You are on page 1of 3


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-asentertainment 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 profitable even after the Disney brothers death. A meeting of all divisions was frequently organized to generate new ideas. Euro Disney was created. For the other parks, attractions were added, and expansion of the hostels emphasized in order to encourage longer says and to attract major conferences. Diversification was pursued over these years: the consumer products division entered books, magazines, and record publishing. The Walt Disney culture widened to a lot of products and markets. The sell through approach allowed Walt Disney to market videos at low prices to purchase by consumer.

In the same way. trying to add value to many of its businesses. Actually. That¶s why profits were more stable throughout the years. studio entertainment ). the ROE of the company seriously decreased over the year. Customers have always been enticed by tangible elements of the Disney Company and intangible elements like this unique « magic » of Disney. Disney¶s magic stemmed from this philosophy and secured the company¶s brand image. Studio Entertainment generated less revenue than Media Networks. We can easily think that Walt Disney is too diversified. Sports complex for instance seem not to be very close to Walt Disney s core activity. between 1984 and 1994. What is also striking in disney¶s history is the resilience of the firm : Disney has always been able to pick up after setbacks thanks to its internal cohesion and cooperation and its diversification leitmotiv. creativity and coordination should always exist in and between the many segments where the firm operates and in and between all the actions that it is undertaking. Then.Acquiring a National Hockey League expansion team added also value to Disney businesses. We should then remind that the core of the company is mainly these features. More globally. but in more efficient ways. especially in some markets (theme parks. which were Disney s main businesses. passing from 25% in 1988 to 4% in 2000. Moreover the strategy of diversification. But we should also take into account the importance of the benefits in terms of image and culture provided by each segment to the company. All its other activities are related to it and could not exist without this main activity. like for the theater production of Beauty and the Beast. Finally. helped Disney to expand as each part of the company could advertise for another part. He adopted a multipronged strategy that put emphasis on innovation and financial . expanding again its culture. watching a Disney movie could prompt people to buy Disney products and to go to EuroDisney and attending EuroDisney could easily encourage people to watch a Disney movie. Actually.Looking at Disney s business lines in 2000/2001. Making theater shows of the motion pictures. But we should also acknowledge that for such a diversified company. movies for adults. many new activities added values to the motion pictures and the parks. 1) Why has Disney been so successful for so long ? Different factors account for Disney¶s success. we can observe that in 2000. with more than $9. Disney created its own philosophy : to make universal family entertainment possible. Acting in so many fields and markets does not help in a context of a declining economy (households have less and less money for entertainment) and of a growing competition. Disney created a virtuous circle of self promotion. the first category for revenue was media network. which are still profitable and are very important for the image of the brand. how did he increase net income in his first four years ? Eisner came to office in 1984. 4. and the theme parks. can also be seen as a way to increase the value of the motion picture. What is more. There were actually inequalities between the many activities and fields where Disney operated. First of all. and forgetting about the diversification strategies it had been pursuing over the years.000. Walt Disney kept diversifying. Internet and Direct Marketing only totaled $368. by relying on a wide array of businesses. In regard to this figure. Walt Disney handles pretty well the wide range of its activities and their coordination. the movies. as the embodiment of Walt Disney culture. The efficiency of the structure of the company needs then to be questioned. can be seen as far from the magic of Disney. But the core activity of Walt Disney is embodied by its animated features. 2) What did Eisner do to rejuvenate Disney ? Specifically. That is why a focused global strategy could be appropriate and favorable for the company. Actually. The firm tried to reach this goal in every business unit it created. Maybe Walt Disney should envision going back to these core activities. do you think that Disney is in the right mix of businesses and that its strategy is well chosen? Why or why not? What (if anything) would you change?In 2000. was attracting and made Disney good advertising. The best way to initiate change in Walt Disney current structure could be to assess the profitability of each of the segments in which it is present. For instance. the company did not depend on one source of profit. the team was located near to Disneyland to Anaheim. even if there are parts of the entertainment industry. which was chosen early.

. Why has Disney been successful for so long? Disney¶s long-run success is mainly due to creating value through diversification. I. Their corporate strategies (primarily under CEO Eisner) include three dimensions: horizontal and geographic expansion as well as vertical integration. Innovation was made possible thanks to the promotion of Disney¶s specific culture in the training programm and the improvement in the coordination of the company¶s various activities. Eisner¶s turnaround of the company and his specific implications/strategies Is this essay helpful? Join OPPapers to read more and access more than 550. Disney was able to extent its boundaries quickly and gain access to a wider level of distribution for its products. which enabled...performance. p..p.. especially through its acquisition of ABC in 1995 (1. Eisner also aimed at maximizing shareholder wealth and he achieved it because of a tight control of the different business units. One will discuss Disney¶s long-run success through a general approach. p.000 just like it! GET BETTER GRADES will be examined in detail in part II. the choice of how to manage a portfolio of businesses and the choice of how to create synergies between those businesses (3. All these choices and decisions are made through Disney¶s corporate strategies and enabled them to reach long-term success.191221). p. the choice of how many businesses to be in. For example. Furthermore. Disney created value mainly through ³vertical integration´ of its business lines..6/7). the choice of how many activities to undertake.11-14). brand image and synergies between businesses (1. forward integration was accomplished between its various channels and its retail stores (³retail-as-entertainment´ concept) (1. Through this acquisition. Disney is a prime example of how to achieve long-run success through the choices of business. Disney integrated production of movies and the final distribution in cinema¶s or on television. Disney could reach long-run success mainly through the creation of value due to diversification and the management and fostering of creativity. especially through the concept of forward integration.6) or theme parks. He refocused Disney by increasing the number of films released and also expanded the firm into new areas. The most important part of Disney¶s long-term success is due to its key strategic choices and incorporation of various diversification strategies.