Disney and Utv, from Outsourcing to Integration: the Relevance of Hymer and Penrose’s Theories

Individual Assignment

Economic Analysis of the Multinational Enterprise (BMAN 70191)

Student ID: 9230838

Title: Disney and UTV, from outsourcing to integration: The relevance of Hymer and Penrose’s theories.

Abstract

Outsourcing has long been a prevalent form of international business, increasingly claimed its popularity across the globe. Contracting out part or even the whole production process has proved its advantages in cost and efficiency savings and flexibility. However, there is a myth that outsourcing is all about cheap production cost and raw materials. Sometimes having works subcontracted is also a strategic move of multinational enterprises (MNEs) towards an ambitious vision. This holds true in case of Disney’s outsourcing animation production to UTV in India then eventually acquiring the company.

Introduction

Before reaching its conglomerate position as today, Disney initially conducted business only in animation production and had its name memorized with well-liked works such as Snow White and the Seven Dwarfs, The Little Mermaid, Pinocchio and Sleeping Beauty. The company then went on to expand and diversify its business scope into live action and other lucrative businesses, for example TV channels, theme parks, merchandising and publishing. As of today, Disney has attained stardom with worldwide presence and businesses ranging from media networks, parks and resorts, film studios, consumer products and interactive services. Among all the offerings, animation production has remained the core business and main money making machine of the company.

Source: adapted from from Tschang & Goldstein (2004) and Dreamworks Animation website (2013)

There are five stages involved in the production of an animation work, namely Conceptualization, Pre-production, Production, Post-production and Marketing and Distribution (Tschang, Goldstein 2005, Dreamworks Animation Website 2013). Since Conceptualization, Pre-production and Marketing...