The Walt Disney Company:The Entertainment King

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The Walt Disney Company:

The Entertainment King

Case Analysis

        The Walt Disney Company is one of the largest media and entertainment corporations in the world. Disney is able to create sustainable profits due to its heterogeneity, inimitability, co-specialization and immense foresight. It also successfully uses 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 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 the company had its down years in its history, it has continued its miracle in success. Disney has long been regarded as a great example of sustainable profits. There are four main criteria for sustainable profits: heterogeneity, inimitability, co-specialization and immense foresight.  

Unlike other companies, Walt Disney Company’s products are heterogeneous, and it has a unique strategy of entertaining the whole family, instead of solely targeting either children or adults. Everything from its theme park to its movies to its music is split into two categories so that Disney can fulfill the needs of both children and the adults. Another unique quality of the Walt Disney Company that differs from many other companies in the market is that it is vertically integrated. For example, Disney owns everything on its theme park from lodging to park rides to food and merchandising concessions to even travel agency. Walt Disney enforces full control of its identity and properties in order to differentiate itself from the rest of the industry.  

        The Walt Disney Company strategy and structure is inimitable because it possesses the following qualities: legal protection, early mover advantage, and human capital. Walt Disney Company learned early that it is important to have legal protection on its products and characters to controls all profits made by the characters and products. More importantly, each character can earn profits in many units of business within the company, and therefore it is important for Disney to acquire all rights for these characters. Since Disney started very early, it has the advantage in the learning curve, making it more difficult for other companies to copy such a large scale of economy. Human capital is also a major advantage to Disney. The company focuses greatly on its creative team, making it possible for innovation in production and acquisition. Also, the brand name of Disney is also something that other companies cannot live up to. Disney’s name grew up with children of many generations, and these people are still bonded with Disney’s other units in their adulthood, such as Touchstone Productions.

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        Disney also has strategic complements which allow the company to gain sustainable profits. Disney has many complementary business units so that the company not only has more control over it sales and distribution; it also decreases the costs of maintaining contracts with other companies. Disney World is an example of the complementary businesses that Disney uses to make itself stand out within its industry. Disney World has hotels and resorts, convention center, amusement and water parks, bars and clubs, sports arena, and a network of transportation.  All these complement each other to make Disney World unique and therefore gain sustainable ...

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