Mini-Case

Walt Disney Company Corporate Strategy

The Walt Disney Company has a diversified set of businesses in movie-making, television show
production, media distribution (e.g., ABC and ESPN), interactive and theme parks (e.g.,
Disneyland, Disney World, Disneyland Paris, and Shanghai Disneyland), and retail and
consumer product sales. It is the second largest mass media producer after Comcast, which
owns NBC and Universal Studios. While other more focused media content providers such as
Discover Communications, CBS, and Viacom have seen decreasing revenues because of lower
ratings and TV Ad weakness, Disney was strengthened through its other businesses based on
its diversification strategy. Although its ad revenues have decreased like other more focused
content producers and distributors, its other businesses are growing and allow it to maintain
higher earnings compared to other rival media producing firms. Disney's strategy is successful
because its corporate strategy, compared to its business-level strategy, adds value across its
set of businesses above what the individual businesses could create individually. In the literature
this is often known as synergy, or in the more academic literature, economies of scope (defined
earlier in Chapter 6). First, Disney has a set of businesses that feed into each other: its studio
entertainment, consumer products and interactive media, media network outlets, parks and
resorts, studio entertainment parks, and retail enterprises have overlapping aspects. Within its
studio entertainment businesses, Disney can share activ- ities across its different production
firms: Touchstone Pictures, Hollywood Pictures, Dimension Films, Pixar Films, and Marvel
Entertainment. By sharing activities among these semi-independent studios, it can learn faster
and gain success by the knowledge sharing and efficiencies associated with each studio's
expertise. The corporation also has broad and deep knowledge about its customers, which is a
corporate-level capability in terms of advertising and marketing. This capability allows Disney to
cross-sell products highlighted in its movies through its media distribution outlets, parks and
resorts, as well as consumer product businesses. Recently, for example, Disney has found
success in making live action movies from former comic books through its Marvel acquisition. A
recent example is the success of Black Panther, a superhero film that deals
with issues of being of African descent. Its success follows other Marvel superhero movies such
as WonderWoman, Guardians of the Galaxy, Captain America, and Iron Man. Marvel's
characters have also led to TV series such as Agency of S.H.I.E.L.D. from Captain America:
The Winter Soldier. Disney has been also been moving from its historical central focus on
animation in movies such as Cinderella, The Jungle Book, and Beauty and the Beast, into the
same titles or stories using a live action approach. The recent release of A Wrinkle in Time
staring Oprah Winfrey and Reese Witherspoon is another example. Cinderella, a live action
version of the original 1950 animated classic, stays particularly close to the "fairy tale version of
the script." This approach comes from its understanding of its customers and what they prefer.
Other approaches can be found in Alice in Wonderland with Johnny Depp and Maleficent with
Angelina Jolie, both of which were twists on their respective originals (Maleficent came from
Sleeping Beauty). The Action versions of these two movies grossed $1.3 billion and $813 million
globally, respectively. Although Disney has had some relatively unsuccessful pictures-John
Carter, The Lone Ranger, and The Sorcerer's Apprentice-its action movies based on its
animated fairy tales have been relatively more successful. Disney successfully promoted
Cinderella products in its stores and in other focused retail outlets and advertised its
movie-themed products along with direct connections to Alice, Maleficent, and Frozen.
All of these have been consumer product successes, and A Wrinkle in Time is likely to have the
same appeal. All of these feed products not only into its Disney stores and Disney-themed
sections in department stores, but also promote resort themes and thus drive interrelated
revenue through cross-selling. One of the downside problems for these fairy tale themes is that
the stories are in the public domain. As such, other competitors are seeking to follow Disney's
successful approach. For example, Time Warner Inc.'s Warner Bros. Studio will release Pan,
which seems to be beating Disney to the punch on its former Peter Pan movie success.
Likewise, Time Warner released Jungle Book in 2017 and has another script based on Beauty
and the Beast. Comcast's Universal Pictures is developing The Little Mermaid. However, neither
of these studios has the retail marketing power nor the franchising capability of Disney and its
interrelated business and corporate skills. Although they are seeking to build these skills, they
cannot duplicate Disney's corporate strategy and parent benefit because they are primarily
focused on content and distribution.
Disney also owns ABC and its sports channel ESPN. Although ESPN subscriber
numbers are down recently due to cord cutting, Disney has developed the ESPN Wide World of
Sports Complex at The Walt Disney World Resort as a sports-related complex that attracts
sports enthusiasts and teams to its Disney World Resort in Florida. The complex also attracts
sports teams such as the Atlanta Braves during their training camp. It is planning to reduce the
cord cutting by offering its own standalone streaming service, and ESPN is already an anchor
tenant of emerging digital platforms, with carriage on Dish's Sling TV, DirecTV Now, PlayStation
Vue, YouTube TV, and Hulu.

In summary, Disney has a current corporate parental advantage over its more focused
movie and content producing and distribution competitors due to the power of its interrelated set
of businesses, where the corporation facilitates customer market information sharing and skill
transfer among the various business units.

(Based on this Mini-Case on Walt Disney Company Corporate Strategy, how does the corporate
office create a parental advantage, which is difficult to duplicate by its more focused
competitors?) (Please answer this question based on the corporate-level strategy on chapter 6
of the book ‘Strategic Management Competitiveness and Globalization by Michael A. Hitt, R.
Duane Ireland, and Robert E. Hoskisson) (in a one 5-6 sentences paragraph)
ANSWER: Perplexity
Disney’s corporate office creates parental advantage through synergistic diversification and
cross-business integration, enabling value creation beyond what individual units achieve
independently. By structuring its operations into interrelated segments (Entertainment, ESPN,
Parks/Experiences), Disney leverages shared activities, such as content production and brand
management, to reduce costs and enhance innovation. For example, Marvel films drive
merchandise sales, theme park attractions, and streaming content, creating a self-reinforcing
ecosystem. The corporation also centralizes strategic capabilities—like deep customer insights
and cross-promotional marketing—to align franchises across divisions, ensuring consistent
brand reinforcement and revenue streams. Competitors like Warner Bros. or Universal lack
Disney’s integrated infrastructure for synergizing content, distribution, and consumer products,
making replication of this diversified, resource-sharing model prohibitively complex. Additionally,
Disney’s corporate culture prioritizes creativity and accountability, fostering interdivisional
collaboration that magnifies economies of scope. This holistic approach, combining operational
integration with corporate-level strategic oversight, sustains a unique parental advantage that
focused rivals cannot easily duplicate.

Alternative Answer:
Answer No. 2
Disney’s corporate office establishes a parental advantage by seamlessly integrating its diverse
business segments—studio entertainment, media networks, theme parks, and consumer
products—creating synergies and economies of scope that drive sustained growth. This
interconnected approach enables cost efficiencies, resource sharing, and strategic
cross-promotion, allowing Disney’s films to not only generate box office revenue but also fuel
merchandise sales, theme park attractions, and streaming content, forming a self-sustaining
ecosystem. Through its deep understanding of consumer preferences and centralized marketing
strategies, Disney delivers a cohesive brand experience, maximizing engagement and revenue
beyond traditional media production. Unlike competitors such as Warner Bros. and Universal,
whose operations remain more fragmented, Disney’s highly integrated infrastructure ensures a
seamless connection between content, distribution, and consumer products, making its model
exceptionally difficult to replicate. This strategic alignment, reinforced by a culture of creativity,
collaboration, and innovation, cements Disney’s position as a dominant force in the
entertainment industry and sustains its long-term competitive advantage.