of the interview stage, three of these individuals will be selected for more thorough review. The 360 degree assessment will require interviewing the individuals current peers, subordinates, and superiors on their qualifications for the job to be filled. The goal is to determine if what the individual says they have done in the organization is consistent with what has actually happened. This is a rigorous and time consuming process, but well worth it. At the 9 month mark, the successor for Mr. Iger would be announced. The next 3 months would encompass a transition between Mr. Iger and his successor. This will ensure a coordinated handoff between the individuals. At the 12 month mark, there will be a formal handoff between the two individuals. The new CEO will remain under observation by the board and re-evaluated at 6 months to ensure that all the standard qualifications and objectives are being met.
There are four potential issues with this alternative. One is that there is no suitable successor in the subordinate companies. If this is the case, then the next best alternative would be another Disney Company executive, followed by Iger staying on longer, and the last resort is going outside the organization. Another problem is potentially Iger deciding to stay on and further delay the inevitable transition. This makes long-term planning difficult for the board and may make investors restless and begin to question the long-term viability of the organization. A third issue is refusal of the position by the designated successor. The individual may decided on their own to withdraw in the event they like their current position or they take a position outside of the Disney umbrella. Either way, it could cause the entire process to need to be restarted which costs time, money, and resources. Finally, there is a chance that the individual selected fuels some conflict amongst subordinate companies or between the subordinate company and the Disney company. Either way, this is a situation that will need to be handled carefully and monitored closely by the new CEO and the board of directors.
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Homework
Read Ch. 1; MindTap quiz
Does strategy matter? Why or why not?
Read Non-disclosure and confidentiality agreement for the SAP project; Signed copy due on Thursday
Discuss Team Composition
Maximize Diversity
