Walt Disney's Strategy Essay

Discuss whether or not Walt Disney’s lineup reflects a strategy of related diversification, unrelated diversification, or a combination of related and unrelated. Explain your answer and justify the extent to which the value chains of Disney’s different businesses seem to have competitively valuable cross-business relationships: Here, related diversification consists of when an organization adds or expands its existing product lines or markets. For instance, a telephone company that adds or expands its wireless products, I. e. , cell phones, Bluetooth’s, etc. and services by purchasing another wireless company is engaging in related diversification. Likewise, with a related diversification strategy you have the advantage of understanding the business and of knowing what the industry opportunities and threats are, yet a number of related acquisitions fail to provide the benefits or returns originally predicted. Conversely, it’s usually because the diversification examination underestimates the cost of some of the softer issues like change management, integrating varied cultures, handling employees – layoffs and terminations, mergers, promotions, and even recruitment.

And on the other side, the diversification examination might overestimate the benefits to be gained in synergies. On the other hand, unrelated diversification occurs when an organization adds new, or unrelated, product lines or markets. For instance, taking the same telephone company might decide to go into the television business or into the radio business. Additionally, this is unrelated diversification, i. e. , there’s no direct fit with the existing business.

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As such, an organization may want to engage in unrelated diversification because there may be cost efficiencies. More or less, the acquisition might provide an offsetting cash flow during a seasonal lull. Thus, driver for the acquisition decision is profit as it needs to be a low risk investment, with high potential for return. Consequently, the Walt Disney company hopes that an forceful marketing and publicity blitz will help their slowing down business. Also, with the company spending tens of million of dollars on TV advertising, and elebrities appearing on spots for Disney. Additionally, Disney has been plunging and has engaged in combination of related and unrelated diversification acquisitions aimed at bringing the family together like its resort properties, cruise lines, theme parks, and TV broadcasting of ABC and ESPN, etc. In addition, by Disney’s actions we will all benefit from lowered prices at theme parks, movie theaters, professional sporting venues, etc, as it will not be as expensive to go to Disney owned events.

Second, it will help restart several industries like the airline and hotel industries by moving it up a little if people want to go to Disney related events. Third, it will help some celebrities get in on some of the action. By putting these people on ad’s that induce fun and excitement. And lastly, it will help the communities that feed off of the money that Disney brings to them by helping little businesses, like books and magazines companies, smaller fledging airlines, musical recordings and related art products.

In fact, the message Disney is sending in its ads and acquisitions is one of get out and buy and incorporating a family diversification theme of a collaborative of unrelated businesses instilling the theme of what could be more magical than spending time with the ones you love at places that’s always brought people together. Reference Disney. go. com. (2010). Company Overview. Retrieved August 2, 2010, from http://corporate. disney. go. com/corporate/overview. html Dr. Mark Lee, Ph. D. , J. D.


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