What are the likely challenges of raising capital to develop the product/service you are
proposing, and how would you suggest resolving these challenges?
The challenge for Walt Disney’s restaurant would be before they go globally, there are many
rivals including overseas and domestic competitors in the local market which they might be
more familiar with the market, customers, environmental changes in term of marketing,
politics, law and regulation, and so on. These factors can affect its strategy. There are the four
big strategic issues in competing overseas market that should be considered in order to
become global brand: offering standardized product globally or the product which matches
local preferences in particular country; using the same strategy for all countries or different
strategies; maximize locational advantages by location of production facilities, distribution
centers, and customer service operations; efficient transfer of company’s capabilities and
strengths from one country to another country (Thomson et al 2010).
Due to different in cultural, demographic, and market condition in different countries, there
are some challenges facing Walt Disney such as variations in manufacturing and distribution
costs, cultural differences, fluctuating exchange rates, market demographics differences,
different tastes and preferences of local buyers, and different trade policies. In order to solve
these problems, Walt Disney should research on customer preferences and marketing before
they entry the foreign markets. Also, Walt Disney should adjust its strategies to fit the local
market in the particular country, which can deliver sustainable growth in the global markets.
There are characteristics of global competition that Walt Disney should consider. Firstly,
many global rivals compete in the same country markets in order to be the worldwide
leadership. Secondly, its position in other countries affects a company’s competitive position
in one country. Finally, a firm’s performance can affect its competitive advantages.
Before going aboard, Disney should analyze both internal and external conditions by using
SWOT analysis and Porter’s five forces. According to SWOT analysis, strengths of Disney
restaurant would be strong brand recognition among customers and competitors, bulk of
financial supports, high quality of products and services, high financial profile, and attractive
characters which can attract the primary target customers. Disney restaurant will be able to
take advantage all of these strengths, which will contribute to sustainable competitive
advantage. Disney restaurant’s weaknesses would be high investment with high risk, high
operating cost, limited target audiences, and unchanged visual merchandising which can
make it become boring and customers will not stay long time. Due to the weaknesses, Disney
should adjust decoration country by country, which can match to local preferences and also
assist Disney to attract a wider customer segment. Also, Disney would research on the local
market before entrant in order to minimize the risk and maximize the opportunities. The
opportunities of Disney restaurant would be Disney can target wider customer segment
which can increase its revenues and profits. Disney also can seize opportunity of customer
brand loyalty and strong brand recognition to expand into global markets because its
customers trust in its products and services. The threats of Disney restaurant would be
intense competition among rivals in this industry such as Hard Rock café, Planet Hollywood,
rainforest (middle to high price segment), McDonald, KFC, Burger King (lower price
segment), different law and policies in different countries, as well as different customer
preferences. These threats can affect its growth in global markets.
According to Porter’s five forces (Porter 2008), external conditions play significant role in
analysis. Rivalry among competing sellers is high because the competition in food and
beverage industry is intense. As mentioned before, Disney restaurant’s rivals would be the
restaurant offering middle to high price segment like Hard Rock Café, Planet Hollywood.
Furthermore, the switching costs to another brand are low and the product differentiation is
low. These factors can make this force become very strong. Potential New Entrants is
relative low. The entry barriers are relative high because the large investment is required. The
threat of substitutes is low. The substitutes are not available in the market and the product
differentiation is low. The switching costs are also low. The bargaining power of supplier
is low. The number of suppliers in food and beverage industry is large relative and the
switching costs to another supplier are low. The buyer bargaining power is strong. Buyer
costs of switching to rivals are low and the standard between Disney restaurant and its
competitors might be not different. In order to overcome this threat Disney restaurant will
offer the premium products and services with the same price.
Regarding to Greenfield strategies, it can enable Walt Disney to take the advantage of high
control on the subsidiary business in foreign market and also offer opportunities to Walt
Disney to learn how the foreign work and how to deliver the suitable products and services
which can match with local conditions. In order to do this, Disney restaurant might have to
recruit the high talent local managers who know their customer tastes, markets, local rivals,
and law and regulations (Thomson et al 2010). However, there are some disadvantages of
Greenfield strategy. The large investment is required because Disney restaurant needs to set
up the entire operation in that country. When the know-how technology and knowledge
transfer to the local parties, these knowledge and technology can be imitated easily. Owing to
this problem, Disney restaurant would protect itself by licensing agreements and legal
protection (Mayer et al 2009).
To consider franchising strategies, Disney restaurant can take advantage of sharing risks
between franchisor and franchisee as well as licensing (Lafontaine & Bhattacharyya 1995).
These can assist Disney as franchisor to only focus on the resources and monitor franchisee.
However, franchising strategies also have some issues. The quality control across the
countries might be difficult and unequal. The franchisee might not offer the products and
services which do not match with the local buys resulted in Disney restaurant can lose its
reputation in global market (Thomson et al 2010). In this case, Disney restaurant would
probably send the expatriate who is familiar with the Disney system to the destination to
teach the local manager about the Disney system and monitor the franchisee in term of
quality control in order to ensure that the quality across the world is equal.
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