Final Submission (2)

Team 1 PM003 Group report Tutor: Sulaiman, Janan

Disney Theme Park to India

Abstract:

This report is aim to analyze profitable adventure of The Walt Disney Company to set

up Disneyland theme park in India. As one of main emerging markets in Asia, India

might be the next destination for The Walt Disney Company to target on. Therefore,

this report uses a series of marketing tools to demonstrate the macro-environment and

micro-environment in India, such as PESTEL, SWOT, Porter’s Five Forces Model

and Self Referencing Criteria. Based on this analysis, the current situation of India

shows an attractive prospect to Disney in terms of economic and technological

development, the diversification of culture, and the acceptance of Disney products

and services.

Introduction:

India with its rich and various cultural heritages is now on one of the top

industrialized nations in the world. India being the seventh largest country in the

world with the coverage area of 32,87,263 sq.km (Indian government, 2010 a). India

is divided into 27 states and 7 union territories (Indian government, 2010 b).

According to WHO (2011), the total population of India was 1,151,751,000

approximately. The Walt Disney Company was founded in 1923 by Walt Disney and

the first Disney theme park was opened in California in the year 1955, ever since

Disney theme park has expanded to encompass Disney Cruise Line, eight Disney

Vacation Club reports, Adventures by Disney, and four more resort locations. This

report will analyze the profitable venture of The Walt Disney Company to India

through PESTEL, SWOT and further on this report will use Porters’ 5F and self-

referencing criteria as a tool to analyze the possibility of achieving success in the

Indian market and will discuss in the discussion section. Finally it will give a

conclusion at the end.

1

The Growth of GDP

7. 5

8

8. 5

9

9. 5

10

2003-2004 2004-2005 2005-2006 2006-2007 2007-2008year

perc

ent

of G

DP


PESTEL Analysis

Political Analysis

Since the independence of India in 1947, India has generally been thought as the few

political stable democracy country in the western world because it has a powerful

political party, namely national congress party whose stability and dominant position

seems difficult to challenge (India: Country Profile, 2005:13). However, both the

Country Profile (2005) and Business Asia (2010:10) highlight that although the

fundamental political keeps stable, the efficiency of political is low. The cause of this

existed problem is that the national parties weakened gradually while the regional

parties which influenced by the coalition government strongly (Business Asia,

2010:10). Current President is Pratibha Patil. (BBC News, 2011). As a result, India

began to conduct a relatively free liberal market reform. Nonetheless, because of the

interests of coalition government members are dissimilar, the speed of market reform

is limited (Business Asia, 2010:10).

Economic Analysis

India’s economy is the fourth largest GDP in terms of purchasing power parity (Gupta

and Gupta, 2008:68).

Table 1: The Growth of GDP in India from 2003-2008

From 2003-2004 to 2006-2007, annual Real Growth Rate increases from 8.4% to

2


9.7%. Because of the summer’s credit-market crisis, the Indian GDP Growth decrease

to 9.0% from 2007 to 2008 and Indian government estimates GDP Growth for 2008-

2009 is 7.1%. The decrease of GDP ascribes the global financial crisis which affects

India primarily through trade and capital outflows (The World Bank, 2008:16). On

trade, exports are possible to weaken and make its contribution to GDP growth may

be drop sharply. However, during the global economic crisis, India’s financial markets

recover largely and India’s economy increase at 6.1% which was among the highest

growth rates in the world in the last quarter of 2009. In 2007, Eleventh Plan (2007-

2012) was published by Indian government and government formulate target of 9%

per year on GDP growth. In the past 16 years, India’s steady reforms make India has

strong economic performance, although sustain the performance going forward need

to do more (MF, 2007:1). Although India is a low middle income, India’s higher-

income states have successfully reduced poverty to levels comparable with the richer

Latin American countries (The World Bank, 2010).

Social Analysis

The Indian society is divided into three classes: lower class, middle class and upper

class (Driver and Driver, 1987). According to Beteille (2001, cited in Mawdsley,

2004), the economy driver, as well as the major consumer group in India is the middle

class, which is driving the economy towards success and development. Furthermore,

referred to Misra (1961), the number of the middle class has been increased

explosively during the last decade and the characteristic in India is its diversity in

terms of language, religion and caste. In other words, India has the most diversity of

middle class in the world through calculation (ibid). To the constraints on growth and

distribution of wealthy part, firstly, the faster agricultural development can raise the

overall rate of growth. Secondly, the distribution of income in industry and agriculture

can affect the growth rate through its effect on demand and consequent have effect on

industrial investment (Dutt and Rao, 1996).

3

app:ds:words

app:ds:other


As mentioned by the table in the American Marketing Association (2006), India has

higher COL (collectivism) scores, PDI (power distance) scores and LTO (long-term

orientation) scores as well as MAS (lower masculinity index) scores and UAV

(uncertainty avoidance index) scores than the United States, which will

correspondingly indicate higher levels of marketing ethical system in India.

Table 2.Comparison on Cultural Values and Ethical Norms

Technological Analysis

Generally, India has successful software outsourcing industries (Upadhya, 2009).

India is considered to be as the IT hub in the world In terms of technology in

animation as mentioned in NASSCOM (2009), India is focusing on developing talent

pool in animation as well leveraging cost competitiveness as compared to other

outsourcing destination such as Taiwan and South Korea by offering significant cost

advantage in game development and animation. In the year 2005, the market for

gaming development was estimated at USD 30 million and was expected to rise and

reach USD 300 million by 2009.

Furthermore, as predicted by NASSCOM (2009), India will emerge as leading

innovation hub with increasing number of patents and grants being filed from. As well

as the IT segments such as; software and services are estimated to cross USD 1.2

trillion by the year 2012.

4


Environmental Analysis

In India, there are three main geographical regions, the Himalaya Mountains, the

Indo-Gangetic Plain, and the peninsula (Flatt, 2001:6). Climate change will influence

India first through affect its water resources (The World Bank, 2008:19). Water

resource is a major issue in India. Focusing on this issue, Disneyland coming to India

will not exhaust the water source because it already has a technological system for

recycling water, which they have put it into use since 1990, starting with Florida and

thereby extending it to all their theme parks all over the world. Because of Indian

history, though the Indian national language is Hindi, there are 18 official language

listed in the laws of the country. English is widely used and understood by many

(Flatt, 2001:8). Referred to UNHABITAT (2010), the population of the youth

occupied 30% of the whole population in India in 2006. In other words, it increased

the possibility for Disneyland to gain more potential customers as well as employees.

Legal Environment

To ensure healthy competition in the economy and eliminate monopoly to have a

proper regulatory environment in India, Indian government has formulated a

competition policy. The law to regulate fair competition in India is The Competition

Act, which was further amended by The Competition (Amendment) Act, 2007. The

Competition (Amendment) Act, 2007 provides a set of policies such as; liberalized

trade policy and relaxed Foreign Direct Investment (FDI) policy, to ensure freedom of

trade with in the country (Business.gov.in).

The Monopolies and Restrictive Practices Act defines takeover as acquiring not less

than 25 percent of the voting power in a company. Whereas, The Companies Act

(section 372) states that if a company invests in more than 10 percent of the

subscribed capital of another company, it will result in takeovers. The Companies

Act, 1956 has laid down legal procedures for mergers or acquisition

(Business.gov.in).

5

Annual Revenue in 2006-2010

14039

14913

15857

16209

17162

9925 1062

11504

10667

10761

7529

7491

7348

6136

701

1869

1990

2415

2425 2678

385

490

719

712 761

33747 35510

37843

36149

38063

0

10000

20000

30000

40000

50000

60000

70000

80000

2006 2007 2008 2009 2010

year

$ in

mill

ion

Total

interative medio

comsumer products

studio entertainment

parks and resorts

media networks


In India the law for patents is The Patents Act, 1970, under this act inventors were

granted with only EMR (exclusive marketing right) for process patent, food,

pharmaceutical and chemical. Controller General of Patents, Designs, Trademarks

and Geographical Indications administers the patent system of India. The Patents Act,

1970 was further amended by the Patents (Amendment) Act, 2002 and there on to,

Patents (Amendment) Act, 2005. After these amendments, instead of process patent,

product patent is being granted for foods, chemical and pharmaceutical products. As

well as the post and pre grant opposition to patents is also permissible

(Business.gov.in).

In summary, a good macro environment builds up a foundation for Disney to develop

its further business in India.

SWOT Analysis

The Walt Disney Company , with four main business components, is the biggest

entertainmenet companies in the world. In the recent years, the sustainable finance

performance is always the main factor which play the key to support its development.

Table 3: Financial Highlights of Annual Revenue in 2006-2010

Source: The Walt Disney Annual Report 2010

6

Segment Operati on I ncome2006-2010

-5000 0 5000 10000 15000 20000

2006

2007

2008

2009

2010

$ in

mil

lion Medi a Networks

Parks and ResortsStudi o Entertai nmentCusomer ProductsI nteracti ve Medi aTotal


Table 4: Financial Highlights of Segments Operation Income 2006-2010

Source: The Walt Disney Annual Report 2010

Strengths Weaknesses

various products range

broad networks and broadcasts

strong brand images

negative performances for Hong Kong

and Pairs

no innovation

Opportunities Threats

international markets

expands new business

strong competition

Strength

Firstly, The Walt Disney Company has various ranges of products. The company has

five departments. Such as, theme parks, consumer products, studio entertainment,

media networks and resorts. These products portfolio contribute to help the company

come into the business market and reduce the competition with other company.

Secondly, Walt Disney has broad networks and broadcasts. For instance, there are 94

million subscribers prefer watching Disney Channel in 2007 in America (Deschriver

et al, 2007). The company can product the film by itself and play in the Disney

Channel, it can attract more audiences. Although it pays more money on the

investments, the company revenues could be boosted. The Lion King, the film, which

created the record that sold beyond $300 million value of tickets all over the world

7


(Keegan & Green, 2011). Thirdly, the company has one of the most strong brand

images all around the world. For example, among the top 100 companies, the Walt

Disney Company was ranked 9th as one of the best global brand in 2010 (Interbrand,

2010). Strong brand image contributes to increase the acceptance of consumers and

open a new market.

Weakness

Firstly, there are some negative performances for Pairs and Hong Kong Disney.

Disney opened a theme park in Pairs in 1992. However, the performance after it

opened was quite disappointed. Meanwhile, in the Hong Kong Disneyland Resort, it

only had 16 attractions and 70% of local tourists expressed that they have no interest

to live the hotel (Equitable Tourism Options, 2008). Secondly, the theme park has no

innovation. The European customer showed an opinion that was the majority the

theme did not want the exactly copy from the Disney theme park from the US (ibid).

Therefore their preference for standardization and not for globalization is one of their

main weaknesses, which led to the failure of Disneyland in Paris

Opportunities

Firstly, the company attempts to develop the international markets. There are five

theme parks in the world. Such as: California, Florida, Paris, Tokyo and Hong Kong.

Meanwhile, it plans to enter into Shanghai and Indian market in recent years.

Additionally, the service of Disney’s Asian television has spread to seven countries in

the Asia Pacific area: Korea, Australia, South Korea, Singapore, Philippines, Malaysia

and Brunei. Therefore, the revenues of the company will increase by more than 400%

in the last three years. Secondly, the company expands new attractions in the theme

parks (Goeldner & Ritchie, 2009).

As projected by Dyson et al (2005: 75), on the other side, the UN medium variant and

World Bank projection suggest that India’s population will be about 1.35 billion

around the year 2026, and that it will be about 1.57 billion by 2051.The growing

8


population will provide a potential market for Disney theme park in India. The

average annual income per capita in India in the year 2008 was US$977, it was raised

from RS 66 per day in the year 2007 to RS 80 per day in the following year (Singh et

al, 2009). Overall, having been looked at the growth in population and the growth in

income per capita, it can be said that it provides a profitable prospects in terms of

increased customers.

Threat

There is strong competition in many of Disney’s key industries. In some instances,

Disney’s broadcasting departments competes with strong market presence and

technical expertise in every aspect of business (Plunkett, 2008). Such as: CBS and

FOX. Moreover, currently there are over 100 amusement parks throughout India.

Meanwhile India plan to add a dozen fun parks in the next two years (Equitable

Tourism Options, 2003, p.39). Therefore, intense competition threatens to block the

company to share the common business.

By accessing the micro environment with SWOT tool, it identify Disney’s advantages

and disadvantages. It probably shows the opportunity that Disney needs to seize.

Porter’s Five Force Model

Bargaining Power from Suppliers

Since from 1990s, The Walt Disney Company has had a highly variable business

segment of theme parks, TV channel, film studios and so on. With the rapid and stable

development of Disney, its suppliers are too many to count. In the aspect of

technology, Pixar provides 3D technology for renewing Disney’s films ( Barthelemy,

2011). Besides, IBM cooperates with Disney in imagineering in its resort to invite

customer to fina out the probability of setting up a planet (Mainframe Computing,

2010). For the reason of that, The Walt Disney does not have to much problem with

bargaining with its suppliers.

9


Bargaining Power from Customers

As Fox (2009) mentioned, Disney Company has many popular cartoon images, which

other companies do not have. So, Disneyland has offered customer a strong identity of

different experience. And, in order to release bargaining power from customer, Disney

can offer more economic family packages in order to target lower income families. In

order to give their customers good quality of vacations Disney expanded its

Adventures by Disney portfolio, which was established in the year 2005, the aim of

this program was to take families to destination other than theme parks such as;

China, Australia, Peru, Costa Rica, eight countries in Europe and four destinations in

the US (Fox, 2009). Disney successfully uses the strategy of differentiation to release

the power of bargaining from customers by offering the value that customers never

see.

Existing competitor

So far, Essel World is probably the biggest competitor to Disneyland in India. Essel

World is the oldest and biggest theme park in India and it opens from 10 a.m. to 8 p.m

(Essel Group, 2009). which is 9 hours shorter than Disneyland. Unlike Essel World,

many show cases are available at night in Disneyland. Customers also can choose to

stay in the resorts to gain more experience in Disneyland. Besides, Disneyland

contains Disney’s Hollywood Studios, which is the first one that other local theme

parks do not have (Disney, 2011). Therefore, the added value on products and services

might be increased by unique selling points and comparative advantages.

Self Referencing Criteria

When approaching global market its necessary to find out whether self-referencing

criteria would be beneficial or not in the host country. As mentioned by Keegan and

Green (2011: 214), the SRC tendency undermines the importance of host country’s

10


cultures, values and beliefs, as can be seen from the examples given by Keegan and

Green which highlights the impact of self-referencing criteria adopted by The Walt

Disney Company, which led to their failure in Paris and Hong Kong. The managers

assumed looking at the home country’s success that the same can be applied globally.

In the case of Disneyland Paris the employees found the written code about the

personal appearance insulted the French culture, whereas, in case of Hong Kong

Disneyland the less familiarity of Disney characters among the people led to failure,

resulting in not being able to attract much visitors (ibid). Therefore, it led to The

Disney Walt Company become aware of SRC and its implications based on the

assumptions of home country success. India being a country where the population is

an amalgamation of various cultures, religion, language and beliefs it is best to keep

the home country’s culture in mind.

The efforts made by Disney in India through Disney Channel prove the awareness of

SRC. The Disney channel in India provides its audience with the a mix of

international and locally developed stories, which led to their growth in India (The

Walt Disney company). The fusion of SRC and the host country culture in case of

Disney Channel’s Popularity, shows that the fusion of SRC and the host country will

lead to a successful venture of Disney theme park to India.

Discussion

As the mentioned content show, from the analysis of PESTEL, SWOT parts, it is safe

to state that localization is more important than globalization. In other word, the key

of success and core point for Disney theme park to India market is the optional

location or selection. Specifically speaking, with the example of Disney theme park

into Shanghai, a suitable place that is considering enter India may focus initially on

the transport hubs, which is convenient for the local residents and foreign tourists to

amuse themselves. Secondly, the established place for Disney theme park may also

have well-developed infrastructure. Furthermore, the place should be a home to a

11


population with a relatively high per capita income. To sum up, the marketers should

do a logical market survey to select a perfect place to establish Disney theme park to

India.

Conclusion:

Although India’s economy is affected by global economic crisis, India’s economy

tendency is likely to increase. Because India’s income levels are rising,the prospect of

India’s economy is good so far. The population of the youth rising means India has

good potential market. India’s social-cultural is well by reason that the majority of

consumers of India are middle class which increased explosively. Besides, if the

efficiency of the government can be improved, it will help IKEA to stand on India

market stale. India releases some laws to regulate fair competition. Based on the

Porter’s Five Force Model, for customer, Disney Company has their own advantage

and the strategy of differentiation to attract customer and to release customer’s

bargaining power. Finally, through Disney Channel prove the awareness of SRC, the

fusion of SRC and the host country will lead to a successful venture of Disney theme

park to India. To sum up, the Disney Company opening theme park to India is

feasible.

12


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Final Submission (2)

Documents

Transcript of Final Submission (2)