Question

Give a broad idea on the background of Disney company and the importance of unrelated diversification to Disney. Explain in detail in your own words.

Answer 1

Walt Disney company was started in the year 1923 by Walt Disney and his brother Roy in Hollywood, California. It was first known as Disney Brothers cartoon studio. It is one of the largest media companies in the world. In 1928 produced first animated film to star Mickey mouse. In 1937 first feature-length animated film. In 1940 it issued its first stock. They opened Disney Land in the year 1955 and in 1971 Walt Disney World. They started channel broadcasting also. In 1986, it was renamed as Walt Disney company. Later few acquisitions happened. They purchased Pixar Animation Studios, Marvel Entertainment, Lucasfilm. They opened Shanghai Disney Resort in Shanghai, China in 2016. In 2019 it acquired Century Fox and launched Disney+. Its business includes media network, parks, studio entertainment etc.

Unrelated diversification is when the company adds unrelated products to its product line to explore new markets. Disney opted for an unrelated diversification. Disney was started as a cartoon studio but now it has reached into entertainment studios, theme park, resort, products and media productions. It started Mickey Mouse Club to sell Disney's products under one roof. Then company diversified into music and produced education films during war. This diversification strengthened its business and brought synergy. It started park and hotels, Disney merchandises, TV channel etc. It was in the year 1983 it began its channel broadcasting.

Thus it could attract wide range of customers by differentiating its products with superior quality and with technological innovations. It could build competitive advantage against its competitors. In short, unrelated diversification is good to expand the business all over the world.