Disney Memo

The main businesses that Disney owned then covered studio entertainment, theme parks and resorts, media networks, consumer products and marketing. For some of the parts, there are synergies between or among them which would add extra value to the whole corporation. And such businesses are the ones that we recommend to held in hand.

One of the synergies is the theme parks and the Disney hotels, cruises around the parks. This synergy can be regarded as customization. Disney can provide its customers better experience by integrating these businesses vertically. Customers can not only experience fantastic entertainment in the parks, but also have a good accommodation in Disney hotels. With better experience, the customers’ willing to pay also increases.

Another good synergy happens among the numerous Disney’s parks, which belongs to the combination and consolidation. Although each of these parks may have different character, such as Disneyland and Walt Disney World, the business models of them are similar. Much of the resources can be shared among the parks, such as the staff training and park management experience. The total cost of learning will be reduced. Besides, the scale effect will also reduce the total cost of the park running. Similar items for many parks can be bought in huge number with a discount. And Disney’s network of its parks has developed to a mature stage, which will increase the entrance difficulty for the potential competitor.

The synergy between Disney’s studios and its media networks also helps a lot. By expanding its control vertically in the industry value chain, Disney can save amount of distribution and marketing fees. For example, the strong media influence power of ABC can help Disney to promote the new movies of its studio without paying much more money to a third company. In turn, Disney studios’ products of high quality will attract more viewers for ABC. In this way, Disney build a good business circle, in which two different business divisions can incentive each other.