Transcript of "International Business Management, Disney Land Case"
YANGON INSTITUTE OF ECONOMICSInternational Business Management Group Assignment (1) Submitted by Group (6) 9/19/2011
International Business Management, Group Assignment (1) September 19, 20111. What do you think motivated Disney to set up parks abroad, and what might be the pros and cons from the standpoint of the Walt Disney Company? Disney is motivated to set up parks throughout the world to expand its sales ofmerchandise goods as well as attendance to their theme parks. The managementrealized how successful they were in the US and that their resorts attracted a lot offoreign travelers. Realizing this allowed them to consider tapping into the global market,which would mean more profits and a more global company. In addition, with the expansion of the parks, Disney can play a role in spreadingadvertisements of their movies and the ideology that Disney is a Place of Dream andhappiness. Disney is motivated to also acquire more resources by their expansion, forexample, Disney wants to create a park in Shanghai so that it can facilitate in probablycreating a Disney channel for the Chinese people. Lastly, Disney wants to minimize therisk of their parks in America in case they do poorly they can gain their profits in Asia orEurope.Pros from the standpoint of the Walt Disney Company can be shown the following. • Great reputation and worldwide brand recognition; lots of pride in making magic happen for guests and consumers. • Disneys brand and products are so relatable to all people. • The culture is extremely collaborative and exchange. • Plenty of opportunity for exposure into multiple areas. • Market share will be increased. Page 1
International Business Management, Group Assignment (1) September 19, 2011 • More resources will be acquired. • It can gain portfolio advantages and competitive advantages.Cons from the standpoint of the Walt Disney Company can be shown the following. • There are cultural factors which will inhibit the company from conducting business. • There are geographic influences such as population of the area and mass transportation to see where to place the park and where it would be profitable. • There can be financial crisis when the unexpected events are occurred. • Political and legal drawbacks of certain countries. • Setting up parks abroad will make more risk.2. Why do you suppose Disney made no financial investment in Japan, one of $140 million in France, and then one of over $300 million in Hong Kong? We believe that Disney made no financial investment in Japan because it was thefirst theme park for Disney outside of the United States. Disney knew it was atremendous gamble to place their theme park in Japan. It was never done before andDisney was afraid of the risk, therefore, it allowed working with the Oriental LandCompany to create Disney and make money from the royalties instead and give theOriental Land Company all the risk involved. Disney wanted to gain in on the profit and quickly invested in Paris which wasconsidered the most tourist density area in Europe and the French are the largestEuropean consumers of Disney Products. Moreover Disney gets so many helps from the Page 2
International Business Management, Group Assignment (1) September 19, 2011French government. However Disney decided to invest only $140 million to take a 49-percent ownership because there are some problems occurred before Disney signed anagreement with the French government. This is because people believed that parkwould contribute to the destruction of French culture. So we believe that there will bemore risk to invest more amount than $140 million. On the other hand, because of thehelp of French government, there will be investors who want to buy the shares andmake an investment. Disney also saw a theme park in Hong Kong as a way to improve its relationshipwith and business opportunities in mainland China. Therefore Disney and Hong Konggovernment negotiated for nearly a year. The final agreement is for a joint venture:Hong Kong International Theme Park owned 57 percent by the Hong Kong Governmentand 43 percent by Disney. And because of this agreement, Disney got a chance to investover $300 million in Hong Kong.3. What factors in the external environment have contributed to Disney’s success? Failure and adjustments in foreign them park operations? Disney had numerous successes throughout Japan because the people enjoyedgrasping the “real thing”. However, in Paris, there was a conflict amongst the people inFrance because they were afraid of the theme park decimating their culture andlanguage. To deal with this, Disney adjusted by catering to French tastes, languagesand exhibits pertaining to famous European actors and individuals. In addition, Disneylearned that he needed to eliminate the ban of Alcoholic drinks to draw more people.Disney also was fortunate to have the French government to create a railway to link allof Europe to the magical kingdom. . Page 3
International Business Management, Group Assignment (1) September 19, 2011Factors in the External Environment that Contributed to Disneys Success:• Current popularity Disney has with movies, television shows, and products.• Focus on regions that are great potential markets.• Paris central location enables a large population to drive there easily.Factors in the External Environment that Contributed to Disneys Failure:• Not adjusting to the foreign culture• Not adjusting to societal norms. Disneyland Paris put a no alcohol policy in the park.• Not adjusting or preparing for the environment climate: all of Disneys American parks are in warm climates and climates in foreign regions were too cold to attract many winter visitors to the park.4. Should Disney set up a park in Shanghai? If so, what types of operating adjustments might it make there? Yes, Disney should take the opportunity to set a park in Shanghai because it is oneof the fast growing cities with a lot of trade and commerce. Then China has had a onechild per family policy which has increased family disposable incomes and makes parentsreluctant to deny anything to their only child. In addition, Shanghai is the next HongKong of Asia where many big companies are flocking to. Also, since the Olympics are coming to China, there will be many people throughoutthe world visiting and touring Shanghai. This will provide a big boost to Disney and itsinvestors. Also, China has the biggest population in the world; I believe people will flockto Disney in great numbers. Shanghai Disney must have to follow any strict rules and Page 4
International Business Management, Group Assignment (1) September 19, 2011regulations by the Chinese government. In addition, we believe Disney must facecrowdedness due to the overpopulation in China as well as solving the traffic situations.Moreover Disney should well competitive plan at China because there are more than2,000 amusement parks even most of them have not done well. Disney also needs tothink about affordability. Page 5