The company should go for acquisition in which SBU? and why?
The Walt Disney Company has its roots lying deep within the Disney Brothers Studio started by Walter Elias Disney along with his brother Roy Disney in the year 1923.Disney is known to be the creator of evergreen characters like Mickey Mouse,Snow White ,etc.
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The Walt Disney Company has its roots lying deep within the Disney Brothers Studio started by Walter Elias Disney along with his brother Roy Disney in the year 1923.Disney is known to be the creator of evergreen characters like Mickey Mouse,Snow White ,etc.
The company went public in the year 1940
and further expanding into televisions and Theme Parks in the year 1955.The
years 1971 and 1976 mark two major expansions of Disney with the opening up
Florida and Tokyo Disney worlds. Besides this, it also went on to start Touchstone
to target the adult movie-goers.
By the 1980s Disney as a company
diversified into many businesses, incurring a heavy cost but was not able to
generate significant financial returns from these areas. As a result, the
overall financial condition of the company deteriorated and the performance of
different divisions fell.
When Michael Eisner joined the company
as the CEO in the year 1984 Disney invested heavily in animation technology and
focused on the growth and development of its theme-parks. The investments
paid-off and some Disney movies like “The Lion King” broke box-office records.
However, Disney again incurred heavy investment and acquired ABC ltd, the
second biggest acquisition in the history of US.
By 2000, Disney stepped into a number of
streams including:
ü Media-Networks
ü Studios
and Entertainment
ü Theme-Parks
ü Internet
and
ü Consumer
Products
The diversification strategy followed by
the company was high on both corporate and operational relatedness.
The theme-parks generated more cash
flows for the company; however this generation is approaching a stage of excess
than what is required for the company to run efficiently.
However, the company has had a high
market share with tremendous growth opportunities in its flagship unit
i.e.Media Networks and Entertainment which is the reason why 50th
anniversary of Snow-White and the 60th Anniversary of Mickey-Mouse
were big hits.
The company should therefore, continue
its focus on media and entertainment,its flagship units,as these areas have
high market share and tremendous growth opportunities.It can even go for
further acquisitions in this sphere, like its decision to aquire Buena-Vista
distribution networks, and maintain its dominant position in this sphere.
Divya Shukla
Section A
Strategic Management
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