NATURE AND SOURCE OF COMPETITIVE ADVANTAGE:DISNEY1
Table of Contents1. How does the concept of economies of scope help to explain Disney’s diversification strategy?.........................................................................................................................................................32. What are the pros and cons for Disney of operating television and cable network?...................43. In 2009, Disney announced it acquired marvel entertainment a comic book and action herocompany for $4 billion. How will you evaluate the value creating a potential of this decision?....44. What are the key challenges Disney’s senior manager face in running such a diverse business?.........................................................................................................................................................5Reference List..................................................................................................................................72
1. How does the concept of economies of scope help to explain Disney’sdiversification strategy?Diversification is a marketing process adapted by various organisations when it tries to expandits business when it tries to launch a new product or enters a new market. The organisation mightnot be familiar with the product or with the market. This is quite risky. The Walt Disney wasentertaining kids of many generations by creating Mickey Mouse, Donald Duck, goofy, Minniemouse, daisy duck etc. After achieving new heights of success it entered in the field of featureand animated movies and after a series of success the organisation diversified its resources toother fields, which happens to be as follows;Media Network: The media network of Walt Disney consists of the radio station and televisionof United States, cables network, and distribution houses through which the organisationdistributed it media to the households of the country. When an organisation access both thedistributionandcontent of its media the profit of the company goes sky high as it can promote its content andshape and has the freedom to take independent decision how and when it is going to bebroadcasted. In the year 1995 the organisation bought Capital Cities which is a radio andtelevision company for $19 billion. Today the media industry like Disney is concentrating moreon conglomerate giants like Time Warner the importance of content providers have increaseddramatically.Resorts and parks: Apart from making animated cartoons, resorts and theme parks were the firstbusiness areas the company got a hold of. The world famous Disneyland was formed in the yearof 1955 in California and in the year of 1971, Walt Disney World Resort was formed in OrlandoFlorida. Till now Walt Disney has opened its theme parks in countries like Japan, France andone is under construction in China. With passing time Disney became very skilful in handlingtourists experience and had formed Disney Vacation Club and Cruise Line.Studio Entertainment: Walt Disney remains renowned for creating immortal animated characters.The core of the company is creative content. It is one of the most creative organisations in theworld. To cope up with ever growing and changing technology it acquired Pixel studio themakers of famous animated films like Toy Story and Finding Nemo in the year 2006. It wasbought Marvel Entertainment, which is the maker of world famous superhero comics like3
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