Building Billion-Dollar Franchises Group 5

Azam Perbasa 29318393

Norma Auditia 29318321
Sarah Nabilla 29318431
Siti Hanum Salsabila 29318306
 Company Overview
Company Overview Disney’s business segments:

Park
Studio
The walt disney company is a worldwide Media experienc
entertainme
Direct to
Network es and consumer
entertainment that was founded back in product
nt

16th of October 1923 by the Disney

brothers. Known for their renowned
character Mickey Mouse, Disney’s first
movie was Snow white and the Seven
Dwarfs. Up to today, the growth of
entertainment industry was heavily
impacted by Disney. Expanding their
business for almost a century Disney now
have expanded their business.
Case Summary
● Disney became the greatest media company due to
its corporate strategy of related-linked diversification.

● Disney company grew as they acquired and goes into

strategic alliance with other new media companies.

● The goal of Disney was to build a billion dollar

franchises through diversification.

● Disney experienced a steady growth from 2010 to

2017 under CEO Robert Iger and earned $10 Billion
profit in 2016.

● Pixar and Lucas Film was noted as one of the most

successful acquisition made by Disney.
Problem Identification

1. Acquisition 2. Declining number 3. Critics saying 4. No successors of

growth strategy of TV subscribers disney is losing its Robert Iger
might not be and viewers originality
sustainable
Theories and Framework

The
Build
Porter’s Generic
Borrow
Buy
Porter’s generic framework

COST LEADERSHIP
Build strong and loyal DIFFERENTIATION
- focuses on affordability and easy
accessibility of its produce across customer base
the globe. - emphasizing over the unique
- targeting the middle class. product features.
- charging low prices by lowering Focus strategy on - embedding the innovation and
production cost and maximizing address the consumers’ growing
supply chain efficiency,
Cost leadership although health concerns.
- frequently offers discounts and there are some - expand the scope of
opportunities within the industry.
coupons to achieve sales targets differentiation
 The build-borrow-or-buy framework
The build-borrow-or-buy framework
provides a conceptual model that
aids firms in deciding whether to:
- pursue internal development
(build).
- Enter a contractual
arrangement or strategic
alliance (borrow).
- acquire new resources,
capabilities and
competencies (buy).
Firms that are able to learn how to
select the right pathways to obtain
new resources are more likely to
gain and sustain a competitive
advantage.
Dynamic Corporate Strategy

Pixar
1986

Pixar
2006

Disney Disney
1923 2006
 Disney Corporate Strategy
● World’s leading media company, active in a wide
array of business activities-movies, amusement
parks, cable and broadcast television networks,
cruises, and retailing.

● Pursuing strategy of related-linked

diversification, alliances and acquiring other
media businesses to create theme-based
franchises.

● Some of business activity share common

resources, capabilities and competencies,
through scope and replication advantage
resulting lower cost of production.
Timeline of Business Acquisition
 Build (internal development)
Disney
Distribution network and stellar
reputation in animated movies
Pixar
Computer hardware company
producing high-end graphic display
systems turned to a computer-
animation film studio.
Borrow (Alliance)
Strategic alliance in 1991
Both partner gets benefit:
Disney was able to rejuvenate its
floundering product lineup, retaining
the rights to the newly created Pixar
characters and to any sequels.
Pixar became successful company
Buy (Acquisition)

● Renegotiations of the Pixar-Disney alliance broke

down in 2004
● After Robert Iger was appointed CEO, Disney
acquired Pixar for $7.4 billion in 2006.
● Two entities' complementary assets matched →
the success of the alliance
● Disney got an inside perspective on the value of
Pixar's core competencies in the creation of
computer-animated features.
● Integrating Pixar allowed Disney to transfer and
apply some of its unique competencies including
marketing, brand building, product extensions.
Building Billion Dollar Franchise
● Franchise strategy : creating a big movie hit and are
followed up with derivative TV shows, theme park
rides, video games, toys, clothing, among many other
spin-offs.
● Under previous CEO, Disney produce 30 movies per
year. The strategy shifted to only produce about 10
movies per year, then focusing on creating box-office
hits. Disney's annual movie lineup is dominated by
such franchises.
● Most successful franchise: Star Wars ($10 Billion
revenue)
● Disney's able to build revenue on top of billion-dollar
franchises through product extensions and add-ons
Streaming Service
● Acquired BamTech (streaming service
suppliers) in 2017

● 2018 - ESPN +
Carry new sports content that extends the
ESPN cable content

● 2019 - Disney +
streaming service for many of Disney's
blue-chip franchises.
Disney will be pulling most of its movies
from Netflix over the next two years.
 Conclusion
- Disney became billion-dollar company with related-
linked diversification strategy: produce hit movies in
small number per year, and spin it off to derivatives
products such as theme parks, merchandises (toys,
clothes, etc), tv shows, video games, cruises,
retailing, etc.
- Disney also applied their corporate strategy by
entering alliance and acquiring other media
business. The company growth steady.
 What’s Next?
1. Acquisition as growth strategy 3. Remake of Disney Classic Movies

2. Catch up with the technology 4. Knowledge transfer - successor

 Lesson Learned
Lesson learned from this case was simply said by Disney CEO, Robert Iger “If you don’t
innovate, you die.” But as we know, innovation = cost. So we need to be wisely to
choose what kind innovation we should take.

For Disney, acquiring company like Pixar, Marvel, Lucas Film, etc is a great way for the
company to grow. Together they applied franchise strategy, started by creating hit/box
office movies and its spin-off products.

Disney also able to acquiring streaming company (BamTech) and create their own
streaming line (Disney+ and ESPN+).

This strategy could not be as effective in anytime soon. The strategy pattern would be
easily copied by others so Disney need to find another strategy to sustain.
Thank you