The Reason of Disney’s Success

Gechunzi Zhang / Rebecca

Professor Kohn

MGMT-458-2017X

6/15/2017

Disney Case Study

The Reason of Disney’s Success

Going through the case I have read, the main reason; why Disney has been successful so many years; is that they have ability to create universal timeless family entertainment by Walt Disney’s philosophy. They use their ability to provide the qualified and diversified products to customers, which builds the good relationship between them. During the time of The Disney brothers, they also emphasized teamwork, communication and cooperation. It encourages employees to communicate with the leaders, which creates a good working environment. In addition, they are so brave to build a park for the entire family, even there was a huge risk for the company. The theme park also generates lots of benefits and revenues to business, and they also market children with toys stores and movies. Filming is one of the biggest parts, which is not only for new and young generation, but also for the adults and older generation. Acquisitioning own channels, like bought ABC, Disney became the largest entertainment company in the U.S. and provided it with worldwide distribution outlets for its creative content. Overall, Disney’s success is caused by the effective strategies, which help them to maximize profits and have better cost control. It is showed by maintaining loyalty customers and attracting new customers with creative ideas.

Three Dimensions of Disney under Eisner

        Corporate strategy is the decisions that senior management makes and the goal-directed actions it takes to gain and sustain competitive advantage in several industries and markets simultaneously. Based on the case, since Eisner wanted to leverage brand and create value depended on corporate strategy, which determines the boundaries of the firm along three dimensions: industry value chain (vertical), products and services diversification (horizontal) and geographical scope.

        Geographically, the company expanded business to international sales, especially in Europe and Japan. In 1999, European consumers spent 40% per capita of the U.S. level on Disney products and Japanese spent 80%. It made Eisner think about consolidating foreign offices under regional executives, which is in order to save money by renting shared office space and coordinating advertising. The main and real aim of it is going to create the more and effective synergies through cross-promotion.

        Disney sought to enter new types of entertainment in the horizontal aspect. For example, Disney expanded into cruise ships and educational retreats. The company packaged cruises with visits to Disney World with low return capital, they are still going to help people bring families together to Disney World. It definitely shows creating “traditional family values” through Disney, which is main goal of them.

        Vertically, Disney saw the Internet as a possible distribution channel for its film library and its sports and news programming, among other content. Therefore, they bought ABC, which as TV network. It could reduce the advertising costs, which is good. For an instance, if Eisner wants to run some Disney shows, he could just let ABC run it for him. It is easier to bring their brand to customers at home.