Sarah Franciosa
Blog1
The Walt Disney Company is one of the most popular companies in the entire world. A couple of years ago, this powerhouse of a company announced their strategic reorganization, in which “new structure consolidates the company’s direct-to-consumer-services, technology, and international media operations into a single, worldwide business to capitalize on growth opportunities.” (Mucha,Jefferson.2018.). The realignment of the Walt Disney Co. has to do with related diversification by utilizing direct-to-consumer platforms for things like sports and entertainment (such as Disney+, Hulu, ESPN+) that consumers have quick, personalized access to.
Critical thinking is absolutely crucial for decision making, especially in a scenario such as the Disney Company. It helps to make better judgements and choices in a business decision. “Decisions leaders make about whether or not to diversify, enter a new product into the market, or change their branding campaign can affect jobs, market share, and even the ongoing viability of an organization” (Soomo,2020). This strategy is what gives them such a competitive advantage.
Their diversification is based on innovation in product development. The company reaches the decision to diversify by using rational decision making. “In the rational decision-making model, critical thinking skills help you identify the problem or goal, brainstorm solutions, interpret data correctly, weigh the options logically, and efficiently organize the implementation and revision of your plan” (Soomo,2020). Disney also likely used the 3 tests for diversification to ensure the decision was a sound one. 1- How attractive is the industry? (Answer- VERY. Think about how the world has been moving in this direction with things such as Netflix, for example. It is a very profitable industry to enter into.) 2- How much will it cost to enter into the industry? (Answer- affordable and worth it, especially with how profitable Disney already was before diversifying.) 3- Will the new unit and the firm be better off? (Answer- Absolutely! This is a decision that will benefit the company substantially.)
The company uses product differentiation as its generic strategy for competitive advantage. (Williams, 2019.) Michael porter’s model is utilized here- this framework is used for assessing and evaluating the competitive strength and position of a business organization. “Michael Porter’s model states that this strategy involved unique products offered to many market segments.” … “The subsidiary Walt Disney Imagineering Research and Development, inc. has dedicated teams to ensure the uniqueness of entertainment experiences in the company” (Williams, 2019).
The Walt Disney Company’s diversification strategy allows them to be the success they are today- in industries like tourism/hospitality (Disney cruise line, for example), sports and entertainment (Disney+, Hulu, ESPN+), etc. and constantly innovating the company. Their related diversification has been a huge success. Although nobody could have foreshadowed the COVID pandemic that started last year, it is a good thing Disney at least had their streaming products to bring in some needed revenue- the company suffered due to the forced closure of theme parks and cruise lines. (Whitten, S. 2020) Even still, the diversification has increased the profitability of the company substantially- even since the announcement in 2018 for strategic reorganization. Since this article/announcement, according to Macrotrends.net, revenue of the Disney Company has increased from $59,434 to $65,388.
Mucha, Z., & Jefferson, D. (2018, March 14). The Walt Disney Company Announces Strategic Reorganization. Retrieved January 06, 2021, from https://thewaltdisneycompany.com/walt-disney-company-announces-strategic-reorganization/.
Williams, A. (2019). Disney’s Generic Competitive Strategy & Intensive Growth Strategies. Retrieved January 07, 2021 from http://panmore.com/disney-generic-competitive-strategy-intensive-growth-strategies
Soomo Learning. (2020). Critical Business Skills for Success. http://www.webtexts.com
Whitten, S. (2020). Disney’s parks were its biggest profit-maker, now they could be its biggest drag on earnings. Retrieved January 07, 2021 from https://www.cnbc.com/2020/05/05/disneys-parks-could-be-biggest-drag-on-second-quarter-earnings.html
Macrotrends, LLC. (2020). Disney Revenue 2006-2020. Retrieved January 07,2021 from https://www.macrotrends.net/stocks/charts/DIS/disney/revenue
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