Table of Contents
Strategies
Generic Strategy
Extent and Relatedness of Diversification
Modes of Implementing Recent Diversification Initiatives
International Strategy Implemented
Conclusion
Disney has a dominant presence in major entertainment segments and markets. The company’s primary operations are in mass media entertainment, but it has diversified into theme parks, personalized gifts, and cruise lines through large acquisitions. It produces and distributes animated films via its business units, including Media Networks and Disney Interactive. Its strategic goal is to develop its products or businesses and expand into untapped markets globally. This paper analyzes the business-level, corporate-level, and international strategies that Disney uses for competitive advantages.
Strategies
A strategy can be implemented at the corporate, business, or functional level of operation. At the business level, the Disney uses licensing and joint ventures for its global expansion strategy. For example, the Walt Disney Parks and Resorts, the company’s highest performing segment, expanded to Tokyo, Japan, by licensing its subsidiary, Tokyo Disney Resort (The Walt Disney Company, 2021). Its expansion into Shanghai, Paris, and other cities entailed partnerships with local businesses.
Disney’s corporate level strategy is geographical diversification, which is aligned with its mission to deliver entertainment experiences for global audiences. According to the Walt Disney Company (2021), it has physical operations in over 80 countries in the Americas, Europe, Asia-Pacific, the Middle East, and Africa. Operations in all its business units are geared towards exploiting new opportunities in new locations. The focus is on creating exceptional experiences for families and children in different countries.
Disney’s international strategy is the transnational approach that is characterized by universal products and local responsiveness. Popular entertainment experiences are changed to fit specific cultures and languages. In some markets, entirely new content is developed, for example, Violetta in Argentina and Easter Eggs in Brazil (The Walt Disney Company, 2021). Thus, Disney’s approach is consistent with the strategy of globalizing the local and localizing the global. This operational flexibility ensures culturally relevant product for each region, increasing the company’s foreign revenues.
Generic Strategy
Disney’s generic strategy is differentiation; it provides a broad product portfolio different from that of its competitors to remain competitive. It provides differentiated family entertainment and interactive media to a wide customer base. Less creativity is required when providing entertainment parks, but creating sensational, theme-based products such as Disney’s Wanda City need innovation. The successful themes for its parks differentiate the company from undifferentiated brands, including Universal.
Disney also delivers unique content through its many operations globally. Its franchises, such as Mickey Mouse, are unrivaled, while its staff adopts a distinctive ‘Disney style’ in attitude, dress, and customer support. The company differentiates its products through high-quality content and technology. Delivering inimitable quality, wholesome, and innovative features such as the streaming platform, Disney+, are key to the Disney brand. Thus, through the differentiation strategy, the company has gained unmatched influence in its market segments.
Disney has a highly diversified portfolio that can be linked to its corporate-level strategy. From its primary animation operations, it expanded to theme-based amusem*nt parks, cruise ships, and live streams. Disney runs five business units: Media Networks, Parks and Resorts, Walt Disney Studios, Disney Consumer Products, and Disney Interactive (The Walt Disney Company, 2021). This ecosystem of franchises and distribution channels helps the company to maximize customer value and experience.
Each strategic business unit (SBU) offers broad and diversified products to different consumers. In the Media Networks segment, it operates television and radio broadcast with channels such as ESPN, Disney, and ABC networks (The Walt Disney Company, 2021). The hotel and cruise ship business comprise the company’s resort segment, while the Walt Disney Studios produces animated films and music. Disney Consumer Products segment sells toys, apparel, household items, stationery, and electronics. On the other hand, the video games provided through its franchises fall under the Disney Interactive segment.
Disney uses related diversification given the strategic fit among its business units. The value chain projects in its diverse segments provide opportunities for sharing expertise and assets. The Walt Disney Studios SBU created Frozen, an animation film that performed well in the market (The Walt Disney Company, 2021). Due to its success, the movie and soundtrack were adapted for its subsidiary, Disney on Broadway. This cross-business sharing is also seen in the film’s adaptation for the Consumer Products SBU. Toys, apparel, and applications are produced based on the Frozen Free Fall theme. The Disney Interactive also produced a video game based on this film. Thus, the company is highly diversified and it employs related diversification to create key strategic fits across its current businesses.
Modes of Implementing Recent Diversification Initiatives
Being a big American firm, growing its international presence is a competitive strategy for Disney. The company has used different modes to enter new locations and markets. The entry approach used depends on business opportunities, cultural differences, language, and country-specific regulations. Its recent diversification project in Hong Kong (Disneyland) involved a joint venture. Through this strategic alliance, the park was expanded in the second phase to accommodate more visitors and include culturally relevant themes. It allowed Disney to transfer the high costs and risks of developing an amusem*nt park to Disney Hong Kong.
Strategic alliances were also involved in creating Disney Shanghai for the Chinese audience. A partnership with a state corporation, the Shanghai Shendi Group, helped finance the project (The Walt Disney Company, 2021). In this alliance, a joint management company that comprises predominantly American managers was formed to run the resort. The partnership ensured that Disney’s unique amusem*nt park concept and expansion plans are safeguarded by incorporating Chinese culture and values.
Mergers and acquisitions comprise another mode that Disney has used recently to internationalize its operations. The company has announced that it will stop producing video games and license Electronic Arts (EA) to compete in the gaming market (The Walt Disney Company, 2021). In this merger, EA will benefit from Disney’s strong brand. EA has a significant global presence that Disney will use to increase its international reach.
International Strategy Implemented
Disney’s international strategy entails providing global products, but with local responsiveness. Although the company has an American-centric past, it pursues a transnational future in its operations overseas. Initially, Disney just changed the language for its films and media for global audiences. However, the huge potential in international market drove the company to adapt popular products to the needs of different cultures. For example, Feng Shui engineers designed Hong Kong Disneyland and Mickey Mouse adorned red-and-gold national attire (The Walt Disney Company, 2021). In some regions, new media content is produced for the audience. This strategy ensures a universal product that is adapted to fit local needs.
Conclusion
Disney is a global leader in many entertainment segments because of a consistent generic strategy of differentiation and diversification. The company provides a broad product portfolio through its five SBUs. Global expansion is a key strategy for Disney’s valuable competitive strengths and long-term success in entertainment media, amusem*nt parks, and resorts. It encompasses providing a global product but changing it to fit local language, culture, and needs.
Reference
The Walt Disney Company. (2021). About the Walt Disney Company.
The article delves into various strategic aspects of the Walt Disney Company, covering business-level strategies, corporate-level strategies, international strategies, generic strategies, diversification modes, and implementation approaches. Let's break down the concepts used:
1. Strategies
- Corporate, Business, and Functional Strategies: Strategies implemented at different levels of operation (corporate, business, and functional) to ensure expansion, differentiation, and profitability.
- Licensing and Joint Ventures: Utilized by Disney at the business level for global expansion, such as the Tokyo Disney Resort.
- Geographical Diversification: Disney's corporate-level strategy involving operations in over 80 countries.
- Transnational Approach: An international strategy adopted by Disney, focusing on both universal products and local responsiveness.
2. Generic Strategy
- Differentiation: Disney's approach to offering a distinct product portfolio different from competitors, emphasizing high-quality content, innovative technology, and unique experiences.
3. Extent and Relatedness of Diversification
- Related Diversification: Disney's strategy of expanding its portfolio across various segments (Media Networks, Parks and Resorts, Studios, Consumer Products, Interactive) while maintaining strategic fits among these units.
4. Modes of Implementing Recent Diversification Initiatives
- Joint Ventures: Used in locations like Tokyo and Hong Kong for cultural adaptation and risk-sharing.
- Strategic Alliances and Partnerships: For instance, the Shanghai venture with the Shanghai Shendi Group to incorporate local culture into the Disney experience.
- Mergers and Acquisitions: Disney's decision to cease video game production and collaborate with Electronic Arts (EA) for global reach.
5. International Strategy Implemented
- Global Product with Local Adaptation: Disney's strategy involves tailoring products to fit local cultures and languages, ensuring a global yet locally relevant entertainment experience.
6. Conclusion
- Differentiation and Diversification: Disney's sustained success attributed to its differentiation strategy and diversified portfolio across entertainment segments.
- Global Expansion: Key to Disney's competitiveness, emphasizing adaptation to local needs while maintaining global products.
The comprehensive analysis provided in the article showcases Disney's multifaceted strategies across different business dimensions, ensuring a global presence while adapting to diverse local markets.
