Reawakening the Magic: Bob Iger and the Walt Disney Company case study looks at how the company evolved after poor financial results amidst competition.
David J. Collis and Ashley Hartman
Harvard Business Review (717483-PDF-ENG)
February 28, 2017
Case questions answered:
- Assess how effective is Disney’s corporate strategy. (Make sure to apply the different frameworks covered in the materials of this week).
- What are Disney’s most valuable resources? Explain their role in creating a corporate advantage.
- Why did Disney need to own Pixar rather than just renewing the contract (even if much less favorable terms for Disney)?
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Case answers for Reawakening the Magic: Bob Iger and the Walt Disney Company
Executive Summary – Reawakening the Magic: Bob Iger and the Walt Disney Company
In this case, I’ll shed light on the effectiveness of Disney’s corporate strategy whilst discussing the various frameworks that Walt Disney Company has opted for throughout the years. Such tactical moves are not limited to vertical integration, horizontal integration, geographies, and diversification. And especially how the diversifications that Disney opted for had helped the company achieve synergy and hence a sustainable competitive advantage.
Also, I’ll be discussing Disney’s most valuable resources through doing a BCG matrix. Finally, I’ll give my insights on the reasons behind Disney’s move to acquire Pixar rather than just renewing the contract.
The case study chronicles incidents and events that happened with Disney under its CEO Bob Iger. What is more, is the set of actions to address the decline in Disney’s corporate image and tumbling stock prices. Additionally, under the former CEO Michael Isner, the employees suffered from the micromanagement perspective of the entire process.
Question 1: Assess how effective is Walt Disney Company’s corporate strategy. (Make sure to apply the different frameworks covered in the materials of this week).
Disney, the business of Happiness without any age limit to its content, pleased consumers in all its segments and ages. Historically, through its corporate strategy, Disney was able to create and sustain profits for a long period of time. Apparently, these sustained profits are rooted in Disney’s focus on building and incorporating its synergies.
As a result, Disney created synergy across its different business units, which added value to the uniqueness of the variety of products offered, whether in the entertainment, mass media, and amusement parks. In fact, Walt Disney Company has set its grounds through its intensive strategies of growth that are focused on differentiation, innovation, and creativity.
Disney has practiced the depth and breadth of its corporate strategy; it made all the decisions that would enable it to reach and sustain its long-term goals. Disney has opted to foster the holistic factors of diversification, vertical and horizontal integration, and target various geographies and expand globally. In fact, the aforementioned tactics have assisted Disney in sustaining its competitive advantage.
One of Disney’s most prominent corporate strategies is vertical integration. It started when Disney decided to select forward integration in its media content. For instance, Disney decided to integrate its movie production and its final distribution by acquiring ABC and later ESPN.
Through this acquisition, Disney was able to exploit further in the adjacent stages of its value chain. This has aided in creating value for Disney, especially as this further extended the boundaries quickly.
In addition, it helped expand its access to a wider level of distribution streams. These strategic tactics have allowed Walt Disney Company to spread its brands across different channels. Thus, making it easier for consumers in their different segments to find Disney’s products.
Disney had also exerted a backward vertical integration, especially when it decided to acquire TV creators such as Lucas films. This move has allowed Disney to own its first line in its operation. Additionally, Walt Disney Company started to build hotels and travel agencies for its amusement theme parks, so instead of using other hotels, it decided to make its own hotels. Disney is an all-rounded firm.
To have more control over the quality, Disney, an all-rounded firm, decided to open hotels in its Disney parks. In fact, Disney has always sought to gain control over its amusement center as any negative feedback might have drastic implications on the image of Disney. Also, this backward vertical integration was created so that the minute visitors enter the park, all they see is Disneyland products and services. Accordingly, this aligned with Disney’s value proposition, as its consumers always come first.
Moving to horizontal integration, Walt Disney Company has opted to increase its breadth to capture a larger market share. The perfect example of horizontal integration is Disney acquiring Marvel Entertainment. Marvel Entertainment operates in the same genre as Disney, as it’s in the business of creating characters and mainly superheroes. Such a move was very strategic and well-studied for Disney’s future growth strategies. This gave Disney a new line of products and services in a new market segment that allowed it to expand its reach to other customer segments.
Additionally, Disney leveraged its existing strength in the entertainment platforms by using its movies to create franchises and platforms of its popular cartoons. Not only that, but it has also expanded from its core animation business into amusement parks, resorts, TV broadcasting, residential communities, etc.
Such diversifications allowed Disney to gain and use its existing competencies and resources to further expand its business. Hence, Disney has developed the capabilities required to support its sophisticated and well-rounded business. This well-established diversification has given Disney a competitive edge over any potential competitor.
Through Disney’s diversified operations, Disney was able to undergo some market developments, and hence it aided in expanding its markets and outreach to global markets. Walt Disney Company has…