international business management, disney land case

YANGON INSTITUTE OF ECONOMICS

International Business Management Group Assignment (1)

Submitted by Group (6)

9/19/2011

International Business Management, Group Assignment (1) September 19, 2011

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1. 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 of

merchandise goods as well as attendance to their theme parks. The management

realized how successful they were in the US and that their resorts attracted a lot of

foreign 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 spreading

advertisements of their movies and the ideology that Disney is a Place of Dream and

happiness. Disney is motivated to also acquire more resources by their expansion, for

example, Disney wants to create a park in Shanghai so that it can facilitate in probably

creating a Disney channel for the Chinese people. Lastly, Disney wants to minimize the

risk of their parks in America in case they do poorly they can gain their profits in Asia or

Europe.

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.

• Disney's 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.


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• 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 the

first theme park for Disney outside of the United States. Disney knew it was a

tremendous gamble to place their theme park in Japan. It was never done before and

Disney was afraid of the risk, therefore, it allowed working with the Oriental Land

Company to create Disney and make money from the royalties instead and give the

Oriental Land Company all the risk involved.

Disney wanted to gain in on the profit and quickly invested in Paris which was

considered the most tourist density area in Europe and the French are the largest

European consumers of Disney Products. Moreover Disney gets so many helps from the


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French government. However Disney decided to invest only $140 million to take a 49-

percent ownership because there are some problems occurred before Disney signed an

agreement with the French government. This is because people believed that park

would contribute to the destruction of French culture. So we believe that there will be

more risk to invest more amount than $140 million. On the other hand, because of the

help of French government, there will be investors who want to buy the shares and

make an investment.

Disney also saw a theme park in Hong Kong as a way to improve its relationship

with and business opportunities in mainland China. Therefore Disney and Hong Kong

government 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 Government

and 43 percent by Disney. And because of this agreement, Disney got a chance to invest

over $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 enjoyed

grasping the “real thing”. However, in Paris, there was a conflict amongst the people in

France because they were afraid of the theme park decimating their culture and

language. To deal with this, Disney adjusted by catering to French tastes, languages

and exhibits pertaining to famous European actors and individuals. In addition, Disney

learned 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 all

of Europe to the magical kingdom. .


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Factors in the External Environment that Contributed to Disney's 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 Disney's 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 Disney's 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 one

of the fast growing cities with a lot of trade and commerce. Then China has had a one

child per family policy which has increased family disposable incomes and makes parents

reluctant to deny anything to their only child. In addition, Shanghai is the next Hong

Kong of Asia where many big companies are flocking to.

Also, since the Olympics are coming to China, there will be many people throughout

the world visiting and touring Shanghai. This will provide a big boost to Disney and its

investors. Also, China has the biggest population in the world; I believe people will flock

to Disney in great numbers. Shanghai Disney must have to follow any strict rules and


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regulations by the Chinese government. In addition, we believe Disney must face

crowdedness 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 than

2,000 amusement parks even most of them have not done well. Disney also needs to

think about affordability.

international business management, disney land case

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