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into its Disney stores and Disney themed sections in department stores, such as J. C. Penney, as
well as promote resort themes and thus drive interrelated revenue through cross selling.
One of the downside problems for these fairy tale themes is that the stories are in the pub-
lic domain. As such, other competitors are seeking to follow Disney’s successful approach.
For example, Time Warner Inc.’s Warner Bros. Studio will release Pan, which seems to be beating
Disney to the punch on its former Peter Pan movie success. Likewise, Time Warner will release
Jungle Book in 2017 and has another script based on Beauty and the Beast. Comcast’s Universal
Pictures is developing the Little Mermaid. However, neither of these studios has the marketing
power nor the franchising capability of Disney and its interrelated business and corporate skills.
Although they are seeking to build these skills, they cannot duplicate Disney’s corporate strat-
egy and parent added value because they are more primarily focused on content and distribu-
tion as well as advertising. As such, Disney has a current corporate parental advantage over its
more focused movie and content producing and distribution competitors. Disney’s corporate
strategy has put it in the list of top 10 most admired firms in Fortune magazine.
Sources: B. Fritz, 2015, Disney recycles fairy tales, minus cartoons, Wall Street Journal, March 11, B1, B6; M. Gottfried,
2015, Walt Disney has built a better mousetrap, Wall Street Journal, Feb 5, C8; M. Lev-Ram, 2015, Empire of tech, Fortune,
January 1, 48–58; C. Palmeri & A. Sakoui, 2015, Disney’s princesses’ give a little live action, Bloomberg BusinessWeek,
March 9, 30–31; C. Tkaczyk, 2015, The world’s most admired companies, Fortune, March 1, 97–104; D. Leonard, 2014,
The master of Marvel universe, Bloomberg BusinessWeek, April 7, 62–68; C. Palmeri & B. Faries, 2014, Big Mickey is
watching, Bloomberg BusinessWeek, March 10, 22–23.O
ur discussions of business-level strategies (Chapter 4) and the competitive rivalry
and competitive dynamics associated with them (Chapter 5) have concentrated on
firms competing in a single industry or product market.^1 In this chapter, we introduce you
to corporate-level strategies, which are strategies firms use to diversify their operations
from a single business competing in a single market into several product markets—most
commonly, into several businesses. Thus, a corporate-level strategy specifies actions a
firm takes to gain a competitive advantage by selecting and managing a group of different
businesses competing in different product markets. Corporate-level strategies help com-
panies to select new strategic positions—positions that are expected to increase the firm’s
value.^2 As explained in the Opening Case, Disney competes in a number of related enter-
tainment and distribution industries.^3
As is the case with Disney, firms use corporate-level strategies as a means to grow rev-
enues and profits, but there can be additional strategic intents to growth. Firms can pur-
sue defensive or offensive strategies that realize growth but have different strategic intents.
Firms can also pursue market development by entering different geographic markets (this
approach is discussed in Chapter 8). Firms can acquire competitors (horizontal integra-
tion) or buy a supplier or customer (vertical integration). As we see in the Opening Case,
Disney has acquired Pixar and Marvel movie production studios, thereby increasing its
horizontal integration in the movie product and distribution business. Such acquisition
strategies are discussed in Chapter 7. The basic corporate strategy, the topic of this chapter,
focuses on diversification.
The decision to pursue growth is not a risk-free choice for firms. Indeed, General
Electric (GE) experienced difficulty in its media businesses, especially with NBC, which
it eventually sold to Comcast. GE also suffered significant revenue declines in its finan-
cial services businesses and thus reduced its assets in that area, choosing to seek growth
in other businesses such as equipment for the oil industry and equipment for industrial
firms to better utilize the Internet. Effective firms carefully evaluate their growth options
(including the different corporate-level strategies) before committing firm resources to
any of them.A corporate-level strategy
specifies actions a firm
takes to gain a competitive
advantage by selecting and
managing a group of different
businesses competing in
different product markets.