EXPLOITING SYNERGY BETWEEN BUSINESSES: SUCCESS
WALT DISNEY COMPANY CASE STUDY
PART I Why is Disney so successful
The success of Disney is a combination of creativity and innovations, and the managerial ability to identify and take advantage of every possible synergy. Walter Disney was the entrepreneur who had the creative skills. Knowing his limitations, he let other people do what he couldn't do good enough himself. This is an important skill, as it leads to quality products being made. The step from making short cartoons to doing full length cartoons and later live-action movie production is quite natural. What is not that natural and straight forward, and at the same time significant to the success of Disney, is the way in which Disney started to integrate vertically when they created the Buena Vista Distribution. The vertical integration along with the horizontal diversification has allowed for the exceptional building and exploitation of the huge synergies that exists in Disney, and which has to be regarded as the main reason for the success of Disney. One of the key factors of the successful diversification is the very strong branding of the name Disney. That the name was famous after the success in the early years made it among other things possible to go into the theme park industry. Evaluated isolated, the theme parks was a success. But when also accounting for the synergies created, the decision to go into this industry was a huge success. It has created a spiral of synergies, where the characters in the movies get more popular due to the parks, as well as the fact that when people are visiting the parks they get stimulated to buy the merchandise. This is just one example of the synergies that exist in Disney. When Michael Eisner took over control in Disney, he kept focusing on same corporate values as earlier, which are quality, creativity, entrepreneurialism and teamwork. These values have been preserved despite of the size of Disney, and are an important factor in sustaining and building the Disney brand.
PART II & III What interrelationships exist between the business & Create a map of the interrelationships
In exhibit 3 we can see a presentation of the different business lines of Disney, and we believe that this can be used to describe the interrelationships between the businesses. All the different businesses are put together under one roof to promote the brand "Disney" and their entertainment products, which is their core competence. We believe that some of the businesses can be seen as having horizontal interrelationships, and some as vertically integrated.
In our opinion you can to some extent see the Media Networks, Theme Parks & Resorts, Consumer Products and Internet & Direct Marketing as distibution channels for Disney's Studio Entertainment products. Some business lines, like Media Networks with tv stations and cable networks, obviously also serve other purposes than just to promoting the Disney brand, and therefore the classification into horizontal and vertical is not clearcut. The Theme Parks & Resorts and Consumer Products main purpose is to work as a "promoting and distribution" channel for the entertainment products. Within the business lines there are also differences regarding the purpose and independence of divisions. Within the media network we believe that ABC, ESPN and the TV channels are quite independent in comparison to Disney Channel and Toon Disney. The same conclusion can be drawn when looking at the divisions within Internet & Marketing. Here Disney Online is serving a totally different puspose than the ESPN and ABC internet group.
PART IV Management of the interrelationships
To answer this we will chose to focus only on the relationships between the different branches of Disney to focus on the corporate level and not on inter company relations. Because of the fact that Disney is a large conglomerate, which consist of many different parts which all rely on...
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