The Most Suitable Location for the Expansion of Disney Theme Park - Example

Names: Tutor: Course: Semester: Date: Executive summary The following report seeks to determine the most suitable location for the expansion of Disney theme park idea from a choice 4 possible locations Brisbane (Australia), Lisbon (Portugal), Montevideo (Uruguay) and Caracas (Venezuela). The report aims to give an exhaustive analysis of factors that lead to the decision that is seen as most appropriate. The report gives an in-depth analysis of Disney’s selection criteria and culture and that of Brisbane Australia as the ideal location. This report will thus educate the reader about Brisbane as the recommended location and also give a strong justification of why the location is suitable for Disney’s expansion plans. Table of Contents 1 Introduction Disney is a well known global brand that has successfully been able to market its brands around the world although facing some cultural difficulties with some markets. The company has the future orientation of expanding to new global locations. This paper will seek to exhaustively and holistically analyze the Disney brand and take into consideration the factors for new expansion area selection to propose a new expansion area for the company. Although there are many cities in the world with very promising economies it is very relevant for Disney to check the availability of all favorable expansion factors before the company establishes its theme park in any particular city (Gunther, 2006). In light of this understanding the paper also acknowledges the internal managerial and organizational factors that have made the company successful in its expansion agenda and which will largely determine its success in the future. After analyzing the four cities proposed for Disney expansion, Brisbane Australia fits all the selection criteria adopted by Disney and this is the focus of this discussion. This does not mean the other cities are totally of the mark. They have their own attractions too but Brisbane came out strongly to claim the best expansion option for Disney theme parks. 2 Business, Disney and culture Globalization is not only a reality in the 21st century but also inevitable as national borders become more open through information technology and efficient transport. Now more than ever, the world is very much connected and the global culture is becoming more homogeneous due to sharing of experiences and engagement in cultural exchanges (Hill, 2007). For any business wishing to operate beyond national borders, understanding different cultures in the markets its targeting is not only important but mandatory. The national borders are not only the barriers to global trade and doing business but also distinct local cultures of the target markets. Businesses have to package their product in a way that it will appeal to the local population. Many countries and communities around the world are modernizing meaning they are having little attachment to traditions and common history but at the same time there are some societies such as the Asian society who still hold much importance to their own distinct cultures. As such the communities are a bit sensitive to any product which seems to be alien to them in terms of culture (Hill, 2007). Understanding different world cultures is important as a business will be able to learn some important consumer behaviors and centre its focus on the under standing of the consumer behaviors. International marketing in the 21st century cannot ignore the cultural factors as it goes a long way in designing products that suit the culture of the target market. In light of this understanding it is important that business development, expansion and marketing strategies which are anchored strongly on the cultures of the target markets (Barnett & Cavanagh, 1994). The actual practicability of penetrating international markets might not be as easy as the theoretical idea might make it look. Penetrating international markets encompasses issues to do with cultural diversity which greatly define the tastes and preferences of the target market. One also has to be aware of the dos and don’ts in the international markets which might dictate failure or success to a company that is successful elsewhere (Joyner, 2009). Disney world is one of the biggest international companies with a product that is very sensitive to diversity in culture and social factors in the international markets. To get other cultures and societies to appreciate some common Disney services Cinderella and Mickey is not an easy task as the company has to come up with exceptionally great inclusion of local culture elements like language and local attachments to pull the customers and eventually make the product s success. Societies in the world are also faced with different standards of living and as such the products Disney is selling to masses in different cultures must reflect the conditions of living in the particular cultures in the areas it is operating. It is also important to know that there is different folklore in every region of the world and a story or character that is very popular with the American audience might not be so popular in Latin America or Africa per se (Barnett & Cavanagh, 1994). Language is also a big factor in international market for Disney products and the company cannot afford to ignore this big factors. There are very strong economies in Europe, Asia and south America which don’t use English predominantly as a language of choice such markets like china would give Disney a had time marketing their product as it is in English language. The masses need to understand what it is all about before thy enjoy spending time in the theme parks. The biggest the company might be dealing with is to get people abandon their culture in favor of another culture. This is very problematic with tradition-based cultures in the developing world than in the modernized cultures of the developed world. The company will then have to decide whether to adapt to the local culture or stick to its culture and get people to adopt it. This will depend on the strength of cultural attachment with the local population (Connell, 2007). 3 Candidate city background 3.1 Lisbon Lisbon is the largest city in Portugal and a very old Mediterranean city which has great history and culture. The city is home to more than 3 million residents and is very densely populated. It happens to be a popular tourist destination which records more than 1.5 million tourists annually. The transport system is well developed with high speed rail, motorway network and busy airports. Lisbon per capita income is higher than the average for EU Nations and so presents a good ground for a Disney park. The government is supportive of growth of tourism sector and perhaps the impediment could be English is not spoken largely in Lisbon and as such may present problems for Disney park. The amenities are good since the city is home to two UN agencies; EMCDA, and EMSA. Disney can be guaranteed of water and electricity supply in good amounts. Getting space for Disney world may pose the greatest challenge since for such an old city little if any expansion land maybe available and the high population density is an indicator to that (MobileReference, 2010). 3.2 Montevideo Montevideo was established in 1724 by Bruno Mauricio. It has a population of more than 1.4 million people. The city boasts of a very cosmopolitan population with a very vibrant cultural heritage and history. It has the best quality of life among the Latin American countries. There are very beautiful natural sites like beaches and hilly countryside. Tourism is a great economic contributor and as such the government will be welcoming of the Disney Park. The economy is not performing all too well but is slowly accelerating due to rapid infrastructure development in the city. There is ample land for establishment of a Disney park and the cities transport is working quite well with commuter trains and bus services all working efficiently. Water and electricity supply are adequate and affordable (Law, 2002). 3.3 Caracas Caracas is the capital and the largest city of Venezuela with a population of about 2 million people. The city is surrounded by hills and Cerro EL Avila mountain ranges that leave little suitable terrain for building. Spanish is predominantly spoken in Caracas by the inhabitants of the city. The economy is largely service based but the government is not very hostile. The city is served mainly by buses as a means of transport but is currently exploring other means as train systems to reduce traffic. The basic amenities are present such as electricity and water. Expansion land may pose a problem since the population density is indicating a lot of pressure on available land (Raub, Masters, & LonelyPlanet, 2010). 3.4 Brisbane Brisbane city is very well developed being the largest and the capital city of the Australian Queensland state. The city has a population of more than 3 million people a very large population as compared to the population of the other three cities. The city is very cosmopolitan with a very large population of inhabitants of the city coming from major regions of the world such as South Africa, Britain, china, America and many other small regions. This means the culture in this city is very heterogeneous in nature and therefore no dominant culture that is likely to dictate the presentation of Disney products. The population predominantly uses English as the preferred communication language which suits the Disney characters and products very well since Disney originated the English speaking America. The government of the region is very committed towards encouraging the growth of the tourism industry and will be welcoming of the idea of having a Disney theme park in the city as it will increase the number of attractions in the city thereby increasing tourism traffic. As such Disney should not expect many problems with the government in terms of their operations (Roberts and deery, 2008). the city has adequate basic amenities such as water and electricity availability that are capable of supporting Disney parks operations without any problems associated with lack or inadequate availability f the amenities. The surroundings of the city are very attractive with hilly sites such as Highgate hill, Enoggera hill and mount Gravatt. If suitable land can be found adjacent to one of these sites then it will be very suitable for a Disney theme park (Roberts and deery, 2008). The transport network in Brisbane is very well developed as the city does not experience major traffic jams like some cities like New-York which are famous for notorious city traffic jams. The transport network is well interconnected to other states of Australia meaning it will be easy for people to access the theme park. There is public transport by bus, rail and ferry and although the population is growing rapidly the government is doing its best to fund projects aimed at expanding the transport networks such as the South East Queensland infrastructure plan and program (Roberts and deery, 2008). It is easy to get an area that is easily accessible to tourists and local population at Brisbane considering it is the third most populous city of Australia that receives very many tourists at any given year. The city is mainly made up of a population that is modernized and as such is welcoming of world cultures. 4 Disney selection criteria Walt Disney is a multinational success which has grown from its firm foundation in America to have its operations as far as Paris and Hong Kong. To achieve even more success globally the company has to employ a variety of stringent selection criteria that would ensure continued success in its expansion plans (Brody, 1976) When entering an international market it is always important to analyze the how the host government is going to receive a business. For Walt Disney, its products come with a great westernized influence on local cultures around the world. As such it is important that the host government be stable politically and can welcome the new development of a product that carries a lot of foreign culture into the country (hill, 2007). If the regulations do not interfere with the companies operations then Disney can go ahead to analyze other key factors (Brody, 1976). A country that is welcoming even to other nationals is very strategic since foreigners too will be able to visit the theme park. Another important factor in selection of an expansion location is the population in the expansion city and country in general. The bigger the population the larger then client base for Disney. However there are other inherent population factors such as demographics and income level that might as well be factored in when it comes to population (Drew, 2006). Hong Kong presented a viable expansion location due to its huge population of more than 7 million inhabitants and a billion more from the larger Chinese population. This big population gives Disney a great success probability and it guides the company in choice of expansion options Li (1999). The infrastructure development in the area and the accessibility is also very important for Disney as it determines how easily patrons get access to the park. A good road and rail network and air transport is vital for success of Disney parks. A good amount of reliable power and water source must be there to support activities at the parks. Availability and the topography of land in the expansion area are the final criteria that Disney uses when selecting a location for development. The minimum land required is 200 acres. A generally flat topography is desired to aid building and landscaping of the park and also to support activities at the park. The park seeks to adapt into area environments and not necessarily to transform environments for the sake of the park. As such areas with natural beauty are desired but not a must (Li, 1999). Ina nut shell, Li (1999) list the following as some of the selection criteria that Disney uses to determine suitable development areas 4.1 Cost Adequate utilities to support park’s demand for water, power and sewerage treatment Existing greenery and natural beauty 4.2 Ease of construction work Development of surrounding environment A favorable government policy Development restrictions as per local area laws which might not allow such development 4.2 Access to the location Nearness to a major highway with capability to handle large traffic A secondary road for emergencies and capacity handling A meadow road for parking preferably along the highway 4.3 Completeness of the location Visibility of the location especially to crossing motorists Nearness to landmarks but so essential Larger area and more regularly shaped, preferably rectangular in shape. Abundance of natural beauty 5 Disney and success Disney as a corporation has been very successful at the international level mainly due to the diverse roles for everybody within the corporation and the well evaluated and implemented expansion strategies. The company has shown great ability to adapt to new cultures and also adapt to new trends in consumer markets to shift its concentration from film to encompass other profitable ventures like theme parks (Smoodin, 2013). Today Disney brand is visible through many brands and not just animated films. This report particularly centers its focus on Disney theme parks which are basically real life representation of the Disney world. The success of the theme world is mainly attributed to the careful selection criteria adopted by the company when considering the profitability of new locations (Paton, 2012). Success for Disney is also attributable to the special focus Disney has on its customers who are fondly referred to as patrons by the company. Disney has a company based research department who analyze how the needs of their patrons can be satisfied. Other companies rely on outsourcing market research services. Having a research department ensures that the staff can use a wealth of company knowledge to know how to market the brand in a particular market (Paton, 2012). Businesses do not exist in isolation; they have a responsibility to care for the society they are operating in (Joyner, 2009). Disney being a multinational has to exemplify the expectations people have in it as a corporate citizen. Towards the late 90s, Disney was involved in a rather infamous scandal with its shareholders when the company paid $140 million to Michael Ovitz for firing him having worked for the company for 14 months. Ovitz was a friend to the then CEO Michael Eisner who had recruited Ovitz. This caused a big outcry from the shareholders about the company being irresponsible to its shareholders. The scandal found its way to the courts but the court held that the directors acted in good faith by doing so (Lederman, 2008). After this scandal there was a widely held contention among the shareholder sand general public that the directors consist of Eisner’s friends and as such the board cannot make objective decisions. This led to the company implementing a guideline that the board of directors has to adhere to. The company recognized and is committed to governance policies that promote independent focus on shareholder interests and ethical standards. This is also designed to ensure the company complies with set laws and regulations. The company encourages everybody including the directors to focus on the diversity of its shareholders, patrons, employees and the communities it operates in (Sonnenfeld, 2006). Disney has listed some of its corporate social responsibilities to guide the company in being responsible to the communities it operates in. some of them are (The Walt Disney Company, 2013): To minimize Disney’s environmental footprint Create an efficient workforce wherever the company does its business Create opportunities for the communities its operates in Help communities raise healthy children The company development of new constructions in expansion areas has been based on ecosystem services assessment and sustainable design evaluation and adoption. The employees work in suitable environments. The company builds healthcare facilities in its workplaces for its employees. To the communities the company has established projects to make a change into the communities for example Disney friends for change, and Disney planet challenge (The Walt Disney Company, 2013). Disney has developed and implemented human rights policy statement to communicate their stand and commitment towards people around the world as far as human rights and ethical conduct is concerned. This efforts point to the fact that the success of Disney in its expansion agenda is not only pegged on satisfying its target market in terms of the content and concepts or to satisfy its shareholders but also to ensure all the stakeholders in its areas of operation are satisfied by Disney as a responsible corporate citizen (The Walt Disney Company, 2013). Overall Disney has been able to implement CSR programs successfully as it has received recognition for its CSR programs (Holcomb, Okumus & Bilgihan, 2010). 6 Recommendation Brisbane came out strongly as the ideal city for Disney expansion plans. Not just because of the selection criteria factors but largely because of the cultural similarity between the America and the Australian population. The company however should do extensive research and analysis of the local success factors to do with the societal norms and values to ensure acceptability of the brand in the Brisbane city. Brisbane being part of Australia means the company has an even larger population target that could provide a good source of patrons for the theme park and a result increase in profitability. 7 Conclusion Disney theme parks expansion plan by the Disney Company is a strategic approach towards expanding the company and making it one of the biggest global brands. The company however has to do a lot more to ensure its product is received well by target populations around the world since it is a product that is particularly sensitive to cultural differences. The company selection criterion is very rigorous to ensure mistakes made inn earlier expansion plans are not repeated. This is very effective and should be bolstered to ensure the expansion plans are successful not only for the company but also for the many customers who love Disney world. References Barnett, R & Cavanagh, J 1994. Global Dreams: Imperial Corporations and the New World Order. Simon and Schuster Brody, M. 1976. The Wonderful World of Disney-Its Psychological Appeal. [Online] Available: http://www.pep-web.org/document.php?id=AIM.033.0350A. [accessed 14th May 2012]. Connell, C. 2007. Pursuing three horizons of growth-three cases: Bombardier, Disney and Hutchison Whampoa. Managing service quality, (8)1, pp. 234-267 Drew, A. (2006). 5 Secrets to Walt Disney World's Success. [Online] Available: http://www.demc.com/artman/publish/article_130.shtml. [accessed 14th May 2012] Gunther, M. 2006. The Iger sanction (business strategy at Disney). Strategic direction, (22)7, pp. 456-467 Hill, C 2007. International Business, McGraw Hill Holcomb, J, Okumus, F & Bilgihan, A. 2010. 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