Walt Disney and Organizational Value - Essay Example

The term value has been aptly defined in a study as the summation of core competencies of individual departments of a company. In simple terms, it means that the value of an organization is nothing, but the level of knowledge and skills that people have in a particular organization. The study also talks about how the value of the organization is enhanced by close collaboration and communication between different organizations. If two organizations willingly share information with each other it would become increasingly important for the success of the organization because the organization is exposed to more learning opportunities in this case. Hence, an organizational value is not only created by its resources, but also by new knowledge and information that it can learn over time. This will also lead to organizational development. (Winkler)

Another important aspect of organizational value creation is the organization’s willingness and ability to meet the needs of its stakeholders and customers. No business can thrive without having satisfied customers because they bring money to the organization. No organization would be able to operate efficiently if its customers are unhappy or do not transact with the company. Many customers often ask for too many things. Businesses, as a result, are forced to do conjoin analysis in order to decide trade-offs. They would be willing to sacrifice certain less important features of a product or service and replace them with important elements to create value for their stakeholders and customers. Many companies which fail to develop customer-driven approaches fail in their ability to satisfy and retain their customers over the long run. They are forced out of the business by their competitors who focus on constantly creating and disseminating value for their customers. In the recent fast and competitive environment, there is no luxury for any business to become complacent, because if a laid-back strategy is chosen, the cut-throat competition in the industry will force the company out of the business. (Tomb and Bailey)

A study done by Krista Jackson highlights the organizational value dimensions as shown in Figure 1 below. The model highlights three-dimensional levels. The first level is about survival values, the second level is about the ethical value dimension and the third stage is about the well-being dimension. Any organization starts from the survival value in order to succeed in the first changing business environment. In the first stage, the organization has to set its system rights. They need to develop proper financial report systems, set conservatives values, and control volatility in the economic environment. After all of this is achieved, the organization moves to the second level of value dimension. Here the organization is concerned about ethical values. At this level, there is greater advocacy for creating interpersonal value, ethical values, and general humane behavior. The third level of value is achieved through developing proper vision values, emotional values, and self-actualization values. Achievement of this results in proper value creation for the organization’s stakeholders. The sum of all these value dimensions is greater than the amount of input used in value creation. It is where the synergy is created and the value created by the organization is greater than its costs and efforts involved in creating the value. (Jackson)

Figure 1: Organizational Value Dimensions

Source: (Jackson)

                       Walt Disney is a large company. The majority shareholder of the company at one time was Steve Jobs with over 10% equity investment in the company. It is America’s large media conglomerate. The company’s financial statements are decorated with amazing financial figures. In 2011 alone, the company earned revenues in excess of $11 billion marks, and its operating profits were around $8 billion. The company is ever-growing. It has adopted several approaches over the years for value creation. The company believes in value creation for not only the shareholders but also for the customers. It also believes in synergies created by the close working of departments within the organization and by creating strategic network alliances to further improve the process of value-creating. (Company)

            Walt Disney has created organizational value through strategic alliances with several companies all over the globe. This is consistent with the finding of Winklen, as discussed in this paper. It is probably the easiest and most cost-effective way of creating organizational value. A large part of the success of Disney has been valuing creation through diversification, control, and leadership. Diversification began in Disney in the 1920s. Since then the company has never looked back and has added several assets without brilliant earning power and potential to its portfolio. Leadership has also played an important role in implementing value creation dimensions as promulgated by Jackson. Michael Eisner took over the reins of the company when it was in deep crisis. The company was lacking any value at all and was poorly managed. In his first effort, Eisner improved the image of the company by implementing proper internal control tools and improve the company’s system of financial management and the way transactions were being handled in the company. Eisner also set conservatives values and controlled the economic volatility that the company through proper diversification strategies. In the second part of the strategy, Eisner propagated the ethical approach. He told all his employees that no unethical behavior will be allowed, and Eisner himself ensured that no employee of the company is involved in activities that might bring a bad name to the company.