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Disney Case Analysis

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Xin Li

Disney Case Analysis 4

The importance of value chain analysis and a crucial aspect of any successful companies that wish to stay ahead of its competitors. The value chain has two broad categories such as primary and secondary activities. In this paper, I will be talking about inbound logistics, outbound logistics and the general administration. Inbound logistics associated with receiving, storing and distributing inputs to the final product or service. Examples would be material handling, warehousing and inventory control. Since Disney is in the film industry, it’s product is not tangible. Its product is films and entertainment to its viewers. The animation division handles most of Disney’s inbound logistics of making many great films that are geared towards family and children. The division was slower to turn around since animated movies took very long to produce and edit. This is also why Disney hire extremely talented and creative group of people to produce its products. There’s also outbound logistics, associated with collecting, storing and distributing the product to the customers. Even though animated films take forever to make, Disney accelerated production by releasing a new animated feature every 12 to 18 months according to the case. This is way faster than the usual of releasing every four to five years. This way, customers can be more engaged as well as giving Disney more opportunities to capture a broader audience. Disney also established new channels of distribution through direct mail and catalog marketing. According to the article, the acquisition of ABC also made Disney the largest entertainment company in the US. Such acquisition also provided the company with many potential outlets for its films and much more. Due to the increase in technology nowadays, Disney took advantage of such by having internet as possible distribution channel for its film. General administration is a secondary supporting activity to the primary activities. It consists of a number of activities such as general management of the company, planning, finance and also legal and government affairs. A strong and effective leadership by top executive can make a significant contribution to the company’s overall success. When Disney was established, the Disney brothers ran the company as a flat, non-hierarchical organization. Everyone used their first names to address each other and no one had titles. Such culture was established in order to emphasize teamwork, communication as well as cooperation according to the article. This creates a psychological safe space for its employees to be creative without restraints. Disney also had a synergy group due to its many acquisitions. Disney’s leverage of its animated movie investments suggests how it utilizes synergy: in the year before the movie releases, many creators would start to promote the film through merchandising, videos as well introducing characters in the theme parks.

Walt Disney’s core industry is to be in the film industry. Related diversification means relating to the film industry as well as creating additional extension to the product it already possesses. It enables a firm to benefit from horizontal relationships across different businesses in the diversified corporation by leveraging core competencies and sharing activities. It also benefits greatly from the economies of scope. One business unit that is a related diversification of Disney would be expanding its television presence. It started in 1954 with the ABC produced television program for children as well as adults. This is related since both are within the entertainment film industry. Having an established TV presence is just another distribution channel of Disney products. Another related diversification for Disney would be theatrical production. In 1993, Disney unveiled its first Broadway bound theater production of Beauty and the Beast. This was a success for Disney as it pulls in more profits from live shows, giving Disney a place on Broadway. This is considered a related diversification since Disney is expanding commitment to live entertainment using the resources they already have. This is branching off its animated production into a more interactive live performance of its classic films. When it comes to unrelated diversification, this means Disney would have to tap into another industry that it’s currently not operating in. When a company is involved in unrelated diversification, it derived very little benefits. An example would be the company buying 25% of Anaheim Angels baseball team in 1996 according to exhibit 2. This shows how the company is trying to get into the sports industry, a sector that it does not operate in. Another business unit that was highlighted in exhibit 2 and is unrelated diversification for Disney would be opening the Town of Celebration in Florida. In 1996, Disney tried to develop the community to be integrated with its theme. This would be tapping into the real estate industry, which is very different from the film industry that the company is in.



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