The Disney company as a whole is part of the entertainment and media industry. However, the company diversified itself in multiple industries and implemented a horizontal integration strategy as Disney’s CEO, Michael Eisner, considered that corporate strategy and synergies were crucial elements to prosper. Hence, over the years, Walt Disney had sought a vast range of diversifications and today it operates in five different industries: media networks, studio entertainment, parks and resorts, consumer products and, the internet and direct marketing. By entering those businesses, Walt Disney spreads its core competencies that are its capacity to create shows and to provide joy to both children and entire families. The film industry and theme parks, for example, depend upon analogous creativity processes as they need to attract …show more content…
In this case, the potential synergy may remain immaterialized. In 1996, Walt Disney decided to merge with ABC to align with its vertical integration strategy and to become the most profitable corporation in the entertainment industry. Eisner believed that the two giants would grow at a faster rate together. Nevertheless, the merger failed to succeed. Walt Disney placed confidence in the acquisition of ABC to obtain complete control over the market and to gain an important market power as it would drive down competitors and build important barriers to entry for potential newcomers. However, while the acquisition of ABC network appeared as an excellent match, no additional value was created due to a clash of culture and due to compromise and coordination costs being too high relative to the gains. Eventually, by penetrating the sectors of suppliers and buyers, Disney managed to reduce the leverage that these parties had over the firm and enabled Disney to reinforce its market power. Still, vertical integration might become an additional source of