Diversification Strategy of Disney

Diversification Strategy of Disney

Application

Critical thinking is the ability to think logically and clearly, comprehending the rational relationship between concepts (Hitchcock, 2018). Critical thinking is an essential skill in an organization’s decision-making process to attain the best possible results in any given scenario. The above assists in reducing the rate of making mistakes that could be notably costly to the organization, in both financial terms and internal damages that may not be reversible (Hitchcock, 2018).

The mission of Walt Disney is to “entertain, inform, and inspire people around the globe through the power of unparalleled storytelling, reflecting the iconic brands, creative minds, and innovative technologies that make ours the world’s premier entertainment company” (The Walter Disney Company, 2020). Today, the organization is widely recognized and is always ready to evolve and learn new techniques that will be an advantage to the general effectiveness of the company. A considerable part of the organization’s success is a result of its application of critical thinking when evaluating diversification options that were necessary to keep the firm running effectively throughout the years of its existence.

Analysis

Walt Disney Productions is among the oldest entertainment industries across the globe, having been started in 1923. Initially, the company was known as the Disney Brothers Cartoon Studio, and its feature was a rabbit known as Oswald. However, in 1929, the organization was rebranded into The Walt Disney Productions, a little after the company had launched Mickey Mouse as its primary cartoon, which replaced Oswald the Rabbit. Prior to expanding into theme parks, live-action film production, and television, the firm made itself a leader in the animation industry in America.

The Walt Disney Company applies a related diversification strategy (Simpson et al., 2020). The type of diversification mentioned above entails expanding into operations whose administrations have competitively valuable strategic fits with the administrations of an organization’s current operations. The initial diversification strategy of Disney started several decades ago. In 1929, just one year after the company had introduced its initial animation, Disney certified the Mickey Mouse Club and a pencil tablet. Walt Disney Company comprehended the connection of amateur firms to one another from the start. The above is a factor that has progressed to be the base of competitive advantage to the organization to date.

The desire to achieve a scope economy has purely influenced the company’s diversification. The economy of scope would offer the company the desired market dominance in order to reduce its business cost (Voigt, Buliga, & Michl, 2017). The company’s main diversification plan is to adopt fresh and valuable products for its clients while at the same time adhering to the company’s core values. Disney establishes and buys other organizations that enable it to bring its products to other markets and still focus on its initial objectives.

To decide on diversification, the organization applied critical thinking to enable it to evaluate what it needed to do better than the other organizations in the same industry. Some of the steps the organization took before diversification include assessing how the organization would manage to attain and sustain a competitive advantage. Before diversifying, managers should not consider what their companies do. On the contrary, managers should think about what their firms do better compared to their rivals (Simpson et al., 2020). Disney Company must have determined that it already had a competitive advantage and the needed infrastructure within its global entertainment industry, which would enable it to enter into numerous operations without the company corrupting its internal business operations. Instead of sheltering the different functions such as television, theme parks, and media under one corporate roof, the company made a critical financial sense to expand into corresponding businesses (Voigt, Buliga, & Michl, 2017). The above decision has enabled the company to improve and strengthen its operations as the company continues with its mission statement of using creative technology and the company’s brand to keep being a global leader in the entertainment sector.

Conclusion

The application of rationality enabled Disney to consider the diversifying world around it and decide to expand with the said world. Through the use of related diversification, the company ensured it remained true to its original objectives while diversifying its operations into fresh and more creative platforms. In 2018, Disney’s executive officer claimed in an announcement that Disney’s reorganization and its diversification would enable the firm to brace itself for the future, establishing a more effective universal framework to meet customers’ needs globally, elevate development, and optimize the value of shareholders.

I firmly believe that Disney’s choice to expand throughout its existence has shown to be effective overall. As mentioned earlier, the company can ensure constant success by considering its surrounding world and diversifying with the world. An excellent illustration of the above was the company’s launch of Disney + in November 2019. According to reports by the company, the service had attracted over 70 million paid subscribers by the end of the fourth quarter. The above figure had surpassed the organization’s initial anticipations in the first year. The above cements my belief regarding how the firm keeps succeeding with every diversification plan the company considers and executes.

References

Hitchcock, D. (2018). Critical thinking.

Simpson, J., Kumar, P., Kemp, A., Awate, K., & Manning, K. (2020). 8.3 Diversification. Strategic Management.

The Walt Disney Company. (2020, March 16). The Walt Disney Company. https://thewaltdisneycompany.com/

The Walter Disney Company. (2018, June 27). The Walt Disney Company Announces Strategic Reorganization. The Walt Disney Company. https://thewaltdisneycompany.com/walt-disney-company-announces-strategic-reorganization/

Voigt, K. I., Buliga, O., & Michl, K. (2017). Making People Happy: The Case of the Walt Disney Company. In Business Model Pioneers (pp. 113-126). Springer, Cham.

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DISNEY – For this assignment, analyze the diversification strategy of either Disney or Kimberly-Clark using the documents linked within your Soomo web text. Explain how critical thinking applies to decision-making based on your review of a real-world scenario. Specifically, you must address the following rubric criteria:

• Application: Explain how critical thinking for decision-making is applicable to the scenario. Use evidence to support your explanations.
o What makes critical thinking crucial for decision-making?
• Analysis: Explain how information (such as facts, opinions, and published reports) is used to determine or establish the context. Use evidence to support your explanations.
o Why do you think the company reached the decision to diversify?
o What steps do you believe were taken? Explain your response using sources found during the research of your selected company.
• Conclusion and related outcomes: Describe the role of logic, evidence, and arguments in the company’s decision-making process.
o Was the decision to expand products, services, or value chain successful? Why or why not?
To begin, choose one of the following to focus on for this assignment and review the corresponding document provided in the Soomo webtext.