Compulsory Exercise 10 PDF

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MBAN-685DE (Section 01) Corporate Strategy Exercise 10.1 (Compulsory) Chara Constantinou U191N0670

1. Why did Disney acquire Marvel? Disney’s motives for acquiring Marvel can be described by three categories strategic, financial and managerial motives. Strategic Motives: Disney aims to enter a specific market, as Marvel targeted audience through its movies are teenage boys. Marvel has strong licensing business and brand/ reputation, as well as its large volume of comic characters, capabilities which Disney wanted to acquire.in addition, as a response to the changing expectations and preferences of customers, in particularly driven by the declining DVDs sales. Its intention is to diversify, by entering the franchise-led strategy, and by adapting to the response, concerning the home entertainment market. By acquiring a higher market power Disney has monopoly in the highly competitive industry, hence, pushing down competition. Financial Motives: Through the acquisition Disney is able to diversify, as well as reduce its costs, in order to meet customer’s expectations, within the highly competitive industry. Managerial Motives: Utilizing to a great extent Marvel’s skilled cost-cutting ability, with the objective of offering financial incentives to the CEO of Marvel. 2. Critically assess how well these companies fit companies in (i) strategic and (ii) organizational terms. (i) The strategic fit refers to the extent to which the target firm strengthens or complements the acquiring firm’s strategy. Strategic fit relates to the original strategic motives for the acquisition: extension, consolidation and capabilities. This specific acquisition was a win-win situation, as Marvel worthed $ 3 billion, and Disney bought it for $4 billion, which it considered to be an adequate price. In addition, Marvel and Disney have a common consumer base, and are both in the film making business. This can be reflected by the fact that Marvel has already produced box office and commercial successes to Disney, including sequels to ‘Thor’, ‘Captain America’ and ‘The Avengers’. The potential synergy will benefit them both in profits, as Disney can use Marvel’s resources in a much more efficient way, that Marvel on its own.

(ii)Disney and Marvel do not fit as organizational strategies go. This is depicted by the fact that Disney is a family-oriented company, in stark contrast to Marvel’s CEO, having a reputation of having a strong opinion and his capabilities on cutting costs creating conflicts and tension with his colleagues, resulting to many of key employees left the new merged organization (e.g the head of

Disney’s Consumer Products Division, the heads of communication, publishing, HR, Disney stores and toys business)...