GROUP DISCUSSION

 Name:阮明淵
 Student ID: A8235352
 Questions and Answers:
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?
In business, the ultimate goal of every company is always profit. We can not deny the fact
that Walt Disney can make a huge profit if their theme parks are successful. So do the
management, they realized how successful they are in the United State for attracting a lot of
foreign visitors that lead them to enter the global market. In this case, it also means more profit
and global company. From that they can expand its sale of merchandise and goods as well as
attendance to their theme parks. By doing so, Disney can venture in spreading advertisements of
their movies and the ideology - Disney is a Place of Dream and Happiness (family image park).
Moreover, Disney is motivated to also acquire more resources according to their expansion. For
example, Disney wants to create a park in Shanghai (China) so that it can facilitate in probably
creating a Disney channel for the Chinese people which we think is a good strategy according to
China’s population. Finally, Disney wants to minimize the risk of their parks in America; in case
they experienced losses, they can gain their profits from Asia or Europe.
The pros and cons from the standpoint of the Walt Disney:
Pros (Advantages): Beside expanding sales, accquiring resources and minimizing the risks
- Identifiable Disney’s brand and characters from all over the world.
- Loosing less money toward investing in these theme parks.
- Tremendous tax incentives.
- Maximizing the wealth of the stakeholders by seizing the opportunities in the emerging
economies.
- Disney’s brand and product are too relatable to all people.
- The culture is extremely collaborative and exchangeable.
- Plenty of opportunity for exposure into multiple areas.
- Market share will increase.
- More resources will be acquired.
- It can gain portfolio advantages and competitive advantages.
Cons: (Disadvantages)
- The American political climate could affect another country’s support for an American
based corporation.
- 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 occur.
- 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 had already known it was an
enormous gamble to place their theme park in Japan. It was never done before and Disney was
afraid of the risk, therefore, it allowed the Oriental Land Company to create Disney (copyright)
and made money from the royalties instead and give the Oriental Land Company all the risk
involved. By having a licensing agreement in Japan, they are not responsible for capital spending
or running the park, so this is a very nice source of incremental profits to Disney. The risk with a
licensing agreement is that the operator may not operate well and damage the brand. Fortunately
for Disney, Oriental Land Company has done a great job with the parks. Disney wanted to gain
in on the profit and quickly invested in Paris which was not only considered the highest tourist
density area in Europe but also had the largest Disney’s product consumers among European.
Moreover, Disney got many helps from the French government. However, Disney decided to
invest only $140 million to take a 49% ownership because some problems were taking place
before Disney signed an agreement with the French government. It was believed that the park
would contribute to the destruction of French culture. In addition, it may gain more risks to
invest more amount than $140 million. On the other hand, because of the French government
supports, there might have investors who want to buy the shares and make investments.
According to some informations I found on the Internet, Disney was wild for just invested $140
in Paris. Because while Paris has had financial issues for turning profit since it was openned in
1992, Tokyo Disney has been a resounding success in the fees it brings Disney and for the owners of
the park itself.
Disney also saw a theme park in Hong Kong as a way to improve its relationship and
business opportunities in mainland China. Thus, Disney and Hong Kong government negotiated
for nearly a year for a joint venture as the final decision with 57% ownership belongs to Hong
Kong Goverment and 43% for Disney. Because of this agreement, Disney got the ability to
invest over $300 million in Hong Kong.
Since Disney has decided to do some expansions , we supposed that they are using some
protecting strategies over the risk so that they might not encounter losses on their initial cash
outlay or investment. They just want to make sure that it is a win-win expansion. Also, as we
mentioned above this was the first theme park outside the US, so they are still “testing the water”
whether the decision they made is feasible. Actually, by doing so, they transferred the related
risk accompanied by their expansion to Oriental Land Company.
3. What factors in the external environment that contributed to Disney's Success, failure
and adjustments in foreign theme park?
Success: They look after the region population and studied the economic conditions. Feasibility
of expansion by studying the risks involved political situations and infrastructure of certain
regions. For example, in Shanghai Disneyland park, Disney had created a Disney Channel just
for Chinese people to adapt the need and easily spread out their ideopology.
 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.
Failure: Not able to easily identified the diversity of cultures. Not able to look after the climate
of certain countries / or regions that they might affect the sales traffic. However, in Paris, there
was a conflict among the people in France due to the fear 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 they needed to eliminate the ban of Alcoholic drinks to draw more people. Disney also was
fortunate to have the French government created a railway to link a lot of European to the
magical kingdom.
 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 American parks are
in warm climates and climates in foreign regions were too cold to attract many winter
visitors to the park.