Case 9 Questions: Disney
Focusing on a billion dollar franchise is a good strategy for Disney. The approach will come with several advantages for the business. For instance, it will lead to the fast growth of the Disney business. Secondly, the business will be able to pass risks to the franchise. The major cons for this strategy would be reduced revenue as well as loss of control for the business.
Given the build borrow or buy framework, the Disney business should not focus on acquisition. According to this framework, organizations need to exploit on their existing internal potential before considering borrowing or buying.
Disney was so successful with the Pixar and Marvel acquisitions while other media interactions were less successful. The ideal growth model for one company may differ and be unsuitable for another. Repeating a strategy that worked in the past is likely to fail the business if the mode of growth is not suitable for that business.
I agree with the opinion that Disney is a global consumer company rather than a media company. In essence, it is contracting most of its media production operations to the billion dollar franchises. Therefore, it remains to distribute the media to consumers and hence has become a consumer company.
Case 8 Questions: Amazon
Amazon’s spending on unrelated diversification gives the company a competitive advantage. In essence, such spending popularizes the company to a wider market. Moreover, such diversification cautions the company against losses occasioned by their major venture.
As an investor, I would be concerned that Amazon.com is yet to make any profit. Ideally, Amzon.com is the main business of the company. The failure to make a profit and the overreliance on diversification puts to question the sustainability of the business.
Amazon’s core business is the sale of books. While AWS brings in substantial revenue for the business, it is not the core business of Amazon. Moreover, it is not related to the core business since it does not relate to the business of books and AWS should be a standalone business.