What are their sources of competitive advantage? Disney’s uniqueness in the media and entertainment industry stems from its seamless synergies between its diverse business segments. Creating synergies between the diverse business operations was a smart move on Disney’s part because the company can build upon each of the entities by advertising products on its other businesses which in the long-run will allow the company to reach a greater audience with each of its products and thus withstand major industry-wide economic shifts.
One specific example of how Disney diversified was when Walt Disney built the first ever Disneyland amusement park in Anaheim, California in 1955, which officially put his company in two separate yet intertwined industries. According to Michael Eisner, a former CEO of Disney, if they have a new product, they feature it in their magazines, on the Disney channels, movie trailers, and throughout their other business platforms (Eisner).
As a result, Disney has been able to turn its revenue around from lows of two billion dollars to over 25 billion dollars in a twenty year span.
The key to behind Disney’s success lies in its intellectual property, or IP. In 2006, shortly after Bob Iger became CEO, Disney was able to acquire Pixar for $7.4 billion. As a result of this acquisition, Disney was able to leverage its creative content and use Pixar’s computer animations to turn the blockbusters (created under their partnership) into billion dollar franchises. Through a series of other acquisitions such as Marvel and Lucasfilm, Disney gained access to multiple billion dollar franchises that targeted a wide group of people ranging from young children to adults.
On top of this, Disney was also able to synergize between its other business segments and create themed rides at their amusement parks, merchandise such as shirts or toys, music, and TV shows.
All things considered, Disney was able to differentiate itself from the competition by creating unity between its various business operations. Although, some may view this as “putting all eggs in one basket” making it incredibly risky, it has fared well for Disney and has allowed the company to thrive in multiple industries and ensure long-term sustainability. Research and describe an example of where they act consistently with the third component in the Pyramid of Social Responsibility, (Ethical Responsibilities, Do what is right, just and fair, avoid harm) and an example where they act inconsistently with this component of Social Responsibility.
Disney has taken a focus on ensuring ethical business practices by implementing internal carbon taxes on its businesses to foster technological innovation regarding energy efficiency. Aiming to reduce emissions and improve energy efficiency is vital to the company’s long-term sustainability because not only will energy efficient operations lower costs in the long-run as well as boost the brand’s reputation for being an ethically responsible company. According to Disney’s previous CFO, Jay Rasulo, it is Disney’s duty to entertain families while also considering the effects the company’s operations can have on the families. Disney’s short term goals for the internal carbon tax is to reduce its emissions by 50% by the year 2020. The company aims to achieve this goal by avoiding emissions all together, reducing its current emissions, and favoring low-carbon alternatives over the higher-carbon fuels currently being used.
Like all thing though, Disney is far from perfect and has breached its ethical limits when trying to suppress nutrition studies conducted on its theme parks. For a sponsor to meddle with an unbiased research is considered incredibly unethical and can tarnish the reputation of a company. Disney had funded a study of its food options for kids in its theme parks but was not concerned about the findings of the study. They were more worried about being publicly associated with one of the authors, James Hill, who sparked public outcry the previous year for downplaying the effects of sugary drinks on obesity. The study concluded that Disney’s initiative to offer healthier options for children actually had been wildly successful and noticeably reduced sodium, fat and calorie content in food items. Disney did not act unethically by trying to suppress the findings of the study but rather by trying to prevent the publication all together.
Overall, Disney has well-placed intentions and although it acted unethically by trying to prevent a publication, they did it to protect the company’s reputation rather than hide subpar results. How is the media and entertainment industry being disrupted? Rapid development of smartphone technology and streaming services are the main contributors to the decline of the media and entertainment industry. With the public favoring these instant, on-demand technologies, large media companies like Disney are going to need to shift their focus away from movie theaters and cable/dish television and towards streaming to be able to compete. Initially, Netflix and other streaming services were only affecting the DVD rental industry, but with its scale now, its threatening the entire entertainment industry in Hollywood. Every age group, including baby boomers, has seen an increase in the amount of people streaming; the number of Netflix users has even surpassed the number of people who watch cable television (L2 Inc.). What are Disney’s biggest strategic challenges? What recommendations would you give to Robert Iger to address these challenges? Be specific.