Research Paper on Advanced Global Strategy

Introduction

Internationalization has provided organizations with numerous business opportunities for an extended period. Multinationals (MNCs) have ventured into international business to increase their revenue collections and increase their competitiveness. Notably, the global market is competitive; therefore, organizations require sound global entry strategies to ensure their success in the lucrative endeavor. Firms formulate different international strategy depending on the target market and international laws. Noticeably, a comprehensive plan that can mitigate various complexities associated with international relations allows a company to meet its anticipated goals in different foreign markets. The Walt Disney Company is one of the most popular entertainment ventures across the world. From its humble origin in the Seattle, United States, the company has devised multiple market entry strategies that have enabled it to become the leading entertainment and tourist enterprises in markets such as Europe and Asia (The Walt Disney Company, 2018c). Nevertheless, its policies have evolved with time and sophistication in its business structure just like other MNCs. The company has utilized a global strategy successfully, in such a way that it has formed significant alliances with local governments, investors and consumers, who have enabled it to dominate the media and entertainment industry.

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The Walt Disney Company Advanced Global Strategy

Initially, the company operated in the United States only. In 1983, the company developed the Disneyland theme and decided to venture into the Asian market. The venture utilized a global strategy, which allowed it to enjoy economies of scale and undergo minimum transformations concerning its products and services. According to Junni, Sarala, Tarba, and Weber (2015, 600), a global strategy permits an MNC to favor global branding compared to market responsiveness. In this case, a firm changes its products slightly to suit the local customers, while still maintaining its global brand. Notably, for Walt Disney, the strategy worked perfectly in the Asian markets due to the strategic alliances between the corporate and. Nevertheless, the ordeal turned sour in Europe as the company incurred huge losses. As a result, the firm decided to utilize other international market entry strategies such as the transnational strategy in the wake of the twenty-first century.

In Paris, the Walt Disney Company forced its American culture on French customers, which turned fatal. The company did not adapt its products to the local European culture, which was entirely different from the Americans. Firstly, it maintained its organizational culture in Europe, which demotivated employees and reduced their efficiency. Unlike in America where workers preferred teamwork, the French preferred an individualistic approach towards work (Karadjova-Stoev & Mujtaba, 2016, 79). Additionally, French workers despised working on weekends compared other Disney workers in the US. The above conditions frustrated the Disneyland Paris administrations since they had to devise a new corporate structure amidst the increased number of customers. Secondly, Disney expected that European consumers would have similar consumption behaviors like their counterparts in the US. Unluckily, they had a unique attitude towards leisure and vacations activities (Karadjova-Stoev & Mujtaba, 2016, 79).

Moreover, French tourists had different eating habits such as their wine culture. On the other hand, the company was not prepared for the extreme cultural change. As a result, by the end of the 1993 fiscal year, the company lost approximately two billion dollars and was in massive debt. Disneyland Paris had turned into one of the most colossal failures the company had ever incurred since its launch.

In 1994, the firm discovered that the advanced global strategy was a failure in Europe, and would affect its future operations in other markets negatively. The firm abandoned the approach and shifted to a transnational strategy. According to Ricart, Enright, Ghemawat, Hart, and Khanna (2004, 180), a multinational policy allows an organization to maintain its efficiency while catering to local preferences in the target market. In this case, Disney would adapt its operations, working organization culture, and services to suit the sophisticated European consumer behavior. The local adaptations were costly but necessary to ensure its success in the country. The strategy foresaw the company changes its restaurant styles to accommodate the French architectural designs (Matusitz, 2010, 235).

Moreover, the firm eliminated the American fast food menu and introduced the use of main meals, which is familiar with most Europeans. The restaurants also started serving wine, which is a significant part of the French meal (Spencer, 1995, 110). In the past, Disney theme parks had implemented a policy to prohibit the sale of alcohol in its premises. Furthermore, unlike in America where customers did not mind spending much time on the ques, the company had to introduce entertainment tools such as videos and movies to reduce the visitor's boredom. Currently, the company has adopted a multi-domestic strategy, which allows it to attend to the local preferences more swiftly in its target markets across the world.

The Firm's Strategic Use of Joint Ventures, Alliances, or Mergers, and Acquisitions

The Case of Tokyo Disneyland Joint Venture

Firstly, the firm utilized a joint venture market entry system to enter into the Japanese market. In 1983, the Walt Disney Company opened the first international Disney theme park-Tokyo Disneyland (Beeton & Seaton, 2018, 255). Currently, the park is the most favorite amusement park in the world. Tokyo Disneyland receives approximately seventeen million visitors yearly making it one of the most visited destinations in the world. The venture's management utilized a non-equity market entry mode into Japan, which allowed it to form contractual agreements with investors in the nation. The firm issued an operating license to Oriental Land Company Limited (OLCL), which is owned by several Japanese companies (Beeton & Seaton, 2018, 255). The OLCL Company had received support and authorization from the Japanese government to utilize the Tokyo Bay. The company approached Disney with the aim of attracting part of its investment into the Asian market. However, Disney was busy developing the Florida theme park and feared to venture into the international business due to the increased risks of business failure. Nevertheless, Disney decided to issue an operating license to the firm under an agreement that transferred all the business risks to the Japanese based firm. OLCL was allowed to utilize Disney's trademarks, engineering designs, and intellectual property. In return, the OLCL would issue Disney with ten percent of its admission revenues and ten percent of sales of beverages, food, and souvenirs. Disney would also provide its partner with technical assistance.

The international strategy was successful since Disney was able to avoid all cultural frustrations in the Asian market. At the end of the 1989 fiscal year, the company had surpassed revenue collections collected from other Disney Parks in the United States. Furthermore, Tokyo Disneyland was able to adapt to the Japanese culture and local regulations since it was operated by a Japanese based entity (Raz, 2000, 80). Notably, its operations and culture became Japanese tailored instead of an American copycat. Therefore, Disney's entry into Japan was smooth and turned out to be the best choice the firm made.

On the other hand, The Walt Disney Company lost many internationalization benefits due to its little knowledge of global business. Despite the Tokyo Disneyland being an imitation of the American theme parks, Disney did not enjoy locational advantages such as strong markets and customer loyalty. Most of these benefits were enjoyed by the OLCL firm, which owned all the firm's assets, while the Walt Disney Company benefited from royalties only. Additionally, it also lost control over the Tokyo subsidiary. According to Beamish and Lupton (2016, 168), a firm that can leverage its resources successfully can grow and achieve its goals compared to one that depends on royalties. Moreover, OCLC reaped more benefits from Disney's established brand name that the enterprise gained.

Significantly, Disney sent representatives-Disnoids to promote its ideology in of 'customer experience' in Disneyland Tokyo (The Walt Disney Company, 2018c). In preparation to avoid future inconveniences, the company sent researchers to Tokyo to analyze and research on globalization to allow it to leverage its resources in foreign markets. The strategy was ideal for its market entry in Europe, especially Paris.

The Case of Disneyland Hong Kong Alliance

Secondly, the Walt Disney Company has utilized partnerships or alliances in the past to venture into foreign markets. Disneyland Hong Kong is an example of a successful collaboration between the company and the Hong Kong government. In 1999, the government of Hong Kong in collaboration with Disney agreed to establish a Disney Theme Park in the region (Wilson, 2017, 66). Unlike in Tokyo, Disney ventured into the new market in a partnership program. The Hong Kong government owned 57% of the amusement park's equity, while Disney owned the remaining shares (Wilson, 2017, 69). The theme park was officially opened in 2005 and is currently operated by the Hong Kong International Theme Parks. Notably, directors from both parties chair the park's management.

One of the significant advantages associated with the above alliance was the ability of the firm to formulate a good relationship with the local government. The Asian market provides multinationals with numerous risks and challenges; therefore, having the Hong Kong government as the primary investor reduced the company's risks. Nevertheless, the partnership has its shortfall. For example, Disney is dependent on the government to make significant decisions since it is the majority shareholder. Additionally, conflicts of interest may arise as Disney decides to open new branches in the region such as Disney Shanghai.

The Firm's International Operations and Management Structure

The Role of the Headquarters versus the Subsidiaries

The Walt Disney Company headquarters are located in Burbank, California, United States. The offices are responsible for the overall company's success, policy formulations, and generation of global strategies (The Walt Disney Company, 2018c). The corporation's president foresees that all subsidiaries across the world, maintains the firm's philosophy of fostering customer experience. Firstly, the headquarters are responsible for the formation of Disney policies and corporate social responsibility. The company relies on its established brand name to attract new visitors to its diverse regions of operations. Therefore, the top executives ensure that all subsidiaries conform to the set standards and guidelines to protect the firm's reputation. Additionally, the headquarters formulate guidelines on how its subsidiaries will engage in corporate social responsibility. Secondly, the central base offers shared services to its subsidiaries such as employee rotation and outsourcing. The entity ensures its workers are diversified and achieves it through integrative human resource services. Thirdly, the headquarters formulates entrepreneurial and value creation decisions. In this case, the top management identifies a target market, researches, and consolidates funds to pursue the endeavor. Its principal task is to ensure that the firm remains an outgoing entity in perpetuity. Noticeably, to achieve the mission, the enterprise seeks potential investors and partners to...