The Walt Disney company

Extraits

[...] Note: 6/6 Threats of new entrants High in every segment: Internet / Video Games / Computer animated films . Note: 4/6 Threats of substitutes Quite high due to multiple domains related to this industry Note: 4/6 Final note: 5/6 Very tough industry Appendix 3 Figures used to determine the McKinsey Matrix As far as the company's competitive advantage is concerned, we have computed a relative scale associating the operating income ratio of each segment, their relative market share and other data excerpted from the case. [...]

[...] Disney was able to do so very efficiently in the past with its theme parks, which needed totally different capabilities than in the film industry. But investing in new segments is often dangerous for corporations because they do not wonder if they have capabilities to do so but in terms of proximity with their core business. The failure of the internet website go.com and the search engine Infoseek are the best examples of a hazardous diversification that can jeopardize the sustainable future of a firm. [...]

[...] Indeed, by entering new businesses, the company may jeopardize its brand equity and brand image. Walt Disney's original legacy seems to be fading, which provokes internal disagreements (between 1994 and high-level executives left the company) as well as external negative consequences: Disney has already suffered from boycotts because it failed to respect its original values and positions. Disney's brand promise cannot help being affected by the new businesses it has entered, but it must remain coherent. The company has to choose between modernity and tradition, which is between respecting its original image and evolving towards a more modern position. [...]

[...] Indeed, the business units are currently suffering from harsh competition between one another which may result counter-productive. In addition, the recent ABC acquisition has reinforced this cohesion issue, because of the culture gap between the two companies and the clashes it provokes among executives. II. Mobilize strategic choices As Disney is not a traditional firm with a main product marketed on different segments, the McKinsey matrix is a performing tool to classify their myriad businesses (see appendix 3 for more details). [...]

[...] The Walt Disney company I. Identify the key issues Identifying the core business The first issue the Walt Disney Company has to face concerns diversification: has it diversified too far? It is legitimate to consider such a question as the number of businesses Disney presents has exploded since the company's beginnings. Indeed, being first a company based on movie-making, Disney then expanded into the music business with records, into theatrical and television productions, into broadcasting networks, into theme parks and resorts, as well as into internet activities and sports teams ! [...]