1.

What do you think motivated Disney to set up parks abroad, and what might be the Pros & Cons from the stand point of Walt Disney Company?
Disney got motivated to set up parks abroad due to The successful launch of Disney in Tokyo, Japan. The Oriental Land Company of Japan proposed the Park to Disney. However, Disney accepted the concept but did not provide any finance. More business opportunities management realized how successful they were in the US attracting foreign travellers. Research showed that millions of Europeans visited Disney USA which encouraged them more to diversify. Expand sales - 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 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. Minimize the risk of their parks in America in case they do poorly they can gain their profits in Asia or Europe. Gain more Profit

Why Paris? Research showed that millions of Europeans visited Disney USA. It is the most visited European city and is centrally located The French is the largest consumer of Disney products. E.g. Comic books Disney got various subsidies Disney got financial assistance from various investors About 17 million Europeans live less than a two-hour drive from Paris Another 310 million can fly there in the same time or less Also, the French government was so eager to attract Disney that it offered the company more than $1 billion in various incentives, all in the expectation that the project would create 30,000 French jobs

Why Asia? Worlds half population, Better infrastructure Increased disposable incomes in China Hong Kong revert as Asias largest tourist destination Pros More Profits More Resources Global Product & Differentiation Diversification of Company Cons Research costs Cultural problems in different countries Political risks in other countries Financial Losses due to Operational Errors Difficulty for French farmers Fluctuation in European currency Failed to understand the climatic conditions

Sales expansion merchandise Advertisements of Disney movies

Failed to understand the European culture No alcohol policy Disney thought that Monday would be a light day for visitors and Friday a heavy one & allocated staff accordingly Major Staff problem adopted the same team work model used in the USA & Japan Breakfast debacle Europeans did not stay as long as they were expected The French didnt show in expected numbers 40% French Many Americans living in Europe or Japanese on Europe vacation In Hong Kong Political risk Disney EIA had a big missing piece the assessment of the decommissioning of the CLS as the tenant refused to allow site investigation for the EIA. Resulted in misspending of taxpayers money on the decontamination work that should have been paid by the polluter Asian Economic Issues Affordability

Resource acquisition - Disney wants to create a park in Shanghai so that it can facilitate in probably creating a Disney channel for the Chinese people

Minimize the risk of their parks in America in case they do poorly they can gain their profits in Asia or Europe Helped other countries create job opportunities Less investment Competitive advantage Improve business opportunities & relationships with countries Learnt from their mistakes - Makes small profit - Adapted to cultural differences Business innovation Created a new way for families to have fun together Adapted to economic issues Changed food & fashion offerings Reduced prices of tickets/stay Unique experience Business innovation Created a new way for families to have fun together

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?
Why Not in Tokyo: First International Venture: Disney made no financial investment in Japan because it was the first theme park for Disney outside of the United States. Conservative Management: In keeping with their conservative philosophy, the Disney management team, led by Ron Miller, wanted to reduce the financial risks inherent in international investments. Risk Aversion: Disney knew it was a tremendous gamble and it was afraid of the risk, therefore, it agreed to work with the Oriental Land Company to create Disneyland. It licensed them to use Disneys characters by paying 10% of admissions revenues and 5% of food and souvenir revenues, and it gave the Oriental Land Company all the risk involved Geographic Issues: Japan is widely known as a high earthquake prone area, and there were many risks involved in the construction and maintenance of the park.

Why in France: Tokyo Disneylands Success: The Tokyo Disneyland opened in 1983 and was literally a cultural and financial success from its start. However, not all of the potential financial benefits had accrued to Disney shareholders, since the facility was entirely owned by The Oriental Land Company. After huge success of Tokyos Disneyland, Disney was more prepared to take the risk of ownership. New Management: By the time a development decision for Western Europe rolled around in 1987, Michael Eisner was Disneys CEO. The new management team was convinced of the benefits of ownership. Confidence in European Market: They were surer about the market in Europe, as the number of Europeans visiting US Disneyland was already high.

Why in Hong Kong: Third International Location: Two locations were in the running early in 1999, representing quite different operating and financial strategies and structures. So it was easier to take an investment decision in Hong Kong considering the huge Asian market that was becoming more affluent, and Hong Kong had 10 million tourists every year. Improved Relations with China: Investment in Hong Kong Disneyland had incentives such as improved business relationships with China. Huge Asian Market: Disney was confident about the huge Asian market that was becoming more affluent.

Q 3. What factors in the external environment have contributed to Disneys success, failure and adjustments in foreign theme park operations? Factors In The External Environment that Contributed To Disney's Success: POPULARITY : Current popularity Disney has with movies, television shows, and products. UNEXPLORED MARKETS : Focus on regions that are great potential markets in terms of exposure and population as well. Eg : HongKong. LOCATION : Paris central location enables a large population to drive there easily. HELP FROM THE FRENCH GOVERNMENT : The help received from the Government of France to extend the railway line till the park helped connect Disney land to a major part of Europe.

Factors In The External Environment that contributed To Disney's Failure HOSTILITY OF A FOREIGN CULTURE. Not adjusting to the foreign culture (Disneyland Paris almost bankrupted Disneyland Parks; people believed the park would contribute to the destruction of French culture). SOCIETAL NORMS. It was hard to maintain a family place image in a country like Paris. CLIMATE : DISNEY was not prepared 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.

Factors In The External Environment that Contributed To Disney's Adjustments CLIMATE : Disney had to adjust to the harsh climate in Europe by installing fireplaces, protecting waiting lines and putting domes on the tea cup ride.

CULTURE : Adjusting to culture by opening French/Japanese cuisine restaurants. Making French the first language at Euro Disneyland. Using european actors as Isabella Rosselini and Natasha Kinski as virtual tour guides. Big screen attraction showing japanese history.