Disney Vertical Integration Essay
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.
The Year: 1991
The Goal: Produce of 3D films to reduce risk in case of failure in the industry
The Strategy: Outsourcing
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 …show more content…
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.
The Year: 1996
The Goal: Develop its own distribution capabilities
The Strategy: Forward Integration
Disney took over the ownership of activities previously performed by its clients with its acquisition of ABC Studios for 18.9 billion dollars.
$ 18,900,000,000
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.
The Year: 2003
The Goal: Distribute protected digital content and compete in high-tech society
The Strategy: Strategic Alliance /
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.
The Year: 1991
The Goal: Produce of 3D films to reduce risk in case of failure in the industry
The Strategy: Outsourcing
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 …show more content…
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.
The Year: 1996
The Goal: Develop its own distribution capabilities
The Strategy: Forward Integration
Disney took over the ownership of activities previously performed by its clients with its acquisition of ABC Studios for 18.9 billion dollars.
$ 18,900,000,000
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.
The Year: 2003
The Goal: Distribute protected digital content and compete in high-tech society
The Strategy: Strategic Alliance /