# Grid Analysis to invest a theme park for Walt Disney Essay Example

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• Pages: 10 (2700 words)
• Published: July 22, 2017
• Type: Case Study
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## Introduction

Grid Analysis, also known as Decision Matrix Analysis or Pugh Matrix Analysis or Multi-Attribute Utility Theory (MAUT), is a beneficial decision-making technique. It is particularly helpful when there are multiple favorable options and various factors to take into account. Grid Analysis is especially valuable for significant decisions where no clear preferred option exists. By utilizing Grid Analysis, people can make confident and rational decisions, even in challenging situations that others may find difficult.

Furthermore, it is simpler to handle and more effective and efficient. The approach involves organizing your options as rows on a table and considering the factors as columns. Each option or combination of factors is then evaluated, assigned a score, and these scores are totaled to provide an overall assessment for the option.

Below is an example of a grid analysis. It focuses on the opportun

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ities and considerations for expanding the Parks and Resorts concern in order to increase profits, cash flow, and allocate capital towards growth initiatives. The analysis compares various states to identify the best location for expanding the subject park concern. This expansion will require careful consideration of six different variables.

In order to calculate the overall score for each option, the process includes arranging options as rows in a table and variables to measure as columns. Each combination of factors determines a score for each option, which is then weighted based on the importance of the factor. The weighted scores are added together to determine the final overall score.

However, the analysis for the mentioned specific example was conducted using information classified into three categories: Equity, Income, and Risk.

The grid for comparing analysis in this instance is slightly different for the firs

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class variable, Equity. This variable does not require numerical values to obtain a result/score. It is determined using two possible options: Accepted or Unaccepted. The other two variables, Income and Risk, remain unchanged and still require computation of scores for a result. For the first class, Equity, the variables involved are the possibility of 100% equity hold and the possibility of licensing to subordinates owned by the majority. For the remaining classes, Income and Risk, each class has three factors that need to be investigated.

Law and Regulations dictate the revenue enhancement rates for "Income" variables. These variables also involve the state's economy, including the income per capita and market size. On the other hand, "Risk" variables include Geographical factors such as weather and climate conditions. These conditions can pose hazards for certain parks, as extreme cold may discourage visitors while excessive heat can impede outdoor activities for staff members.

When choosing a location for the new Walt Disney theme park, several factors need to be taken into account. These factors encompass natural disasters like earthquakes or floods. Additionally, foreign exchange rates and potential political matters should also be considered as they can influence the park's functioning.

## Country Analysis

A total of five countries, namely Argentina and Cuba, have been included in the list of potential locations for the new Walt Disney theme park.

The analysis focuses on Brazil, Thailand, and Indonesia as the selected states. These states were chosen due to the current unavailability of access to the subject park. Among the five states, three are situated in South America while the remaining two are located in Southeast Asia. The analysis evaluates these states based on three main factors:

Equity.

Income and Risk. The analysis focused on the first class, "Equity," which included all states except for Argentina. Argentina was excluded because it had an "Unaccepted" consequence in terms of its 100% equity clasp, which was considered a non-possible state. The remaining states were assessed based on other variables in the analysis.

The following variable on equity class is the allowable on licensing to subordinates which own my bulk. All of the states are able to accept this status. In the subsequent class for the analysis is the “Income” factor that consists of three variables. For Law and Regulations of revenue enhancement rate which can be looked at as the international revenue enhancement rate such as trade barrier and duty rate. A duty rate is a restrictive step which seeks to control the amount of import.

The protection of domestic industry can be achieved by implementing high duties that completely forbid the import of a specific product. However, in practice, duties do not have to be extremely high to be considered protective. Regardless of the duty amount, imports can still flow in unless there are specific regulations in place.

However, the protective effect of a duty can be observed in the increase of domestic production of a trade good, made possible by the rise in prices within the domestic market. These higher prices allow domestic producers to cover their increasing marginal costs on a larger volume of output. For example, in Indonesia, which had an average duty rate of 10, there were economic distortions caused by non-tariff barriers, rent-seeking by state-owned enterprises, domestic subsidies, barriers to domestic trade, and export restrictions.

Indonesia has a rate of 89% in terms

of income per capita, while Brazil has 11.8%, Cuba has 14%, and Thailand has 20.93%.

It can be said that Brazil has the highest income per capita among the four states. Brazil’s income per capita norm is 3753.4 USD, equivalent to 46% of the world’s norm. Cuba comes next with a norm of 3156.0 USD, equivalent to 40% of the world’s norm. Indonesia has the lowest income per capita compared to Thailand. Indonesia’s income per capita is 786.6 USD, equivalent to 14% of the world’s norm, and Thailand is at 1477.

0 USD accounts for 27% of the worldwide average. In terms of living conditions and quality of life, Brazil outperforms other countries. The scale of its market is determined by the size, distribution, and openness of its population. A larger population leads to higher demand and more successful businesses catering to the market.

The existence of a sizable population spread out across a wide geographical expanse can result in the formation of regional markets, which are composed of smaller local markets within a larger governing area. The dimensions of these markets are influenced by various factors such as economics, geography, technology, laws, and politics that establish market limits and hinder potential rivals from entering. The importance of analyzing the jurisdiction's economic impact largely hinges on its position in the global context.

Trade understandings or agreements with other economic systems, whether existing or potential, are an integral part of a country's trade policy. A common market policy or broad trade policy can help bridge the economic gap between different systems at borders, rendering the legal power less relevant in economic analysis. Indonesia's market size is larger than Brazil's due

to its population of 245.9 million, compared to Brazil's 193 million.

Thailand's population is 66.8 million, while Cuba has a smaller population of 11.2 million.

The market potential of Indonesia in Southeast Asia is demonstrated. It is assumed that if Walt Disney establishes a theme park in Indonesia, visitors from neighboring countries will significantly impact the size of the market, particularly in Southeast Asian countries. The third aspect of the comparative analysis is risk, which consists of three variables, one of which is the weather or climate conditions.

The climate in Brazil varies significantly throughout the country. Along the equator, temperatures are generally warm, with an average above 25 °C (77 °F), but not as hot as the summer highs of up to 40 °C (104 °F) observed in temperate zones. Most regions of Brazil experience moderate rainfall, averaging around 1.

Both Brazil and Cuba share a tropical climate with moderate air currents. The yearly precipitation in both countries ranges from 1,000 to 1,500 millimeters. In Cuba, the dry season lasts from November to April, while the rainy season occurs between May and October.

The local climate is tropical and influenced by trade winds, with a dry season from November to April and a rainy season from May to October. There may be some local variations in these patterns. The average temperature is around 23 degrees.

Cuba experiences a variation in temperature, with the coldest month being January at 1°C (73.6°F) and the hottest month being July at 27°C (80.6°F). Hurricanes mostly occur in September and October. On the other hand, Indonesia, located along the equator, enjoys a stable climate year-round.

Indonesia experiences two distinct seasons: a moisture season and a

dry season, both without extreme temperatures. The moisture season generally falls between October and April throughout the country, while the dry season occurs from May to September. Coastal areas maintain an average temperature of 28°C (82.4°F), while inland and mountainous regions have an average temperature of 26°C (78.8°F). Higher elevated mountain areas are even cooler.

The temperature in the area is 23°C (73.4°F) while the humidity levels range between 70 and 90%. However, due to Indonesia's active volcanic mountains, this creates a hazardous situation. Unfortunately, the country faces serious environmental issues as it has a large population and rapid industrialization. These concerns often take a backseat due to high poverty levels and weak administration with limited resources.

The region faces various challenges. These include widespread illegal deforestation, which leads to wildfires and heavy smog in western Indonesia. Malaysia and Singapore also have their own issues, such as the unsustainable exploitation of marine resources, environmental impacts from rapid urbanization and economic development (which includes air pollution and traffic congestion), waste management problems, and the need for reliable water and wastewater services.

Thailand's climate is categorized as tropical moisture with dry or savannas characteristics across most of the country according to the Koppen climate classification system. However, the South and eastern tip of the East experience a tropical monsoon climate. In general, temperatures in Thailand range from an average annual high of 38 °C (100.4 °F) to a low of 19 °C (66.2 °F).

During the dry season, temperatures rise significantly in late March and exceed 40 °C (104 °F) in some countries by mid-April when the Sun reaches its zenith. In Thailand, there have been several natural hazards such as

land erosion in Bangkok caused by depletion of the water table, droughts, earthquakes in the Indian Ocean in 2004, and floods towards the end of the year. Currency exchange rates are crucial for determining a country's competitiveness and are extensively studied and predicted globally. These rates are affected by supply and demand dynamics in international markets.

The exchange rate of USD/IDR in Indonesia is currently at a norm of 7819.6400, which is the lowest exchange rate of the US Dollar. This will have an impact on income net income. Meanwhile, Cuba has the highest norm for USD/CUC with an average of 3.9400, followed by Brazil with an average exchange rate of 1.8000 and Thailand with an average of 32 for USD/THB.

Despite the potential impact of foreign exchange on Walt Disney's theme park, their previous success with Disneyland Tokyo and Disneyland Paris in Asia and Europe suggests that any issues related to currency fluctuations can be addressed and possibly resolved.

However, political considerations may have a greater impact on business operations. This is because many of the selected states are currently experiencing political turmoil. The concept of political risk in international business is based on the existence of potential threats to the company due to political uncertainty and instability in the investing country. Once a company goes beyond the boundaries of domestic business law, the global environment becomes much more unpredictable. Most states have numerous means of exerting power to extract more resources from foreign investments. There are two main types of political risk that affect international business. The first is firm-specific risk, which involves threats targeting a particular business or group of businesses.

Tactical investments like gold, oil,

or natural gas are often needed to deal with risks related to unfair treatment or seizure of assets. Country-specific risks are not limited to specific companies but affect the whole country or region, such as currency devaluation, local uprisings, or the potential for nationalization. Operating in these countries can pose significant challenges for any business.

Added to it. There is a high inclination of drug-related offenses in several states. Brazil experiences illegal narcotics trafficking, Indonesia deals with crystal Methedrine (drug) illegal trafficking, and Thailand faces cocaine illegal trafficking. Additionally, some foreign authorities are unstable, leading to frequent dramatic and unpredictable government alterations and/or political agitation.

• During these times, industries may be nationalized.
• Private belongings may be seized or destroyed.

Normal concern operations may be suspended, and the work force may go on strike, as seen in Thailand and Indonesia due to issues with the government and deliberate work stoppages.

Political tendencies to divide large economic systems into smaller ones and the move towards more market-oriented economic systems have resulted in competition policy becoming an important and essential tool in the development of new market economies. The shift from direct government control of the economy to increased reliance on the market has led to the recognition of competition laws as a fundamental part of economic reform measures in many jurisdictions. Additionally, only recently have many smaller jurisdictions realized the significant role of competition laws in regulating their markets and maximizing the benefits of market dynamics. These trends highlight the need for a study on the impact of small size on competition policy, which is one of

the primary economic tools utilized in market economies. This analysis is based on the comparison grid table shown above.

According to the results displayed in the table, it can be concluded that Walt Disney's decision to develop and execute their theme park operation in various countries has both advantages and disadvantages in terms of practicality and profitability. Among these countries, Brazil has the highest weightage in the Income class category based on three variables, with a score of 8. Additionally, it has the lowest risk score of 3. Hence, Brazil emerges as the most favorable country for Walt Disney to establish a theme park business in South America.

Having the highest income per capita among other states is the main advantage of this state. This advantage will provide benefits in terms of potential labor force and potential clients for running a theme park business, as human resources are the most important asset for business growth. Without a sufficient human resource, it would be meaningless for any business to operate. Furthermore, the market size can be sustained in a growing trend due to Brazil's large population.

Meanwhile, the costs involved in running Walt Disney's park in Brazil are considered reasonable and cost-effective. This is because the necessary adjustments in installations, transit, and urbanization can significantly reduce operational expenses since there won't be a need for many additional facilities to cater to customers. Additionally, Brazil's climate varies considerably from predominantly tropical regions. Temperatures near the equator are consistently high, averaging above 25°C (77°F), but don't reach the summer extremes of up to 40°C (104°F) found in temperate zones. This climate is ideal for Walt Disney to operate in.

However, there are

still risks in Brazil that could potentially threaten Walt Disney's theme park business. These risks include political hazards and drug-related offenses. However, Walt Disney can mitigate these risks by establishing a positive cooperation and relationship with the Brazilian authorities. This can be achieved by instilling a sense of protection and security in Walt Disney's operations.

South America can offer a fantastic amusement experience that the whole family can enjoy and create lasting memories. Disney's plans for a planetary theme park section show an exciting and innovative future, with the potential for a thriving family entertainment industry in South America. In conclusion, Walt Disney is well-positioned to enter the South American market by establishing a centralized theme park in Brazil.

## References

1. Duties – The Economic Effect of Tariffs retrieved on 21st October 2013 from https://economics.about.com/cs/taxpolicy/a/tariffs.htm
2. Geographical of Cuba. Brazil.

Thailand and Indonesia have a population that can be found on the Wikipedia page on Tariff Rate ; A.

Additionally, the population of Cuba, Brazil, Thailand, and Indonesia can be found on this website.