STRAT Case Study
“The Walt Disney Company: Its Diversification Strategy in 2012
February 9, 2015
February 9, 2015
* Understand why a company’s resources and capabilities are central to its strategic approach: Diversification is Disney’s main strategy for constant growth. The company is broadly diversified, including five major segments. Disney attempted to capture synergies existing between its business units.
* Strengthening a company’s market position by expansion: Disney aims to expand globally and exploit the business opportunities in the emerging market since the domestic market is about to be saturated.
* Become aware of what the company ...view middle of the document...
The brand name and brand image is a valuable intellectual property of Disney and all of its divisions are heavily dependent on the brand.
According to the case, Disney’s corporate strategy mainly focus on (1) creating high-quality family content, (2) exploiting technological innovations to make entertainment experiences more memorable, and (3) international expansion. In general, Disney has been focusing on an offensive strategy recent years. The company acquired some very valuable brands such as Pixar and Marvel, which were all very successful acquisitions and has created high cash flows for the company. Even though Children are always the target audience for Disney, they are not the cost driver for Disney. Therefore, Disney always aims to create attraction for the whole family instead of only focusing on Children.
Segment | 2011 Revenues (in millions) |
Parks and Resorts | $9,302 | 41% |
Media Networks | $8,790 | 39% |
Studio Entertainment | $1,733 | 8% |
Consumer Products | $1,933 | 9% |
Interactive Media | $768 | 3% |
The domestic market for Disney is about to saturate. One of the strategic priorities of Disney is to internationally extend its impact by expanding in to growth market such as China and India, which has large population and potential growth. The Company invested nearly $15 billion in capital in its businesses from 2008 to 2012, including a 43 percent investment in a $4.5 billion theme park in China. Disney planed to construct two new 340-meter ships for its Disney Cruise Line, and the acquisition of Pixar and Marvel. The Shanghai Project is conducted by Disney and another Chinese company, which has more control over the project than Disney. The deadline for the project has been changed for several times. Even though Disney is very optimistic about the project and expects the project to generate high income for the company, developing business overseas is still very challenging. However, the theme park industry is becoming more and more competitive in China and there are many theme parks opened every year in China. In order to succeed in the global theme park industry, it is very necessary for Disney to diversify their resources and localized the company’s products. Disney should also try to adapt its theme parks to the preferences of its new Asian customers. In order to successfully compete with the local companies, Disney should focus on strategies of decreasing their operation costs and become more competitive on cost and price. In addition, Disney’s expansion plan is very likely to be influenced by the changing laws and regulations in foreign countries. Foreign countries may impose any number of a variety of restrictions---trade restrictions, ownership restrictions, or currency exchange controls, any of which could affect the Disney Company. The company’s businesses in foreign countries are subject to the laws of those countries. The company may have to spend additional money to comply with that country’s...