Reawakening the Magic: Bob Iger and the Walt Disney Company Harvard Case Solution & Analysis

Reawakening the Magic: Bob Iger and the Walt Disney Company Case Solution

Does Disney have a corporate advantage? Why? Why not

The company has been enjoying sustainable profits and growth for years due to its unique corporate advantage, which gives Disney an edge over its competitors.  The company’s corporate advantage is mainly based on offering unique products to different customer segments in the entertainment, amusement parks and the mass media industry.

According to Michael Porter, a company’s competitive advantage depends on its generic corporate strategy, whereby the generic corporate strategy of Disney is to provide high-quality entertainment services to its customers all around the world, with the adoption of effective technology and relevant platforms for delivering such entertainment services.

The competitive advantage of Disney is based on product differentiation, i.e. the company is focused on delivering unique product solutions to its different target markets, which makes it different from its competitors. Disney’s competitive advantage lies in the competitive advantage by Michael Porter, i.e. the generic strategy for maintaining the corporate advantage lies in offering unique products to many market target segments. For instance, the company offers entertainment services to consumer segments of all ages, as the core purpose of the company is over the provision of family-oriented entertainment services.

Animated series (i.e. Snow White, Goofy, and Donald Duck), movies, and Disney theme parks have provided value to the customers by creating a unique entertainment to be offered for each customer segment. In an amusement park, from children to parents, everyone gets leisure, i.e. Disney fits the shifting trends and preferences of each individual.

According to a report prepared by (Stawicki, 2016), Disney is considered as a leader and leader of entertainment services and its other business segments. The company’s holding including: ABC, the Disney Channels and ESPN, have been delivering unique and extraordinary content, which cannot be distributed or licensed to other media channels and players in the industry. The exclusive content gives Disney a cutting edge over its competitors. Through uniqueness and product differentiation; Disney enjoys a higher customer’s willingness to pay, ultimately leading towards higher profitability through advertising and affiliation fee charges in comparison to its competitors..

Moreover, the company’s acquisition of Pixar has also given an edge over the competitors, as during hard times Disney was enjoying profits only because of the unique content provided by Pixar. In addition, the companies allow their customers to engage with the same character through different channels, including: TVs, video games, theme parks films,etc. Disney is able to tie up its different business units together and enjoy higher profitability from these merging business units.

Lastly, the competitive advantage of Disney lies in its brand recognition among customers of different target segments, all around the world. Brand recognition is the most attractive asset as Disney is considered a  household name throughout the globe.

What is the global strategy of Disney? How does it create value

Earlier, Disney used to create its content in different localized forms, to expand the company in different geographical locations. The company has expanded in China, India, and Russia. The global strategy of Disney includes the usage of foreign outsourcing, whereby, it allows the foreign producers (especially China) to produce its content and distribute it in the local markets. (Ward, 2012) The company has many contracts and license agreements with the Chinese manufacturers to produce the company’s content in the localized form at a relatively lower cost fraction. Moreover, the company has opened stores in the USA, UK, Italy, and Spain to sell its products and services. The company has opened its theme parks in Europe, Asia, the Middle East, China and America.

Moreover, despite facing different international cultural, language, political and legal barriers; the company has responded to the localized needs of consumers by offering the locally produced content through licensing in multiple languages and by realizing the price acceptability differences among the people of different nations.

Value Scorecard

The adding value scorecard measures the levers provided by the company’s global strategy, which might create value or destroy the value to consumers. Disney’s global strategy is measured according to different levers, which are explained below:

Adding Volume or Growth

Disney has expanded its operations to different countries including China, Russia, India, Spain, Italy, etc. The company has billions of consumers all around the globe, who demand the company’s unique product offerings. The company has offered its products from movies, animated series, theme parks entertainment, etc. to selling CDs and offering online content through Netflix. The company’s global expansion of offering local products according to the needs of a particular market has increased the revenues of the company and the company has achieved tremendous growth. For instance, in 2015, the international revenues reached 27% and the revenues from Europe and North America increased from 6% to 11% from 2005 to 2015.

Decreasing Costs

Disney’s costs have decreased with the adaptation of the global strategy as it uses foreign licensing for the production and distribution of its products. It gets its products produced especially through Chinese manufacturers, who produce the local contents at low-cost fractions. This foreign outsourcing strategy has generated sufficient return for Disney along making the Disney prices competitive as compared to Disney’s competitors, yet the consumers havehigh willingness to pay, which further enables the company to enjoy higher-margin thereby incurring lower costs.

Differentiating / Increasing Willingness-to-Pay

Disney products are among the highest selling toys across the globe. Sales of Disney’s license merchandise increased from 40.9 billion in 2013 to 52.5 billion in 2015. In 2014 the total sales of Disney Princess toys were approximately $722M making it the most sold product as compared to other Disney products as well as its competitors’ products. The number of sales and earnings clearly shows that customers are willing to pay for Disney merchandise. The global strategy of Disney positively affects the sales of Disney related products across the globe. Disney’s services in India (for example, UTV) increased sales of its content. Customers were receiving their favorite content in their native languages-instead of foreign language, increasing the number of customers and their willingness to pay.

Improving Industry Attractiveness / Bargaining  Power

Walt-Disney is a huge company. The company is made up of several popular acquisitions. Apart from acquisitions, the company’s business portfolio is huge. It includes media networks, hotels, theme parks, interactive games, and other products, etc. Table 1 below, displays the business portfolio of Disney.

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