The Walt Disney Company Employs the Vertical Integration Strategy, Diversification Strategy and Global Strategy

The Walt Disney Company employs the vertical integration strategy, diversification strategy and global strategy.

Vertical integration strategy

As we discussed in the question 3, the Walt Disney Company pursues distinct vertical integration strategy in its different business lines. The Walt Disney Company is fully vertically integrated in studio entertainment, media networks and Internet and direct marketing. It involves in every stage of the value chain in these industries and adds 100 percent value in these industries. For consumer products and theme park, the Walt Disney Company is more or less vertically integrated. It only involves some stages of the value chain. For example, Disney designs all of its consumer products but outsource the production to other companies. By using the vertical integration strategy, the Walt Disney Company not only save the cost but also control the quality of its service and products which help Disney get the sustainable competitive advantages.

Diversification strategy

The Walt Disney Company follows the product-market diversification strategy and related-linked diversification strategy. It pursues a product and a geographic diversification strategy simultaneously. For example, The Walt Disney Company opened several theme parks in different countries and sells the different consumer products in different countries. The Walt Disney Company has invaded several markets, diversifying its offer to many fields. In 2000, we can find five big main fields of action where Walt Disney operates: Media Network, studio entertainment, theme parks and resort, consumer products and internet and direct marketing. Moreover, each of these categories is itself divided in other categories characterized by the horizontal diversification strategy. For instance, The Walt Disney Company bought the ABC Company in 1995. Walt Disney Company expanded its core animation business into theme parks, resorts, TV broadcasting, etc. by developing the strategic assets it needed along the way. Walt Disney Company uses the related-link diversification strategy. Walt Disney has several activities that can be shared across business units. According to the value chain model, we can find that Walt Disney has many opportunities to share value chain activities and achieve strategic fits. For example, the customer services portion in the value chain can be shared among all the five business lines Walt Disney operates. Also, the resources used in the sales and marketing activities in Media Networks line can be shared to Parks and Resorts line, Studio Entertainment line and Consumer Products line. The Disney business units can use the same distribution channel in most cases. Walt Disney uses horizontal integration to enter new types of entertainment. For example, Disney combined cruise ships with educational retreats. It brings family to the Disney

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