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Case Study: Walt Disney’s Business Strategies

Walt Disney Company is a $27 billion a year Global Entertainment giant which is an American based company was started by Walter Disney in venture with his brother named Roy O Disney in 1923. In 1928, Walt Disney created Mickey Mouse for which Walt wanted to call his character “Mortimer” but his wife convinced him to be called as “Mickey Mouse” and since then Mickey has been a classical hit for Walt Disney. In 1937 Disney presented their first feature full length Musical animated movie called “Snow white and the seven dwarfs” which is still a huge hit and remained in the hearts of its consumers forever.

Walt Disney recognizes what is customer value in Disney brand. They value a fun experience and homespun entertainment based on old-fashioned family values. Disney responds to these consumer preferences by leveraging the brand across different consumer markets. Let’s say that an American family goes to see a Disney movie together. They have a great time. They want to continue the experience. So Walt Disney offers Disney’s consumer products with multiple product lines aimed at specific age groups.

In 2003, Walt Disney came up with a movie called “Pirates of the Caribbean” which was a block buster hit at the box office. The movie was targeted for all the members of a family. In addition to the movie, Disney created a theme park ride, merchandising program, video game, TV series and comic books. In 2004, Disney presented the movie called “Home on the range” which was again a hit. Apart from the movie Disney created an accompanying sound track album, a line of toys for kids, clothing featuring the heroine, a theme park ride and a series of books. So Disney more often or not supports and promotes its movies with a host of secondary products attached to it.

Disney’s strategy is to build consumer markets for each of its characters, from classics like Mickey Mouse to snow white to new hits like Kim Possible. Each brand is created for a special age group and distribution channel. Disney has a large distribution channel. Baby Mickey Mouse and Disney babies target infants. Mickey Mouse is sold through the department and specially gift stores while Baby Mickey Mouse is a lower price option sold through mass-market channels. Disney’s Mickey’s stuff for kids targets boys and girls while Mickey unlimited targets teens and adults.

When it comes to TV channels, Disney has its own channel called the Disney channel which is the top prime time destination for kids’ age b/w 6 to 14. Disney has a pre school program called the “play house” which is targeted to small kids’ age b/w 2 to 6. Disney offers a Co-branded visa cards to adults. Card holders earn one dollar for every $100 charged to the card and the card holders can charge the card up to $75000 annually and then they can redeem the earnings for Disney merchandise or services, including Disney’s theme parks and resorts, Disney stores, Disney studios and Disney stage products. Disney has also been in Home depot offering a line of licensed kids’ room paint colors with paint swatches in the signature mouse and ears shape.

Disney also has licensed food products with its characters on its brands. For example, Disney provides a Yogurt called Yo-Pals yogurt which feature Winnie the Pooh and its friends. The four ounce yogurts are targeted to preschoolers who have an illustrated short story under each lid of the yogurt that encourages reading and discovery. Disney also has some imprinted cookies in vanilla and other flavors have impressions of its famous characters like Mickey Mouse, Donald Duck etc.

Disney has come up with a recent TV program character called KIM POSSIBLE, which is an integration of all of its consumer product lines. Kim possible is a typical high school going girl who in her spare time saves the world from evil villains. It is the number one rated cable program in its time slot and has spawned a variety of merchandise offered by the seven Disney consumer product divisions. The merchandise includes:

• Disney Hard lines- stationery, lunchboxes, food products, room decor.
• Disney Soft lines- sportswear, sleepwear, daywear, accessories.
• Disney toys- action figures, wigglers, beanbags, plush, fashion dolls, poseables.
• Disney Publishing- Diaries, junior novels, comic books.
• Walt Disney records- Kim possible soundtrack.
• Buena Vista Home Entertainment- DVD/video.
• Buena Vista Games- Game Boy advance.

The success of Kim Possible is driven by action packed storylines which translate well into merchandise products in many categories. Today, the pervasiveness of Disney product offerings is staggering and all in all, there are over 3 billion entertainment-based impressions of Mickey Mouse received by children every year.

Porter’s Five Forces Analysis of Walt Disney

Threat of New Entrants

Since the Walt Disney Company has been able to find a very unusual niche within the industry, the entrance barriers are high relatively. The company is able to grow over a long term period, and has to develop from the departments of Research and Development (R&D) , marketing, and finance. By depending on past experience, the company officials know to a large extent what the target customer wants.

Threat of Substitutes

The products or services are moderate to low. Other cartoon figures, theme parks, and movies can search the market in which the Walt Disney Company is operating in, but this is obviously representing a significant threat. The Walt Disney Company has placed price controls on many of its product lines already, and should be able to cope with other new competitors. However, by upgrading products and services, the threat alone of new entrants into the market requires the Walt Disney Company to hedge against such risk by simultaneously.

Bargaining Power of Suppliers

The suppliers are governed by a few companies as the Walt Disney Company is operating in a highly differentiated and unique industry with high switching costs associated with operations. Besides, they are most probably very concentrated. However, the Walt Disney Company is a unique company and important customer of many suppliers. Furthermore, the size of the company may be a great advantage certainly. The company will create a dependency relationship in the industry by being able to order large volumes of unique products from unique suppliers.

Bargaining Power of Buyers

The bargaining power of buyers is high in the service and in the entertainment industry. The customers have powers certainly since a large number of customers are needed to make the Walt Disney Company’s operations run smoothly. For example, if the price on a particular home video is too high, customers may be averse to spending the money needed to purchase the products. Another example is the entrance fee charged at the Walt Disney Company’s theme parks. Furthermore, the entertainment industry does not take the buyer money, even if it is planned in a way that it will make the buyer spend more. A majority of the Walt Disney Company’s product mix focuses on intangible returns of the buyer’s money. However, some customers may not realize that they are getting such a return may increase the bargaining power of the customers.

Rivalry among Existing Firms

It does not play a very important role in the Walt Disney Company’s external operational environment. Nevertheless, it is true that the company’s exit barriers are extremely high. Furthermore, capacity is expanded in extremely large investments. However, there are no closer direct competitors to the Walt Disney Company’s operations. Competitors such as “Lonely Tunes” retail stores do not appear to appoint themselves to expensive advertising campaigns in order to obtain market shares. Moreover, the Walt Disney Company’s products are highly differentiated. The switching costs are therefore quite significant. A multinational corporation such as the Walt Disney Company faces internal weaknesses and strengths, which can to a certain extent be controlled. The external forces such as opportunity and threats are more difficult to control, and the Walt Disney Company has to adopt and take advantage to those forces.

SWOT Analysis of Walt Disney

There are four things a business should consider that are crucial to keep up with the competition and to give an accurate point of view on where they stand. The four things are Strengths, Weaknesses, Opportunities and Threats referred to as SWOT analysis . The SWOT analysis provides information that is useful in matching the firm’s resources and capabilities to the competitive environment in which it operates. When doing a SWOT analysis it is imperative to know that the Strengths and Weaknesses are internal reflections, while the Opportunities and Threats are external reflections.

The Walt Disney Company’s main strength is in its resources, its experience in the business, and its low-cost strategy. Besides, the company has developed clearly a very strong and well known “brand-name” through many years. The company has also been able to diversify its operations and products to hedge against decreasing sales in product lines. In recent years, it has categorized into Home Video, Film, merchandise, Radio broadcasting, Net-work television and in theme parks. It has also effectively diversified globally its operations from USA to Japan and Europe. The main strengths in internal resources relate to human resources and financial stability. Employees in the Walt Disney Company studies appear to be extremely creative and they have produced several box-office productions in these recent years. A company without new ideas is bounded in today’s competitive business environment . However, the low-cost corporate strategy is a benefit for the company. The company can control costs , and still produce quality goods and services. Financial risks have been minimized by sharing initial investment costs with a maximum number of outside participants.

Corporations always have internal weaknesses. The Walt Disney Company’s main weaknesses are the following: A very large work load, often changes in top-management, and high overhead expenditures. The company has 58,000 employees in 1991. This fact represents possible communications problems, and a high bureaucracy level through the corporation. The company’s work load will increase even larger, and the organizational structure has to be able to support an extension of the work load by varying into more businesses and niches. The company has a very frequently changes and its corporate officers makes the corporate structure even more difficult. There are many positive things that often changes, but the changes are also associated with resistance, and high expenses.

Opportunities

External opportunities should be recognized, analyzed, and responded to in a very early stage. The Walt Disney Company is facing several external opportunities. However, the external threats facing the company are out-numbering the opportunities. Opportunities include the following; positive government attitudes towards its operations, barriers of entry are significant, and include the entertainment industry itself. Legal and legislative forces are usually identified as negative external factors to the company. Furthermore, the French government contributed greatly in the Euro Disneyworld project in the Walt Disney Company’s case. The French government invested in the project to built communication facilities, and gave the Walt Disney Company tax relief’s on cost of goods sold accounts. In addition, since the barriers of entry into the highly specialized industry in which the Walt Disney Company is still operating, competition will find it difficult to penetrate the company’s highly diversified product or service mix. Therefore, large initial capital investments are required to enter the industry accordingly.

Major threats to the Walt Disney Company include the following; Over saturated markets, politics and economic aspects from a global perspective, and foreign competition. As the supply of products and services in the entertainment industry is starting to saturate the markets, competition will be more exciting, and only the most powerful companies will be able to survive finally. The Walt Disney Company has leveraged this risk to a certain level as it has diversified and globalized its operations, but still, the company is in the service/entertainment business. The Cable-giants such as Turner Broadcasting Systems (TBS) may not be able to manage the stress on its operation such as the Network-television division.

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The Walt Disney Company: A Corporate Strategy Analysis

Carlos Carillo Jeremy Crumley Kendree Thieringer Jeffrey S. Harrison , University of Richmond

Walt Disney is a completely integrated media powerhouse. Films provide material for theme parks and resorts, consumer products, and even a cruise ship. Network and cable broadcasting is also a part of the integrated Disney package. None of Disney’s competitors are as successfully integrated. Still, in spite of a long record of success, Disney is facing more competition on many fronts and, like other media and entertainment companies, must continue to adapt to a changing technological and social environment.

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Carillo, Carlos, Jeremy Crumley, Kendree Thieringer, and Jeffrey S. Harrison. The Walt Disney Company: A Corporate Strategy Analysis . Case Study. University of Richmond: Robins School of Business, 2012.

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Case Study: The Walt Disney Company

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Having developed the Leadership Lifecycle over the preceding chapters, including the leadership roles that correspond with the phases of the organization’s lifecycle, the dangers inherent in transitions from one phase to another, and how it is possible for some individual leaders to span multiple roles, it is perhaps advantageous to illustrate the Lifecycle by looking at how the various roles and transitions apply over time within an organization. This chapter and the next will apply the model to two organ-izations that have enjoyed substantial and storied histories to provide a historical application of the Lifecycle to these respective organizations. This chapter applies the Lifecycle model to The Walt Disney Company, and the following chapter to Marks & Spencer.

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Flower, Joe. 1991. Prince of the Magic Kingdom: Michael Eisner and the Re-making of Disney. New York: John Wiley & Sons, p. 21.

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Eisner, Michael, with Schwartz, Tony. 1998. Work in Progress. New York: Random House pp. 136–7.

Masters, Kim. 2000. The Keys to the Kingdom: How Michael Eisner Lost his Grip . New York: HarperCollins.

Slater, Robert. 1997. Ovitz . New York: McGraw-Hill..

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Ward, A. (2003). Case Study: The Walt Disney Company. In: The Leadership Lifecycle. Palgrave Macmillan, London. https://doi.org/10.1057/9780230514478_9

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Walt Disney Operations Management, 10 Critical Decisions, Productivity

The Walt Disney Company’s operations management deals with a diverse set of strategic goals and objectives corresponding to diverse business operations. The company operates in the media and entertainment industry and the travel, tourism, and hospitality industry, as well as markets for merchandise, such as Disney-branded books and clothes. The company’s 10 critical decisions of operations management are holistic in supporting high efficiency and productivity in this diversity of business operations. Business optimization strategies based on the competitive advantages, opportunities, and challenges discussed in the SWOT analysis of Walt Disney align with goals for efficiency and productivity in the company’s operations management decision-making processes.

Considering the impact of operations management on business capabilities and competitive advantages, effectiveness in the 10 critical decision areas addresses the competitive pressure described in the Five Forces analysis of Disney . The company’s competitors include the theme park operations of Six Flags, Cedar Fair, and Universal Studios; the entertainment businesses of Sony and Paramount; and the travel and tourism services of Royal Caribbean, Carnival, and Norwegian. Moreover, Disney’s streaming services (e.g., Disney+) compete with the video streaming services of Netflix, Amazon , Apple , YouTube ( Google (Alphabet) ), Microsoft , and Facebook (Meta) . Disney’s operations managers’ decisions affect competencies against these competing firms.

Disney’s Operations Management: 10 Critical Decision Areas

1. Goods and Services. Disney’s strategic objective in this decision area is to ensure consistency in operations that satisfy the company’s standards for the whole organization. For instance, the design and specifications of movies must be consistent with the design and specifications of the company’s theme parks and resorts. The design of goods and services is based on the business purpose and goals represented in Walt Disney’s mission statement and vision statement . For example, the objectives of the company’s mission and vision determine operations management decisions focused on the entertainment quality of organizational outputs. The elements of Walt Disney’s marketing mix (4P) and corresponding marketing strategies work with the operations management specifications of goods and services developed and released for target customers around the world.

2. Quality Management. The critical decision in this area of Disney’s operations management focuses on the objective of consistent quality while considering cost limits and resource availability. Walt Disney’s competitive strategy and growth strategies influence the quality specifications, resource requirements, and corresponding operating costs for ensuring product uniqueness as a competitive advantage. The company’s operations managers maintain processes that satisfy these requirements while optimizing efficiencies and productivity.

3. Process and Capacity Design. Disney’s operations management aims for high efficiency and productivity in processes that satisfy the output requirements of the business. For example, the company’s cruise line operations require high efficiency, capacity, and productivity despite the physical space limitations of cruise ships. Also, at Disneyland and other parks and resorts, the company’s operations managers adjust processes and production capacity to match seasonal and occasional trends in market demand.

4. Location. Walt Disney’s strategy for this critical decision area of operations management considers market access and geographic proximity for theme parks, resorts, and travel and tourism services. For its production and distribution of content, like movies and music, the company’s strategy focuses on accessibility involving talent and related human resources. The departments and divisions of Walt Disney’s company structure (organizational structure) influence some strategic variables of this operations management area, like groups and teams for handling operational targets in regional markets.

5. Layout Design and Strategy. Disney’s strategic objective for this critical decision area is to optimize the movement of people, materials, and other resources and assets through layouts that facilitate efficient and productive processes in the business organization. For example, in operations management for Disney theme parks and cruise ships, backstage layout designs prevent disruptions in providing entertainment to guests.

6. Human Resources and Job Design. The critical decision in this area of operations management at Walt Disney focuses on continuously improving human resources to support the operational requirements of the company and its subsidiaries and divisions. For example, the company has training programs and performance appraisal systems to facilitate skill development and to improve job designs. Walt Disney’s company culture (business culture) promotes innovation and quality in workplace behaviors for organizational learning and employee satisfaction, in line with this area of operations management.

7. Supply Chain Management. Walt Disney’s strategies for this critical decision area of operations management aim for a streamlined and stable supply chain involving suppliers whose strategies align with the media and entertainment company’s strategies. The company’s material supply chain management supports the material needs of the operations of amusement parks, resorts, hotels, cruise ships, and media and entertainment production. Operations managers account for the various market and industry trends discussed in the PESTLE/PESTEL analysis of Disney to ensure that the supply chain remains cost effective, efficient, and stable to support the company’s operations in different online and regional markets.

8. Inventory. The strategic objective of Disney’s critical decision in this operations management area is to maintain adequate inventory while minimizing costs and addressing internal and external variables. For example, the company’s inventory control decisions continuously adjust inventory levels to ensure adequacy despite fluctuations in supply and material availability, and to match changes in market demand. Disney has business information systems for coordinating inventory management and the supply chain in all areas of the business.

9. Scheduling. The critical decision in this area aims for work and process schedules that adequately support Disney’s business needs. The company’s operations management involves information systems for automated scheduling for some business processes, like the schedules of maintenance checks of IT assets. However, many schedules for employees and processes involve human input. For example, schedules of some rides and shows at Disneyland involve manual setting after employees perform necessary safety checks.

10. Maintenance. Walt Disney aims for reliability of processes and resources, including human resources, in this critical decision area of operations management. For human resources, the company has HR development and training programs, as well as leadership programs to develop workers’ knowledge, skills, and abilities that match business needs in media, entertainment, travel, tourism, and hospitality operations. Effective maintenance of machinery and equipment, like the ones used at Disneyland and in movie production, ensures optimal efficiency at all times. This efficiency and the corresponding minimization of wasted resources facilitates Walt Disney’s CSR (ESG) and stakeholder management practices , especially programs for business sustainability and environmental conservation.

Productivity in Walt Disney’s Operations

Walt Disney’s operations managers have high productivity targets, although external influences may reduce actual productivity. For example, unfavorable weather conditions may reduce the productivity of theme parks and resorts. The following are some productivity metrics suited to the case of operations management at Disney:

• Number of tickets sold per day (theme park productivity)
• Number of guests accommodated per day (hotel productivity)
• Episodes filmed per month (film production/studio productivity)
• Brookey, R. A., Phillips, J., & Pollard, T. (2023). Reasserting the Disney Brand in the Streaming Era: A Critical Examination of Disney+ . Taylor & Francis.
• Disney Careers – Benefits .
• Jahangir, J. (2023). Revisiting the principles of economics through Disney. Real-World Economics Review , 89.
• The Walt Disney Company – Form 10-K .
• The Walt Disney Company – Supply Chain .
• Tsarouhas, P. (2023). New Trends in Production and Operations Management. Applied Sciences, 13 (16), 9071.
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Disney at the crossroads of disruptive trends

Owing to its intangible nature and oligopolistic structure, the Media & Entertainment industry used to seem particularly difficulty to disrupt, and Disney was sitting right at the top. Yet, ten years after Netflix launched its online video streaming service, incumbents acknowledged that surviving the online revolution requires drastic changes. Until 2017, Disney had not taken the threat seriously. Its streaming strategy could be described as exploratory, at best: It had a 30% stake in Hulu, a third-party streaming platform jointly owned by media giants, and it sold its “old” content to Netflix. However, as Disney’s cable partners (e.g., Comcast) started to lose millions of highly profitable subscribers, the company realized that its half-hearted approach to online streaming was a recipe for disaster. That year marked the turnaround of Disney’s approach to streaming. First, it shocked the world in August, when it announced that it would gradually withdraw its movie content from Netflix. That same month, it revealed it had taken a controlling stake in BAMTech, a technology company providing streaming video technology. Finally, in December, it announced its intention to acquire 21st Century Fox in a deal that closed 15 months later, giving it a controlling stake in Hulu and greatly expanding Disney’s already formidable content library. With the nomination of Kevin Mayer at the helm of DTCI in March 2018, Disney realized its intention to transition into a B2C company. However, it was going to be a long road for Mayer, who faced both external and internal challenges. The case explores Mayer’s options to succeed in a rapidly evolving marketplace in which former partners and internet giants have become the competitors. It also examines how Mayer can position DTCI within Disney, addressing the complexities of collaborating with other business units and the potential cannibalization of the Media Networks division.

• Acquire a holistic view of what is needed to create and support a firm’s overall strategy by conducting a thorough analysis of the environment and the competitors.
• Identify key aspects of strategy formulation and strategy execution in a global dynamic and highly competitive industry.

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The Walt Disney Company’s Strategy in Context Case Study

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Introduction

The case study selected for the investigation of strategic management and planning is devoted to the Walt Disney Company. It is one of the leading mass-media and entertainment corporations with the central office in the Walt Disney Studios in Burbank, California (Cieply, 2012). At the moment, it is considered the world’s largest conglomerate that is focused on the production of movies, cartoons, and entertaining products such as theme parks that are popular among the population globally.

It is an American company headed by its president, Robert Iger who is considered a successful CEO because of a number of effective solutions contributing to the development of the company and it’s becoming a leader in the selected market segment ( The Walt Disney Company announces, 2018). The company also owns other famous franchises and studios such as 21st Century Fox which contributes to the generation of the competitive advantage and significant empowerment of the corporation.

The decision that is discussed in terms of this case is the purchase of Lucasfilm for $4 billion by Disney. The given strategic solution became a surprise for the media world because of the popularity of the legendary Star Wars franchise and multiple opportunities related to its possible utilization to create new products such as movies, theme parks, or cartoons (Cieply, 2012). Despite stakeholders’ fears associated with this deal and high risks, the decision turned out successful because of the stable revenue generated due to the licensing agreements, sales of merchandise apparel, toys, and more than $4,8 billion income at the box office (Cowley, 2012). It also improved Disney’s position in the market providing new ways to evolve and broadening the target audience. For this reason, this purchase is selected for discussion and in-depth analysis.

In such a way, the deal between Lucasfilm and Disney is taken as the basis for the provided case study. Being one of the leaders in the market segment devoted to entertainment and movie making, Disney accepted the decision to buy the famous franchise regardless of the potential risks and possible negative attitudes from fans. The positive effect of this strategic move provided the corporation with new opportunities for its development and growth via the distribution of products associated with the Star Wars brand. Analysis of this decision will help to acquire an improved understanding of how strategic planning was impacted by internal and external factors and what aspects were considered by CEOs.

The following case study has a particular structure that contributes to a better comprehension of the discussed issue. There is the introduction of the central actors who planned the strategic decision and its details. This part is followed by the detailed evaluation of external and internal factors impacting this step with the application of stakeholder theory. Furthermore, the power of rivals and ideological constructs is investigated to determine the degree to which they preconditioned the change. The value created due to the given move is also analyzed. Finally, there is a conclusion summarising all meaningful details and discussing the importance of strategic management.

When it Happened

October 30, 2012, Disney announced that it would buy Lucasfilm company and rights for a famous franchise Star Wards. The established price of the deal was $4,05 billion in cash and stock which became one of the most significant agreements in the world of cinema (Baidawi, 2016). The given news became astonishing for the business sector because it signalized the new era of Star Wars and the Disney conglomerate. Today, specialists consider the purchase one of the smartest acquisitions ever made in the corporate world of America because of its critical impact on the market and companies’ position in it (Baidawi, 2016). However, the given solution was not spontaneous as it was preceded by complex negotiations both between Lucasfilm and Disney’s CEOs and within these very companies. The high price along with the existence of numerous complications associated with the utilization of the franchise stipulated significant risks.

Robert Iger, Disney’s CEO, insisted on the given strategic decision as one of the possible ways to improve the state of the company and create the basis for its further evolution. One of the main elements of his strategy was the focus on significant acquisitions and exploration of the well-known franchises to return Disney to its leading positions and reconsider the functioning of the corporation (Whitten, 2018). Since his appointment in 2005, Iger has adhered to a particular strategy that presupposes the acquisition of powerful and recognizable trademarks that will be able to diversify products offered by Disney and increase income (Harmanci, 2012). For this reason, Pixar’s purchase became the first significant deal offered by Iger regarding the suggested course. It became a successful strategic decision as the corporation earned about $1 billion for Toy Story 3 (Baidawi, 2016). The positive outcomes associated with this solution make the discussed deal possible as the acquisition of Lucasfilm was expected to contribute to the corporation’s growth.

Preliminary Work

At the same time, the complexity and large scope of the problem meant that the company’s CEO had to consider all possible options for analyzing both the advantages and disadvantages of the given strategic decision. For this reason, before October 2012, the analysis of the market situation, external and internal factors was performed with the primary aim to determine if the company can afford this deal and utilize the franchise effectively (Goldsby & Mathews, 2018). Another problem was to keep the agreement secret to avoid interference of rivals or the negative impact of the important financial information’s disclosure. For this reason, by the end of June 2012, the company managed to accumulate $4,4 billion in cash and short-term investments to make the deal, which helped to benefit from this strategic decision and overcome the closest rivals (Krantz, Sinder, Cava, & Alexander, 2012).

In such a way, it was a planned decision that demanded the utilization of all resources available for Disney at that moment. Moreover, Iger and Lucas’s participation was critical as they both represented their companies and acted regarding the existing interests and goals. Due to the effective negotiation and cooperation, The Walt Disney Company managed to acquire Lucasfilm, one of the most recognizable brands of the modern entertainment industry which significantly contributed to the further evolution of the conglomerate.

Impacting Factors

The scope of the given strategic decision means that there was a set of factors impacting the company at that period of time and preconditioning the emerging need for this step. These include both internal and external aspects that have an essential impact on the development and functioning of the organization (Kotler & Armstrong, 2015). The roots of this strategic decision can be found analyzing all forces that are relevant and unique features of Disney’s problems or strategic planning (McPhail, 2014). For this reason, the strategy utilized by the corporation while buying the rights for using the famous franchise comes from the existing issues and problems that should be solved or improved to achieve success and contribute to the further evolution of the conglomerate.

Cogitating about the purchase of Lucasfilm, it is critical to understand external factors that preconditioned this decision. First of all, Disney had to struggle against the closest rivals such as Sony, CBS, and Comcast who mainly provided products for TV, cable, DVD, video games, and Internet markets (Segal, 2018). Their position was strong due to brands’ unique peculiarities, Disney had no alternative products that would be able to compete with these. For this reason, the focus on making content resting on the popular franchise was made. Previously, Marvel studio was bought by Disney as one of the ways to introduce new heroes and attract a wide public audience. Lucasfilm became another brand bought because of the growing pressure of rivals.

The stable popularity of Star Wars and the growing interest in a new movie about this Universe became another factor that impacted this strategic decision. Correctly realizing the tendency towards the increasing attention to fantastic movies and superheroes, Disney decided to relaunch one of the most successful franchises in history. This factor had an essential impact on decision-making because of the opportunity to generate high income and acquire a competitive advantage (Sylt, 2018). Moreover, the target audience of Star Wars had a high level of expectations because of multiple rumors about the creation of a new episode of a famous movie which contributed to the high box office sales.

Finally, another significant external factor that preconditioned the given decision was George Lucas’s readiness to sell the brand. Analyzing the market and the functioning of the most important actors, Disney concluded that Lucasfilm experiences a period of stagnation because of the lack of new products and the impossibility to engage in competition (McLauchlin, 2015). For this reason, negotiations were successful, and parties managed to come to an agreement. George Lucas was provided with high compensation while Disney became able to make products belonging to the Star Wards universe.

Nevertheless, there are also internal factors impacting decision-making and this strategic step. Regardless of visible successes and the company’s value of $180 billion, there was a set of internal problems. First of all, its televised sports network ESPN failed and lost about seven million subscribers which can be considered a significant problem for the company (Cowley, 2012). Additionally, shares of the corporation fell more than 9% which also became a great disappointment for the company (McLauchlin, 2015). The combination of these factors evidenced the existence of a need for the introduction of an effective solution that would help to improve the situation and make the position of Disney stronger.

The company’s CEO, Robert Iger, also correctly realized the danger of the given situation because of the possibility to lose leadership in the sphere and connection with the target audience because of the inability to follow the popular trends (McLauchlin, 2015). For this reason, the purchase can be considered regarding the reconsideration of Disney’s functioning and attempts to select a new course that would satisfy the new demands.

Another internal problem that preconditioned the purchase of Lucasfilm was a limited diversity of products and demographics affected by Disney’s products. In the last two decades, the corporation has been successful at creating material for children (Russel, 2012). Disney princesses and fairies were popular among girls while some other characters such as Pixar’s cars inspired boys. However, there was a critical need to extend the target audience to attract male and female consumers of all ages. Acquisition of Marvel was the first step to achieve this goal, but having bought Lucasfilm, Disney created the basis for capturing new market segments characterized by a broad sweep of demographic appeal (Kober, 2017). That is why today Disney’s target population is characterized by the increased diversity as all people regardless of their age or sex are interested in Star Wars globally and wait for new movies or products labeled by the famous trademark.

The company’s CEO Robert Iger was also sure that to reacquire the leading positions, the company should create a new value. Speaking about Disney’s purchase of Lucasfilm, he outlined the necessity to ensure both the publicity and corporation’s employees the conglomerate can launch large scale projects that will attract public attention and alter the balance of power in the world of media and movies (The Walt Disney Company, 2018). For this reason, the deal promoted by Iger also resulted from the internal need for a new project that would serve as the stimuli for further improvement and achievement. The inclusion of Lucasfilm into the company’s structure also meant the emergence of new ideas due to the diversification of the staff composition and new CEOs who will be responsible for supporting the project and monitoring the state of the market.

Finally, the decision to buy Lucasfilm can also be explained by the necessity to create a new ideology and utilize it to overcome the closest rivals. The fact is that regardless of Disney’s leading positions at that moment, there was no clear understanding of how the company should evolve and what qualities cultivate. At the same time, the major competitors managed to create a successful concept that devoted significant attention and promoted as one of the factors guaranteeing better positions (Bondic, 2012). That is why, the strategic decision to make this deal can be a result of Iger’s attempts to create the atmosphere and ideology of exclusiveness as the conglomerate acquired the unique rights for the distribution of popular products and their utilization to interest the target audience, which can be considered a serious advantage resulting in a better position at the market.

Stakeholders’ Theory

In such a way, a set of factors mentioned above, both external and internal, shows that Disney’s strategic incentive to buy Lucasfilm was not spontaneous. It was preceded by the in-depth investigation of the market, main competitors, company’s main goals, and stakeholders’ interests. For this reason, the application of Stakeholders’ theory can help to understand the nature of this solution better. In accordance with this perspective, the functioning of any company and its decisions can be taken as a result of the impacts of all actors affecting its rise and evolution (Bernstein, 2015). In other words, the nature of all strategic solutions is preconditioned by the assemblage of current aspects associated with stakeholders and their needs (Freeman, Harrison, & Zyglidopoulos, 2018). The ground for the introduction of change lies in the necessity to satisfy their interests and contribute to the further development of the company.

Applying the model to the investigated case, the decision to purchase Lucasfilm comes from both internal and external stakeholders:

As it has already been mentioned, the impact of internal stakeholders such as the owners’ demand for increased income, managers’ need for the generation of new value and better functioning, and the necessity to provide employees with a new ideology that will help to promote the further rise became critical aspects preconditioning the solution (Duyne, 2016). At the same time, external shareholders’ impact such as the ability of creditors to provide the needed sum, customers’ interest in new products, and the tendency towards the alteration of the societal demands also contributed to the decision to buy a franchise.

Altogether, Disney’s decision to purchase Lucasfilm can be considered one of the most significant deals in the sphere of entertainment and media as the company acquired the rights for the production and distribution of products belonging to the Star Wars Universe. The investigation of the main aspects preconditioning this change and application of the stakeholders’ theory shows that the deal was made because of the need for the further expansion, diversification of products, and such factors as a high level of rivalry, the decrease of the popularity of brand’s products, narrow target audience, lack of value and new ideology to cultivate the competitive environment.

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