The Shadows Behind The Walt Disney Company
Janet Yuen
Global Environment of Management
Florida Atlantic University
Dr. Veronica Diaz
June 28, 2009
Shadows Walt Disney 2
Executive Summary
The Walt Disney Company (TWDC), together with its subsidiaries and affiliates, is a
leading diversified international family entertainment and media enterprise with four business
segments: media networks, parks and resorts, studio entertainment and consumer products.
This executive summary summarizes the issues surrounding The Walt Disney Company
based on its globalization efforts into a multinational corporation, its business power related to
the exportation of “American imperialism”, its business ethics related to its theme parks and
resorts, and its corporate governance problems under former CEO Michael Eisner.
Many blame these kinds of changes in company values and mission to Michael Eisner.
Globalization efforts made by The Walt Disney Company would prove costly when it
made bad decisions based on naïve assumptions of the cultural acceptance of Mickey Mouse into
Japan and France.
Tokyo Disneyland emerged as the most profitable theme park, but with TWDC having no
stake in the company; and Disneyland Paris, backed heavily by TWDC, had to be restructured
only after two years of opening.
Domestically, theme park safety had been compromised, all in the name of profit.
An embittered declaration for Eisner’s resignation came in 2003 by ousted board member
Roy E. Disney, nephew of Walt and last remaining active family member at TWDC, and his
trusted friend, Stanley Gold, who resigned the board.
Ultimately, Roy Disney helped lead a Disney shareholder revolt that arguably contributed
to Eisner’s departure from the company with nearly 45% of shareholders disapproval of Eisner.
Shadows Walt Disney 3
Table of Contents
Introduction ......................................................................................................................................4
Globalization ....................................................................................................................................5
Tokyo Disneyland ................................................................................................................5
Disneyland Paris (formerly knownas Euro Disney) ............................................................6
Business Power ................................................................................................................................7
Business Ethics ................................................................................................................................9
Safety vs. the Bottom Line.................................................................................................11
Corporate Governance ...................................................................................................................12
Conclusion .....................................................................................................................................13
References ......................................................................................................................................14
Shadows Walt Disney 4
Introduction
“The Walt Disney Company (TWDC), together with its subsidiaries and affiliates, is a
leading diversified international family entertainment and media enterprise with four business
segments: media networks, parks and resorts, studio entertainment and consumer products” (The
Walt Disney Company, n.d.).
“Walt Disney pioneered the concept of the theme park...[beyond]…the random collection
of roller coasters, merry-go-rounds and ferris wheels, which could be found in the conventional
carnival atmosphere,…[into an] idea of the ‘lands,’ distinct areas in which a selected theme can
vary from an exotic adventure, to a childhood fairy tale” (Mills, Debono, and Debono, 1994).
Disney’s vision to create theme parks stemmed from his childhood experiences of
walking past Fairmont Park, an amusement center in his hometown of Missouri, and his inability
to afford admission (Schweizer and Schweizer, 1998). “The boyhood experience gave him a
lifelong belief that entertainment needed to remain affordable” (Schweizer and Schweizer,
1998).
Disney opened his first park, Disneyland, in Anaheim, California in 1955. “Disneyland
had been Walt’s idea, [which] he had pursued even over Roy O.’s [Walt’s brother] objections;
[so] the shadow of Walt hovered over the theme parks more than any other division in the
company” (Stewart, 2005).
In 1965, Disney had purchased thousands of acres of land in Orlando, Florida, to build
his theme park, Disney World, where “he could write his own zoning restrictions and plan his
own roads, bridges, hotels – even a residential community for his employees” (The Birth of Walt
Disney World, 2009). Renamed Walt Disney World by Disney’s brother Roy O. after his death
in 1966, the entrepreneur would not have predicted an international expansion of his pioneering
vision into a multinational corporation.
Shadows Walt Disney 5
Using topics from Steiner and Steiner (2009), this paper will summarize the issues
surrounding The Walt Disney Company based on its globalization efforts into a multinational
corporation, its business power related to the exportation of “American imperialism”, its business
ethics related to its theme parks and resorts, and its corporate governance problems under former
CEO Michael Eisner
Globalization
Globalization efforts made by The Walt Disney Company would prove costly when it
made bad decisions based on naïve assumptions of the cultural acceptance of Mickey Mouse into
Japan and France. And as hindsight tells, TWDC made backwards assumptions of both the
Japanese and the French.
Tokyo Disneyland
In 1983, TWDC ventured into its first overseas theme park in Japan by signing a
licensing deal with the Oriental Land Company, which owns and operates Tokyo Disneyland.
This would turn out to be a huge mistake because TWDC “refused to buy an interest in the park
when it was set up, believing it too risky;” and it underestimated the success of the park, “which
by some industry estimates makes [Tokyo Disneyland] the most visited amusement or theme
park in the world, exceeding the other Disney theme parks” (Kristof, 1995).
“Mickey Mouse is not a Zen Buddhist here, and it is still Little Red Riding Hood, not
Little Red Kimono” (Kristof, 1995). “The signs are mostly in English, to create an American
ambiance, and the rides and sights are virtually identical to rides at other Disney properties”
(Kristof, 1995). Overall, the Japanese have overwhelmingly accepted the Disney brand.
“Unfortunately…[TWDC] took no equity stake in the Oriental Land company…[and]
consequently from this venture, [TWDC] only earns a relatively modest share for the use of its
Shadows Walt Disney 6
name and characters in the form of 10 percent of admission revenues and 5 percent of food and
souvenir revenues” (Mills et al., 1994).
“Says one American Euro Disney official: ‘After our successful encounter with Japan’s
highly complex culture, we thought we’d be able to open a Disney Park in any part of the world
– that is, until we arrived in France’” (Michaud, 1992).
Disneyland Paris (formerly known as Euro Disney)
As a consequence of the success of Tokyo Disneyland, TWDC began planning its second
overseas venture in Marne-la-Vallee, just 20 miles east of Paris. Not to let this financial cash
cow escape, TWDC sunk $240 million of its own money into the project; and the French
government made concessions by offering subsidized loans and land while ownership shares
were being offered to the European community (Mills et al., 1994).
TWDC had not considered the “erosion of cultures” that Steiner and Steiner (2009)
discussed, which states that “there is much ambivalence about the impact of U.S. cultural exports
on other cultures”.
Unlike Tokyo Disneyland’s acceptance of the English language, Disneyland Paris’ first
language is French. Michaud (1992) states:
The demand that angered Disney most…was that a number of exhibits be renamed in
French. Disney relented, and the Swiss Family Treehouse, for example, became La
Cabane des Robinson, the Dragon’s Lair became La Taniere du Dragon and the
Enchanted Castle, Le Chateur de la Bell au Bois Dormant. Disney wouldn’t give in on a
number of other names which they say would have lost their meaning in French: Main
Street USA, for one, has absolutely no meaning or equivalence in French, while La
Montagne du Grand Tonnerre didn’t seem to Disney officials as powerful or poetic as
Big Thunder Mountain.
Shadows Walt Disney 7
Euro Disney opened its doors in April 1992, and by the end of 1993, it was “carrying a
debt burden of around £2.3 billion by the end of 1993” (Mills et al., 1994). In order to pull it
from the brink of closure, Euro Disney was restructured, rebranded, and renamed Disneyland
Paris “to shake off the negative associations with Euro Disney…[even though] just about
everyone outside of Disney kept referring to it by the old name” (Stewart, 2005; Mills et al.,
1994).
No starker contrast of naïve cultural assumptions can be made other than comparing the
acceptance of the Disney brand between Japan and France. As cited by Dawson (2001),
University of Tokyo professor Masako Notoji wrote in his book, Disneyland as Holy Land, “the
opening of Tokyo Disneyland was, in retrospect, the greatest cultural event in Japan during the
‘80s”.
In contrast, “France’s environmental lobby claimed that Euro Disney was, ‘after
Chernobyl, the continent’s second most important ecological disaster’” (Michaud, 1992). “Other
intellectuals, not to be outdone, [refer] to Euro Disney as a cultural Chernobyl” (Michaud, 1992).
French intellectuals “felt that the idea of Euro Disney was a threat to French civilization and
culture” (Mills et al., 1994).
“The real problem with [Disneyland Paris]…is an overly optimistic belief that the Disney
concept could be exported anywhere in the world...‘If we had to do it over again,’ says one
official, ‘we’d probably think twice – not only about setting up shop in France, but about our
approach to exporting Disney abroad altogether”’ (Michaud, 1992).
Business Power
Steiner and Steiner (2009) argue that “business has tremendous power to change
society…[and] corporate actions have an impact on society at two levels, and on each level they
create change”.
Shadows Walt Disney 8
The French press heavily criticized TWDC for its economic power as described by
Steiner and Steiner (2009) as having “the ability…to influence events, activities, and people by
virtue of control over resources”. People “voiced complaints about the threat of irreparable
damage to the region” as well as “Parisian street fair vendors and performers [who] protested the
potential loss of their livelihood to Disney” (Forman, 1998).
More importantly, TWDC is criticized mostly for their cultural power for their “ability to
influence cultural values, habits, and institutions such as the family” (Steiner and Steiner, 2009).
TWDC’s venture represented to the French“the latest version of American cultural imperialism”
(Forman, 1998).
French commentator Marc Lambron (as cited by Forman, 1998) “feared that Disney
cartoon figures would replace the memorable characters of French literary masterpieces in the
minds and hearts of its citizens”. Others express concern “that Euro Disney might prove a
permanent threat to French culture, wiping away all traces not only of Corneille and Moliere but
also of Bordeaux wine and Camembert cheese” (Michaud, 1992).
More reasonable critics, however, have “cautioned against viewing French culture as so
fragile that it would succumb to the creation of a park…[and]“urged restraint in the country’s
reaction to the Disney venture, which was…a newcomer to a land ‘that has known eighty kings
and five republics’” (Forman, 1998).
The most disputable business power that TWDC imposed on the French that enraged
them the most was the power over individuals, which Steiner and Steiner (2009) states as power
“exercised over employees, managers,…consumers, and citizens”.
“Disney retained its U.S. employment policies and practices…[with] the expectation that
Disney’s Anaheim and Orlando rules of conduct would pass invisibly into the French system”
(Forman, 1998).
Shadows Walt Disney 9
Employees were expected “to work late into the night during the key tourist
months…[and] these company expectations are at odds with French employment practices
concerning employee holidays and compensation for overtime” (Forman, 1998).
The French also had problems with TWDC’s dress code and the rules of personal
hygiene.
The dress code appeared to be particularly restrictive to the French. Among the rules,
women are required to have natural-looking hair, to limit themselves to one ring on each
hand, to wear very little make-up, and, if they wear earrings, to be sure that their diameter
does not exceed two centimeters. Men need to have well-groomed hair that does not
touch their collar, to limit themselves to one ring on each hand, to avoid beards and
mustaches, and to conceal tattoos. (Forman, 1998)
The labor expectations by the French are understandably infuriating especially if they
were granted certain rights by their government; but the legal authorities’ challenge of Disney’s
right to place restrictions on dress and make-up in Disneyland Paris points to the power of the
French worker over corporations versus the U.S. worker who is forced to abide by corporate
dress codes.
TWDC faced many bitter battles against the French press, critics, construction
companies, and employees. None of the company’s problems, however, was isolated abroad.
Many domestic issues happening in its theme parks and resorts were often covered up in the veil
of the shadows of the Eisner regime.
Business Ethics
“Both Disneyland and Disney World grew out of Walt Disney’s fervent desire to create
theme parks that were clean, safe, and enjoyable” (Schweizer and Schweizer, 1998). “No
tradition was more hollowed than Walt’s habit of personally picking up any scrap of paper or
Shadows Walt Disney 10
refuse that he detected on his frequent visits to Disneyland” (Stewart, 2005). Disney’s behavior
represented what Steiner and Steiner (2009) called the first level of the corporate culture,
artifacts, “which include both physical expressions of culture and visible behaviors”.
The parks were amazingly clean: “cast members,” so named by Walt, were clean-cut,
friendly, and helpful, every aspect of their appearance and demeanor regulated by a
detailed handbook…Park employees for the most part exhibited an almost fanatical and
genuine devotion to preserving Walt’s dream, an attitude cultivated in the intensive twoweek orientation. (Stewart, 2005)
Disney meticulously detailed his company’s espoused values, which Steiner and Steiner
(2009) called the second level of a corporate culture. Disney personally developed the park’s
Standard Operating Procedure (S.O.P.) formula on the four basic elements of safety, show,
courtesy, and capacity (Schweizer and Schweizer, 1998). “The company’s reputation for safety
is something Disney continues to cultivate when it markets itself to families around the world”
(Schweizer and Schweizer, 1998).
Unfortunately, TWDC may not deserve that reputation anymore. In Schweizer and
Schweizer’s (1998) book, Disney: The Mouse Betrayed, the authors describe how the Board’s
appointment of former CEO Michael Eisner, “the first outsider to ever hold that position,” was a
“change in management…but what [they] ended up getting was a change in company mission”.
Steiner and Steiner (2009) called tacit underlying values “the hidden influence of [the]
third cultural level, [in which]… resides the deep, shared assumptions in the organization’s
culture about how things really work”. Employee testimonies, which are chronicled in Disney:
The Mouse Betrayed, represent the “unspoken, unwritten beliefs about the nature of the company
and what behaviors bring success” (Steiner and Steiner, 2009).
Shadows Walt Disney 11
Safety vs. the Bottom Line
Employees have stated that cutbacks have led management to place “an emphasis on a
strict, bottom-line approach to running the park” (Schweizer and Schweizer, 1998). New
policies such as the Operational Hourly Ride Capacity (OHRC) have been implemented to
accommodate more guests, but it comes at the cost of safety (Schweizer and Schweizer, 1998).
Fantasyland was the test site. “They started with the Dumbo ride. [They] took the fact
that we have sixteen Dumbos, the fact that we put slightly more than two people in a
Dumbo on average, and they figure the ride runs one and a half minutes, and they figure
it takes us one and a half minutes to load the guests and check all the Dumbos. So they
calculated in an hour that we should get five hundred fifty through. If you don’t, they
want to know why”. (Schweizer and Schweizer, 1998)
“In observing how safety complaints are handled and the attractions are operated…‘they
make more money continuing to operate in a dangerous situation and getting sued than they
would shutting down and fixing the problem’” (Schweizer and Schweizer, 1998).
Many blame these kinds of changes in company values and mission to Michael Eisner.
As cited by Schweizer and Schweizer (1998), Spencer Craig, a former employee of 24 years,
stated that:
[TWDC] was being reborn as something different. And the new management had little
interest in what the company had stood for over the years…There was a concerted effort
to minimize Walt’s legacy in the company…You’d hear things like…“who cares if
[Walt] rolls over in his grave”.
“Michael Eisner set about to boost the company’s profitability by more successfully
exploiting the Disney resources he inherited…Admission to the Magic Kingdom had been
relatively cheap, reflecting Walt’s desire that ‘every child in America’ be able to afford a visit,”
Shadows Walt Disney 12
but that gave wave to a 45 percent increase in park admission fees when Eisner took over
(Schweizer and Schweizer, 1998).
Based on Stewart’s (2005) book, DisneyWar, many of the problems at TWDC can be
attributed to one man – Eisner – who’s “management failures include an inability to delegate, a
frequent mistrust of subordinates, impulsive and uncritical judgments, his pitting of one
executive against another, [and] his disrespect for any hierarchy of authority other than his own”.
The culmination of these criticisms came to an embittered declaration of Eisner’s
resignation in 2003 by ousted board member Roy E. Disney, nephew of Walt and last remaining
active family member at TWDC, and his trusted friend, Stanley Gold, who resigned the board.
Corporate Governance
“‘Michael Eisner must leave now’” proclaimed Stanley Gold at the 2004 Annual
Shareholder’s meeting in Philadelphia (Stewart, 2005). Roy E. Disney along with Stanley Gold
launched the Save Disney campaign immediately after the board (led by Michael Eisner) refused
to allow the re-nomination of R. Disney on the board due to mandatory age limits established by
Corporate Governance Guidelines. “In Roy’s view, the decision to purge him from the board
was a declaration of war” (Stewart, 2005).
Save Disney was a campaign designed to appeal to TWDC’s shareholders to force Eisner
to resign. R. Disney would have no support from the board because “there were considerable
conflicts of interest that may have prevented board members from speaking out against Eisner,
even when this would have been in the best interest of the shareholders” (Downes, Russ, and
Ryan, 2007).
Eisner enjoyed lavish executive compensation not only for himself but for other
executives he brought in to the company. For as many friends as he brought in to the company,
he made enemies just as fast. Eisner has burned bridges with former best friend Michael Ovitz,
Shadows Walt Disney 13
former Disney president whom he hired and fired sixteen months at post, as well as other former
Disney executives such as Jeffrey Katzenberg and Steve Jobs. ‘“[Eisner] gets rid of anyone who
disagrees with him. But autocracy and creativity cannot coexist”’ (Stewart, 2005).
“For all the lip service paid to shareholder value, [TWDC] under Eisner was managed not
for all of its shareholders, but primarily for three: Eisner himself, Sid Bass [Disney’s former
largest shareholder] and his family interests” (Stewart, 2005).
The abandonment of the founding Walt Disney Company’s values “that if you provided
quality products that the public enjoyed and wanted, then profits would follow” has been
replaced by “Eisner’s drive for short-term profits, a near-obsession over 20 percent annual
growth, was at the root of many of Disney’s problems” (Stewart, 2005).
The problems reared itself in the form of issues surrounding The Walt Disney Company’s
globalization efforts into a multinational corporation, business power related to the exportation
of “American imperialism”, business ethics related to its theme parks and resorts, and corporate
governance problems under former CEO Michael Eisner.
Conclusion
In the eyes of the public, Roy emerged as the guardian of the Walt Disney legacy not
Eisner. “Roy Disney helped lead a Disney shareholder revolt that arguably contributed to
Eisner’s departure from the company” with nearly 45% of shareholders disapproval of Eisner
(Rosen, 2007). Eisner, foolish to think he can defeat Roy, exclaimed “It’s that Disney name!”
(Stewart, 2005). Indeed, it is.
Shadows Walt Disney 14
References
Dawson, C. (2001, September). Will Tokyo embrace another mouse: Disney's second park is
facing a swarm of challenges. Business Week, 3748, 65. Retrieved July 10, 2009, from
ABI/INFORM Global. (Document ID: 79891922).
Downes, M., Russ, G. S., & Ryan, P. A. (2007). Michael Eisner and his reign at Disney.
Journal of the International Academy for Case Studies, 13, 79-87. Retrieved July 18, 2009,
from ABI/INFORM Global. (Document ID: 1301620831).
Forman, J. (1998) Corporate image and the establishment of Euro Disney: Mickey Mouse and
the French press. Technical Communication Quarterly, 7, 247-258.
Kristof, N. (1995, August 27). Disney’s Tokyo Kingdom. The New York Times, p. 5-10.
Retrieved July 6, 2009, from http://80-proquest.umi.com.ezproxy.fau.edu/pqdweb?did=
674035281&sid=9&Fmt=3&clientId=3326&RQT=309&VName=PQD.
Michaud, P. R. (1992, October). Going global: Wild Kingdom. World Trade, 5(8), 46.
Retrieved July 18, 2009, from ABI/INFORM Global. (Document ID: 1350848).
Mills, R., Debono, J. D., & Debono, V. D. (1994). Euro Disney: a Mickey Mouse
project? European Management Journal, 12(3), 306. Retrieved July 18, 2009, from
ABI/INFORM Global. (Document ID: 9041471).
Rosen, K. M. (2007). Mickey, can you spare a dime? DisneyWar, executive compensation,
corporate governance, and business law pedagogy. Michigan Law Review, 105, 6, 11511168. Retrieved July 10, 2009, from ABI/INFORM Global. (Document ID: 1290089511).
Schwizer, P., & Schweizer, R. (1998) Disney: the mouse betrayed. Washington, D.C.: Regnery
Publishing, Inc.
Shadows Walt Disney 15
Steiner, J. F. & Steiner, G. A. (2009). Business, government, and society: a managerial
perspective, text and cases. New York: McGraw-Hill/Irwin.
Stewart, J. B. (2005). Disney war. New York: Simon & Schuster.
The Birth of Walt Disney World. (2009). Orlando-Disney World. Retrieved June 10, 2009,
from http://www.fodors.com/world/north-america/usa/florida/orlando-disney-world/
feature_30006.html.
The Walt Disney Company. (n.d.). Retrieved June 6, 2009, from http://corporate.disney.go.com