Walt Disney Company Diversification

WALT DISNEY COMPANY DIVERSIFICATION

Founded in 1923, Disney Brother Studio (the name of the studio was changed to Walt Disney Productions in 1929) is the origin of the entertainment king; The Walt Disney Company. As time passes alongside with the success of Micky Mouse, Goofy, and Donald Duck, Disney Company expanded its corporate domain (diversification). In 2000, the company was diversified through five business lines (exhibit 3 case study): Media network; studio entertainment; theme parks and resorts; consumer products; and internet and direct marketing. Media network and studio entertainment are related diversification while theme parks and resorts, consumer products, and internet and direct marketing are unrelated diversification.

Each of the business lines is divided into other categories characterised by the horizontal diversification strategy, for example, media network is diversified into broadcasting and cable network. Furthermore, the company also apply vertical diversification within their business, e.g. consumer products business line produces books, magazines, audio and video which were sold in a store which is also owned by Disney (see Table 1. Disney's Business Lines Diversification overview). The acquisition of ABC also categorises as vertical diversification, to the degree that it was a route for Walt Disney to diffuse a portion of its projects alone.

Table 1. Disney’s Business Line Diversification Overview

RELATED DIVERSIFICATION UNRELATED DIVERSIFICATION

Horizontal Integration MEDIA NETWORK

• Broadcasting

• Cable Network and International

STUDIO ENTERTAINMENT

• Theatrical Films

• Buena Vista Home Entertainment

• Buena Vista Music Group

• Theatrical Productions

• Distribution

• Television Production

• Tele-ventures THEME PARKS AND RESORTS

• Walt Disney Attraction

• Walt Disney Imagineering

• Anaheim Sports

• Disney Regional Entertainment

CONSUMER PRODUCTS

• Merchandising Licensing

• The Disney Store

• Disney Publishing

• Walt Disney Art Classics

• Disney Interactive

INTERNET AND DIRECT MARKETING

• Disney Online

• ESPN Internet Group

• ABC Internet Group

Vertical Integration BROADCASTING:

• ABC Television Network

• TV Station

• ABC Radio Network

• Radio Stations

CABLE NETWORK & INTERNATIONAL

• ESPN

• Disney Channel

• Toon Disney

• SoapNet

THETRICAL FILMS

• Walt Disney Picture

• Touchstone Pictures

• Hollywood Pictures

• Miramax

BUENA VISTA MUSIC GROUP

• Hollywood Records

• Mammoth Records

• Lyrics Records

DISTRIBUTION

• Buena Vista

• Buena Vista International

TELEVISION PRODUCTION

• Program Development

• First-Run Animation

• Live-Action Syndication

• Pay Television Services WALT DISNEY ATTRACTION

• Disneyland Resort

• Walt Disney World Resort

• Disney Vacation Club

• Disney Cruise Line

• Tokyo Disneyland

ANAHEIM SPORTS

• Mighty Ducks of Anaheim

• Anaheim Angels

DISNEY REGIONAL ENTERTAINMETN

• DisneyQuest

• ESPN Zone

No vertical integration within consumer product and internet and direct marketing division

In 1954, Walt Disney started pursuing a strategy of financial economies: the ABC-produced television program Disneyland was bound to produce financing and gain people awareness. Then, the real park is created the same strategy. With Eisner, management incentives appeared with the employees training. In the meantime, the efforts made to boost theme park profitability were the aftereffect of an income improvement system by organising the organisations to build an eagerness to pay off the customers; this strategy applied the concept of retail-as-entertainment.

SOURCE OF SYNERGY USED BY DISNEY’S CORPORATE STRATEGY

Since 1984, Eisner takeover Disney Company. To maximise shareholder wealth, he planned to build Disney brand while doing company's activities. All the new employees and executives are required to join a three-day training program at Disney's corporate university which includes the history and culture of the company and the legacy of Walt Disney. To develop the sense of "Disney Pride", the program required them to worn Disney character's custom at the theme parks. Nevertheless, in 1987, the company installed corporate marketing function to coordinate the promotional activities within the businesses,