This is MBA project submitted for Strategic Diversification of Walt Disney. States the steps taken by Disney to diversify from just cartoons to more of established entertainment company.

1. Cardiff Metropolitan University
Strategic Diversification of
Submitted By:
Siva Shankar Biswal

2. WaltDisney
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Acknowledgement
I want to express my warm gratitude towards all persons who have in any
case backed & assisted me out to finish this task. As a matter of first
importance, I want to express my thankfulness to Prof. Siddhartha Bose
who gave Strategic Management task to me on Walt Disney. I am
remarkably beyond any hesitation that this will help me in molding my
future in some way or the other.
I might wantto express acknowledgment toward Universal Business School,
Karjat & every one of its educationalists who helped me in understanding
the ideas of Strategic Management & also to Cardiff Metropolitan
University, UK who have given me this chance to yield a shot at Strategic
Management.

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Table of Contents
Acknowledgement.................................................................................................1
About...........................................................................................................................3
Walt Disney’s Area of Diversification..............................................................4
Performance of the Company.............................................................................6
Performance Of Disney After Diversifying Into Different Sectors ........7
1. Media Networks.......................................................................................7
2. Parks & Resorts........................................................................................7
3. Walt Disney Studios................................................................................8
4. Disney Consumer Products..................................................................8
5. Disney Interactive ...................................................................................8
Leadership Role In Strategic Diversification ................................................9
Type of Diversification ......................................................................................10
Rationale of Diversification .............................................................................11
References..............................................................................................................13

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About
‘If You Can Dream It,You Can
Do It’
Since the making of “Steamboat Willie” in
1928,thelandmark step in thehistory of Walt
Disney and the entertainment industry to the
first colour feature flick, ‘Snow White & the
Seven Dwarves’ in the year 1937 & the
construction of Disneyland in Anaheim,
California in 1950s, Disney endangered his
private properties as well as his studio to
construct a reality from his imagination.
Started in the year 1923, The Walt Disney
Company is Multi-National mass media and
Entertainment Company. Walt Disney was
started by Walt Disney and Roy O. Disney
(Disney Brothers) as a cartoon studio & later
it expanded itself to many other business
related to entertainmentand mass medialive
theme parks, live action film production, TV
channels and Merchandise.
(The Walt Disney Company, 2017), (Dozier,
n.d.)

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Walt Disney’s Area of Diversification
The Hunger To Lead The Entertainment Industry
In the year1955,Disneybrothersopenedthe gate of the worldfamous
theme park known as Disneyland for the public. The California’s
Disneyland wascovered across160 acres. In 1966, thevisionary Walt
Disney passed away & the management went over to the younger
brother Roy. Since then, the diversification of the Disney studios
started. The management keep on changing to subsequent deaths in
the family and in subsequently Disney wantto the handsof Ron Miller
(Son in Law of Walt Disney). Disney started growing rationally after
that. They added another theme parksunder their name. In 1983, the
popular Disney Channel was launched by Disney in America. Back
then it used carter the whole family, children’s and teenagers in the
morning & families during the evening. The Disney now wanted to
expand globally in the hunger of growth. The opened theme parks in
Tokyo and Europe. Disney then wanted to diversify to the film
industry. They purchased Miramax Film Corporation and produced
two the best films in Hollywood i.e. ‘Shakespeare in love’ & ‘Pulp
Fiction’. This was smooth diversification for a Disney. The strategic
could not see success for a longer period of time. Due to some of the
dissatisfaction between the managementand parentcompanyDisney,
it was sold to Tutor-Saliba Corp. Disney keep on diversifying
themselves by acquiring many companiesin the
television industry. They took over ABC. This
gave them access to the television and
cable networks industry. With the
acquisition of ABC,they got ESPN,one
of the largest sports channel in the
world. They entered sports
entertainment industry with that. They

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acquired Pixar which helped them to enter a creative
and visual effects segment. After acquiring Pixar,
they have another world visionary in the world
“SteveJobs”. Together, they producedsomeof
the excellent animated movies like Finding
Nemo, Cars & The Incredibles. In 2006, a $4
billion deal with Marvel comics and
entertainment gave them the chance to rule
the comics market. With access to some of the
famous characters created by Stan Lee,
Disney started creating animated marvel universe and with the
success in the animation industry, Disney produced themovieHulk 2.
With few bumps, Disney plannedto drop theall the past moviesmade
by Marvel and build a cinematic universe of Marvel Heroes. The
Strategic movecome in handy and they produced the biggest union of
superheroes “The Avengers”. The hunger to be a leader in the film
industry, Disney brought Lucasfilm from George Lucas in 2012.
Lucasfilm have some of the legendary and cult movies under their
name e.g. IndianaJones & Star wars. Disney CEO said in an interview
that “This is one of the great entertainment assets of all time, one of
the finestbranded & one of the most loved & its justfantastic for usto
take the chance to purchase it, run it & develop it”. They released a
new star wars movies known as Star Wars: The Force Awakens. The
main reason to take over Lucasfilm is to get the mass followers of
these movies. Star warsalwaysbeen one of the best sci-fi moviesever
produced. They took over the legacy from George Lucas and released
their extended version which was loved by the franchisee’s mass
followers. They purchased Touchstone Pictures to produces ski-fi
movies for children and teenagers. Disney always keeps on
diversifying itself. The introduced various merchandise of their
cartoon characters and movie characters. Disney also bought
Hyperion books. It is a cable network which focuses on family
entertainment. However, Disney haven’t forgot their on animation
studio. They released Frozen which was a huge success and went on
to win the Oscar for best animated movie. The main reason for the

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diversification was to be the leader in the entertainment industry.
(Markides, 1997) (Bracho, 2014) (Forrest, 2011)
Performance of the Company
Disney have their stand in various segments of
entertainmentindustry.TheyareMediaNetworkswhich
gives them around $18,714 million every year, Parks &
Resorts helps them to get a revenueof $11,797 million,
Walt Disney Studios gives them revenue more than
$6,350 million, Disney Consumer Productscontribute around $3,049
million to Walt Disney and Disney Interactive get revenue around
$982 million.
The Chief Financial Officer of WaltDisney Jay Rasulo gavea statement
that, “unlike other media houses, we really do have a very clear and
strong strategy of an environment in which we together own the
franchises & own the means of supply to get those franchises out
across almost all customer trace points”. Disney is developing its
various business sectors to maximise the economic worth of its
produces.
The Toy Story in good example of how Disney uses all his market
segments by strategic take over. Toy Story 3 became the 2nd highest
grosser for Disney in America. The production manager of Disney told
about Toy Story 3 that, “Although we always intended to create Toy
Story 3 our Pixar acquirement put this project
back under the influence of Toy Stories original
architects, who we knew would make a
magnificent animated movie”. Overall, this
acquisition gave Disney a revenueof $1.1 Billion.
Their strategic moveto acquire Pixar andget into
new dimensions of cartoon industry was a
successfulwith ToyStory. WhenIger took over as
the CEO of Disney, the disney’s market cpaitalisation has increased
from$46Billion to $146Billion,increasedby 223%atthe end of 2016
FY. (Carlos Carillo, 2012), (Investments, 2012)

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Performance Of Disney After Diversifying Into
Different Sectors
Walt Disney when started Disney studios, he mainly focused on
creating Disney characters, animation movies and theme parks. But
later when Disney’s management came into the hand of Iger, he
started diversifying the company. He started entering different
segments mainly through acquisition. He started acquiring different
media houses and television broadcasting companies to enter the
cable and television segment. Disney produced $7.5 billion in profit
last year, dwarfingthe incomes of competitors such as Time Warner,
Viacom & 21stCentury Fox. Detailinformation performanceof Disney
after diversifying are as follows:
1. Media Networks
This area captures the businesses in cable networks, radio networks,
digital operations and broadcast television networks. The media
division contributes 46% of the revenueto Disney group. Before this
the major chunk of revenue used to come from the Disney’s theme
parks and resorts. After acquisition, Disney focused to increase the
revenueof these cable channels by higher advertisementrates in NFL
and NASCAR. The main focus was on ESPN, whose performance was
going down before Disney’s acquired it through their strategically
diversified plan. However, in 2011ESPN didn’tperformed welldueto
poor publicity of FIFA world cup 2010 whichshowed negativeimpact
in media business of Disney.
2. Parks & Resorts
It the second largest revenuegeneration sourcefor Disney. Itwasfirst
diversification doneby the company to increase their fan followingof
Mickey Mouse Cluband revenue. Currently, Theme parksand resorts
contribute 29% of the revenue generation to Disney. In 2011, the
revenues increased by 9.6% due the success of Toy story 3, Tangled
and Alice in the Wonderland in 2010. Toy Story came into being after

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Disney took over Pixar to enter 3D animation movies segment. In
2011, the Tokyo earthquake resulted to heavy loss for Disney.
3. Walt Disney Studios
Walt Disney Studios is the parent company of all the
other subsidiaries of Disney group. Now through
acquisition to increase the product portfolio Disney
have Marvel, Touchstone Pictures, Walt Disney
Studio Motion Pictures, Walt Disney Animation
Studio, Lucasfilm and Disney Nature. All these
contribute around $6 Billion to the parent
company. However, due high investment in production they made a
profit of $618 Million only in 2011. However, Disney also produced
disastrousmovielike LoneRanger and John Carter which amountto a
heavy loss to the studios. They failed in the beginning but they were
able to produce some marvelous movie in the coming years which
increasetheir pocketmorethe $1.8billionin a first3quartersof 2013.
4. Disney Consumer Products
The ConsumerProductssectionof Disneycarriesthe two-dimensional
video thoughts that Disney produces to customers in three-
dimensional merchandises, allowing Disney to further exploit on the
objects that the businesscreates. These productsareusually available
in the form of toys, stationery, action figures, accessories, consumer
electronics, footwear, etc. These products contributes around 7%-
10% every year. This section increased the revenueof Disney by 8%
approximately.
5. Disney Interactive
Disney Interactive developsvideo gamesfor consumers. Thesegames
are available in mobile phones, video consoles and PC’s. This segment
offer online content & also runs ads for other Disney products. This
divisionleadscustomersto Disneyproduces&offerscustomersaway
to play with the Disney characters in many of the Disney franchises.
This segment contributes about 2% of the overall revenueof Disney.
However, Disney Interactiveregistered a loss of $308 Million in 2011.

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The main reason to have this business is to create a continuous
customer interaction. (Carlos Carillo, 2012)
Leadership Role In
Strategic Diversification
WaltDisneystarted the businessto
make his childhood memories to
true.The WaltDisneyproducedthe
first animated short movie with
iconic character Mickey Mouse.
Since then, Disney brothersnever looked back. Even after the death of
Walt Disney, the younger brother Roy never let the flow of
imagination stop in Disney. Many Iconic character were developed
under his regime. When Miller took over the diversification of Disney
studios started. He first diversified the company by entering channel
broadcasting industry after starting “Disney Channel”. After the
success of Disney channel, the future management took the decision
of diversifying the company by acquiring ABC to enter cable and
broadcasting business.
Currently, Disney is led by its Chairman & CEO Robert A Iger. Iger is
known as the modern architect of Disney. He the reason behind
diversifyingthe company on a larger basis. He took some important
decision like entering the comic business by purchasing Marvel
Comics and later entered the feature films by purchasing the whole
Marvel Entertainment business, Pixar and Lucasfilm. Iger with his
team acquired all these brands with an
objective to create mostinnovativecontentby
exploiting latest technologies and &
innovationswhich will eventually strengthen
the Disney’s brand name in the world. Iger
forecasted that this can be done by
diversifying the business of Disney. He took ROBERT A IGER

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the acquisition routefor diversifyingthe businessof Disney. The Pixar
deal may be the one that established Iger's purchase bona
fides, but Disney wouldn'tbe where it is now without the
Marvel& Lucasfilm acquisitions. Iger’s investmenthuge
chunk of money in diversifyingthe business and also
in the parks& resorts. However, someshareholders
believethat theROIis notuptothe markagainstthe
investment done. In 2013, the contract of Iger was
renewed based on his vision to diversify the business
and create a cinematic universe for future Disney
projects. Iger has proved his success with the
success of Marvel movies, Disney’s animation
movies, Pixar produced movies and huge returns from the
theme parks and resorts in the following year. However,
whatever Iger touched didn’t turned into gold. He have Lone Ranger
in pocket which led to minus $200 million from the Disney’s pocket.
After the disaster of Lone Ranger, Iger moved very swiftly to correct
everything. Hebrought in AlanHorn, the ex-presidentof WarnerBros.
After that, Iger with Horn took over Marvel Studios and produced
three films that have crowned $1 billion at the box office "The
Avengers", "Iron Man 3" & "Avengers: Age of Ultron". Iger now plans
to diversifythecompanydigitally.Digital innovationwillbeimportant
to Disney’s future. (Miller, 2015) (Bob Iger, 2017) (Walt Disney
Company, 2014)
Type of Diversification
Basically, there are five types of diversification i.e. Horizontal
diversification, Vertical diversification, Concentric diversification,
Heterogeneous or Conglomerate diversification and Corporate
diversification. Disney diversification in usually based on the
“Concentric Diversification”. Concentric diversification means that
there is a technical similarity amongthe businesses,which meansthat
the organisation is able to influence its technical know-how to

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increase some benefit. Walt Disney understand the interrelation of
new businesses to each other correct from the start, something that
continuesto be the foundationofcompetitivebenefitto the enterprise
till now.
When Disney has extended its processes to undertake playhouse,
radio, printing, online media, etc., in its umbrella. In the earyly 80’s,
Disney concentrated only on family entertainment. This resulted for a
clear differentiated market from their counterparts. This changed
when Michael Eisner took over as the CEOof Disney. Eisner'saim was
to develop an organisation that would grow by 20% a year. Eisner
trailed three ideologies to obtain this objective which contains
keeping its price low so it doesn't erode its returns, run the core
business in a gainful method & find some fresh businesses that could
assimilate with organisation & assure a yearly growth rate of 20% for
the organisation. He wasn’t able achieve the said target with the
acquisition but the results were healthy than before. When Iger took
over he changed the whole Disney world. He took over some big
brands under Disney which were strategically aligned
with the objective of the company. Marvel, Pixar and
Lucasfilm took Disney to the top of the entertainment
industry which was alwaysbeen the main objective
of Walt Disney. Currently, with some move
marvelous moves by Iger, Disney able to produce
some quite good movies like Frozen, Pirates of
Caribbean, Toy Story 3, etc. (Strategy Train, 2009)
(UKessays, 2015)
Rationale of Diversification
Disney's extension & diversification plans was motivated purely by
the requisite to accomplish an economy of scopewhich will provideit
the preferred market supremacy as well as the economies of scale to
take down its cost of trade. Disney chased this plan all over the 90's
usinga mixtureof diversification into regions which werethe natural

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addition of their existing trade as well as such other regions where
they had low interaction but apparentlyhad foundpossibleprospects.
Bothof these headed to the creation of DisneyCruises, PleasureIsland
& the integration of theme park managementinto its trademodel. The
company'spurchaseof Marvelin 2009&Pixar in 2006haveenhanced
company'sdevelopmentprospectsand amplified diversification even
more.
In spite of the massive accomplishments logged, it was uncertain
whether the diversification hooked on some market or acquisition
strategies chased with some business houses such as ABC truly
boosted the shareholders share value. The belief is that when 2
business houses, who are front-runners in marginally differentareas
get to gather, together would be healthier off by the synergy formed
among 2 of them. Both Disney & ABC are bests in providing
entertainment & both with widespread networksin creativeness and
creation. When companies cannot leverage on their strong suit
DISNEY SUBSIDIARIES

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followinga union,then they stand the threat of weakeningtheir brand
to a place where they may not be capable to generate the returns
essential for a return on investment to their shareholders.
Currently, Disney has developed themselves past the traditional
theme parks, cinemas, TV shows, clubs and books business. Its
established businesses comprises of Resort Properties, Disney Cruise
Line, Radio Broadcasting, Musical Recordings, Interactive software,
sale of animation art, NHL franchise & internet website, etc. Apart
from the NHLfranchise, all businessesare related to the core business
of Walt Disney and it creates a proper synergy for all the segments.
Walt Disney’s corporate strategy recognizes the point that while
Disneymay havesome'magical' products,its strongpointis notin the
productsthemselves, but instead in the way in which they correlate &
supplement to each other.
When Iger took over as the CEO of Disney, the Disney’s market
cpaitalisation hasincreased from$46Billionto $146Billion,increased
by 223% at the end of 2016 FY. Currently, Disney valued at $178
billion, which makes them the most valued media company and all
these become possible by the strategic diversification of Disney
through acquisition of big media and production
houses. The modern Disney is built on the take
overs made under the leadership Iger. He proved
that his decision to enter varioussegmentworked
in a positiveway and today Disney have grown to
very different organization which have complete
leadership of entertainment business. This is
possible because of the diversifications of its
operations. (Varcoe, 2017), (UKessays, 2015),
(Investments, 2012), (Forrest, 2011), (Rodriguez,
2017)
References
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Disney’s CEO on a More Modern Mouse. (A. IGNATIUS,

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its-diversification-strategy-in-201/
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http://www.businessinsider.com/discourse-on-
diversification-2011-3?IR=T
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diversification-is-key-to-growth
Markides, C. C. (1997, November-December). To Diversify or Not To
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https://hbr.org/1997/11/to-diversify-or-not-to-diversify
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http://www.latimes.com/entertainment/envelope/cotown/la-
et-ct-disney-iger-20150607-story.html

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Rodriguez, A. (2017, March 23). Disney won’t let Bob Iger go: Media’s
most successful CEO is staying on through 2019. Retrieved July
21, 2017, from Quartz Media LLC:
https://qz.com/940692/disney-dis-ceo-bob-iger-who-
oversaw-the-acquisitions-of-pixar-marvel-and-star-wars-
owner-lucasfilm-has-had-his-contract-extended-through-
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http://st.merig.eu/?id=145
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https://thewaltdisneycompany.com/about/
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‘If You Can Dream It,
You Can DoIt’