International Business Student Collaboration Project

International Business Student Collaboration Project

Team # 131

Client (Company): Walt Disney Company

Product/Service: Disney Family Fitness Center

Team members:

Name	Country	Did Not Participate (please make a note if this teammate did not contribute during the project, has not replied to emails, etc.)
Sharon Grefiel	USA
Seo-Young Byun	Korea
Daniel Mauricio Triana Sanchez	Colombia	Stopped replying to e-mails after we chose tasks; did not submit work for proposal
Selby Gokiyeva	UAE
Michael Untono	Indonesia	Stopped replying to e-mails; did not help with proposal
César Rico Gonzalo	Spain
Caitlyn Ybarra	Spain
Liviu Marius	Romania
Ilie Andreea Mihaela	Romania	Never replied to any e-mails

 

Table of Contents

Executive Summary………………………………………………………………3

General Company Description…………………………………………………..4

1. Company Overview……………………………………..…………4
2. Mission and Vision…………………………………………..…….4
3. Strengths and Core Competencies……………………………..…..4

Services Overview………………………………………………………………...5

1. Services……………………………………………….……………5
2. Benefits and Features……………………………………..………..6
3. Why People Need this Service?........................................................6

Target Market……………………………………………………………....…….8

1. Consumer Segment………………………………………………....8
2. Target Market Strategy………………………………………….….8

Service Location………………………………………………………………...…9

1. Background…………………………………………………………9
2. Location…………………………………………………………….9

Entry Mode…………………………………………….………….………………11

1. Background……………………………………………...…………11
2. Direct Investment…………………………………………………..11
3. Direct Investment Advantages……………………………………..12
4. Direct Investment in Texas……………………………..………….12

Staffing…………………………………………………………………………….15

1. Staffing Plan……………………………………………………….15

Market Plan………………………………………………………………….……16

1. Environmental Variables…………………………………..………16
2. Market Analysis…………………………….………………….…..17
3. Market Strategy……………………………….………..…………..17
4. Market Strategy Analysis……………………………….……….…18
5. Marketing Mix……………………………………………..………20

Payment Arrangements…………………………………………………….…….22

1. Payment Arrangements………………………………….…………22
2. Payment Methods……………………………………….………….24

Capital……………………………………………………………………………..25

1. Initial Stage……………………………………...………………….25
2. Expansion Stage………………………………....………………….25

Challenges………………………………………………………………………….27

1. Likely Challenges…………………………………….…………….27
2. Solutions……………………………………………………………27

Executive Summary

 

The Walt Disney Company is a worldwide known family entertainment enterprise.  As a parent company, the Disney Family Fitness Center will provide top of the line fitness facility while maintaining the Disney image. The Disney Family Fitness Center will provide families with a fun way to workout. The target market for this facility will be middle and upper class families with children between the ages of 3 to 16. The facility will be located in San Antonio, Texas. The motivation for choosing this city is documented in section 4.2. The Walt Disney Company will have the most success joining a new business market by taking a direct investment entry. The staff for this new facility will bring new faces as well as old employees who have worked for Walt Disney Company. The marketing strategy for the new facility will be a differentiation strategy because no other businesses offer the same services. As well there are plenty of different payment methods for customers. The Disney Family Fitness Center is unique and fun. Walt Disney Company would be smart to take this chance to use the Company’s own capital and open a new business in San Antonio, Texas, that will be sure to thrive with success.

 

 

 

General Company Description

1. Company Overview:

The Walt Disney Company is a worldwide known family entertainment and broadcasting enterprise with four business sections: consumer products, studio entertainment, parks and resorts and media network. Walt and Roy Disney founded the Walt Disney Company in 1923. The Walt Disney Company’s headquarters can be found in Burbank, California. The Walt Disney Company provides love and happiness to families all over the world. Opening a Disney Family Fitness Center, means the Walt Disney Company could provide families with a fun way to stay healthy (The Walt Disney Company, 2011).

2. Mission and Vision:

Mission: “The Walt Disney Company's objective is to be one of the world's leading producers and providers of entertainment and information, using its portfolio of brands to differentiate its content, services and consumer products. The company's primary financial goals are to maximize earnings and cash flow, and to allocate capital toward growth initiatives that will drive long-term shareholder value.” (Walt Disney Company, 2011)

Vision: “We seek to develop the most creative, innovative and profitable entertainment experiences and related products in the world.” The company wants to make people happy (Walt Disney Company, 2011).

3. Strengths and Core Competencies:

• Very aware of the safety of products and facilities
• All employees are trained in the areas of health, safety and environmental issues
• Takes pride in bringing happiness to families in as many ways as possible

Services Overview

1. Services:

Disney Family Fitness Center geared towards the needs of a family who wants to stay fit and healthy.

The center will provide health related services:

• Family Activities

• Basketball

• Soccer
• Softball
• Tennis
• Volleyball
• Racquet Ball
• Swimming

• Children’s Activities (ages 2-5)

• Swimming

• Soccer
• T-ball

• Children’s Activities (ages 6-12)

• Swimming

• Soccer
• Softball
• Tennis
• Basketball

• For parents with younger children (1 month-24 months), a daycare center is available

• Parents may leave their children for up to 3 hours

• Children will have an indoor and outdoor playground
• Various age appropriate activities will be available for the children
• Each day there will be a new Disney character to play with them

2. Benefits and Features:

• State of the art facility with latest equipment from quality manufacturers

• Children ages 13-17 must be accompanied by their parent(s) in the workout room

• Multiple television screens will be available for viewing while exercising

• There will be 2 locker rooms equipped with showers and changing rooms:

• Men

• Women

• Disney Environment

• Each sport activity would be accompanied with a Disney character

• Every two hours several Disney characters will walk around the Fitness Center and interact with all the guests
• The interior and exterior of the fitness center will be decorated Disney style

• For families who are just visiting the city of San Antonio, Texas, they can pay for a weekend or week membership so they can experience the Disney Family Fitness Center

3. Why people need this service?

In the United States, obesity is a major issue. About one-third of U.S. adults are obese. Approximately 17% or 12.5 million children and adolescents aged 2-19 years are obese (National Health and Examination Survey, 2008). Being overweight and obese result from an energy imbalance. This involves eating too many calories and not getting enough physical activity. Behavior and environment play a large role causing people to be overweight and obese. These are the greatest areas of prevention and treatment actions (U.S. Surgeon General’s Call to Action to Prevent and Decrease Overweight and Obesity, 2001).

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Target Market

1. Consumer Segment:

Most Americans consider themselves middle class. A 2005 New York Times survey found that only 1% of respondents considered themselves to be ‘upper class’ and only 7% considered themselves part of the ‘lower class.’ The remainder said that they were either ‘middle class’ or ‘working class’ (Cashell, 2008). Due to this survey, our team will target middle class families with children between the ages of 3 to 16; especially in San Antonio, Texas because of the high obesity rate. According to the 2010 Census Bureau, the total population for Texas is 25,145,561 persons, meaning that San Antonio will be a great location to start Disney’s new business.

2. Target Market Strategy:

The strategy our team has chosen is the differentiation strategy. The Disney Family Fitness Center provides a service that no other gym in San Antonio provides. We put great emphasis on teaching a healthy lifestyle to our customers and working out in a fun way. We want entire families to become fit while having fun. Other competitors in San Antonio: Spectrum Clubs, 24 Hour Gym, Planet Fitness Gym, Bally Total Fitness, Joe’s Gym, Life Time Fitness, and Custom Fitness Center. These competitors offer different deals and discounts, but none offer the entire package that the Disney Family Fitness Center has to offer.

 

 

 

Service Location

1. Background:

A research conducted by Centers for Disease Control and Prevention (CDC) reveals an ever-increasing rate of obesity among United States citizens. In the last twenty years (1990-2010), the percentage of obese United States adults increased threefold. At the beginning of the 90’s some of the states had less than 10% obese adults, whereas in 2010 most of the states are now dealing with rates of obese adults higher than 30%. Studies show that obesity is a national problem increasing equally throughout the United States. However, it seems that the Southeastern part of the country is most affected. For example, the state with the highest obesity rate in 2010 was Mississippi (34%).

2. Location:

Our suggestion for the Disney Family Fitness Center is in San Antonio, Texas for a number of reasons:

• It is easily accessible from all over the United States
• San Antonio has 1.33 million residents and a metropolitan area of 2.2 million people (U.S. Census Bureau)
• According to CNN, San Antonio is the fourth fastest growing city in the United States (Christie Les, 2007)
• Texas is one of the cheapest states in terms of land price (City of San Antonio)
• Texas has an obesity rate of 31%
• San Antonio has mild weather in the winter and doesn’t get too hot in the summer. According to National Oceanic and Atmospheric Administration (NOAA), the average high during summer is 97 degrees Fahrenheit, which is 34 degrees Celsius
• San Antonio has world class hotels and restaurants along the Riverwalk and plenty of tourist attractions such as, Fiesta Texas and Sea World Texas

 

 

 

 

 

 

 

 

 

 

 

 

 

Entry Mode

1. Background:

Today the globalization of the world’s economy pushes companies to enter foreign markets. International markets introduce new opportunities for selling products and services, if a company decides to enter foreign markets; it has to know that it requires purposeful planning and practical reasoning of the chosen direction. The company is required to make decisions about entering foreign markets in the form of export, import or other foreign economic activity, enterprise management of the firm must consciously go for extension of its function and carry out serious preparatory analytical work on the feasibility and potential effectiveness of economic activity in foreign markets (Foreign Market Entry Modes, 2010).

Despite all the difficulties involved in entering foreign markets, development of an international strategy for output of products to external markets is an essential to the success of modern businesses in a tough international competition.

When choosing an entry strategy for a foreign market the company has four options: exporting, licensing, direct investment, and/or franchising. Firms choose one option or a combination, in order to achieve their goals and to adapt to current market conditions.

2. Direct Investment:

The Direct Investment strategy was chosen for the Disney Family Fitness Center. Foreign direct investment provides the highest level of control that the company may have when entering a foreign market. There are two methods of direct investment:

• First, the company can create a new company on a foreign market. With this method the company has to create new contacts and sales channels, select the location for the new company, hire employees, and acquire equipment.
• Second, the company may acquire an existing foreign company. In this case, the company only has to make changes in the organizational structure of the foreign company (Foreign Market Entry Modes, 2010).

3. Direct Investment Advantages:

Direct Investments have a number of advantages over other methods of entering foreign markets:

• The company can completely determine marketing and sale policies. This may be especially important for large enterprises such as Disney who wants to pursue a common policy in all its markets.
• The company would also have a direct contact with customers in the foreign market and therefore may better meet their requirements. This will definitely increase the company’s competitiveness.
• Another benefit is that Disney would create new jobs, as a result promoting a positive image of the company in its host country.
• Maintaining good relations with government, consumers, local suppliers and distributors, the company tailors its products to the needs of this market (Foreign Market Entry Modes, 2010).

4. Direct Investment to Texas

Texas is one of the leading global locations for foreign direct investment (FDI). The bright state of the economy, perfect conditions for business, centrally located and comparatively low production costs lured foreign multinationals corporations. Texas also has a diversified manufacturing base and technological challenges (Foreign Investment in Texas, 2011).

• Texas is the top destination city for inter-state investment in 2010. An interstate of projects in Texas rose by 33 percent, with 227 projects located in Texas
• Texas’ two cities - Houston and Austin, where Disney is planning to launch its Family Fitness Center – were on FDI magazine’s "Top 10 Overall U.S. cities of the future
• Texas is the second place for jobs available at U.S subsidiaries of international firms. Subsidiaries play a vital role in the economy of Texas by providing 439,400 jobs; an increasing of 24.5 percent over the past six years
• The latest publicity available date states that, Texas led the country with more than $119.25 billion FDI assets in 2007. The majority FDI assets of the state are headed by Europe, Britain, Germany and France (Texas Foreign Direct Investment, 2010).

Forming a strategy to enter the foreign market is a very demanding task for the company; as it may be difficult to succeed in an unfamiliar field of activity, and vice versa. The wrong economic strategy developed to enter external markets may hurt the image of the industry and result in substantial financial losses and loss of competitive position. Organization of foreign economic activity abroad requires substantial financial resources. Therefore necessary to revise the mission and strategy of enterprise development, major changes in the organizational structure of enterprises, in addition it is necessary to study the experience of doing business in a foreign country, the ability to work with foreign partners and employees.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Staffing

1. Staffing Plan:

The company should hire new staff for the new Disney Family Fitness Center. The present staff does not have experience in sports activities and new employees need to be found. Our team thinks that the best option would be the following:

• Disney should deploy someone with management experience that has been with the company for a long time and appoint this person as Chief Executive Officer. This is the person that responds to Disney Corporation and makes sure that the new facility in Texas is reaching its goals.
• New staff should provide the second level management. The individuals will be selected in Texas based on their experience, communication skills, and the ability to work in San Antonio; our teams expects the Fitness Center to do business with U.S. citizens mostly. Young, healthy, and good-looking people with the ability to speak more than one language should take front desk positions. If our employees knew more than two languages then this would be a plus. This part of the staff would be very multicultural.
• For the back office positions, Disney should consider hiring third party nationals. There is a vast pool of potential employees due to the proximity with Mexico. In an article, written by Reuters, states that Mexicans work the highest number of hours out of 29 industrialized countries. This would provide Disney with an advantage of cheap and efficient work force (Reuters, 2011).

Market Plan

In this section we will try to explain briefly the main points for the Disney Family Fitness Center marketing strategy.

1. Environmental Variables:

The first thing to consider is the stage. By knowing the stage, it allows the company to meet the changes and trends that may affect the business. These could be technological, economical and cultural variables:

• Respect to technological changes, the Disney Family Fitness Center will have advanced technology. Nowadays the technology is evolving rapidly and offers many opportunities for the center. We will apply the latest technology to offer quality service. Not everyone in our target market can use advanced sport machines because they are children and not of age. Therefore our technology will provide children with an incredibly fun atmosphere to play and undergo physical activities with our highly skilled staff. We want to satisfy the needs of our customers in order to differentiate ourselves from our competitors.

• This technology will be seen, for example, in installations, media, sports equipment suitable for children, and technology for the employees who work in the center to facilitate their work and provide services in the best way possible.

• Regarding the economic environment, we must be conscious about the recent economic crisis. The crisis has affected many families, but by analyzing the damage we can design low-cost offers to attract customers. Further in the proposal, idea offers are mentioned.
• Concerning the socio-cultural trends, the obesity rate in the United States is very high. Consequently the importance of a healthy lifestyle and nutritional care has increased. The main issue of the increased obesity rate is due to a lack of exercise. This is why the Center’s focus is on getting the whole family healthy.

2. Market Analysis:

We will open the Disney Family Fitness Center in the United States because the potential market is rather large. The city of San Antonio has a high population and we believe that a high percentage of citizens may need our services due to a problem of childhood obesity and other nutritional problems in the area. The market segment will be mainly focused on children 3 to 16 years of age because these are the ages most affected by childhood obesity. The Disney Family Fitness Center will be designed for middle and upper middle class families. We will design our activities and prices according to our knowledge about their incomes and hobbies. We will be entering into a growing market because citizens will continue to create families and the importance of the health of the family will continue to increase. It is a market with many opportunities for our business.

3. Market Strategy:

It will be a differentiation strategy. We want to be different from our competitors because we are entering a market with many companies. We differ in issues such as:

• Technology that we use for the development of activities
• Great facilities with equipment adapted for children
• Complementary activities such as nutrition lectures for parents, celebrating birthday parties, outdoor activities, etc.
• Professional staff:

• They must be people who have qualifications in sports science and must be able to prepare exercise activities based on physical characteristics of each age group

• The daycare will have the appropriate qualifications for taking care of and teaching infants
• There will be one or two experts in child nutrition and obesity problem to observe the improvement and development of different age groups.
• A psychologist that will be responsible for assisting the children and parents if needed
• We will provide parents with the development of their child’s health
• The Disney aspect will allow children to have fun without realizing they are exercising

These are some points that will help us to differentiate ourselves from our competitors and gain market share.

4. Market Strategy Analysis:

• Strengths:

• Human Resources: All of our professional staff have a college degree and are able to offer the best customer service possible
• Activities: We have a variety of physical and nutritional activities and group games designed for children and parents
• Great local capacity for development of all activities, as well as specific material to work with children. The high technology we have is the key to providing better service and results
• Theme: Everything in the Disney Family Fitness Center will be related to Disney, including staff and décor
• Individual program for each client: We adapt our services for each age group because they are all developing at different speeds

• Opportunities:

• Lifestyle: People prefer to care about exercising and eating healthy

• Decrease the obesity rate
• High population: Most important cities have large populations, meaning there will be a lot of people concerned about their health as well as their family’s health
• Facilities: They are very large and we can continue to expand in the future

• Weaknesses:

• We mainly focus on working with children between the ages of 3 to 16, however we do allow other age groups to workout as well

• We are a new business and will be weaker because we are just now entering the market
• Disney Family Fitness Center is designed for upper-middle class families

• Threats:

• Competitors

• There are other competitors who are more experienced with this market and can afford to offer their services for less
• There are services that we do not offer and other competitors do offer
• Changing mindset: If people change their minds about obtaining a healthy lifestyle our business would be meaningless. However, this is unlikely to happen.

5. Marketing Mix:

We describe briefly the four key variables of our marketing mix: Service, Price, Distribution and Promotion.

• Service:

• We offer a high-quality service that helps parents improve the health of their children. As a service, its results are intangible, but measured by nutrition professionals.

• Disney oriented
• The service is adapted to the individual needs of each family and characteristics of each child.

• Price:

• The price of our service will be a bit higher than our competitors because the cost of starting in a new market is high and will require us to maintain a higher price at the beginning.

• However, there are flashy promotions and discounts such as:
• One day free-trial
• Physical and nutritional test for the child with a diagnosis from our professionals for free during the first six months of opening
• Reduced price for all who sign up for the Disney Family Fitness Center during the first month of opening
• Discount for one month if you recommend a friend to join the Disney Family Fitness Center
• Discount if you are signed up for more than one activity
• Agreement with Disney: If you buy products/tickets from Disney you can accumulate points. When you reach a certain number of points, we will offer free days for your child.

• Distribution:

• As a service, it is offered at our center. The parents can see their child’s progress on the Disney Family Fitness Center website.

• Promotion:
• Our promotion or advertising is carried out in the following ways:

• Our website

• On web pages about nutrition and recreation
• At the door of the Disney Family Fitness Center
• Journals about sport and nutrition
• In anything related to Disney’s normal advertising

 

 

 

 

Payment Arrangements

Disney Family Fitness Center will provide various ways of payment for the convenience of customers, both in terms of payment arrangement and method.

1. Payment Arrangement:

The Disney Family Fitness Center will offer three different forms of payments: Advance Payment, Open Account, and Pay-As-You-Go.

1. Advance Payment

• The membership program will be organized into three different temporal cases: weekly, monthly, and annual. Customers may decide which temporal coverage is most suitable for themselves, considering their available time and price. Weekly and monthly passes will be attractive to those who may be busy and/or may want to join for short periods to make sure they like the center. On the other hand, annual advance payment will be able to retain customers for a longer time, providing a variety of additional services/benefits and price discounts.

2. Open Account

• Open account refers to the payment arrangement in which customers do not literally pay ‘cash’ but where the transaction takes place via bank account. The temporal choices would be the same as advance payment: weekly, monthly and annually.
• The Disney Family Fitness Center has two ways in paying via bank account:

• Independent Account: Customers may use their own bank account regardless of which bank it belongs to.

• Dependent Account: Customers may make a separate bank account just for the Disney Family Fitness Center. This would be made possible through strategic alliance with Bank of America.

• There are two options for transaction method for each of the bank account:

• Voluntary transfer/deposit: For customers using an independent account, they may transfer money, while dependent account users can deposit money. They may transfer/deposit any time during the first two weeks after the expiration date. Initial payment will take place on a specific date on which consensus is made upon between the company and the customer.

• Automatic withdrawal: To enhance customers’ convenience, Disney Family Fitness Center takes advantage of the automatic withdrawal system. Customers may choose a particular date weekly/monthly/yearly (according to their membership) and money will be withdrawn on that day automatically. After the withdrawal, customers will receive an email with details on the transaction for verification purpose.

3. Pay-As-You-Go

• The name ‘Pay-as-you-go’ is self-explanatory as customers are to make payment at the moment of receiving the service under this arrangement. However, membership payments have to be done using either advance payment or open account.

2. Payment Methods:

• Cash
• Check
• Credit/Debit card
• Internet/Mobile transaction

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Capital

The use of capital would differ depending on the stages of business operation of Disney Family Fitness Center.

1. Initial Stage:

Disney Family Fitness Center is an innovative service provider and a new approach that the Walt Disney Company is taking, which means that it is at the initial stage of business operation. Although this service has marketability and potential profitability, it is always risky when starting a new business. Considering the risk and the fact that the Walt Disney Company is a large company with diverse sources of financing in itself, it is recommended to invest using its own capital. Additionally, the name value of ‘Walt Disney’ may be reduced if Disney receives external help in funding. Therefore, until Disney Family Fitness Center settles down and is positioned well in the target market, the Walt Disney Company should utilize its capital independently.

2. Expansion Stage:

After the initial and settling down process, the Walt Disney may be faced with the option of expanding its business to other areas in the United States and even further, to foreign countries. This is highly plausible as health issues are not limited to San Antonio and more people are becoming conscious of keeping a healthy lifestyle. In this case, external funding may be a possibility.

Even though the company can seek for funding itself through local or international financial institutions and venture capitalists, if Disney Family Fitness Center shows profitability through various financial measures, individual investors and corporations will naturally begin to show interest in funding. The best option would be getting financial aid from investors, venture capitals and other companies that pursue similar goals such as providing happiness and value to children and promoting health.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Challenges

1. Likely Challenges:

• Lower income families will be excluded due to the price target for middle-income families and higher
• Finding qualified personnel to run a fitness center and maintain the Disney image
• Maintaining customer loyalty
• Economic cycles that affect consumer behavior negatively

2. Solutions:

• Provide discounted prices for eligible families
• Current Disney employees may be transferred and help establish the Disney environment
• Establish a rewards system that gives current customers a discount if their contract is renewed for so many years
• Giving loyal customers certain perks such as, free personal trainer for a week
• Offer further discounts and incentives to new and existing members

 

 

 

 

References

Cashell, Brian W. “Who are the Middle Class?” CRS Report for Congress. October 22, 2008.

Centers for Disease Control and Prevention. Overweight and Obesity. (2010). [online]. Available at: http://www.cdc.gov/obesity/data/trends.html

Christie Les. “The fastes growing U.S. cities.” (28 June 2007). CNN.

City of San Antonio Official Website. City of San Antonio. (2011). [online]. Available at: http://www.sanantonio.gov/

National Oceanic and Atmospheric Administration. Climatography of the United States NO. 84. (2011). [online]. Available at: http://www.ncdc.noaa.gov/DLYNRMS/dnrm?coopid=417945

QuickMba Knowledge to Power Your Business. Foreign Market Entry Modes. (2010). [online]. Available at: http://www.quickmba.com/strategy/global/marketentry/

Reuters. Hard-working Mexicans upstage other OECD nations. (12 April, 2011). [online]. Available at: http://www.reuters.com/article/2011/04/12/us-oecd-work-idUSTRE73B59720110412

Texas Wide Open for Business. Texas Foreign Direct Investment. (2011). [online]. Available at: http://www.texaswideopenforbusiness.com/assets/documents/fdi/FDI-Overview.pdf

Texas Wide Open for Business. Foreign investment in Texas. (2011). [online]. Available at: http://www.governor.state.tx.us/files/ecodev/Foreign_Investment.pdf

U.S. Census Bureau. 2010 Census Interactive Population Search. (2010). [online]. Available at: http://2010.census.gov/2010census/popmap/ipmtext.php?fl=48

U.S. Census Bureau. State and County QuickFacts. (2010). [online]. Available at: http://quickfacts.census.gov/qfd/states/48/4865000.html

The Walt Disney Company. Company Overview. (2011). [online]. Available at: http://corporate.disney.go.com/corporate/overview.html