INSC 20263-10
Business Information Systems
Disney World Theme Parks
Strategic Global Project
Submitted to Layne Bradley
By:
Lexi Wachman, Tanner Murphy, Laura Hawkins, & Chelsea Patterson
October 26, 2011
Table of Contents
Executive Summary ...........................................................................................................1
The Walt Disney Company....................................................................................................2
Background .................................................................................................................................. 2
Alternatives ......................................................................................................................2
Recommendations ............................................................................................................2
Analysis ...............................................................................................................................4
Proposed Global Geographic Location ........................................................................................ 5
Country Research ......................................................................................................................... 5
Industry Research ......................................................................................................................... 5
Industry Environment – Porter’s Five Forces .............................................................................. 5
Company Internal Environment ......................................................................................4
Culture.......................................................................................................................................... 5
Resources ..................................................................................................................................... 5
SWOT Analysis ........................................................................................................................... 5
Current Marketing Strategy.......................................................................................................... 5
Process Model .............................................................................................................................. 5
Collaboration and Knowledge Management ..................................................................4
Strategy ........................................................................................................................................ 5
Tools ............................................................................................................................................ 5
Enterprise System Strategy ...............................................................................................4
Maintain in house ......................................................................................................................... 5
Outsource ..................................................................................................................................... 5
Combination ................................................................................................................................. 5
Mobile/Remote Systems Analysis .....................................................................................4
Applicability................................................................................................................................. 5
Options ......................................................................................................................................... 5
Recommendations....................................................................................................................... 4
Executive Summary
After extensive research studying the many aspects of Walt Disney Company, an
opportunity has been identified to further expand internationally, increase sales revenue,
and heighten competitive advantage while still maintaining a cohesive system.
Walt Disney is the world's largest company in the recreation industry, experiencing
the majority of sales in the theme park and resort conglomerate. By expanding this aspect
of the company globally the company will experience numerous advantages industry
wide.
There are many areas in which the company can increase its presence and increase
sales. Walt Disney Company has already begun its expansion to the Asian market,
limiting the option of that particular geographical area however there are many other
options to explore throughout Western Europe specifically. Of all the possibilities, it has
been concluded Rome, Italy, would ensure the greatest profitability.
Rome, Italy, is a country with promising tourist attractions and future growth. With a
lack of theme park and amusement attractions, The Walt Disney Company would benefit
immensely from expanding its presence to the city.
Compared to other industries, that of the recreation and theme park industry continues
to thrive despite the recent economic downturn. The Walt Disney Company is the leading
company controlling over 51% of the industry and consistently increasing sales, however
the Porter's five forces model adequately illustrates the high threat of rivalry and
substitutes if global expansion is not considered.
The internal culture of the company eases the global transition. With a pride in
ownership, employee selection, and ethical standards, the appeal to customers is evident
throughout the brand and reflective of the historic success thus far. Based off of the
success, the marketing strategy will remain consistent to that of Disney's current market
plan, focusing specifically on the customers already loyal to the company. A process
model has also been created to illustrate the ability of a customer to purchase a ticket and
the needed steps to complete the transaction.
After completion and application of the SWOT analysis, it has been concluded the
strengths heavily outweigh the weaknesses, hence further increasing confidence in
continuing the plan of expansion.
Through the use of the ERP, the numerous systems of Disney will be streamlined into
one cohesive format in Italy. Further collaboration will be accomplished using Microsoft
SharePoint allowing all locations to perform as one unit.
As for meeting and joining all plants throughout the globe, Walt Disney Company can
take advantage of video conferencing to ensure all areas are adequately involved in
business decisions. In addition, by use of the cloud method, files, messages, and other
information can be sent via air to eliminate time and effort involved in synching
processes. Such mobile remote systems will save time, money, and effort to be allocated
elsewhere.
After completing a series of business strategies and internal analyses, such as SWOT
and Porter's five forces, we confidently recommend a new profitable park be established
in Rome, Italy.
Company Background
The Walt Disney Co. is the World's largest media conglomerate that specializes in 4
business segments: Media networks, consumer products/retail, studio entertainment, and
finally Parks and Resorts. Today the segment that has produced the second highest
revenue, behind the expected media networks, is the Parks and Resorts business segment.
The theme-park business focuses on increasing attendance through means of
marketing campaigns, prices cuts, and investments and renovations/improvements to its
parks. It is no surprise then, The Walt Disney Co has accumulated more annual sales than
some of its leading competitors, including Cedar Fair LP, this year.
Today The Walt Disney Co. is looking to expand its theme park business globally in
order to increase its presence throughout the world, like it has in the US.
Alternatives
In order to expand globally many alternatives had to be considered. One of the major
markets in which Disney would benefit from in planting its presence was that of the
Asian Market. It wasn't too far into the research that the team revealed such
advancements were already being taken place by the company. Walt Disney plans to
build a 3.6 million dollar theme park in Shanghai and expand its already working park in
Hong Kong. After seeing the economic benefits experience by Disney in the Asian
tourism market, the team decided to research other countries that thrive off of
international tourism and finally decided upon Rome, Italy. The city is like no other for it
streets are lined with architectural heirlooms and historic stone statues. It has been stated
a trip to such a city is that of a lifetime and addicting after one visit. The Companies
monetary benefits that would be experience in Rome, Italy are very promising.
Recommendations
We recommend The Walt Disney Company expand is company globally, focusing on
the City Rome, Italy. It is clear the company has outdone its leading competitors
domestically within the last few years and continues to lead the industry with its many
advancements internationally. Having already expanded to many locations in Asia and
outskirts of Italy, the next best location to increase presence is that of Rome. Some of the
many factors that make such a venture promising include: the increasing industry
success, the countries booming tourism, and the companies many internal strengths and
opportunities.
Analysis
People are always buying things, but that is not all that people want. They want
entertainment and they want an experience. Modern Italy became a nation-state during
the Risorgimento on March 17, 1861. Italy has more than 43.2 million tourists a year.
Italy is the fourth highest tourist earner, and fifth most visited country in the world,
followed behind France, Spain, United States, and China. People mainly come to Italy for
its rich art, cuisine, history, fashion and culture, its beautiful coastline and beaches, its
mountains, and priceless ancient monuments, especially those from the Greek civilization
and Roman civilization. Tourism is one of Italy's fastest growing and most profitable
industrial sectors, with an estimated revenue of $42.7 billion.
Italy has a free market economy. After World War II, Italy rapidly transformed
itself from an agriculture based economy into one of the world's most industrialized
nations and a leading country in world trade and exports. It is a developed country that is
well known for its influential and innovative business economic sector and an industrious
and competitive agricultural sector. Italy is the world's largest wine producer and is
known for its creative and high-quality automobile, industrial, appliance and fashion
design industries.
Rome became the capital of Italy in 1871. This is the country's largest and most
populated city, with over 2.7 million residents. Rome is located in the Lazio region of
central Italy on the Tiber River and is built on seven hills.
With Italy’s population around 60,626,442, plus 43.2 million tourists a year, the
entertainment industry would be successful because everyone is looking for enjoyment
and fun. The entertainment industry, also informally known as show business or show
biz, consists of a large number of sub-industries devoted to entertainment. However, the
term is often used in the mass media to describe companies that control the distribution
and manufacture of mass media entertainment.
Amusement and theme parks are places of entertainment attractions and rides and
other events in a location for the enjoyment of large number of people. An amusement
park is more elaborate than a simple city park or playground, usually providing
attractions meant to cater to children, teenagers, and adults.
Amusement parks evolved in Europe from fairs and pleasure gardens, which were
created for people's recreation. The oldest amusement park in the world opened in 1583
in Bakken, at Klampenborg, north of Copenhagen, Denmark. In the United States,
world's fairs and expositions were another influence on the development of the
amusement park industry.
Most amusement parks have a fixed location, as compared to traveling funfairs
and carnivals. These temporary types of amusement parks are usually present for a few
days or weeks per year, such as funfairs in the United Kingdom and carnivals. The
temporary nature of these fairs helps to convey the feeling that people are in a different
place or time.
In common language, theme park is often used as a synonym for the term
'amusement park'. A 'theme park' is actually a distinct style of amusement park, for a
theme park has landscaping, buildings, and attractions have one or more specific or
central themes. Despite the long history of amusement parks, the first park built with the
original intension of promoting a specific or exclusive set of themes did not open until
1946. Where many parks have traditionally incorporated themes into the evolving design
and operation of the park the first one to open was Santa Clause Land, which is currently
known as Holiday World & Splashin' Safari, located in Santa Claus, Indiana. Some
people have mistakenly said that Disneyland, located in Anaheim, California, was built
around the concept of encapsulating multiple theme parks into a single amusement park
and is noted as the first themed amusement park.
Walt Disney World is the world's largest and most-visited recreational resort.
Located approximately 21 miles southwest of Orlando, Florida. It opened on October 1,
1971 with only the Magic Kingdom theme park. It has since added Epcot in 1982,
Disney's Hollywood Studios in 1989, and Disney's Animal Kingdom in 1998.
The resort was inspired by the dreams of Walt Disney, who wanted a park on the
East Coast to supplement Disneyland in California. However, Walt envisioned Disney
World to be much different from Disneyland's one-day visit. This included entertainment,
uniquely themed resort hotels, and a much wider variety of sports and recreational
opportunities. In fact, Walt's original plans for the Florida property were far more
ambitious. Walt died in 1966 before his vision was fully realized, and his plans for
Disney World eventually evolved into what it is today.
The industry is growing due to the economic recession. Because of the current global
recession people can no longer afford to travel outside the country to find recreation,
hence this industry is rapidly growing. Many Italians that could not afford to take
holidays because of deteriorating economic conditions decided to visit tourist attractions.
In many cases, they chose to go to concerts performed in nearby cities or visited theme
parks. The Italian and international economies are expected to recover from 2012. As a
consequence, higher numbers of tourists are predicted to visit Italy while the economic
conditions of Italian families improve. Thus, in terms of tourist attractions, both the
number of visitors and constant value sales are projected to grow by a 2%. The number of
visitors increases by 2% in 2010 to reach 119 million
Higher interest in more expensive attractions such as live performances and theme parks
boosts retail value sales growth. The number of tourists to visit theme parks is expected
to rise from 12,000 to 14,000 in the next four years.
Porters 5 Forces
Power
High/Low
Justify
Buyer Power
Low
Buyers: is low because
an individual person
cannot bargain with
our prices. Set price.
Supplier Power
Low
It is low because we
own the land, and
equipment. There are
also a lot of substitutes
for vendors (food,
retail, and equipment)
Threat of Substitute
Products or Services
High
This is high because
there are so many
other things to do to
entertain yourself.
Threat of New
Entrants
High
Rivalry Among
Existing Competitors
High
This is high because
the cost for investment
of buildings, public
facilities, displays and
rides, and the amount
of land required.
This is high because
location, promotion of
attractions, quality of
facilities and
accommodation, and
making sure each
attraction is relevant
to each family, group,
or person.
Company Internal Environment
The Walt Disney Company is unlike any other competitor in the market. The
company’s internal environment contributes to the vast differences from its competition.
Disney’s culture, resources, and marketing strategy all influence how the company
succeeds.
The Walt Disney Company has an internal culture that many aim to copy. Disney is not
only famous for the entertainment it offers but also for the way it operates. Disney even
offers a training program called Disney Institute that gives insight into the company
culture and business practices. One aspect of Disney’s organizational culture is to inspire
employee pride and ownership. Through their selection, training, communication, and
care of their employees, Disney builds a supportive environment that enables their
employees to deliver outstanding service. Disney’s employees are referred to as cast
members, which creates a sense of worth in the employee. Organizational creativity is
also important in the Disney culture. Disney employees are encouraged to use their
creativity to create innovative products and services. Upholding ethical standards is
incredibly important amongst the Disney culture and is to govern how the employees
treat everyone with whom they have contact. The seven main Disney values are honesty,
integrity, respect, courage, openness, diversity, and balance. The remaining aspect of
Disney’s culture is to succeed in completing the mission statement, which states, “ The
mission of The Walt Disney Company is to be one of the world's leading producers and
providers of entertainment and information. Using our portfolio of brands to differentiate
our content, services and consumer products, we seek to develop the most creative,
innovative and profitable entertainment experiences and related products in the world.”
By incorporating all of the components discussed above, Disney has created an
exceptional internal culture that is unmatched. For the possible park in Italy to thrive the
famous Disney culture would need to be maintained and implemented. The park will
need to make small modifications due to the international cultural differences but the
overall company culture needs to remain true.
A company should have four main types of resources to evaluate: financial,
human, physical, and intangible. Financial resources look at existing funds as well as, the
ability to raise new funds. Even with the drastic drop in the economy over the last couple
of years Disney has been able to make a large profit and still control 51% of the
amusement park market. The historical data shows that Disney can still maintain its
position in the market regardless of the fluctuations in the economy. The ability to raise
new funds is also no problem due to the positive and successful reputation of the
company. Disney also has had strong relationships with its current investors and lenders.
Having already implemented profitable parks in France and China, the company should
not have an issue with finding investors for the new park in Italy.
Human resources deals with the skills base of the business including existing staff
as well as, changes required with in the business. Disney has a great existing staff from
its executive team to its cast members in its parks. Training its staff is an area that Disney
highly invests in and it pays off. They have their employees and cast members go through
a program called Disney Development Connection, to ensure that they have the
knowledge and training to act ethically and legally in compliance with the company’s
Standard of Business Conduct. The executives and management team need to oversee the
implementation of the new park in Italy and ensure that the new employees follow the
same code of conduct. The park’s customers will be expecting the Disney reputation to
be copied in the new Italian park.
Physical resources deal with production facilities and information technology.
Disney does not currently own any land in Italy and therefore physical resources is one of
the largest concerns for the new expansion. The production process will be similar to the
process the existing parks went through. Information technology is an aspect of the
company that is well established. Disney is well integrated with both its customers and
suppliers through various technological avenues.
Intangible resources deal with reputation, brands, and intellectual property. Walt
Disney Company has one of the most positively perceived brands. Its reputation for
delivering wholesome family fun and creating magic are executed to a tee. It also has an
exceptionally high brand awareness factor that will contribute to the success of the new
park. Disney has many key commercial rights that are protected by patents and
trademarks, which adds to the accomplishments of the company.
SWOT ANALYSIS
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Strengths
Location near area with
significant populations and
domestic and international
visitors
Access to large pool of multi –
skilled casual workers
Appropriate climate conditions
Value high level of maintenance
and safety
Ability to quickly adopt new
technology
Large player in the market
Established customer base
High tourism draw
Succeeded in introducing the
concept to other countries
Opportunities
No competition in the area
regarding amusement parks
Profit margins will be good
Extend customer base
internationally
Help to boost tourism for the
economy
Fill a void for children’s
entertainment
Brand awareness is very high
Available funding
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Weaknesses
Large amount of land required
Language barrier
Staff will need training
No pilot or trial has been
completed in the area
High pricing for admission into
the park
Have to import many components
to build and maintain the park
High cost to build
Threats
Demand could be seasonal
Environmental concerns for
building
Stability of economy
Political regulations
Many historical substitutes
Stability of international
agreements
To be a successful company Disney has had to market successfully over its
lifetime. The current marketing strategy for Disney amusement parks consist of five
components: sell more to existing customers, expand the marketplace, continuous
promotion, always improve and develop new products, and tracking business. The first
marketing strategy of selling more to existing customers is one that is seen in every
Disney Park. When customers exit attractions they enter a store themed to the attraction
with gifts. Another way is marketing announcements are playing during travel on trams,
monorails, trains, or boats. These recordings inform the customers of ways to upgrade
their tickets, to visit other parks, to dine at restaurants, to stay longer, or to go to other
attractions.
The second marketing strategy of expanding the marketplace has already occurred
with the new parks in France and China. By adding another park in Italy will only add to
this globalization. By having parks in other countries offers residents of the United States
a little bit of home as well as, offering residents of the park’s country an entertainment
opportunity without having to leave home.
The third marketing strategy of continuous promotion is a key component of the
financial budget. There is a constant influx of ads on TV, in the mail, online, and in print
publications. Their goal is to keep Disney on your mind so when it is time to plan a
vacation you will decide to come to one of their parks. By keeping itself in the
customer’s awareness it makes itself a consideration for their vacation destination.
The fourth marketing strategy is to always be improving and developing new
products and services. Disney is never complacent; they are always improving,
expanding, growing, and building. The existing theme parks are regularly being updated
with new attractions and shows as well as, updating old rides. Disney is also always
making new products to sell, specifically movies. The theme parks features attractions
and sells merchandise that is related to their films. They have created this profitable
synergy between their theme parks and movies.
The fifth marketing strategy is tracking business. Disney pays attention to what
times of the year their parks are busy or slow and then plans accordingly. They run
promotions during the slower times of the year such as lower ticket prices. They will also
run specials such as free food with a hotel room. They also advertise during the slow
months to parents with children who are to young to be in school. Implementing this
strategy helps to raise the attendance in the slower months.
Collaboration and Knowledge Management
In globalizing Walt Disney World, collaboration and knowledge management will
be a key component in its success. In the U.S., a common misconception is that business
is done everywhere like it is done here. Other countries do business much differently. To
discover the Italian ways of communication and business, a group will be created. With
the knowledge from this group, Disney will come up with a training program to
implement the company’s ways of business with those of the Italians. The program will
also teach the Italian managers to use the different forms of communication and
collaboration. There will also be persons established for interpreting the Italian
management for the U.S. managers. In regards to the knowledge management systems,
the systems from the U.S. will be used with the use of a direct network. Employees will
be taught how to use the systems already in use.
To implement an effective collaboration system the company will incorporate the
three keys to effective collaboration: communication, content management, and
workflow control. Communication will be imperative to run a company headquartered
thousands of miles away. Two different types of communication will be used. These are
asynchronous and synchronous. The main asynchronous form will be email. This will be
useful for things that need to be done, but they do not need to be done immediately. The
main synchronous forms will be by phone and videoconferencing. The phone will be
good for tasks that need to be looked at immediately on an individual basis. For meetings,
the videoconferencing equipment will be useful. The content management and workflow
control will be accomplished using Microsoft SharePoint. Employees both in the country
and overseas will be able to collaborate effectively using the system.
Enterprise System Strategy
Walt Disney World has many information systems already implemented here in
the U.S. Instead of starting all these systems over again in Italy, Disney will use a direct
network to connect the systems in Italy to those already implemented in the U.S. With the
use of the systems in the U.S. it will keep everything streamlined. All data would be
recorded and automatically sent overseas. This will save the company a large amount of
money.
For an enterprise solution, the Walt Disney Company will use enterprise resource
planning (ERP). This software will allow the consolidation of all business operations into
a single, consistent, computing platform in turn eliminating all “islands” and allowing the
different systems to share data. All the systems will run through the direct network. So
many business operations occur on the theme park at once that it would be impossible to
operate without something to consolidate the data.
The vendor Walt Disney Company will use for the enterprise resource planning is
SAP. It provides models for 24 different industries. The company will use the model
closest to the already existent needs then change the minor operations to fit it to the
system. SAP is the system used by most of the largest organizations. It is designed to
support multiple currencies and languages, manage international transfers of goods in
inventories, and work effectively with international supply chains.
This enterprise system will solve a few problems for the company. Since Italy
uses Euros for currency, some transactions will be hard to deal with due to non-uniform
currencies. Since SAP supports different languages and currencies, it will solve the
problem of doing business in a foreign country. This is a huge advantage. The language
barrier will also be solved with SAP. The system will streamline all business, allowing
for everything to be done more efficiently. More efficiency gives the potential for more
income.
The major challenge for the system will be converting the current business
practices to the ERP format. Since not all processes are in the format that SAP provides,
some practices will have to be changed to use the system. Changing and moving to using
SAP will save money in the long run, but initially it will be an expensive change. The
employees will also have to go along with the change. This is sometimes hard.
To implement the system Disney will take three steps. The steps include:
determine current and ERP models, remove inconsistencies, and implement the
application. The first step that must be taken is to find out how the processes work
without the system. Then Walt Disney Company will look at the ERP format and analyze
it. Next to remove consistencies Disney will have to compare the ERP format with the
current methods. The inconsistencies that appear will be handled in two ways. Either
organizational process will be changed, or the ERP application must be modified. After
this the application must be implemented. This includes training users, testing, converting
data, and converting to the new processes.
Mobile/Remote Systems Analysis
Technology is constantly improving and changing how the course of business
is conducted. The Walt Disney Company needs to be aware and adapt to these
changes. Remote access is the ability to provide computer-based activity or action at
a distance. This allows company’s to save huge amount of money and time. Disney
should take advantage of this by not sending employees to Italy when
videoconferencing is sufficient. Mobile access refers to the use of networked
computers while in motion. This allows people to always be communicating and
doing business. People are able to continually check email and voicemails as well as,
work from anywhere at any time. These two accesses will allow business to save
expenses and time.
Another area that Disney should look into when planning for the new park in
Italy is investing in a cloud network. A cloud network allows the company to send
information between different physical locations through the “air”. Client
virtualization enables users to run their desktop on different computers. This allows
an executive who may be in Italy conducting business to get on a computer there
and access his personal desktop and files. Using the cloud and client virtualization
allows people to skip the synching process that takes time and effort.
Disney is a company that typically keeps up with the ever-evolving
technological advancements. They need to keep with this plan when working on the
new park in Italy. If they don’t invest in the new technological advancements they
could potentially lose customers to competitors. For example, if Disney did not have
an option for purchasing tickets online then some customers could become
frustrated and switch to a substitute that was more technologically advanced.
Recommendations
We recommend The Walt Disney Co. expand to Rome Italy for its strengths and
opportunities heavily outweigh the weaknesses. The tourist attraction of Rome will
concrete international visitors and already established loyal customers. Domestically, due
to the economic downturn and recent recession, the capability of Italian citizens to travel
outside the outskirts of the city are impacted; this provides an important marketing
strategy and attracts those domestic persons to the new park.
With the increase in technology, many collaboration tools have been created to ease
the process of integrating a new system into the already established ones.
Finally despite the recent recession, the theme park industry has experienced a steady
and promising growth in sales with the Walt Disney Co. leading the way and controlling
over half of the market. By increasing the presence of the company in Rome, Italy, Walt
Disney Co. will experience a competitive advantage to further distinguish itself from
other competitors and limit the ability of new entrants.
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Web. 25 Oct. 2011. <http://portal.euromonitor.com/>.
The Walt Disney Company and Affiliated Companies – Corporate Information. Web. 24
Oct. 2011. <http://corporate.disney.go.com/>.
"Walt Disney Parks and Resorts." Hoovers.com. Hoovers Incorporated. Web. 25 Oct.
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