6_3_Case_Analysis_The_Walt_Disney_Compan.docx

Running header: - 6-3 CASE ANALYSIS 1
6-3, Case Analysis
(The Walt Disney Company)
Muhammad, Malik
SNHU- MBA 700 - 17TW3
Prof Dr. Steven Verrone
Date of Submission: 02/12/2017

6-3 Case Analysis (The Walt Disney Company). 2
Introduction
The Walt Disney company is most popular family entrainment in USA and worldwide. The Walt
Disney Company has been the leading name for family entertainment. This leader in the animation industry
has served to represent innovation, optimism, creativity, trust, quality and decency through their
international them parks, world class animation studio and business franchise including products and other
media productions.
There are five business segments Disney is involved in.
This includes:
 Media Networks of Walt Disney Television International, Disney Media Distribution (Asia Pacific)
and ESPN
 Disney Interactive Media Group o Disney Interactive Studios; Disney Online; Disney Online
Studios; Disney Mobile; Playroom
 Studio Entertainment o Walt Disney Studios Motion Picture International, Walt Disney Studios
Home Entertainment, Disney Music Group, Disney Theatrical Group
 Disney Consumer Products of Consumer Products, Publishing
 Parks and Resorts of Disney Destinations all over the world.
Disney recently reported annual revenues of over US$38 billion during its last fiscal year and as a
publicly traded company Disney have more than 144,000 employees in their all facilities worldwide. This
explains why Disney group is named #1 in entertainment on Worlds’’ Most Admired Companies by
Fortune.
In 2010, Disney was also ranked as the 10th fastest growing brand value growth company of the world.
In this case we will be evaluating the in-depth research of the Walt Disney Company’s history, and its
current international theme park operations. From this information we will evaluate common trends they
followed when conducting their research to open at those locations. Starting from Quantitative and
Financial information and moving along to the Qualitative information, in which we will narrow down the

top two international country prospects. After reviewing the information in great detail we will select the
Walt Disney Company’s best and most profitable options. We will then perform exhaustive research on the
best way to enter the market, trends, customs and cultures of the country in order to make sure Disney
adapts its product and promotion strategy appropriately.
Product Diversity:
The Walt Disney Company has made sure to diversify its product offerings in the form of theme
parks. The Disneyland Resort in Anaheim, California is comprised of 461 acres and includes 2 theme parks.
One of this theme Parks is split up into four principal areas: Golden State, Hollywood Pictures Backlot,
Paradise Pier and “a bug’s land”. The second theme park to be established was The Walt Disney World
Resort, which is located 22 miles southwest of Orlando, Florida, on approximately 25,000 acres. The resort
is comprised of 4 theme parks, hotels, vacation club properties, retail, dining and entertainment complex, a
sports complex, conference centers, campgrounds, golf courses, water parks and other recreational
facilities. Magic Kingdom, the first theme park opened as part of the Walt Disney Resort in 1971, is similar
to Disneyland in some ways in that it has many of the principal areas. These areas include Adventureland,
Fantasyland, Frontier land, Main Street USA and Tomorrowland. However, they do a great job in
diversifying the theme parks so that visitors can get a variety of different scenery, rides, and lands when
visiting these two separate locations.
Each of the four Disneyland parks consists of several different themed lands, and although the
exact attractions found in each vary some are repeated in all. All the parks are home to an Adventureland
and a Fantasyland. Tomorrowland is found at all parks except Paris and Main Street U.S.A. is in each
location except Tokyo. The main attraction at each of the parks is of course the castle. Disney has two types
of castle designs, Sleeping Beauty’s Castle and Cinderella’s Castle. The castles serve as the center of park
and are the center of celebrations especially at night during the fireworks display. Sleeping Beauty’s Castle
was the original first opened in Anaheim and a similar version was recreated in Hong Kong. The castle in

Hong Kong followed similar patterns while adopting eastern notion of Feng Shui to incorporate the culture.
The third sleeping beauty castle is located in Disneyland Paris. The Cinderella Castle was opened in Walt
Disney World Orlando and stands much higher than the Sleeping Beauty Castle.
similar Cinderella Castle was also opened in Tokyo Disney. It has been suggested that Cinderella’s
virtues and work ethic resonate more deeply in Japanese culture than Sleeping Beauty, which is why they
selected to create this castle in Tokyo (Vaux).
“Walt Disney became one of the most entertaining companies of the world. It initially targeted kids
and then focused on young adults. The strategies developed by the organization always take care of the
customers and follow their preferences in the field of entertainment. Maker Studios is having its business
over $500 million.” [Watanabe, 2014]
Financial Performance:
The Walt Disney company is Ranking # 53 in Fortune 500 (June 2016) and they are the largest media
conglomerate in the world in terms of revenue. The company had over $40 Billion dollars in revenues in
2011 and over $8 Billion in Net Income. Despite the economic instability of most countries of the world in
the past 5 years, Walt Disney Company has been growing at a constant rate of $2 Billion dollars a year in
Revenue for the past 6 years. Net Income had been growing at a constant rate of $1 Billion dollars per year
since 1999 when in 2009 it dropped $2 Billion compared to the year before (2008: $8 Billion, 2009: $6
Billion). An example of one of the parks that lost money in 2009 was Hong Kong Disneyland, losing $170
million that year. Since then, Walt Disney Company has been growing at a constant $1 Billion dollars in
Net Income. In 2011 Walt Disney Company Annual Financial Reports, the conglomerate had $72.1 Billion
in Total Assets and $37.4 Billion in Total Equity. The company has been able to reduce the percentage of
sales devoted to cost of goods sold from 81.68% (2010) to 80.86% (2011). Debt as a percent of total capital
has increased at Walt Disney Co. over the last fiscal year to 26.58%, it is still an “ok” percentage with the
Media industry's norm. Walt Disney Company trades its stocks in the New York Stock Exchange (NYSE)

using the DIS symbol. On January 6, 1978 Walt Disney Company started trading in the NYSE at a price of
$0.77 a share. Walt Disney Co. (DIS) is trading today (Sept. 7, 2012) at $52.00 a share with a daily average
of 8.45 million shares. Disney Co. currently owns 40% of Euro Disney (Disneyland Paris). In the last
months there has been speculation that Disney Co. will be buying out the stock it doesn't currently own.
Disneyland Paris is not profitable and has made total net losses of €212 Million over the past five years.
This would be a relief for some of Euro Disney’s stockholders. When the company first went public in
1989, Euro Disney’s stocks traded at €13.50 a share and in 1992 when Disneyland Paris opened, it hit a
peak of €30.00 per share. Unfortunately for Euro Disney, today it trades at around €5 per share. The Walt
Disney Co. now has a market capitalization of $88.9 billion, with only $290 million being for Euro Disney.
Current International Development
Description of International Development When Walt Disney opened Disneyland on July 17, 1955,
he created a unique destination built around storytelling and immersive experiences, ushering in a new era
of family entertainment.
“More than 55 years later, Walt Disney Parks and Resorts has grown into one of the world’s leading
providers of family travel and leisure experiences, providing millions of guests each year with the chance
to spend time with their families and friends making memories that will last forever” [The Walt Disney
Company, 2012].
“Disney has established five world-class vacation destinations with 11 theme parks and 43 resorts in the
United States (Anaheim and Orlando), France (Paris), Japan (Tokyo), China (Hong Kong) and soon a sixth
destination in Shanghai estimated to open in 2016” [The Walt Disney Company, 2012].
“Disney was not an exception to companies that struggle with international expansion. Through its
international development, what was once a completely All-American strategy has now moved to a more
globalization approach” [Matusitz, 2010].

So, what made the Walt Disney Company chose these markets for entry? Andy Bird, Chairman of
Walt Disney International says Disney has a three-pronged entry strategy, which focuses on the economic
health of a country, the advances in technology made there and the country’s infrastructure. “When you
look at the combination – certainly of the latter two – that really starts to drive our market strategy”, said
Bird [International Business Times, 2009].
Using the Global Edge as our source, the chart below compares some of the key criteria for the current
Disney markets.
The following are our interpretations of the key criteria.
 GDP per capita – Is over $30,000 for all countries with the exception of China that has a significantly
lower GDP per capita just over $7,000. However, the destinations of Hong Page 17 of 84 Kong and
Shanghai make up for the low GDP since there are highly populated and tourist’s cities.
 Population Total – Range from 64 million to over 1.3 billion. All of these Disney destinations are
in developed countries and strategically placed in popular cities.
 Country Risk Ratings – For these countries, the risk rating is basically good and stable. China’s
rating of A3 reflects the somewhat more volatile political and economic environment and its effects
on corporate behavior.
 Ease of Doing Business Rankings – Once again for France and Japan they rank 29 and 20
respectively and China has a significantly lower ranking of 91. This is once again due to the Chinese
government and its intervention in many aspects of business policies.
 Global Competitiveness Report – All countries rank 29 or higher in this category. They are all
competitive and attractive markets.
“The Company owns and operates the Walt Disney World Resort in Florida, the Disneyland Resort
in California, Aulani, a Disney Resort & Spa in Hawaii, the Disney Vacation Club, the Disney Cruise Line,
and Adventures by Disney. The Company manages and has effective ownership interests of 51% in

Disneyland Paris, 47% in Hong Kong Disneyland Resort, and 43% in Shanghai Disney Resort. The
Company also licenses the operations of the Tokyo Disney Resort in Japan.” [The Walt Disney Company
Annual Report, 2011].
Disney has faced management, marketing and financial challenges amongst other obstacles
abroad. Failure to adapt and customize to local markets has occurred in all of the destinations and we will
give some examples of Disneyland Paris (originally Euro Disney). Trying to impose and strictly enforce
Disney’s American ways in Disneyland Paris was a costly mistake. The Walt Disney Company had to
globalize its strategy and target four key issues [Matusitz, 2010].
Disney Group have planned different strategy to make them most competitive and attractive for all
entertainment
1. Reduce the admissions price – The price of admissions tickets that were even higher than
the U.S. locations, had to be significantly reduced. They were too high, even for European
standard.
2. Turn shows and settings into French style – Even though Mickey Mouse is popular with
children and adults worldwide, the French are not fans of the classic Mickey concept. A
big challenge was that of Disney merchandise. The French culture does not vale giving
gifts/souvenirs as does the American culture. A significant form of income at most Disney
locations, this became a very costly mistake due to lack of market understanding.
3. Change food and eating habits – U.S. Disney locations have a very casual, family oriented
dining concept. The complete opposite proved to be true in Paris. Not serving alcohol as
is custom in the United States, was practically the biggest insult that could have been made
to the French. Consuming wine or other alcoholic beverages with meals is a part of
everyday French living. Also, meals on-the-go were not typical. The casual chicken

fingers, pizza and snacks at any time of the day did not work for Disneyland Paris. French
required more formal substantial meals at particular times of the day. Disney became more
flexible and allowed for alcohol to be consumed and altered its dining options for
customers.
4. Change of employee customs and labor policies – In January 1995, Disneyland Paris was
charged with violating French labor laws (Brannen, 2004).
Disney employees also known as “Cast Members” were being prohibited employee rights due to
the strict dress code, facial hair requirement and personal hygiene standards. The employee “Look Book”
was altered to allow staff to customize their look with minor details such as different colored stocking and
nail polishes. The Walt Disney Company has accommodated to Europe’s local preferences and dietary
requirements, but it has also applied the globalization model to different cultures, such as the one in Hong
Kong after the Hong Kong Disneyland was opened in 2005. [Zhang, 2007].
The globalization of Disney also exemplifies that the world is not being transformed into a single
homogenized sphere because, across the globe, there are sites of resistance, regardless of the momentum of
this revered representative of popular culture (Bryman, 2006). The Walt Disney Company has faced
challenges in all of its international locations. The key component of their long-term success has been
globalization. Learning was most difficult with its first international destination, Disneyland Paris. Since
then, the Walt Disney Company has come a long way in having a better understanding the needs and
preferences of their foreign customers.
Disney’s current international development is primarily focused on its Shanghai project that will
cost approximately $15 billion upon completion. The Walt Disney Company is more confident in this
investment as they now have experience in China with its Hong Kong destination. Knowing more about
dining, entertainment and attraction preferences, Disney executives are hopeful that this project will be
more successful from its beginning unlike other destinations. They are also currently working on a 14-acre

expansion at Hong Kong Disneyland that will be completed in 2014. Focusing on creating the largest
Disney castle ever and on not releasing attraction details due to knock-off issues in China, the ambitious
construction plans hope to have the Shanghai complex open by the end of 2015 [Barboza and Barnes, 2011].
Quantitative Analysis
In this research we have also identify ten prospective markets for the Walt Disney Company to consider
establishing a new theme park. The following countries were carefully chosen based on their current
economic status, population, size, and potential that is Mexico, Brazil, South Africa, Australia, United Arab
Emirates, United Kingdom, Philippine and Indonesia.
“Disney’s current operations in the international arena include various locations in Asia, one in Europe
and two in North America. By region we believe the aforementioned countries are strategically located to
account for the potential markets where there is no operation. Key Success Factors to date, Disney’s six
theme parks around the globe attract more than 119.1 million guests [Highbeam Business, 2012].
How have they been so successful?
key targets of their international strategy is based on three main benefits that is the increase of market
size, economies of scale and location advantages The secret behind the world’s best known cartoon
character, according to Andy Bird, chairman of Walt Disney International, is because of their sound
planning and comprehensive strategy is in place, which they continue to evolve with the times
{International Business Times, 2009].
We have determined that Disney has a six-pronged decision criterion, which takes into account the
economic health of a country, the advances in technology made there, its infrastructure capacity, tourism,
disposable income, and its regulatory environment. These success factors have proven time and time again
that Disney has chosen the appropriate locations for their theme parks.
1. Economic Freedom: Countries close in economic development have similar market segments that can
afford to consume similar types of goods and services. Entering a country that is widely different

economically from an economic standpoint means we will need to adjust to the new market conditions. To
evaluate this variable, we will use the Economic Freedom Index provided by The Heritage Foundation in
Partnership with The Wall Street Journal. Economic freedom is vital to our success because it measures a
countries economically free society, whether “governments allow labor, capital and goods to move freely,
and refrain from coercion or constraint of liberty beyond the extent necessary to protect and maintain liberty
itself.” (The Heritage Foundation, 2012)
2. Advances in Technology: Disney Imagineers use innovative technology to help build the new
attractions, restaurants and other guest areas. Their use of technology is evident in the majority of their
attractions and simulations. For instance, Disney uses ATLAS (Advanced Technology Leisure Application
Simulator) technology for their motion simulator amusement rides such as Star Tours operating at
Disneyland, Disney's Hollywood Studios, Tokyo Disneyland, and Disneyland Paris, and also Body Wars
at EPCOT Center (The Disney Driven Life, 2011). Countries with the capability to provide this magnitude
of technology would be greatly favorable for the establishment of a new Disney theme park. The World
Economic Forum publishes a technology index which denotes a country’s technological readiness. The
index is created with indicators such as companies spending on R&D, the creativity of its specific
community, personal computer and internet penetration rates. [NationMaster, 2005]. We will use this
variable to measure whether each country is equipped with the technological infrastructure necessary for
operation.
3. Infrastructure Capacity: The infrastructure work related to the park will be considerable. Land
reclamation, roads, irrigation, ferry piers and more will be needed to make the site accessible to the public.
Infrastructure in the area of the park and the region supporting it are equally important. Visitors should be
able to reach the park easily, by various forms of transportation – airports, railroads, roadways, tunnels,
bridges, bus lines, etc. Walt Disney has invested heavily in its utilization of fixed assets by establishing its
own film studios, theatres, amusement parks, and other facilities. Operating in a prime area would be easily
accessible and would also support a park most efficiently. Infrastructure capacity is a fundamental factor is

when determining which country to venture into. Therefore, we have selected to measure the Infrastructure
Quality from the World Economic Forum which they state is calculated based on the general infrastructure
(transport, telephony, and energy) in each country. They are ranked from 1 to 7, where 1 indicates an
extremely underdeveloped country and 7 is considered extensive and efficient based on international
standards.
4. Tourism: The Walt Disney Company typically selects park locations in top tourist destinations in
Metropolitan areas with subtropical climate conditions. Tourism is especially important for Disney as it is
the driving factor to determine the volume of potential guests. In this study, tourism was accounted for by
using the UNWTO World Tourism Barometer. The World Tourism Organization is a specialized agency
of the United Nations that measures millions of international tourist arrivals by country of destination per
year. They promote tourism as an indicator of economic growth, inclusive development, and environmental
sustainability (UNWTO World Tourism Organization, 2012).
5. Growth of Disposable Income or GDP: As disposable income increases the market subsequently
increases. When choosing an international market, Disney takes into account the gross and disposable
income levels of the area’s citizens as well as of foreign visitors. As personal incomes expand, and
discretionary spending increases, Disney thrives where there is a developing focus on relaxation and
entertainment by a rapidly growing segment of the population. Disney’s core constituency is the urban,
median income family who wants to have fun (Saleschase.com Corporation, 2012). As Walt Disney himself
stated, “We believed in our idea – a family park where parents and children could have fun – together.”
GDP Per Capita is an essential component; it considers the country’s standard of living. The CIA World
Facebook publishes information “on the history, people, government, economy, geography,
communications, transportation, military, and transnational issues for 267 world entities.” We derived the
purchasing power parity data from this source to determine which of our ten options have the resources to
expend on park passes, annual passes, resorts, merchandise etc.

6. Regulatory Environment: In all Disney international operations, support from the local government is
critical. They cannot exist in a vacuum – they need a supportive political infrastructure to grow and thrive.
It is essential to evaluate how easy it is to operate in the market chosen. The Ease of Doing Business Index
is a great indicator of the regulatory environment. A high rank on the index means the country is favorable
to the starting and operation of a firm. The index averages the country’s percentile rankings in ten areas,
made up of various indicators, with an equal weighing on each.
7. Population: In keeping with the traditional conservative philosophy of the Disney management team in
the 1970s, Tokyo Disneyland Park was designed as a close replica of the original Disneyland in the United
States. A proven theme park prototype was transplanted across the Pacific Ocean to a site where 30 million
people lived within 30 miles of the new facility (Lopez, 2002). Therefore, we will consider the population
of each country as a variable to consider for the decision making process. The data was extracted from the
CIA World Facebook which collects population data on a yearly basis. Prospective Countries Building and
investing in a multi-billion-dollar theme park would represent another major, long term commitment for
The Walt Disney Company. Therefore, much research and planning are involved in this decision. We have
also gathered data on the six key success factors we believe are essential for Walt Disney’s success in a
new international market. After narrowing down to ten potential markets, a weighing system is needed to
rank all countries based on the opportunity each provides to Walt Disney. The methodology consists of
assigning a percentage weight to each variable according to the importance it represents for the decision
making process. The weight allocation is as follows:
Variable Source Importance (Weight)
1. Economic Freedom the Heritage Foundation 18%
2. Technology Index World Economic Forum 16%
3. Infrastructure Quality Photos 21%
4. Tourism World Tourism Organization 7%
5. GDP Per Capita CIA World Facebook 21%

6. Ease of Doing Business World Bank 12%
7. Population CIA World Facebook 5% Weights for each variable were determined based upon their
importance in the implementation of a Disney theme park in an International setting.
We believe that the quality of infrastructure along with the GDP Per Capita for each country were the
most important since they are the foundation of each park—the facility and the customers. These two
variables were weighed equally, each given a percentage of twenty-one. Next in standing, we gave
economic freedom an eighteen percentage because we believe it is important to operate in an economically
free society. Subsequently, we gave technology index is given a sixteen percent weight. Having the
necessary technological advances is absolutely imperative for the operation of a Disney Park. Additionally,
the ease of doing business in another country is of interest since business regulations can have a big impact
on our decision, therefore it is given a percentage of twelve. Tourism was given a seven percent since we
believe that our parks will have a substantial influence on this metric.
The brand of Walt Disney has become part of the list of top most brands of the world with their innovative
and excellent international marketing strategies, which they have achieved by expanding horizon of their
plan and strategy both in home and overseas.
In International strategy Walt Disney is very care full including all local believes and cultural aspects of
each area. Also Walt Disney is planning long term in factors more in International market.
Also if we speak about the competitors of Walt Disney in local and international market than we can write
few name like NBC Universal, Viacom, Time Warner their all international strategy is based only on
“Licensing”. Disney is also facing many challenges and dealing with those variety of barriers to
international trades that is legal, political, sociocultural and economics differences which can affect their
international strategies one or other way.

Conclusion
Walt Disney is a prominent international company of family entertainment and media enterprise. They are
operating worldwide with three type international strategies which are multi-domestic strategy, Global
strategy and transitional strategy. Also from this case study we understood the key targets of their
international strategy is based on three main benefits that is the increase of market size, economies of scale
and location advantages. So international entry mode and entry decision is the key and most important
aspect that can affect in implementing of their international strategy.

Reference: -
http://www.hoovers.com/company-information/cs/company-
rofile.the_walt_disney_company.432c15c5e0758b7d.html
https://thewaltdisneycompany.com/about/
http://www.hollywoodreporter.com/news/walt-disney-international-boss-talks-842180
http://seekingalpha.com/article/1916861-disney-counting-on-international-growth
form. The Journal of Popular Culture, 15(1), 116-140.
Allan, R. (1999). Walt Disney and Europe. Visual Resources, 14(3), 275-295.
Watanabe, Y. (2014). The Japanese Walt Disney. Japanese Animation: East Asian

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