Contents

• This report is based on the following case study -
• Case Study – Walt Disney
• The Walt Disney’s mission “To make people happy” reflects the philosophy and values of the people who found the company. Since its foundation in 1923, the Walt Disney Company objective has been to become “one of the world’s leading producers and providers of entertainment and information, using its portfolio of brands to differentiate its content, services and consumer products”. It seems like Walt Disney aimed to make this company successful perpetually by producing unique entertainment experiences of high quality and creativity.
• When mentioning some of Walt’s achievements, as the Mickey Mouse, the first full-length animated movie, the theme park, and the first modern multimedia corporation, the Time Magazine states that “the most significant thing Walt Disney made was a good name for himself”.3 Walt Disney was a visionary entrepreneur who became one of the most successful entrepreneurs in America influencing the business corporate culture of the time.
• Michael Eisner took over the leadership of the company in 1984, after the company had experienced several unsuccessful CEOs since the death of the founder, Walt Disney. Eisner’s leading period is known for success in reaching high profits and search for monarchic power within the company.
• During Eisner period, he was both CEO and Head of the Board of Directors. The company expanded the theme parks and its financial performance
• It was also during this time, CEO Michael Eisner hired his best friend Michael
• Ovitz to be the new president of the company and fired him in 1996. In
• University of Portsmouth ___________________________________________________________________________________
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• September 2005, the board approved Ovitz appointment unanimously but not all the board members were properly informed regarding the full process of Ovitz hiring. Delaware Supreme Court affirms dismissal of shareholder derivative suit against Walt Disney Co. complaining about company’s hiring and firing of Michael Ovitz and payment to him of $130 million. Nevertheless, despite the lack of complete process in hiring Ovitz, this hiring was accompanied by an increase in the market value of Disney’s stock by over $1 billion in value. Given this, Walt’s nephew complained about the way Eisner was leading the company. He argued that Eisner had been ruling the Disney Company for many years in an imperial and very independent way. After this revolt, the board stepped in in 2004, and with 45% of the votes, they removed Eisner from the position of chairman of the board.
• After Eisner decided to step down as CEO in 2005, Robert Iger, chief operating officer (COO) was unanimously approved by the board as new CEO. The first challenge Iger faced was to create a working environment for workers motivated to achieve high goals set by management. He aimed to change the leadership way at Disney and started by giving managers the chance to make independent decisions.12 Iger promoted collaboration, enhanced diversity and gave people a sense of purpose. Moreover, he believed that adopting technology would be necessary for the business to grow and be more efficient. As a result of this ambition, in 2005, Disney supplied his programs and movies in iPod platform.
• More importantly, Iger, through the humble position he held, showed to care not only about the business performance, but also concern for the people working for the organization. This behavior made people feel appreciated and respected.
• Amidst all these, Robert Iger was given on March 2012 also the post of chairman.13 Iger’s additional post as Board Chairman may remind shareholders of the Eisner period. Iger will hold the CEO position until March
• 2015 and the chairman position until June 2016.

Description

This paper answers the following questions on the case study -
a) Describe the various theories of Corporate Governance. Apply these theories that relate to the case study and substantiate your answer.
(7 marks)
b) Explain the importance of the management board in governance. Explain how they can affect the company and cite relevant materials from the case. (7 marks)
c) Given some weaknesses in governance, suggest areas of improvement which could be relevant for Walt Disney.