In the recent past, international businesses have experienced massive growth. This has given precedents of international business expansion that have had substantial influence on further expansion. In this essay, we analyze the venture in international business by the Walt Disney Company (Disney) and the effects that initial involvement in international business have had on subsequent strategic decisions.
One of the greatest problems facing international businesses is the remodeling of their policies to suit different cultures. Walt Disney Company has not been an exception. Consider the Disneyland Resort Paris for example; the resort was under so much cultural pressure that it had to go against most of its policies for it to thrive in Paris.
To have a glimpse of how Paris culture affected the resort, consider the following facts: The resort altered its policy and served beers and wines in response to french drinking habits, the French government had to be sure that French language would dominate the park before allowing the establishment of the park, the dressing code of workers within the park was ruled out to be against French culture.
All these problems were caused by French vigilance to avoid cultural domination by Americans. The problems stated above had a lot of impact on the performance of the resort. Disneyland Resort Paris and its problems showed that cultural strictness and diversity can draw the thin line between the success and failure of an international company (Phatak, Bhagat, and Kashlak 3).
Tokyo Disney Resort, on the other hand, experienced substantial success attributed to the fact that Japanese are normally anxious to learn western culture. Therefore, implementation of resort policies was relatively easy and the Japanese were supportive of Disney culture. It can, thus, be argued that the Disney Culture did not clash with the culture of the Japanese. Thus, the setting up of the Tokyo Disney Resort was very instrumental in helping these two cultures learn from each other and share their strengths (Phatak, Bhagat, and Kashlak 5).
Expansion of businesses to venture in international markets faces a lot of political pressure and influence in host countries. This is evidenced by the lengthy negotiations that were characteristic of the agreements between Disney and the host governments. Consider the Tokyo Disney Resort for example; its development costs were paid by Oriental Land Co. This led to Disney’s failure to acquire ownership rights. Disney, therefore, only received royalties for the design and license of the idea (Phatak, Bhagat, and Kashlak 9).
In Paris, negotiations with the government ended after two and half years. Disney wanted ownership rights and therefore, it was made a partner in the project. The government helped in the establishment of the resort by providing cash and loans at low rates of interest. After the establishment of the resort, the French government still wanted to impose controls over the resort by incorporating a lot of French culture in it.
This is the main reason why the Disneyland Resort Paris performed poorly. It can, therefore, be argued that international businesses face a lot of problems stemming from political risk. This can potentially lead to company failure as seen in the Disneyland Resort Paris which was overwhelmed with political and cultural pressure (Phatak, Bhagat, and Kashlak 27).
After learning from its success in Tokyo and relative failure in Paris, and with a myriad of strategic advantages in Hong Kong, Disney expected to succeed in Hong Kong China.
The company claimed that there was a demand for Disney products in China. China had many strategic advantages to attract Disney. First, Chinese economy was flourishing and thus setting up the park in China was very strategic. Hong Kong became specifically strategic for the establishment of the Disney Park. due to its good infrastructure and international finance convenience.
This was because China was characterized with substandard infrastructure and inconvertibility of its renminbi currency. Another strategic advantage of setting up the third international Disney Park in Hong Kong was the presence of tourist attractions. These included Ocean Park, Victoria Peak, open-air markets, Repulse bay etc (Phatak, Bhagat, and Kashlak 12).
The main source of competitive advantage for the Hong Kong Disneyland was the unique characteristic of Disney to integrate tourist attraction with professional business ideas. The fact that Hong Kong has numerous tourist attraction sites was also a substantial competitive advantage. As a matter of fact, Hong Kong is termed as a world-class tourist destination and thus Hong Kong was perfect for the third Disney Resort (Phatak, Bhagat, and Kashlak 17).
After establishment, Hong Kong Disneyland experienced its fair share of problems. It brought about prospects of potential growth for Disney from the onset and thus critics were not happy with it. Incidences of inefficiency in the park received a lot of media coverage since its establishment. This has led to confusion as to whether the park was successful or not.
International companies have experienced a lot of growth in the recent past. This has led to a lot of economic and cultural development of the host countries of these companies. On the other hand, the companies have been able to find large markets for their products and enjoy economic diversity of different countries.
The international expansion has also enabled the companies to enjoy more strategic options from the diversity of the business climates of different countries. International companies like Disney should thus solve their problems and continue expanding their businesses internationally.
Works Cited
Phatak, Arvin, Bhagat, Rabi, & Kashlak, Roger. International Management: Managing A Diverse and Dynamic Global Environment. New York. McGraw-Hill, 2006. Print.