Challenges of Expansion to a Foreign Location - WALT DISNEY

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Economics

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Purpose of Assignment

This week students will review and revise their Week 3 Research Analysis for Business Signature Assignment based on economic analysis and the feedback provided by their facilitator. Students will also expand their Week 3 analyses to evaluate the challenges of expanding their chosen company's production to a foreign market.

About Your Signature Assignment

This signature assignment is designed to align with specific program student learning outcome(s) in your program. Program Student Learning Outcomes are broad statements that describe what students should know and be able to do upon completion of their degree. The signature assignments might be graded with an automated rubric that allows the University to collect data that can be aggregated across a location or college/school and used for program improvements.

Assignment Steps

Resources: Tutorial help on Excel® and Word functions can be found on the Microsoft® Office website. There are also additional tutorials via the web offering support for Office products.

Revise your Week 3 assignment, Research Analysis for Business, using the feedback provided by your facilitator. This Week 6 report should only include one conclusion, so you will need to rewrite the conclusion you included in your Week 3 assignment, Research Analysis for Business.

Select a foreign market in which to expand your chosen product.

Prepare a minimum1,750-word report addressing the points listed below. The use of tables and/or charts to display economic data over the time period discussed is highly encouraged, you may submit any economic data in Microsoft® Excel® format in a separate file. You may use the U.S. Department of Labor's Bureau of Labor Statistics (BLS), U.S. Dept. of Commerce's Bureau of Economic Analysis (BEA), the Federal Reserve of St. Louis's FRED data, the CIA World Fact Book, World Bank data, and World Trade Organization, or other appropriate sources you might find on the Internet or in the University Library. The new sections of your report should:

  • Evaluate current global economic conditions and their effects on macroeconomic indicators in your selected country. Provide forecasts for population growth, gross domestic product (GDP) growth, GDP per capita growth, export growth, and sales growth.
  • Evaluate any competitors' existing production in the chosen country.
  • Assess sales forecasts in the selected country by using the Federal Reserve of St. Louis's FRED data, the CIA World Fact Book, World Bank data, World Trade Organization, or other appropriate sources you might find on the Internet or in the University Library.
  • Categorize the type of economy that exists in your selected country as closed, mixed, or market. What is the difference between these types of economies and how might this affect your expansion?
  • Assess how your chosen country's current credit market conditions, especially interest rates and the availability of financing, affect demand for your product or service and your planning or operating decision for your production in that country.
  • Analyze the role of the selected country's central bank on that country's economy.
  • Compare the availability, education, and job skills of the work force in the selected country. Discuss any additional challenges of international production, such as political stability, availability of government financing or other incentives, threat of capital controls, and exchange rate risks.
  • Explain any additional supply chain challenges you anticipate if attempting to make your product in your chosen country and selling the product in other countries.
  • Based on the data gathered and analysis performed for this report write a conclusion in which you:
    • Create business strategies, including price and non-price strategies, based on your market structure to ensure the market share and potential market expansions and explore global opportunities for your business in a dynamic business environment and provide recommendations.
    • Develop a recommendation for how the firm can manage its future production by synthesizing the macroeconomic and microeconomic data presented.
    • Propose how the firm's position within the market and among its competitors will allow it to take your recommended action.
    • Recommend strategies for the firm to sustain its success going forward by evaluating the findings from demand trends, price elasticity, current stage of the business cycle, and government.
    • Recommend any comparative advantages your company will have over competitors currently operating in that country, and defend your position, either for or against, expanding your company's production into your chosen country based on your research.

Integrate with the Week 3 Individual Assignment, and incorporate corrections and suggestions from the instructor's feedback. The final report should be a minimum of 2,800 words.

Cite a minimum of three peer reviewed sources not including the textbook.

Include all peer-reviewed references and government economic data sources/references from Week 3.

Format your assignment consistent with APA guidelines.

Click the Assignment Files tab to submit your assignment.

Attached are as follows:

Wk 3 paper

Wk 3 grade to help guide you

Grading guide for this paper

Reference:

McConnell, C., Brue, S., & Flynn, S. (2015). Economics Principals, Problems, and Policies (20th ed.).

https://library.phoenix.edu/Phoenix


Unformatted Attachment Preview

Individual Assignment: Research Analysis for Business Week 3 Grading Guide/Rubric Content – 7 Possible Points Identified the market structure student’s chosen firm operates in, analyzed student’s chosen firm’s current market share, and identified the firm’s local/global competitors. Analyzed the barriers to entry in this market to illustrate the potential for new competition and its impact on firm’s future in the market. Identified and explained trends in current macroeconomic indicators for last three years including: • Current stage of the business cycle. • Real gross domestic product (GDP). • Inflation as measured by the consumer price index (CPI). • Unemployment rate. • Federal funds rate. • Current rate for borrowing funds such as the so-called “prime rate.” Evaluated trends in demand over last three years and explained their impact on the industry and the firm. Included quarterly (last two quarters) and annual sales (last three years) figures for the product student’s firm sells. Created business strategies by analyzing information and data related to the demand for and supply of firm’s product(s) to support student’s recommendation for the firm’s actions. Included a graphical representation of the data and information used in student’s analysis. Examined available, current data and information, such as pricing and the availability of substitutes, and explained how student could determine the price elasticity of demand for firm’s product. Assessed how the price elasticity of demand impacts the firm’s pricing decisions and revenue growth. Applied the concepts of variable and fixed costs to firm for informing its output decisions. Analyzed how different kinds of costs (labor, research and development, raw materials) affect the firm’s level of output. Based on the data gathered and analysis performed student’s conclusion included: • Business strategies, including price and non-price strategies, based on market structure to ensure the market share and potential market expansions. Also included exploration of global opportunities for student’s business in a Partially Met Met Not Met Comments: Mkt structure, Mkt share, Local/global competitors, Barriers to entry/Relation to potential competition & impact on firm’s future in mkt. [Yes] 1 3 yr trends – -Current stage in bus cycle -Real GDP -Inflation (CPI) -UE rate -FFR -Current rates for borrowing funds [Yes] 1 -D trends over last 3 yrs & explained impact on industry and firm [yes] -Last 2 qtr+3 yrs sales data [ok] -Bus Strats by analyzng info & data rel to D & S to support recs for firm’s actions [ok] -Incl graf of data & info used. [No] 0.9 0.9 -Exam avail current data & info (pricing, avail substit) & explained calc of PEOD. [brief] -Assessed how PEOD impacts pricing decis & rev growth [ok] 0.9 -Used fixed/var cost of firm to shape output decisions. [ok] -Explain how diff kinds of costs affects firm’s level of output [brief] 0.8 Conclusions -Bus price/nonprice strats based on mkt struct to insure mkt share & potential mkt expansions -inclu explor of global oppors for bus w/recommends -Rec for how firm can manag 1 Content – 7 Possible Points • • • Met Partially Met Not Met dynamic business environment and provided recommendations. A recommendation for how the firm can manage its future production by synthesizing the macroeconomic and microeconomic data presented. Proposal for how the firm’s position within the market and among its competitors will allow it to take your recommended action. Recommended strategies for the firm to sustain its success going forward by evaluating the findings from demand trends, price elasticity, current stage of the business cycle, and government policies. Cited a minimum of three peer-reviewed references and a minimum of two government economic data sources/references. 1,050 words. Writing Guidelines – 3 Possible Points future productn using macro/micro data -Proposal for how firm’s position in mkt & among competitors will support recommendations -Rec strats for firm to sustain success by eval findings frm dem trends, peod, current stage of bus cycle & gov’t policies [brief in parts] Met 0.5 Intellectual property is recognized with in-text citations and a reference page. 0.5 Paragraph and sentence transitions are present, logical, and maintain the flow throughout the paper. 0.5 Total Earned 7 6.5/7 Partially Met Not Met Comments: OK OK OK 0.5 0.5 The analysis is a minimum of 1,050 words in length 0.5 Additional comments:95% - Nicely done!! \ Total Available OK Rules of grammar and usage are followed including spelling and punctuation Assignment Total 3 peer reviewed refs & 2 gov’t econ data sources & 1,050 words [Yes} 1 The paper—including tables and graphs, headings, title page, and reference page—is consistent with APA formatting guidelines and meets course-level requirements. Sentences are complete, clear, and concise. Comments: 9.5 OK OK Total Available Total Earned 3 3/3 10 9.5/10 13. Position (5%) Does Not Meet Expectations Did not defend your position, either for or against, expanding your company's production into your chosen country based on your research. Approaches Expectations Analyzed your position, either for or against, expanding your company's production into your chosen country based on your research. Meets Expectations Defended your position, either for or against, expanding your company's production into your chosen country based on your research. Exceeds Expectations Synthesized your position, either for or against, expanding your company's production into your chosen country based on your research. 14. The paper is organized in a logical and coherent manner. Transitions are used to improved flow. (10%) Does Not Meet Expectations Paper is organized in a logical or coherent manner but not both. Approaches Expectations Paper is generally organized in a logical and coherent manner; transitions, however, are awkward. Meets Expectations Paper is generally organized in a logical and coherent manner; transitions for the most part are smooth. Exceeds Expectations Paper is fully organized in a logical and coherent manner; transitions are smooth and flow seamlessly from one point to the next. 15. Valid research is used to appropriately support the content. References to sources are used when required. (10%) Does Not Meet Expectations Valid research is not used to support content; references to sources are not used when required. Approaches Expectations Valid research is generally used to support content; references to sources are minimally used when required. Meets Expectations Valid research is properly used to support content; cited at least two references. Exceeds Expectations Valid research is properly used to support content; cited more than two references. 16. The author uses correct grammar and spelling. Format and citations are consistent with APA rules. (10%) Does Not Meet Expectations Multiple errors in grammar and spelling; some format and citations are not consistent with APA rules. Approaches Expectations Several errors in grammar and spelling; some format and citations consistent with APA rules. Meets Expectations Few errors in grammar and spelling; most format and citations consistent with APA rules. Exceeds Expectations No errors in grammar and spelling; all format and citations consistent with APA rules. Rubric [OA] Challenges of Expansion to a Foreign Location (100% of total points) 1. Global Economic Conditions (10%) Does Not Meet Expectations Did not evaluate current global economic conditions and their effect on local macroeconomic indicators in your selected country. Approaches Expectations Analyzed current global economic conditions and their effect on local macroeconomic indicators in your selected country. Meets Expectations Evaluated current global economic conditions and their effect on local macroeconomic indicators in your selected country. Exceeds Expectations Synthesized current global economic conditions and their effect on local macroeconomic indicators in your selected country. 2. Forecasts (5%) Does Not Meet Expectations Did not consider forecasts for population growth, GDP growth, GDP per capita growth, export growth, and sales growth. Approaches Expectations Analyzed forecasts for population growth, GDP growth, GDP per capita growth, export growth, and sales growth. Meets Expectations Considered forecasts for population growth, GDP growth, GDP per capita growth, export growth, and sales growth. Exceeds Expectations Developed forecasts for population growth, GDP growth, GDP per capita growth, export growth, and sales growth. 3. Competitor Production (5%) Does Not Meet Expectations Did not differentiate the competitors' existing production in the chosen country. Approaches Expectations Explained the competitors' existing production in the chosen country. Meets Expectations Differentiated the competitors' existing production in the chosen country. Exceeds Expectations Evaluated the competitors' existing production in the chosen country. 4. Forecast Sales (5%) Does Not Meet Expectations Did not assess forecast sales in the selected country. Approaches Expectations Analyzed forecast sales in the selected country. Meets Expectations Assessed forecast sales in the selected country. Exceeds Expectations Assessed forecast sales in the selected country. The assessment went beyond the assignment requirements. 5. Types of Economy (5%) Does Not Meet Expectations Did not prioritize the type of economy that exists in your selected country - closed, mixed, or market. Approaches Expectations Explained the type of economy that exists in your selected country - closed, mixed, or market. Meets Expectations Prioritized the type of economy that exists in your selected country - closed, mixed, or market. Exceeds Expectations Evaluated the type of economy that exists in your selected country - closed, mixed, or market. 6. Differences in Types of Economy (5%) Does Not Meet Expectations Did not explain the difference between these types of economies and how this might affect your expansion. Approaches Expectations Identified the difference between these types of economies and how this might affect your expansion. Meets Expectations Explained the difference between these types of economies and how this might affect your expansion. Exceeds Expectations Evaluated the difference between these types of economies and how this might affect your expansion. 7. Credit Market Conditions (5%) Does Not Meet Expectations Did not justify how your chosen country's current credit market conditions affect demand for your product or service and your planning or operating decision for your production in that country. Approaches Expectations Analyzed how your chosen country's current credit market conditions affect demand for your product or service and your planning or operating decision for your production in that country. Meets Expectations Justified how your chosen country's current credit market conditions affect demand for your product or service and your planning or operating decision for your production in that country. Exceeds Expectations Justified how your chosen country's current credit market conditions affect demand for your product or service and your planning or operating decision for your production in that country. Justification went beyond the expectations of the assignment. 8. Role Central Bank (5%) Does Not Meet Expectations Did not analyze the role of the selected country's central bank on that country's economy. Approaches Expectations Explained the role of the selected country's central bank on that country's economy. Meets Expectations Analyzed the role of the selected country's central bank on that country's economy. Exceeds Expectations Evaluated the role of the selected country's central bank on that country's economy. 9. Comparisons (5%) Does Not Meet Expectations Did not compare the availability, education, and job skills of the work force in the selected country. Approaches Expectations Identified the availability, education, and job skills of the work force in the selected country. Meets Expectations Compared the availability, education, and job skills of the work force in the selected country. Exceeds Expectations Evaluated the availability, education, and job skills of the work force in the selected country.
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Explanation & Answer

Attached.

Running Head: CHALLENGES OF EXPANSION TO A FOREIGN MARKET

Challenges of Expansion to a Foreign Market
Name
Instructor
Institutional Affiliation
Date

1

CHALLENGES OF EXPANSION TO A FOREIGN MARKET

2

Company Introduction
The Walt Disney Company is an American multinational entertainment and mass media
company that is located in Burbank, California. The diversified media conglomerate is the
second largest media company in the world in terms of revenue. The company was established in
1923 by Walt and Roy Disney. Since then, the company has been engaging in a range of
products and services such as film and television production as well as theme parks. Walt Disney
is a public traded company that trades its financial securities in the New York Security Exchange
Market (Mannheim, 2016). The company’s CEO and chairman is Bob Iger and it employs more
than 200,000 employees in its world-wide stores.
Walt Disney New Division for Pixar Animation Studios will be introduced in the Chinese
Market, one of the world’s fastest growing economies. The decision to introduce the company’s
new division in the Chinese market was reached after evaluation of the various economic factors
existing within the Chinese market (Krugman, 2008). China is considered one of the fastest
growing economies in the world. In 2014 the Chinese economy made up about 17.53% of the
World’s Gross Domestic Product (GDP) according to World Bank. China being one of the
countries with the highest purchasing power will therefore be an ideal market to introduce this
product. Research indicates that in 2015 about £ 8.9 Trillion in financial assets were held by
households and this means that the company has opportunity to do well in China since most of
the wealth is held by individuals who are the prime consumers of the company’s products. China
also provides an ideal place to start up a company since the country has the strongest and huge
open economy in the world with a cutting edge for business culture (Krugman, 2008). This
makes it more attractive for foreign direct investment by many foreign companies across the

CHALLENGES OF EXPANSION TO A FOREIGN MARKET

3

globe. The country’s population also has the strongest urge for new product trends and
technology.
Although Walt Disney has its existence in the Chinese market, the company’s new
division of Pixar Animation Studios will be introduced in the Chinese Market. China is also one
of the countries with the highest disposable income and this means the country will be an ideal
place to conduct business for the company. Moreover the country is also considered one of the
countries more current in technology and since Walt Disney’s Pixar Animation Studios is an
innovative product made from the current technology, it will be more attractive to a large number
of consumers within the Chinese market (Krugman, 2008).
Current Global economic condition of China
China’s economy has been forecasted as the second largest economy among the emerging
market economies after India. The country’s economy is highly developed, stable and efficient
and on the basis of productivity the country is ranked 12th. Labor and workforce in the Japanese
market are extremely efficient and highly skilled (Chen, 2004). The country also has the highest
growing population with middle class being the highest within the country’s population income
prospects. The country has the largest overseas investors with the country’s economic growth
heavily dependent on export in which the country exports electrical equipments and machines.
China is the third largest economy in normal GDP and forth largest by purchasing power
parity. The country’s Gross Domestic Product currently stands at 19.51 Trillion US Dollars with
a population of about 1.367 billion people based on the statistics provided by the International
Monetary Fund (IMF). Despite the global economic crisis that hits the global economy in 20082009, the country has been able to stand steadily in terms of stable economy (Krugman, 2008).

4

CHALLENGES OF EXPANSION TO A FOREIGN MARKET
Macroeconomic indicator (China)

2012

2013

2014

2015

2016

2017

2020

GDP (USD bn)

8,575

9,694

10482

11065

11964

12600

14800

Inflation Rate (CPI, annual variation in %)

2.72

2.63

1.92

1.44

2.0

1.2

3.7

Unemployment Rate

4.1

4.1

4.1

4.05

4.05

4.02

4.0

GDP per capita (USD)

6,333

7,124

7,662

7,924.65

-

6,890

8,330

Population (million)

1,354

1,361

1,368

1,376

1,382

1,388

1,407

Exports (USD billion)

2,049

2,209

2,342

2,150

1,720

2,100

Source: Tradingeconomics.com
Competitor Analysis
Expanding the company’s division into the Chinese market may seem to be very
productive considering the fact that the country has a large population and a large number of
middle class consumers that have high affinity for technology related products. It is also
important to note that although the Chinese market would be a productive market for the
company, it’s a very competitive market considering the fact that the country has a large number
of techno savvy companies (Krugman, 2008). There are several companies that produce similar
products to that of Walt-Disney in the Chinese market. Despite the presence of these companies
in the Chinese market, Disney still enjoys greater market share in the industry.
Walt Disney’s main competitors include Viacom, Time Warner, 21st Century Fox, CBS,
and Comcast. Although these companies compete for the same market with Walt Disney, Walt
Disney still enjoys greater popularity within the market. Time Warner is the biggest competitor
of Walt Disney within global market. The company not only tries to challenge Walt Disney in

CHALLENGES OF EXPANSION TO A FOREIGN MARKET

5

the television industry but also in the merchandise sector. CBS on the other hand offers a huge
threat to Walt Disney and ABC television network through their innovative media programming
products (Krugman, 2008). Although ABC presents a huge future threat to Walt Disney, Walt
Disney still enjoys larger market share when compared with its close competitors.
Forecasted Sales for the company in the Chinese market
Although there is stiff competition within the Chinese market, the company has
forecasted sales of about 200 Billion Yuan for the first year of operation of Walt Disney’s Pixar
Animation Studios. Consequently the company intends to gain a market share of about 50% in
the Chinese market and this is seen from the fact that Chinese population has high affinity for the
new product and more innovation (Krugman, 2008). Since the company intends to introduce
products that have existed in the Chinese market though in the perspective of different brand a
high sales is forecasted for the first year of operation and in the consequent years.
China’s open economy
The type of economic system that exists within a country usually determines the level of
foreign direct investment (FDI). Closed economies usually are unattractive for foreign investors
since the government imposes restriction on export and imports as well any entry by other
investors within that market. The most common economic systems are traditional, command,
market and mixed economies and each of these economic systems have their own strengths and
weaknesses in regards to trade and investment. Chinese market economy is an open economy
which means that foreign companies are free to set up their firms and carryout business freely
within the market. Traditional economic systems are the oldest economic systems. This system
influences the produc...


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