Walt Disney

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PRESENTS:

International LLM
Strategic Management

A) Industries where Walt Disney compete:

Walt Disney tries to be the biggest global provider of media and entertainment contents, for that purpose, operates in four different sectors:

1. Media Networks: with two main bodies, on the one hand Broadcasting units, which include the ABC television acquired in 1995 for $19 billion (second largest acquisition in US history at that moment), making Disney the largest entertainment company in US and providing it with worldwide distribution outlets for its creative content. On the other hand, Cable Networks, which include ESPN-branded cable networks, Disney Channel, Disney Channel International, stakes in E! Entertainment and Lifetime and the start-ups like Toon Disney and SoapNet.

2. Entertainment Studio: producing several movies, television animation programs, musical recordings and live stage plays. Also engages covering sectors such as theatrical, home video and television distribution of Disney’s film and television library. And finally including studios like Walt Disney Pictures, Touchstone, Buena Vista, Miramax and Pixar (the successful animation studio created by Steve Jobs).

3. Theme Parks and Resorts: which are pretty famous all over the world and include the Walt Disney World resort in Florida with around 15 million visitors per year, the Disneyland Park and two hotels in California, and the Disney Cruise line operated out of Port Canaveral, Florida. It also produces royalties on revenues from Tokyo Disneyland where Disney receives 10% of gate receipts, 5% of other sales and ongoing consulting fees, and Disneyland Paris, which was bailed out by some investors after suffering important economic difficulties.

4. Products for consumers: it licenses the company’s characters to consumer manufacturers, retailers, and publishers throughout the world. The company also works in direct retail using The Disney Stores, and produces books and magazines in the US and Europe. The company also produces audio and computer software products, film, video and computer software products for the educational marketplace.

B) Strategy and corporate objectives of Walt Disney:

Participation in these four sectors allows the company to benefit from synergies and consequently be able to cover the whole entertainment experience of customers. Eisner (Walt Disney CEO known for being able to rebirth the company in the late twentieth century) used to say: “the ability to leverage the Disney brand depended on corporate synergy”, for this reason it was created different activities such as the “synergy boot camp” where employees learn about the company during 8 days not being allowed to handle their regular duties, they also have an award system for those who had been most committed to synergy, forcing everyone to look left and right and to build bridges between divisions.

This synergy process, boosted revenues through cross-promotion among different divisions, for instance one year before a movie was going to be released, it was presented to directors of consumer products, home video and theme parks, so they were able to participate in the process and prepare their strategies for new products.

In its web page the Company states its main corporate objective: “The mission of The Walt Disney Company is to be one of the world's leading producers and providers of entertainment and information. Using our portfolio of brands to differentiate our content, services and consumer products, we seek to develop the most creative, innovative and profitable entertainment experiences and related products in the world.” This can be considered as too general but is such a huge Company that it is very difficult to set an identified unique objective for all its divisions.

There are two main ways for creating competitive advantage. 1) cost leadership; and 2) differentiation. Walt Disney follows mainly the differentiation method, they try to be...
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