Management Problem Report

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Introduction

Walt Disney is one of the world’s largest companies in the US entertainment industry. Based on the case study, it is evident that the company faced a myriad of challenges brought about by the management style of the company’s former CEO, Michael Eisner. His poor leadership and organization, as well as inadequate planning set the precedent for the company’s current problems. In addition, Walt Disney’s extensive wide brand portfolio presents the company with numerous opportunities for growth and enhances the company’s vulnerability to management challenges. This vulnerability is apparent in Walt Disney’s exposure to conflicts with partners such as Pixar Studios. Notably, key theories of management help explain how the management styles demonstrated by my predecessors brought about the problems outlined in the case study.

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Problem Statement

In the case study, it is abundantly clear that Walt Disney’s problems are a direct result of decisions made by the former management, as well as their management style. Poor organization, planning and leadership are some of the key management concepts that underlie Walt Disney’s problems as the company transitions into the next phase of business. One notable problem that is attributable to Michael Eisner’s critical and abrasive management style is Walt Disney’s conflict with Pixar studios. His unwillingness to compromise with Pixar Studios chief executive officer, Steve Jobs resulted in a relations breakdown which caused both Pixar Studios and Walt Disney to lose millions in revenue. This unwillingness on the part of Walt Disney’s CEO serves to demonstrate the significance of leadership in organizational management. In the case study, another key problem that is the result of my predecessor’s management style is the Michael Eisner’s conflict with board members, shareholders, as well as creative partners. In management, such internal conflicts set the stage for poor growth and performance and ultimately the organization’s unprofitability. In the case study it is also evident that Walt Disney was in desperate need of brand rejuvenation during Michael Eisner’s tenure as CEO. The fact that old brands such as Mickey Mouse and Winnie-the-Pooh generated 80% of sales demonstrates that the company’s former management was not privy to the need for brand renewal. This problem is attributable to poor planning on the part of Walt Disney’s management under Michael Eisner. Another significant problem that is pretty apparent in the case study is that of poor market segmentation and targeting. Walt Disney’s products primarily appealed to youngsters thus effectively missing out on the preteens and teens market segments. Lastly, Walt Disney movie products faced the problem of weak scripts, low-quality production, in addition to poor acting, as evidenced by the poor reception of films such Bedtime Stories. Evidently, poor planning, organization and leadership demonstrated by Walt Disney’s former management played a key role in the creation of the aforementioned problems.

Case Study Analysis

Several key management theories help explain the problems within management that are observable in the case study. One such theory is systems theory which postulates that systems are the sum of subsystems which work collaboratively to realize a predetermined goal (Chikere & Nwoka, 2015). In essence, systems theory gives managers a perspective of events, as well as patterns within organizations (Chikere & Nwoka, 2015). In addition, the theory enables management to harmonize programs to function as a whole for the sole purpose of goal realization (Chikere & Nwoka, 2015). It is worth noting that systems theory is built upon several key principles. One key principle that underlies the theory states that systems comprise other systems that are often elements of bigger systems (Caddy & Helou, 2007). In the context of the case study, this principle is applicable to Walt Disney’s structure under Michael Eisner’s leadership. The Walt Disney company may be viewed as a system consisting of subsystems which include employees, board members, shareholders, as well as creative partners. As such, Michael Eisner’s failure to appreciate that a system cannot function properly without its subsystems led to his conflicts with board members, shareholders and creative partners. Another key principle that underlies systems theory postulates that systems grow and evolve over time in both size and structural complexity (Caddy & Helou, 2007). In the case study it is apparent that Walt Disney’s management under Michael Eisner’s leadership failed to recognize that the company was a system that evolved over time in size and sophistication. This consequently led to the strategic problem of ‘brand fatigue’ whereby the company’s chief brands were the 1928 character, Mickey Mouse and the 1961 character, Winnie-the-Pooh. Michael Eisner’s inadequate planning, as well as the failure to recognize that systems evolved over time also led to the problem of ‘age compression.’ Age compression in this scenario denotes a situation whereby a brand appeals solely to youngsters over the course of time.

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System theory’s third principle also helps explain the Walt Disney’s problems under Michael Eisner’s leadership. The principle states that the complexity of a system affects its adaptability to an ever-changing environment (Caddy & Helou, 2007). In the context of the Walt Disney company, this principle is applicable with regard to the company’s problem of brand value depreciation. Over the years, the organization grew increasingly complex as a result of its acquisition of franchises in different industries including parks, resorts, consumer products, as well as media networks. This enhanced complexity thus made it difficult for the Walt Disney company to adapt to a changing environment where there were more competitors and consumer tastes had changed. Under the leadership of Michael Eisner, the company’s management failed to plan for a changing business environment and take into account the organization’s increased structural complexity. Evidently, systems theory is crucial to comprehending the problems caused Walt Disney’s poor planning, leadership and organization.

Contingency theory is also a key theory that helps explain the cause of the problems within Walt Disney’s former management. In the realm of management, contingency theory postulates that the decision making process entails taking into account all possible options and choosing the option that best suits a specific circumstance (Morton & Hu, 2008). A key premise of the theory is that the decision making process is predicated on the current situation, as opposed to assuming a blanket approach (Jokipii, 2010). In the case study it is abundantly clear that Michael Eisner’s management style runs contrary to the postulations of contingency theory. His decision to deny Pixar Studios total creative, as well as financial control over films did not suit the circumstances at hand. As a consequence, the Walt Disney company lost a lot of money in potential revenue and relations between the two companies broke down. That the leadership style of Michael Eisner does not align with the principles of contingency theory is also true for his decisions that led to conflicts with Walt Disney’s board members, shareholders and creative partners. To conclude, contingency theory gives crucial insights into the ways through which poor planning, organization and leadership contributed to problems within Walt Disney’s management.

Chaos theory is crucial to understanding the cause of the problems within Walt Disney’s former management. In the context of organizational management, chaos theory highlights the inevitability of change and notes that change can be rarely controlled (Alshammari, Pavlovic, & Qaied, 2016). A key premise of this theory is that systems, by their very nature, become increasingly sophisticated and as a result their susceptibility to catastrophic events increases (Stapleton, Hanna, & Ross, 2006). In a bid to sustain the sophistication, organizations use up extra energy and structural change becomes a prerequisite for the organization’s stability (Galbraith, 2004). In the case study it is pretty apparent that Walt Disney’s management during Michael Eisner’s stint as CEO fails to appreciate the principles of chaos theory. The inevitability of change in Walt Disney’s case is evident given that the company’s brands no longer appealed to certain age groups which formerly constituted the organization’s core market segment. As a result, the change makes it increasingly difficult for Walt Disney’s management to control. Chaos theory is also applicable to Walt Disney’s scenario in the case study since the company’s current situation warrants a structural change for the organization to remain stable. In addition, Walt Disney’s increased sophistication over the years made it more susceptible to catastrophic events and hence its current quandary whether to retrench, grow or stabilize.

Conclusion

In conclusion, it is evident that the problems within Walt Disney’s management are attributable to key management concepts such as poor leadership, organization and planning. This position is given credence by the consequences of the management style employed by the organization’s former chief executive officer, Michael Eisner. Notably, several key theories, namely, contingency theory, chaos theory and system theory help explain the causes of the problems within Walt Disney’s management.

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Recommendations and Proposals on Possible Courses of Action

To solve the problems that the Walt Disney company currently faces, the organization may take various courses of action. First, as Walt Disney transitions into the future, the organization’s management should take into account the workings of system theory in planning, decision making and organizing. In planning and decision making, the chief executive officer should appreciate that the company is essentially a system made up of subsystems that work collaboratively towards a common goal. It is worth noting that in Walt Disney’s scenario, the subsystems include board members, shareholders and creative partners. A key principle of systems theory that Walt Disney’s leadership should take into consideration in the planning process is the fact that systems grow and evolve over time in size and structural complexity. Appreciating this principle will allow the company’s leadership to contemplate about renewing their brands and introducing novel brands.

Moving forward, the Walt Disney company should also recognize the postulations of contingency theory in planning, organizing and leadership. As such, key decisions to aimed at solving the problems within management should be predicated on the option that best suits the specific circumstance. The decision to grant full creative control to Pixar studios, for instance, should have been based on an evaluation of all available contingencies and the subsequent selection of the best possible option. Third, Walt Disney’s management should be cognizant of the workings of chaos theory in planning, organizing and leadership. As a consequence, the organization’s management should appreciate the inevitability of change in the business environment and implement measured geared towards attaining stability. In addition, they should appreciate that they can rarely control change and effect structural change in the face of increased vulnerability to catastrophic events. Structural change in this situation should revolve around the management and decision making structures, as well as a restructuring of divisions that are highly vulnerable to catastrophic events.

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Executive Summary

In the case study there are various problems within Walt Disney’s management. In addition, poor planning, leadership and organization are some of the management concepts that underlie the company’s dismal performance in the entertainment industry. One notable problem in Walt Disney’s management structure is the friction between the CEO and organizational entities such as board members and shareholders. Another significant problem that is apparent from the case study is that of inadequate planning on the part of Walt Disney’s management regarding market segmentation and targeting. As a result of poor market segmentation, most of the company’s brands appeal solely to a small section of the market, that is, young children. Several key management theories help explain the problems within management that are observable in the case study.

Systems theory, in particular, demonstrates the need to appreciate the fact that the Walt Disney company is system made up of subsystems that must work collaboratively to attain planned goals. Contingency theory, on the other hand, is crucial to understanding the problems within Walt Disney’s management since it demonstrates that Michael Eisner’s failure to take into account important contingencies in decision making resulted in undesirable consequences for the company. Lastly, chaos theory gives insights into the causes of problems within Walt Disney’s management during Michael Eisner’s tenure as CEO. Clearly, the management failed to recognize the inevitability of change in the precarious business environment and sweeping changes with regard to consumer preferences affected the organization’s stability.

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  1. Alshammari, M., Pavlovic, M., & Qaied, B. A. A. (2016). Chaos Theory in Strategy Research. American Journal of Business and Management5(1), 1-13.
  2. Caddy, I. N., & Helou, M. M. (2007). Supply chains and their management: Application of general systems theory. Journal of Retailing and Consumer Services14(5), 319-327.
  3. Chikere, C. C., & Nwoka, J. (2015). The Systems Theory of Management in Modern Day Organizations-A Study of Aldgate Congress Resort Limited Port Harcourt. International Journal of Scientific and Research Publications5(9), 1-7.
  4. Galbraith, P. (2004). Organizational leadership and chaos theory: Let’s be careful. Journal of Educational Administration42(1), 9-28.
  5. Jokipii, A. (2010). Determinants and consequences of internal control in firms: a contingency theory based analysis. Journal of Management & Governance14(2), 115-144.
  6. Morton, N. A., & Hu, Q. (2008). Implications of the fit between organizational structure and ERP: A structural contingency theory perspective. International Journal of Information Management28(5), 391-402.
  7. Stapleton, D., Hanna, J. B., & Ross, J. R. (2006). Enhancing supply chain solutions with the application of chaos theory. Supply Chain Management: An International Journal11(2), 108-114.
  8. Williamson, D. (2007). The COSO ERM framework: a critique from systems theory of management control. International Journal of Risk Assessment and Management7(8), 1089-1119.
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