The Diversification Strategy of Disney - Special Academic Support

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Summary

In the current reality in which business has to work, the exceptional dynamics and turbulence of the external environment require a new type of thinking not linear and one-sided, but flexible, rational, and critical. Making decisions, and pondering problematic situations, managers unconsciously start from the information known to them, especially from the one that is imposed on them or which they have learned recently. This arises from the fact that people tend to have certain dogmas, and beliefs in order to limit their perception and better recognize the surrounding circumstances. However, most of the stereotypes, norms, habits, and beliefs that exist in management are no longer progressive but fill the managers consciousness, they become negative boundaries of thinking, implicitly hindering the adoption of high-quality and effective decisions, as well as the perception of new management tools and implementation creativity. Moreover, the emergence of new problems or the transformation of unresolved ones into chronic ones contributes to the strengthening of the emerged boundaries.

Obviously, it is necessary to clearly distinguish and delineate traditions that require respect and preservation from those tools and methods that are important to constantly update, in view of changes in the management object and consumer requirements. Each change should be viewed as a new opportunity. In this context, it should be noted that, when making a decision, it is necessary to identify why the manager chose this particular solution, based on what motives and conclusions a specific alternative was chosen, in order to avoid the pattern traps.

Disney is one of the examples of successful critical thinking for making strategic management decisions. The business of the company is widely diversified, both in terms of geography and business segments. In addition to extensive growth, the Walt Disney Company is increasing efficiency, which translates into continuous growth in profitability. The structure includes various companies, including ABC-International Television, ESPN, Lucasfilm, MARVEL, Pixar, and others. With the acquisition of Maker Studios, the largest network of YouTube channels, Walt Disney has access to the latest digital technologies and unique expertise to assess the interaction of modern users with the short video format. The new Disney + ad-free streaming service was launched in the United States on November 12, 2020, with plans to expand to every major global market.

From Disneys Annual Report, it is evident that the company provides a wide range of channels for various categories of users, taking into account their diverse interests and needs for example, Disney Junior for youngest kids, Disney XD for kids ages 6 to 11, a multimedia sports entertainment ESPN, Freeform (a channel targeted to viewers ages 18 to 34). Disney offers broadcasting, including a domestic broadcast network, television production and distribution operations, and eight owned domestic television stations (The Walt Disney Company, 2020, p.4). The concentration of efforts and assets in one area helps any company to take a strong position in it. However, if the opportunities for growth in this area are exhausted, diversification of production will be required a transition to diversified production with various types of products, as well as access to various markets. Disneys unrelated diversification reflects a financial approach entering new markets with the goal of increasing the market value of the companys shares. Companies operating in any area of business in different markets are acquired. The selection criterion is their perceived profitability, and strategic fit does not play an important role. This allows for reducing the risks of portfolio management and optimizing the portfolio matrix. At the same time, Disney applies critical thinking to the analysis of the need to acquire or create specific business units in different segments, conducting a comprehensive assessment of the relevant situation, dynamics, prospects, interweaving of interests of stakeholders, etc., including a global scale. In its report, the company provides a short but succinct explanation of the motives for its activities in different segments, as well as assessments of competition in the segments and risks associated with internal and external factors and agents of influence. The dynamics of the financial and balance sheet indicators given in the report indicate the success of the diversification strategy chosen by the company.

References

The Walt Disney Company. (2020). The fiscal year 2019 annual financial report. Web.

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