418
In 2015, Disney signed a contract with IMAX Corporation to show Disney’s animated
and live-action movies in the IMAX theaters. The initial agreement runs for three years and
provides another and a different outlet for Disney entertainment. In this way, the Disney brand
receives greater visibility with the public and continues to increase in value.
Interestingly, Disney’s largest profits come from its media division, which includes ABC
television network and ESPN. ESPN is a highly valuable unit, with the main ESPN channel being
received in 95 million homes. Although it has been primarily sold in packages and on cable,
Disney will soon introduce an unbundled subscription to ESPN. Thus, Disney has many ways to
create profits, but most of them come from innovations and being creative in the way it deals
with and reaches the consuming public.
Sources: M. Lev-Ram, 2015, Empire of Tech, Fortune, January 1, 48–56; A. Chen, 2015, Disney, IMAX sign three-year agree-
ment, Wall Street Journal, http://www.wsj.com, April 8; B. Barnes, 2015, For Lucasfilm, the way of its force lies in its ‘Star War’s
fans, New York Times, http://www.nytimes.com, April 17; A. Sakoui & C. Palmeri, 2015, My universe is bigger than your universe,
BloombergBusiness, http://www.bloomberg.com, April 23; A. Sakoui, 2015, Disney boosts ‘Avengers’ U.S. sales total to $191.3
million, BloombergBusiness, http://www.bloomberg.com, May 4; N. Tartaglione, 2015, Disney/Pixar spotlight on ‘Finding Dory’,
‘Good Dinosaur’ & more charms Cannes, Deadline Breaking News, http://www.deadline.com, May 20.I
n Chapter 6, we explained that Disney had diversified its operations. One of the reasons
to diversify is to spread the risk, and it appears that Disney’s strategic decisions have been
effective. For example, in the second fiscal quarter of 2015, Disney reported that its prof-
its increased by 10 percent, which was well beyond what analysts forecasted. There were
declines in profits from the movie and cable businesses, as expected, but Disney had signifi-
cant increases in profits from its theme parks, cruise line, media and network businesses, and
consumer products. Although the movie business was doing well, its revenues did not equal
the phenomenal success of its animated movie Frozen in the previous year. Income from its
other businesses more than offset the decline in movies. Interestingly, Disney’s most prof-
itable division focuses on media and networks (ESPN and ABC). However, as explained in
the Opening Case, Disney’s innovations (creativity and technology) in studio entertainment
and interactive businesses are likely to drive future revenues and profits. Of course, suc-
cessful innovations in its movie entertainment spill over to consumer products and theme
parks, suggesting the synergy that Disney creates using its related diversified businesses
(see Chapter 6 for more detail).^1 As noted in the Opening Case, Disney is a highly creative
company, but its success in innovation has been driven in recent years through acquisi-
tions of innovative businesses such as Pixar, Marvel, and Lucasfilm. These acquisitions have
been successful partly because the firm gained access to knowledge that has the potential to
meaningfully contribute to enhanced innovative outputs in other operations held by Disney.
Disney learned from its acquired businesses. It learned the importance of and how to build
and maintain a strong and loyal fan base (as done by Lucasfilm).^2 Building knowledge from
external sources by making acquisitions of businesses with valuable knowledge or through
networks of relationships contributes to innovation, and helps firms compete both domesti-
cally and internationally.^3 Moreover, these sources of information and knowledge help firms
identify opportunities to pursue and strategies to implement and exploit today’s opportuni-
ties while simultaneously trying to find opportunities to exploit in the future.^4
The focus of this chapter is on strategic entrepreneurship, which is a framework firms
use to effectively integrate their entrepreneurial and strategic actions. More formally,
strategic entrepreneurship involves taking entrepreneurial actions using a strategic per-
spective. In this process, the firm tries to find opportunities in its external environment
that it can exploit through innovations. Identifying opportunities to exploit through inno-
vations is the entrepreneurship dimension of strategic entrepreneurship. Determining the
best way to competitively manage the firm’s innovation efforts is the strategic dimension.^5Strategic
entrepreneurship involves
taking entrepreneurial actions
using a strategic perspective.