Good Example Of The Horizontal Scope Framework For Disney Company Business Plan

Business

Individual Assignment in Corporate Strategy
Business
Individual Assignment in Corporate Strategy

Executive Summary

A corporate strategy refers to the direction and scope taken by a corporation and the various ways through which it runs its core businesses.
The operations must work together to ensure that the organization achieves the objectives it set at the time it entered the industry.
When formulating the corporate strategy, it is important to avoid the use of a generic approach that does not define clear targets that the organization wants to achieve.
The most important element of the corporate strategy is its ability to fit the needs and objectives of the organization. For this reason, it must be tailored to fit or copied from an alternative successful organization that has the same objectives.
In this context, Disney Company’s corporate strategy is to maximize its sales and revenue by operating theme parks and studio entertainment.
The company’s decision makes sense because the corporate strategy is in line with the company’s core business of processes, and it works towards the achieving its objectives. Disney wants to increase its market segment and serve the highest number of consumers the competitive world of entertainment.
The company can manage this by diversifying its business process at the head office and in the subsidiaries, which makes its decision to take part in theme parks and studio entertainment very reasonable.

A horizontal scope framework refers to the combination of services and products offered by the organization to its customers. In most cases, many organizations diversify the products they offer to attract more customers given that consumers have varied preferences and specific needs. The horizontal scope framework determines the corporate strategy of the firm, and it is a significant dimension, which can help any firm to enjoy a competitive advantage over other participants in the market.
The company’s core business is to provide family entertainment to families throughout the world. There are also other companies in the industry, who have invested heavily and offer stiff competition to Disney (Disney Oliver & Company, 1996, p. 21). For this reason, Disney expanded its operations into five segments through the establishment of subsidiaries. These segments are media networks, resorts and parks, consumer products, interactive media, and studio entertainment. In this context, the focus is on the incorporation of theme parks and studio entertainment alongside the other three processes of business.

Disney Company’s Theme Parks

Disney inspired a unique form of entertainment focused on telling stories, which created a new form of entertainment for the family. The experiences in the story offer immersive experiences for the audience of the company, which makes the company’s theme parks an important source of entertainment for customers who love travelling and leisure. The parks offer wonderful experiences, and they host millions of travelers and visitors who are eager to share wonderful experiences with their friends and families (Pardo, Boluda, & Suemanotham, 2010, p. 34). The company’s theme parks have some remarkable features that act as the center of operations for this business process. These are five destinations suitable for visitation by visitors from all parts of the world. Currently, the company is constructing the sixth destination as it looks to expand the sector of theme parks. All these parks are called Disney parks, and they are a significant part of the company’s business accounting for nearly 30 percent of the company’s market segment.
Disney Theme Parks diversify the company’s business into the tourism sector beyond the provision of entertainment for families across the world. Tokyo was the first city to witness the construction of a Disney Park outside the United States. The move enabled Disney Company to attract more customers from Asia given that Japan is an influential economic force in Asia. Hong Kong was also a beneficiary of the expansionist move as the company established Hong Kong Disneyland. It is under the management of Hong Kong International Theme Parks (Griffin, 2000, p. 4). In spite of the good performance in Tokyo, Disneyland Paris welcomes more than 250 million visitors every year. All these parks have classy resorts where guests can enjoy good accommodation. The establishment of theme parks was a good idea in the company’s horizontal scope framework because it resulted in the generation of revenue for the company. It als led to the expansion of the market segment into regions that the company might not have established its influence.

Disney’s Studio Entertainment

Studio entertainment accounts for the company’s success. Disney’s involvement in the studio entertainment sector spans over a period of 90 years. Studio entertainment has been the foundation of the company since its establishment. Today, the studios continue to entertain millions of people in the world through movies, stage plays, and music (Pardo, Boluda, & Suemanotham, 2010, p. 4). The company’s studio division has many facets that deal with different products, and it is one of the major studios in the entertainment city of Hollywood. The company lays emphasis on quality products for the consumers, a factor that it promotes through the different facets. Each facet specializes in the production of specific theatrical productions. Location in regions such as Hollywood ensures that the company has a ready market for the resources in the studios.
Disney should continue to invest in studio entertainment to maintain its financial performance. In its 2014 financial year, Disney’ studios generated an approximate 15 billion dollars through the sale of its primary products. These products include animated motion, live action, motion pictures, direct video content, live plays on the stage, and musical recordings. The company has engaged in mergers and acquisitions to increase its asset bases in terms of studios and increase the sale of its products. In 2012, the company acquired Lucasfilm Limited in a transaction valued at 4 billion dollars. Such expansionist moves will enable the company to increase its scale of production and meet the growing demand for its products.

The Better-off Test and the Ownership Test

The better-off test asserts that the firm of individual acquiring another asset in business must be able to boost his or her growth and market share through the combined effort in order to pass the better-off test. Mergers fail because companies may become weaker after combining compared to their strength when they operated individually. In this context, the horizontal scope framework for Disney passes the test due to the growth of its market and revenue resulting from the mergers in studio entertainment.

The Ownership Test

The ownership test asserts that the acquiring company must be able to control more than 50 percent of some powers during the test period for the company to pass the test. These powers are the voting power, the right to receive dividends, and the right to be given capital distributions. In both sectors, theme parks, and studio entertainment, Disney Company has retained its influence in all the markets.

References

Disney Oliver & Company. (1996). Burbank: Walt Disney Records.
Griffin, S. (2000). Tinker Belles and Evil Queens: The Walt Disney Company from the Inside Out. New York: New York UP.
Pardo, E., Boluda, I. K., & Suemanotham, T. (2010). Product placement in video games as a marketing strategy: an attempt to analysis in Disney company.