The Walt Disney Company is one of the largest media and entertainment corporations in the world.
Duh. Anyways…
Disney is able to create sustainable profits by successfully using synergy to create value across its many business units. After its founder Walter Disney’s death, the company started to lose its ground and performance declined.
Michael Eisner became CEO in 1984, and his strategy of expansion and diversification successfully rejuvenated Disney. Over the past 15 years, Disney seemed to be growing for the sake of growth and many problems aroused.
It is important though, for Disney to refocus on its corporate value, and manage its brand, creativity, and synergies.
Disney’s Success in Creating Sustainable Profits The Walt Disney Company had begun as a small animating company and grew into a multinational organization with undeniable profits. Though, their long-run success is mainly due to creating value through diversification.
Corporate strategies (primarily under CEO Eisner) include three dimensions:
- horizontal expansion
- geographic expansion
- vertical integration
Disney is a prime example of how to achieve long-run success through the choices of business, the choice of how many activities to undertake, the choice of how many businesses to be in, the choice of how to manage a portfolio of businesses and the choice of how to create synergies between those businesses.
All of these choices and decisions are made through Disney’s corporate strategies and enabled them to reach long-term success. Disney could very well reach long-run success mainly through the creation of value due to diversification and the management and fostering of creativity, brand image and synergies between businesses.
The most important part of Disney’s long-term success is due to its key strategic choices and incorporation of various diversification strategies.
Disney created value mainly through “vertical integration” of its business lines, especially through the concept of forward integration. For example, Disney integrated the production of movies and the final distribution in cinema’s or on television, especially through its acquisition of ABC in 1995. Through this acquisition, Disney was able to extend its boundaries quickly and gain access to a wider level of distribution for its products.
Disney is still successful today, and still has a lot to offer to customers and employees. Now, reaching out to students for summer work programs is just another way the magic touches our lives and is another reason why the corporation still has many years to go.
Hopefully, Disney will be around forever, with not just the “Entertainment King” but every King, Prince, Princess, Dwarf, and Mermaid out there.
