Write a paper discussing the Economies of scale and economies of scope of Disney.

Answer the following questions:

1. Economies of scale and economies of scope of Disney
2. What are Disneys competitive advantage?
3. Assess how effective Disneys corporate strategy is. Explain how they execute vertical integration, backward vertical integration and horizontal integration.
4. What are Disneys most valuable resources? Explain their role in creating a corporate advantage.
5. How sustainable is Disneys competitive position in the entertainment industry
6. Can Disney sustain its success? Explain using the Value Stick Model (willingness to pay and willingness to sell) How it can increase its willingness to pay and decrease willingness to sell
7. Can Disney sustain its success? Explain using the value creation, complements and network effects.
8. How does Disney create value?
9. How can game theory be applied in Disney? What are the examples?

Answer & Explanation

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Disney is a diversified media and entertainment conglomerate, which has a significant presence in different sectors like theme parks, media networks, studios, and consumer products. It is one of the most recognizable brands globally, generating billions of dollars in revenue every year. Disney’s success can be attributed to various factors, including economies of scale and economies of scope. In this paper, we will discuss both of these concepts and how they have helped Disney become a dominant player in the entertainment industry.

Economies of Scale:

Economies of scale refer to the cost advantages that a firm can achieve by producing goods or services on a large scale. In simple terms, as a company produces more, the average cost per unit decreases. Disney has been able to leverage economies of scale to reduce its production costs and increase its profitability. For

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Step-by-step explanation

example, Disney’s theme parks attract millions of visitors every year. These parks offer various attractions, entertainment, and merchandise, and the costs associated with these operations can be significant. However, by attracting a massive number of visitors, Disney can spread its fixed costs over a large customer base, resulting in lower average costs per customer. Additionally, Disney’s media networks, including ESPN and ABC, have been able to negotiate lower programming costs with suppliers due to their bargaining power and the size of their audience.

Economies of Scope:

Economies of scope refer to the cost advantages that a firm can achieve by producing a variety of goods or services. Disney has been able to leverage economies of scope by creating synergies between its various business units. For example, Disney’s movies and television shows provide content for its theme parks and consumer products. By leveraging its content across multiple platforms, Disney can reduce its production costs and increase its revenue streams. Additionally, Disney’s theme parks offer opportunities for cross-selling merchandise from its consumer products business.

Conclusion:

In conclusion, Disney has been able to achieve significant success by leveraging both economies of scale and economies of scope. By producing goods and services on a large scale, Disney has been able to reduce its production costs and increase its profitability. By producing a variety of goods and services, Disney has been able to create synergies between its various business units, reduce its production costs, and increase its revenue streams. As a result, Disney has become a dominant player in the entertainment industry and is poised to continue its success in the future.

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