Maximilian Scheufler
Strategic Management

The Walt Disney Company: The Entertainment King[1]

I. Why has Disney been successful for so long?
Disney’s long-run success is mainly due to creating value through diversification. Their corporate strategies (primarily under CEO Eisner) include three dimensions: horizontal and geographic expansion as well as vertical integration. Disney is a prime example of how to achieve long-run success through the choices of business, the choice of how many activities to undertake, the choice of how many businesses to be in, the choice of how to manage a portfolio of businesses and the choice of how to create synergies between those businesses (3, p.191-221). All these choices and decisions are
In order to reach such a sustainable comparative advantage, Eisner’s main corporate strategy was diversification. As one can see in “Exhibit 3 & 10” (1), Disney’s business (in 2000) is widely diversified. Not only is the company engaged in the production of movies, tv shows, music and theatrical productions, but also in broadcasting, publishing, cable networks, theme parks/resorts, consumer products (retail business) and internet/direct marketing. Especially in the first four years of Eisner’s leadership, Disney highly diversified its business lines. As one can see in “Exhibit 2”, Disney got more engaged in other businesses than their traditional ones. It diversified its business through creation of the Touchstone label (1984) and production of adult tv shows (1985), which gave them a footstep into the adult movie film sector and enabled them to capture other audiences than children and families.
Moreover, Disney diversified its business further when it opened Disney stores in 1987. Thus, it got a foot in the retail business and was able to capture huge profits. To put it differently, through expanding into new businesses, regions and audiences, especially through the retail business, Disney pioneered the “retail-as-entertainment” concept and created a completely new way of generating profits. Disney was able to generate sales per square foot twice as much as