There was an article today about how Disney is "ruthlessly" trying to cut costs even to the point of taking away company cars from the executives (the horror!) in order to maintain their current profit margin. The entire article is below. Basically what it says is that Disney has had some amazing profits the past few quarters, and so they are doing anything and everything they can to maintain that level of profit. In today's corporate world, companies in general do not accept that there are going to be good quarters and bad quarters, and good years and bad years. They don't look at the average profit over the past year or the past five years as the benchmark for where they should head. They look at the highest possible profits they've had and make that the benchmark, and now they will not accept anything less then that, and will set corporate goals for about 10% or so above that number for the following year. If they don't make those goals, then people get fired and other people with a "proven track record" of exceeding their goals with a previous company will take their place. Now Disney seems to be slightly better then the average company in that I think their are a lot of people within the company at all different positions that really do care about the Disney name and what it represents, but at the same time they are responsible to their shareholders and have to make the shareholders happy first and foremost.
I was thinking specifically about the article a week ago that showed Bob Iger taking the board of directors out and showing them Cars Land and how successful the investment has been. I am hoping that he is trying to convince them that another large investment somewhere at Disneyland can be just as successful. Cutting costs is never a solution because that only works for a quarter. Eventually you get to the point where you just can't cut anymore, so your fake profits that you posted by reducing costs instead of actually making more money disappear, and because your quality has declined, your sales have declined and in the end, you not only run out of things to cut, but your actual profits go down and everyone gets fired anyway. So I guess we'll have to just wait and see if this extends to the parks and more things get cut, or if they're cutting things that they think are unnecessary expenses IN ORDER to invest more in the parks. Time will tell.
Here is the complete article:
Disney Phases Out Executive Car Perks in Iger Profit Push