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GRID ANALYSIS: A STUDY ON WALT DISNEY PARK & RESORTS AND OPPORTUNITIES OFFERED BY MALAYSIA

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GRID ANALYSIS: A STUDY ON WALT DISNEY PARK & RESORTS AND OPPORTUNITIES OFFERED BY MALAYSIA Powered By Docstoc
					       GRID ANALYSIS: A STUDY ON WALT DISNEY PARK & RESORTS AND
                      OPPORTUNITIES OFFERED BY MALAYSIA




1.0      INTRODUCTION TO GRID ANALYSIS

         Company’s management is always looking for the new opportunities to

increase their sales and profits. Grid Analysis can be used to propose a useful

framework for detecting new intensive growth strategies and make comparisons

between countries based on information such as equity, income and risk.



         Company first preference is to check whether they can gain more market

share with their current products in their current markets. It is the first strategy

company is looking to adapt for increasing their sales and profits. Any the marketing

efforts by the company which aim to offer their existing products in the current or

foreign markets are called market penetration strategy. The best way to do is to gain

as much as information with specific requirement to the cause.



         In other words, Grid Analysis simplifies the ranking and comparison process:



      a) It captures relative importance of attributes as well.

      b) It is easy for respondents to understand and respond.

      c) It is easy to collate and analyze.


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      d) It provides objectivity to subjective factors as well

2.0      THE WALT DISNEY COMPANY

         The Walt Disney Company was founded in 1922, and has become a world

leader in family entertainment. Today, the company is operating on a multinational

level, and has over 58,000 employees’ world wide, and over 189,000 share holders.



         Walt Disney Parks and Resorts is the segment of The Walt Disney Company

that conceives, builds, and manages the company's theme parks and holiday

resorts, as well as a variety of additional family-oriented leisure enterprises. The

Theme Parks and Resorts division was founded in 1971 as Walt Disney Attractions

when Disney's second theme park, the Magic Kingdom at the Walt Disney World

Resort in Florida, opened, joining the original Disneyland in California. In 2009, the

company's theme parks hosted approximately 119.1 million guests, making Disney

Parks the world's most visited theme park company




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       3.0     SIMPLE GRID COMPARISON AND GATHERED DATA

                                                TABLE 1

       Simple Grid Comparison of Countries for Penetration of Market by Walt Disney


         Variables               Leverage   Country I     Country II   Country        Country      Country
                                            (SINGAPORE)   (MALAYSIA)     III            IV           V
                                                                       (PHILIPPINE)   (THAILAND)   (VIETNAM)
1. Accepted factor (A),
   unaccepted (U)

1.0 Allow 100% equity hold          -           U             A             A             A           A
2.0 Allow licensing to              -           A             A             A             A           A
    subsidiaries which owed
    by majority

2. Income
(higher score=higher score)

1.0 Size of investment             0-5           -            4             3             3           3
    needed
2.0 Direct cost                    0-3           -            3             1             2           2
3.0 Tax rate                       0-2           -            2             1             2           2
4.0 Market size, current           0-4           -            3             2             4           1
5.0 Market size, 3-10              0-3           -            3             1             3           1
    coming years
6.0 Market share, in short         0-2           -            2             1             2           1
    time, 0-2 years
7.0 Market share, 3-10             0-2           -            2             1             2           0
    future years

          TOTAL                                              19            10            18           10
3. Risk
(lower score, higher choice)

a) Loss of market, 3-10            0-4           -            2             1             3           2
   coming years
b) Problem with foreign            0-3           -            0             0             3           3
   exchange
c) Potential political problem     0-3           -            0             1             2           3
d) Business law, current           0-4           -            1             0             4           3
e) Business law, 3-10              0-2           -            0             1             2           2
   coming years

          TOTAL                                               3             3            14           13

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4.0   ANALYSIS AND CONCLUSION

      The model is explained in terms of its applicability in the context of the

company’s specific requirements. Using the market selection grid with three major

variables (ranked 1 to 5) and associated leverage weights (each weighting each is

between 1 and 5), thereby making the 60 points the maximum attainable score for

any one of the five countries. The outcomes analysis is presented as below:



      Malaysia (country II) is seen as potential and promising country to do

business with. Both variable and leverage data states that it is a country that has a

high income and low risk with total of income is 19 and the total of risk is 3. It is

followed closely by Thailand (country IV) that also has a high income of 18. But it

also comes with a high risk of 14 which made it unsuitable to do business with.

Philippine (country III) has a low income and low risk with both totals of 10 and 3.

Low income makes it undesirable even though the risk level is low.



      Vietnam (country V) is known as a country with low income and high risk with

total of income is 10 and total of risk is 13. With low income and high risk, it is the

most unsuitable country to expand business with. Singapore (country I) allows

licensing to subsidiaries which can be owned by the majority. But no information has

yet available or to be collected regarding to income and risk of doing business in that

country.




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       By comparison, Malaysia is seen as the suitable and potential place for the

Walt Disney World Company to expand its theme park business. The management

should look positive on adding the size of investment, market size and company

objective here due to good acceptable factor in Malaysia Government incentive,

good investment climate, political stability, encouraging foreign direct investment

rules and business regulation, potential income and reasonable risk. While different

researchers produce slightly different weighted scores, Malaysia tends to always be

as the most attractive foreign markets with the current and future market shares she

offers. The same cannot be said about the rest of the countries as the important

market as the weight of variable and leverage does not feature positively in the

rankings above. The finding shows that shifting the focus in these countries will

gives Disney access to a much larger earning, but also this means that the costs

have to be kept under tight control to generate significant returns.



       The bargaining power of Malaysia customers is high in the service and in the

entertainment industry for the past ten years with steady increase in its in-house

gross income index. Since a large number of customers are needed to make

Disney's operations to run smoothly in Malaysia, , Disney must be able to design in a

way that it will make not only local but also foreign visitors come and spend their

money at the theme park. A well development plan with high tech infrastructure

areas such as Iskandar Corridor in Johor and KLIA Sepang as the central entrance

hub to the state is a good indicator of Malaysia’s suitability and the ‘wow’ factors

against other countries in the analysis.


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         As a multinational corporation, Disney will continue to face internal and

external weaknesses and strengths if it’s decides to expand and gain more foreign

market share. The external forces such as opportunity and threats are more difficult

to control, and Disney has to adopt and take advantage to those forces. Major

threats to the Disney as stated in the grid analysis include the over saturated

markets, politics and economic aspects from a global perspective, and risk that

comes from foreign investment. As the supply of services and products in the

entertainment industry is starting to saturate the markets, competition will be more

intense, and only the most powerful companies will be able to survive. Disney must

be able to leverage this risk to a certain extent as it has diversified and globalized its

operations.



         Finally, efficiency is vital in any plan for penetration of foreign market. The

Disney must always be able to increase its current asset requirements and keep

current liabilities under strict control. Under no circumstances should the current

liabilities be allowed to increase in a greater rate than the current assets. Efficiency

enforced by good investment planning, tight budgets and expected high returns,

have surely made it possible for Disney keeps on inadvertently compromise its

magic.




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REFERENCES

Daniels, J.D & Radebaugh, L.H. (2001) International Business: Environments and
Operations (9th ed.) New Jersey: Prentice Hall


E.J. McCarthy, W.D. Perrault, (1990) Basic Marketing: A Managerial Approach. New
York: Irwin


John W. Creswell. (2003) Research Design: Qualitative, Quantitative and Mixed
Methods Approaches. London: Sage Publications


"TEA/ERA Theme Park Attendance Report 2009". At www.themeit.com. 2010-04-26.
http://teaconnect.org/etea/2009ThemeIndex.pdf. Retrieved 2010-04-27




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DOCUMENT INFO
Description: By comparison, Malaysia is seen as the suitable and potential place for the Walt Disney World Company to expand its theme park business. The management should look positive on adding the size of investment, market size and company objective here due to good acceptable factor in Malaysia Government incentive, good investment climate, political stability, encouraging foreign direct investment rules and business regulation, potential income and reasonable risk. While different researchers produce slightly different weighted scores, Malaysia tends to always be as the most attractive foreign markets with the current and future market shares she offers. The same cannot be said about the rest of the countries as the important market as the weight of variable and leverage does not feature positively in the rankings above. The finding shows that shifting the focus in these countries will gives Disney access to a much larger earning, but also this means that the costs have to be kept under tight control to generate significant returns.