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How does the concept of economies of scope help to explain Disney’s diversification strategy?

Make a one page PowerPoint about the following question and provide the speaking script.

the PowerPoint page should be detail and specific, and the PowerPoint should only be related to the bullet point provided


How does the concept of economies of scope help to explain Disney diversification strategy?
Bullet point:

Intangible resources: brands, good management , technology

Organizational capabilities

Scope of the firm: vertical, product, geographical


“The Power of Economies of Scope in Disney’s Diversification Strategy”

highlights the significant role that economies of scope play in Disney’s successful diversification efforts. Economies of scope refer to the cost advantages and synergies that a company can achieve by leveraging shared resources, capabilities, and brand equity across different business lines or product offerings.

Disney, as a global entertainment and media conglomerate, has strategically diversified its operations into various areas such as film production, television broadcasting, theme parks, merchandise, and streaming services. The concept of economies of scope helps explain how Disney has been able to extract value and generate competitive advantages through its diversification strategy.

One key aspect of economies of scope in Disney’s diversification is the ability to leverage intellectual property and brand recognition across multiple business segments. Disney’s iconic characters, such as Mickey Mouse, Cinderella, or Marvel superheroes, have become instantly recognizable and beloved worldwide. By utilizing these characters across their various businesses, Disney maximizes their value and attracts consumers who have an emotional connection with these brands. For example, characters from Disney films can be featured in theme parks, merchandise, television shows, and streaming content, creating cross-promotion and enhancing the overall appeal of the Disney brand.

Additionally, Disney’s diversification allows for the sharing of infrastructure, distribution networks, and expertise across different business segments. For instance, the company can leverage its film production capabilities to create content for both theatrical releases and streaming platforms. This sharing of resources reduces costs and increases efficiency, enabling Disney to capitalize on economies of scale as well.

Moreover, Disney’s diversification strategy facilitates risk diversification. By operating in multiple segments of the entertainment industry, the company can mitigate the impact of market fluctuations or downturns in a specific sector. For example, if there is a decline in box office revenue, Disney can still rely on revenue streams from its theme parks, merchandise sales, or streaming services.

Furthermore, Disney’s diversification into various businesses creates opportunities for cross-promotion and bundled offerings. For instance, Disney can package theme park tickets with film releases or offer merchandise tie-ins with television shows, enhancing customer engagement and driving incremental revenue.


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