Question

What is the structure of Walt Disney Company and outline the major business areas?

Answer 1

The Walt Disney Company has a cooperative multidivisional (M-form) organizational structure that focuses on business type. A multidivisional or M-form organizational structure is common in diversified companies. In this company analysis case, Disney specifically uses the cooperative M-form corporate structure. The cooperative M-form involves related constrained diversification. For example, interdivisional benefits are a priority in diversifying the business, and in implementing The Walt Disney Company’s generic strategy for competitive advantage and intensive strategies for growth. Also, the company has strong centralization involving functional groups in its corporate headquarters. Such centralization is a structural aspect that ensures strong managerial control on diversified growth in the global mass media, entertainment, and amusement park industries.

The Walt Disney Company, together with its subsidiaries and affiliates, has the following business segments:

1. Media Networks;

2. Parks, Experiences and Consumer Products;

3. Studio Entertainment; and

4. Direct-to-Consumer and International.

Media Networks

Disney's Media Networks segment operates a long list of properties, including: cable networks such as Disney, ESPN, Freeform, FX, and National Geographic; ABC broadcast television network and eight domestic television stations; production and distribution; and National Geographic magazines. The segment's revenue comes from affiliate fees, advertising, as well as licensing fees and other revenue.

Parks, Experiences and Products

Disney's Parks, Experiences and Products segment is comprised of theme parks and resorts in Florida, California, Hawaii, and Paris, as well as ownership interests in resorts in Hong Kong and Shanghai. It also includes a cruise line and vacation club. Revenue comes mainly from selling theme park admissions, food, beverages, and resort and vacation stays.

Studio Entertainment

Disney's Studio Entertainment segment is engaged in motion picture production and distribution through the Walt Disney Pictures, Twentieth Century Fox, Marvel, Lucasfilm, Pixar, and other companies. The segment also produces and distributes live entertainment and music, among other activities. Revenue comes from licensing motion pictures to theaters; sale of motion pictures in DVD, Blu-ray, and other formats; and licensing fees, stage play ticket sales, and post-production services.

Direct-to-Consumer & International

Disney's Direct-to-Consumer & International segment includes branded international TV networks and channels such as Disney, ESPN, Fox, National Geographic, and Star; its new direct-to-consumer streaming service, named Disney+, and also ESPN+, Hotstar, and Hulu. The segment's revenue includes advertising, affiliate fees, and subscription fees.