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The Walt Disney Company has pursued a related diversification strategy by capitalizing on the synergies among its movies, TV shows, media distribution channels, theme parks, and consumer products. Disney’s strategy is successful because its corporate strategy, compared to its business-level strategy, adds value across its set of businesses above what the individual businesses could create individually. In addition, the corporation has broad and deep knowledge about its customers that is a corporate-level capability in terms of advertising and marketing. This capability allows it to cross-sell products highlighted in its movies through its media distribution outlets, parks, and resorts, as well as consumer product businesses.
Brainstorm several examples of links across Disney businesses, such as movies based on theme park rides and retail products based on film characters. Why is this strategy successful in creating value?
Case Discussion Questions
Your minimum writing content for all four questions must be at least 200 words.
2 points will be deducted if not provided.
1. What corporate diversification strategy is being pursued by Disney? What evidence do you have that supports your position?
2. How does the corporate office create a parental advantage, which is difficult to duplicate by its more focused competitors?
3. What are synergies and economies of scope and how do they work at Disney to lower its overall costs?
4. Given the diversification approach that Disney uses, what are some things they can do to deal further with the trend toward cord-cutting and competition from large streaming and content producers such as Netflix, Amazon, and other content producers?