Tag Archive: resource

Resource Utilisation: Turnaround at Walt Disney

In 1984, Michael Eisner became CEO of the Walt Disney Company. Between 1984 and 1988, Disney’s sales revenue increased from US$ 1.6 billion to 3.7 billion, net income from US$ 98 million to 570 million, and the stock market’s valuation of the company rose from US$ 1.8 billion to 10.3 billion.

The key to the Disney turnaround was the mobilisation of Disney’s resource base. Among Disney’s underutilised resources were 28’000 acres of land in Florida. With the help of the Arvida Corporation, a land development company acquired in 1984, Disney began hotel, resort and residential development of their land holdings. New attractions were to Epcot Center, and the new theme park Disney MGM Studio was built. They expanded into resort vacations, convention business, and residential housing. The huge investment in the theme parks were accompanied by a heavier marketing effort and increased admission changes. A chain of Disney Stores was established to push sales of their merchandise.

In order to exploit their huge film library, Disney introduced VHS sales of their movies and licensed them to TV networks. The most ambitious part of the turnaround was Disney’s regeneration as a movie studio. Eisner began a massive expansion of the Touchstone label with the objective of putting Disney’s film studios to fuller use, and establishing the company in the teenage and adult markets. Disney Studios doubled the number of movies in production and by 1988, it became America’s leading studio in terms of box office receipts.

[Source: Grant (2010) Contemporary Strategy Analysis]

Technology Influence in Business Strategy

There is a spectrum of attitudes towards technology that is found in different organisations:

1 2 3 4 5
Technology as a tool for efficiency Technology as a tool for achieving business strategy Technology as a function alongside finance, marketing, HR, etc., typically called R&D (product technology) or operations (process technology) Technology strategy influences business strategy in a bottom-up manner Technology strategy leads the business, effectively determining business strategy

Table 1: Degrees of technological influence on business strategy (Source: Fowles, 2005)

Technologies mean different things to different people at different times in the sense of how they are interpreted. Rural customers of the Ford Model T used it for ploughing. Farm tractors evolved as a response. Lacking electricity, the same customers used the car as a source of power to drive farm machinery and even domestic tools such as a washing machine. Nor is it only customers who interpret a technology in various ways. The maker’s technology strategy decides on resource allocation. The decisions of one strategy are closely intertwined with those of the other. By asking to what they allocate resources it is possible to tell them apart.