The document provides a case study report on Shanghai Disney Resort. It discusses Disney's expansion to Shanghai, including a company analysis of Disney, external factors to consider in Shanghai, potential problems, and recommendations. Specifically, it analyzes challenges such as cooperating with the Chinese government and companies, identifying customer demand given cultural differences, and controlling excess customer volume. It recommends appointing leaders knowledgeable in Chinese culture, maintaining Disney's original style while adding Chinese elements, and using "special days" tickets to manage crowds.

1. EB3803 Shanghai Disney Case Study Report
1. Introduction
Disney has been constructing its Shanghai Disney Resort since 2009. And the first
phase is expected to be completed by December 2014. This report aims to investigate
and analyze the problems that are in store for the company, thus, recommendations on
strategies will be put forward to improve Disney’s this expansion to Shanghai. There
are mainly four sections included in this report. Firstly, a company analysis of Disney
will be carried out. Secondly, PESTLE factors related to Disney’s entry into Shanghai
will be discussed. Then, problems that may arise in this joint venture will be analyzed
while the mistakes that Disney has made in previous international expansion will be
considered. Finally, recommendations will be given to improve this Disney’s strategic
expansion to Shanghai.
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2. EB3803 Shanghai Disney Case Study Report
2. Company Analysis
Firstly, established by Walt Disney in 1923, Disney is an international brand with a
long history (The Walt Disney Company 2014). Before its first theme park opened,
Disney had created its popular animated films in which the world-wide famous
cartoon characters Mickey and Minnie appeared. All the achievements in animated
films made Disney’s core competence in its operation of theme resorts. And Disney
has been keeping on adding new adorable characters in its Disney cartoon family,
which enhances Disney’s strength of unique brand image. Besides, Disney’s other
strengths are the advanced technology, an excellent leader team etc.
Then, a broad differentiation strategy which is not transferable is applied by Disney.
Because of company’s wide geographic scale and the distinctive entertainment
services provided, this strategy makes it possible for Disney to differ with other
entertainment resorts. Since the unique Disney characters have been absorbed into the
resorts’ culture, it is hard for its competitors to copy. However, the weakness may be
reflected in some regions like mainland China where people are not that familiar with
Disney, because it takes time for customers there to recognize Disney’s differentiate
value.
Thirdly, as more countries are developing their economies rapidly, more people have
the demand for leisure consumption. This gives Disney a great opportunity to expand
to new markets. On the other hand, considering that the construction and operation of
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3. EB3803 Shanghai Disney Case Study Report
Disney resort can not only stimulate the local economic growth but also improve the
city status, most governments are willing to support the construction.
Lastly, the prime threat Disney may be faced is the clash between Disney’s
management style and the diverse local management styles in different regions. This
will negatively influence company’s decision-making process. It will be hard to
mobilize resources because local employees may not be qualified to prepare the
sufficient resources to implement the decision.
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3. External Factors Need to Be Considered in Entry to Shanghai
As to the political factor, China has a stable government which can provide Disney a
stable business environment. However, this will be Disney’s first time to enter a
market in socialism system which means a greater governmental control. Although
Shanghai is the most western city in China, all the land and infrastructure construction
are owned and managed by government. In order to make full use of them, Disney is
expected to communicate well with the Shanghai government. Moreover, Disney
needs to avoid the sensitive political speech which may worsen the relationship with
Chinese leaders. Besides, bureaucracy and red tape commonly exist in Shanghai, time
cost and other communication strategies should also be considered.
Legal factors when entering into Shanghai market can not be neglected. Since the law
system for intellectual property protection is not completed in China, pirate products
are rampant. This will bring a big loss in Disney’s sales of DVDs and toys which
charge higher prices in its resort stores. In fact, Disney has already suffered the loss
before because the pirate version of Disney movie ‘Mulan’ were available before it
was released in cinemas (Lopez 2002, p. 4).
Mainland China has a very different social environment with Hong Kong. People in
mainland China live and work in a more traditional way. This brings the challenges
both in satisfying customer needs and in managing the local employees. Then the
awareness of cross-cultural communication should be paid attention to.
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4. Potential Problems in Shanghai Disney
4.1 Cooperation with Chinese government and company
Since there exist big differences in both communication contents and management
styles Disney’s cooperation with Chinese government and company is faced with
great challenges. Firstly, Chinese government may limit Disney’s development in
China if Disney’s communication contents are considered “disharmonious”. In 1997,
Disney has created a movie named Kundun which told a story of Dalai Lama, and this
led to Chinese government’s strong objection to Disney at that time (Lopez 2002, p.
4). In this way, the similar disharmonious media contents in Disney’s products will
worsen its relationship with Chinese government. Secondly, different management
styles will also make the cooperation with Chinese companies difficult. According to
the cultural dimension index, China is much higher than America in power distance
(Ahlstrom & Bruton 2010, p. 47). This can be reflected in the differences in
leadership style and decision making process. Chinese employees will expect
Disney’s leader to make all the decisions, while Disney prefers consultative decision
making or even group decision making. This will confuse employees involved and
delay the implement of decisions.
4.2 Identification of customer demand
Because there is no existed reliable business model in China, it is hard for Disney to
identify customer demand and seek a balance of taste between local customers and
customers from neighbor countries. Firstly, it is inconclusive whether Shanghai
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customers like a localized style resort or an original style Disneyland (Lee 2014, p. 4).
Although Tokyo Disney was successful as a replica of the California resort,
Disneyland Paris suffered low attendance due to cultural clashes (MacDonald 2013).
The dilemma makes Disney stuck in choosing a resort style for Shanghai; moreover, it
will delay the decision about the design of buildings, parade shows, and cartoon
characters etc. Secondly, it will make the identification of customer demand more
complicated that customers from neighbor countries like Thailand and South Korea
are also Disney’s target groups. The neglect of their preferences which are different
from Chinese’s will not only hinder Disney’s expansion plan.
4.3 Control of excess customer volume
It is a big challenge for Disney to control a large number of visitors especially in
Chinese traditional festivals. In 2006 Spring Festival, Disney Hong Kong kept closed
to excess visitors for two days because the resort was filled. The event caused a
serious jam outside the gate and a strong dissatisfaction among the customers. The
same problem may also arise in Shanghai Disney. According to Shanghai Municipal
Health and Family Planning Commission, larger than it of Hong Kong, the population
of Shanghai reached 14.2 million (SHPFPC 2013) in the end of 2012 and over half of
it belongs to middle class which is Disney’s target group. Plus potential customers
from neighbor provinces and foreign countries, the large number of visitors will make
Disney’s facilities quite crowded. This will ruin guests’ interactive experience. And
the media exposure about the jam will lead to a disaster in public relations.
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7. EB3803 Shanghai Disney Case Study Report
5. Recommendations
Firstly, in order to cooperate well with Chinese government and companies, Disney
need to establish a leader team whose members have similar managing experience in
China or at least know local culture well. In this way, the leader is clear about how to
seek for a sufficient support from Shanghai government and how to manage the
Chinese employees effectively. According the success of Hong Kong Ocean Park, the
CEO Allan Zeman’s past Hong Kong developing experience and good knowledge of
local culture helped him a lot to make the park in a solid financial position
(Gallindoss 2013).
Secondly, Chinese elements can be added while the original Disney style needs to be
generally maintained. In this aspect, Disney Paris can be a good example for
Shanghai. Since some European rooted characters like Pinocchio and Peter Pan were
added in Paris, Chinese rooted characters like Mulan and Kong Fu Panda can also be
leading characters in Shanghai Disney family, along with other characters popular in
China such as the Lion King. To get closer to Chinese customers, all the characters
can be dressed in Chinese traditional costume and participate in traditional
ceremonies. Moreover, big events need to be arranged in big Chinese reunion festivals
like Spring Festival and Mid-autumn Festival. Zodiac animals and festival symbolic
animals can be added into the cartoon characters in these special days. On the other
hand, the activities with Chinese characteristics can also be new attractions for foreign
customers who seek for unique Disney experience. And because the original Disney
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style is maintained, customers’ need for common Disney entertainment can also be
satisfied.
Thirdly, Hong Kong Disney’s policy of ‘special days’ tickets can also be applied to
Shanghai Disney to control the large customer volume. Different from the common
tickets which are in six months’ validity, the ‘special days’ tickets can only be valid on
the specified days. The policy can also help Shanghai Disney control the customer
volume in the peak time. Besides, to improve the possible crowded situation, opening
hours should be extended and more service staff need to arranged to maintain order in
the busy period. In addition, Disney should try to guide the media to describe the
scene of loaded people as ‘popular’ or ‘lively’ instead of ‘crowded’ to maintain its
image of fun and entertainment.
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6. Conclusion
Disney’s entry to Shanghai is filled with both opportunities and challenges. Chinese
government’s support and the big customer demand for leisure activities makes
Shanghai an attractive site for a Disney resort. However, potential problems also exist.
The three main problems lie on the cooperation with Chinese government and
companies, the identification of customer demand, and the control of excess customer
volume. In order to solve the problems, three recommendations are put forward
separately. They can concluded as the appointment of leaders who know Chinese
culture well, maintenance of original Disney style with Chinese elements added, and
‘special days’ tickets policy assisted with longer opening hour and public relations
guide for media. By using the strategies suggested, Shanghai Disney is expected to
move on well on this international expansion.
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7. Reference List
Ahlstrom, D& Bruton, GD 2010, International Management: Strategy and Culture in
the Emerging World, South-West Cengage Learning, USA.
Gallindoss, A 2013, ‘Allan Zeman’s Heart Is in Hong Kong’, Jewish Business News,
July 7th
2013, accessed 24 April 2014,
<http://jewishbusinessnews.com/2013/07/07/allan-zemans-heart-is-in-hong-kong
Lee, C 2014, ‘A Case-Study of Shanghai Disney Resort’, SCOPE, City University of
Hong Kong
Lopez, RH 2002, ‘Disney in Asia, Again?’, Case Studies, Pace University
McDonald, B 2013, France: What’s Right, What’s Wrong and What’s Next at
Disneyland Paris, Los Angeles Times, accessed 25 April 2014,
<http://articles.latimes.com/2013/nov/05/news/la-trb-disneyland-paris-walt-
disney-studios-20130920>
Shanghai Municipal Health and Family Planning Commission 2013, Current
Demographic Situation of Shanghai, Shanghai Government, accessed 26 April
2014, < http://www.popinfo.gov.cn/spfpen/>
The Walt Disney Company 2014, accessed 25 April 2014,
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< http://thewaltdisneycompany.com/about-disney/disney-history>
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