What corporate-level strategy is being pursued by Disney? What evidence do you have that supports your position? Walt Disney Company Corporate StrategyThe Walt Disney Company has a diversified set of busi-nesses in movie-making, television show production,media distribution (eg, ABC and ESPN), interactive andtheme parks (eg. Disneyland, Disney World, DisneylandParis, and Shanghai Disneyland), and retail and consumerproduct sales. It is the second largest mass media producerafter Comcast, which owns NBC and Universal Studios.success of Black Panther, a superhero film that dealswith issues of being of African descent. Its success fol-lows other Marvel superhero movies such as WonderWoman, Guardians of the Galaxy, Captain America, andIron Man. Marvels characters have also led to TV seriessuch as Agency of S.H.LE.L.D. from Captain AmericaThe Winter Soldier.While other more focused media content providers suchas Discover Communications, CBS, and Viacom haveDisney has been also been moving from its historicalcentral focus on animation in movies such as Cinderella,seen decreasing revenues because of lower ratings and TVad weakness, Disney was strengthened through its otherbusinesses based on its diversification strategy. Althoughits ad revenues have decreased like other more focusedThe Jungle Book, and Beauty and the Beast, into the sametitles or stories using a live action approach. The recentrelease of A Wrinkle in Time staring Oprah Winfrey andReese Witherspoon is another example. Cinderella, a liveaction version of the original 1950 animated classic, staysparticularly close to the "fairy tale version of the script"This approach comes from its understanding of its custom-ers and what they prefer. Other approaches can be found inAlice in Wonderland with Johnny Depp and Maleficent withAngdina Jolie, both of which were twists on their respec-tive originals (Maleficent came from Sleeping Beauty). Theaction versions of these two movies grossed $13 bllionand $813 million globally, respectively. Although Disneyhas had some relatively unsuccessful pictures-JohnCarter, The Lone Ranger, and The Sorcerer's Apprentice-itsaction movies based on its animated fairy tales hav beerelatively more successful. Disney successfullyCinderella products in its stores and in other foc sed routlets and advertised its movie-themed prodctswith direct connections to Alice, Maleficent, an FrocenAll of these have been consumer product successes, andA Wrinkle in Time is likely to have the same appeal. Allof these feed products not only into its Disney stores andDisney-themed sections in department stores, but alsopromote resort themes and thus drive interrelated revenuethrough cross-sellingOne of the downside problems for these fairy talethemes is that the stories are in the public domain. Assuch, other competitors are seeking to follow Disney'ssuccessful approach. For example, Time Warner Inc'Warner Bros. Studio will release Pan, which seems tocontent producers and distributors, its other businessesare growing and allow it to maintain higher earnings com-pared to other rival media producing firms.Disney's strategy is successful because its corporatestrategy, compared to its business-level strategy, addsvalue across its set of businesses above what the indi-vidual businesses could create individually. In the lit-erature this is often known as synergy, or in the moreacademic literature, economies of scope (defined earlierin Chapter 6). First, Disney has a set of businesses thatfeed into each other: its studio entertainment, consumerproducts and interactive media, media network outlets,parks and resorts, studio entertainment parks, and retailnterprises have overlapping aspects. Within its stu-lio entertainment businesses, Disney can share activ-ities across its different production firms: TouchstonePictures, Hollywood Pictures, Dimension Films, PixarFilms, and Marvel Entertainment. By sharing activitiesamong these semi-independent studios, it can learnfaster and gain success by the knowledge sharing andefficiencies associated with each studio's expertise. Thecorporation also has broad and deep knowledge aboutits customers, which is a corporate-level capability interms of advertising and marketing. This capabilityallows Disney to cross-sell products highlighted in itsmovies through its media distribution outlets, parks andresorts, as well as consumer product businesses.Recently, for example, Disney has found success inmaking live action movies from former comic booksthrough its Marvel acquisition. A recent example is the Book in 2017 and has another script based on Beauty andbe beating Disney to the punch on its former Peter Panmovie success. Likewise, Time Warner released JungleC Cn lang M 202Part 2 Strategic Actions: Strategy Formulationthe Beast. Comcast's Universal Pictures is developing TheLittle Mermaid. However, neither of these studios has theretail marketing power nor the franchising capability ofDisney and its interrelated business and corporate skills.Although they are seeking to build these skills, theycannot duplicate Disney's corporate strategy and parentbenefit because they are primarily focused on contentand distribution.In summary, Disney has a current corporate parentaladvantage over its more focused movie and content pro-ducing and distribution competitors due to the power ofits interrelated set of businesses, where the corporationfacilitates customer market information sharing and skilltransfer among the various business units.Disney also owns ABC and its sports channel ESPN.Although ESPN subscriber numbers are down recentlydue to cord cutting, Disney has developed the ESPN WideWorld of Sports Complex at The Walt Disney World Resortas a sports-related complex that attracts sports enthusiastsand teams to its Disney World Resort in Florida. The com-plex also attracts sports teams such as the Atlanta Bravesduring their training camp. It is planning to reduce the cordcutting by offering its own standalone streaming service,and ESPN is already an anchor tenant of emerging digitalplatforms, with carriage on Dish's Sling TV, DirecTV Now,PlayStation Vue, YouTube TV, and Hulu.Sources: E. Low, 2018, Forget ESPN, this part of Disney is 'underappreci-ated by Wall Street, Investors Business Daily, February 7, 20;S. Mendelson, 2018, Box office: Marvel's "Black Panther tops $800Mworldwide today, Forbes, www.forbes.com, March 2; A. Gara, 2017.Disney's 1995 deal for ABC made Buffett billions by marrying MickeyMouse with SportsCenter, Forbes, www.forbes.com, May 23; C. Harrison,2017, ESPN subscribers drop to 14-year low, putting pressure onDisney. Bloomberg, www.bloomberg.com, November 22: N. LaPorte,2017, Marvel rules the universe, Fast Company, May, 60-68; B. Fritz,2015, Disney recycles fairy tales, minus cartoons, Wall Street Journal,March 11, BI, B6; M. Gottfried, 2015, Walt Disney has built a bettermousetrap, Wall Street Journal, Feb 5, C8; M. Lev-Ram, 2015, Empire oftech, Fortune, January 1, 48-58; C. Palmeri & A. Sakoui, 2015, Disney'sprincesses' give a little live action, Bloomberg Business Week, March 9.30-31; D. Leonard, 2014, The master of Marvel universe, BloombergBusiness Week, April 7, 62-68; C. Palmeri & B. Faries, 2014, Big Mickey iswatching, Bloomberg Business Week, March 10, 22-23.Case Discussion Questions1. What corporate diversification strategy is being pursued byDisney? What evidence do you have that supports your position?4. Given the diversification approach that Disney uses, what aresome things that they can do to deal further with the trendtoward cord-cutting and competition from large streamingand content producers such at Netflix, Amazon, and other con-tent producers?2 How does the corporate office create a parental advantage,which is difficult to duplicate by its more focused competitors?- at are synergies and economies of scope and how do theyworka Disney to lower its overall costs?

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What corporate-level strategy is being pursued by Disney? What evidence do you have that supports your position?

Understanding Business

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ISBN:9781259929434

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