Disney's competitive strategy
1) Vertical integration
2) Strategic alliances
3) Corporate diversification
4) Creative content
5) International strategy
Sometimes it's not worth it to vertically integrate because then you hold all of the risk if an investment goes wrong. My first example of Disney's strategy is actually the antithesis of vertical integration- outsourcing.
Produce of 3D films to reduce risk in case of failure in the industry The Strategy:
Disney outsourced the production of 3D films to Pixar to invest in the new product type without as much risk if the new technology should fail in the markets. However, as Pixar gained confidence and competitive advantage, the company started taking advantage of Disney's reliance to renegotiate contract terms, to such a point that it became more worthwhile for Disney to buy out Pixar than to continue doing business with it.
Distribute adult-oriented films as well as child-oriented films The Strategy:
Disney acquired Miramax, a studio that produced films for adults, to allow the company to diversify its content and produce films like Pulp Fiction and Kill Bill. Instead of trying to build and produce that type of content by itself, which could potentially damage the Disney brand, the company decided to buy out a studio that already produced adult-oriented films.
Develop its own distribution capabilities
Disney took over the ownership of activities previously performed by its clients with its acquisition of ABC Studios for 18.9 billion dollars.
Disney estimates that its products and services reached 99% of American households by 2009 with the help of the ABC acquisition.
The company expanded its advertising revenue from 3,000,000 in 1995 to 98,000,000 in 1996 to 206,000,000 in 2008.
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