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Case study The Walt Disney Company: The Entertainment King

1.Briefly describe the type(s) of diversification strategies that Walt Disney pursues/has pursued over the years. The Walt Disney company can be seen as a highly diversified company. Over the years, it has pursued a wide range of diversification strategies that we can enhance:•Horizontal integration: obviously, Walt Disney has invaded several markets, diversifying its offer to many fields. In 2000, we can find five big main fields of action where Walt Disney operates: Media Network, studio entertainment, theme parks and resort, consumer products and internet and direct marketing. Moreover, each of these categories is itself divided in other categories characterized by the horizontal diversification strategy. For instance, we can break the media network category in two: broadcasting and cable network. •In a way, we can also consider that Walt Disney favored vertical integration: for instance, many of its products (books, magazines, VHS, audio and computer software, etc) were sold in stores simultaneously owned by Disney. The acquisition of ABC can also be considered as an expression of this strategy of vertical integration, to the extent that it was a way for Walt Disney to diffuse some of its programs on its own. •In 1954, Walt Disney started pursuing a strategy of financial economies: the ABC-produced television program Disneyland was actually destined to generate financing and stimulate public interest. The creation of the first park in 1955 pursued the same strategy. •With Eisner, management incentives appeared with the employees training. •At the same time, the efforts made to maximize theme park profitability were the result of a revenue enhancement strategy by coordinating the businesses in order to increase to willingness to pay of the consumers; The “retail-as-entertainment” concept is coherent with this strategy. The calendar of promotional activities of the next six months, introduced in 1987, responded to this strategy too through the concept of “cross promotion”. The different strategies presented were used several times over the years, for different purposes. The main point is that Walt Disney relied on many logics of diversification to implement the introduction of new products on the market, and to diversify its activity, that is why its activity seemed to be so flourishing and so wide. 2.What is the critical resource that Walt Disney is trying to leverage in its businesses?Walt Disney handles a lot of resources in its businesses, but we can consider that there is one main critical resource that it tries to leverage: creativity, and in a way, all the resources that are linked to it (intellectual property for instance). Actually, over the years, Walt Disney adopted different strategies, diversified its activity, always trying to manage creativity in the best way. Under Einer, creativity was handled through the brain-storming meetings, and when they were reduced or became useless, they were regretted. Furthermore, the only way to survive for the company was to keep being creative, which is why it had hard times when creativity was not sufficient or handled correctly. Diversification is also a way to expand creativity to many fields keeping the Walt Disney spirit and culture. 3.The period from 1984 until about 1994 was a successful one for Walt Disney. How was Disney set up to extract so much value out of its businesses?The years 1984-1994 were those of change for Walt Disney, under the management of Eisner. And success followed changes and innovations. Disney used several ways to extracts so much value out of its businesses:The movies industry was enhanced: Walt Disney released many new movies, basically 15 to 18 per year. Katzanberg was a major actor of this change, for he had a real talent in finding good script and attract good actors and actress and partners. New attractions made the theme parks even more successful, while they had remained...
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