Walt Disney is a multinational Corporation headquartered in the United States. The primary competitors of Walt Disney are Universal Studio and Six Flags. Universal Studio is a multinational company that has been expanding it business operations into new geographical segments. Universal studio plans to invest heavily in Europe to leverage the growing demand for theme parks.
Six Flags is one of the largest amusement parks based in New York and headquartered in Grand Prairie, Texas. Six Flags own some properties in Canada, Mexico and the United States. Six Flags plan to expand its theme parks into a new market segment in Mexico to increase revenues. In the long-run, the company has a strategic plan to open up new branches in France and Germany.
Walt Disney is expanding into new market segments outside the US. Disney is entering the Indian market through a licensed joint venture with Modis. Walt Disney will license the joint venture in order to penetrate the market easily. The joint venture will enable Disney to sell its products including films, toys and videos. The entry of Walt Disney in India will discourage local producers who have enriched themselves by infringing the company’s copyright.
As a result, local producers in India will be required to pay royalty fees for using Disney’s characters to gain popularity (Tribe, 2011, p. 235). Walt Disney also plans to expand its theme parks in Germany, Russia and China. Globalization has enabled Disney theme parks to leverage and seizes new business opportunities in Europe and Asia Pacific thus increases sales.
Moreover, globalization ensures risk diversification. For instance, in 2014, Walt Disney Latin American sales decline by an estimated 8.6 percent. However, the loss in market share and revenues was offset by increased market share in Europe and especially France.
Globalization is essential to promote the economic growth of Walt Disney into new market segments. Zibart (2010) argues that globalization of Walt Disney has promoted rapid expansion of the theme parks across the world (p. 26). However, it has encouraged fierce competition among enterprises in the theme parks and resort industry. In some cases, internationalization of Disney exposed the firm to new business risks.
For instance, when Walt Disney was opening its business operations in Paris, a law suit was appealed against the company. In fact, the company suffered substantial losses due to the incompatibility of workers policies with those of French employees (Mitrašinović, 2006).
Walt Disney can reduce business risk by expanding its operations in Russia. Globalization exposes Disney parks to stiff competition from sellers with homogenous goods who drive prices down. Disney parks are located in areas where competitors such as Universal Studios and Six Flags try to create market imperfection in order to have ultimate control over market share.
Russia represents a large market segment with few competitors who do not have the innovation or the creativity to compete with Walt Disney. However, this expansion will likely expose Walt Disney to new business risk and market decline (appendix 2). Moreover, the company may experience barriers to entry as the Russian theme parks industry is highly regulated. Nonetheless, if the new expansion plans succeed, Disney could increase it current revenues by a significant percentage.
References
Mitrašinović, M. (2006). Total landscape, theme parks, public space. Aldershot: Ashgate.
Tribe, J. (2011). The economics of recreation, leisure and tourism. Oxford Waltham, MA: Butterworth-Heinemann.
Zibart, E. (2010). The unofficial guide to Walt Disney World for grown-ups. Hoboken, N.J. Chichester: Wiley John Wiley distributor.