Grid Analysis to invest a theme park for Walt Disney

Topics: The Walt Disney Company, Walt Disney, Walt Disney Parks and Resorts Pages: 9 (3041 words) Published: December 15, 2013
1.0Introduction
Grid Analysis (also known as Decision Matrix Analysis, Pugh Matrix Analysis or MAUT, which stands for Multi-Attribute Utility Theory) is a useful technique to use for making a decision. It is particularly powerful where you have a number of good alternatives to choose from, and many different factors to take into account. This makes it a great technique to use in almost any important decision where there isn’t a clear and obvious preferred option. Being able to use Grid Analysis means that you can take decisions confidently and rationally, at a time when other people might be struggling to make a decision. Besides, it is easier to manageable, efficient and effective. The technique works by getting you to list your options as rows on a table, and the factors you need consider as columns. You then score each option or factors combination, weight this score, and add these scores up to give an overall score for the option. Here is the example of a grid analysis.

VariableLeverageCountry
ArgentinaBrazilCuba Thailand Indonesia
Accepted Factor (A);Unaccepted (U)
Allow 100% equity hold
Allow licensing to subsidiaries
which are owned by majority
Income (higher score = higher choice)
Tax rate0 - 2
Economy - Income per capita0 - 5
Market size0 - 4
Total

Walt Disney Company have been the world’s largest media corporation, with five main business segments of media networks, parks and resorts, studio entertainment, consumer products and interactive media. More than 55 year later, Walt Disney Company have expand their business to five world class Walt Disney Parks and Resorts vacation destinations with 11 theme parks and 43 resorts in North America, Europe and Asia. Looking into great business opportunities on the Parks and Resorts, the expansion of this business to maximize the earnings and cash flow as well as allocating capital towards growth initiatives, a comparative analysis of potential countries to expand its theme park business has been done.

Expanding a theme park business will need six different variables to take into account. It works by listing down options as rows on a table, and the variables that need to measured as columns. Count in score of each option/factor combination, weight this score by the relative importance of the factor, and add these scores up to give an overall score for each option. For the case in point, the analysis has been done based on the information which is divided into three categories of Equity, Income and Risk. However, the Grid comparison analysis to compare potential countries in this case has a slight different for the first category variable. This firs category variable which is Equity does not require counting any numbers to get the result/score. It is only decided by using two possibility options which are Accepted or Unaccepted. While the other two variables which are Income and Risk remains as usual that required a calculation of scores to get a result.

For the first category of “Equity , the variables involved are the possibility to allow 100% equity hold and the possibility to licensing to subsidiaries which are own by majority. For the rest of the category of “Income” and “Risk”, each category have three factors to be look into. For “Income” variables there are Law and Regulations which include the taxes rates, Economy of the country that involves the country income per capital and market size. For “Risk” variables there are Geographical as this includes the weather or climate. Weather or climate can be a risk for many theme parks, if the weather is too cold the visitors may not visit the place or the weather is too hot will cause many staff to have difficulty performing outdoors. It is also determine the frequent of natural disaster happenings that includes earthquakes or floods. Foreign exchange rates and the potential political problem will be part of the risk as well...

References:  Tariffs - The Economic Effect of Tariffs retrieved on 21st October 2013 from http://economics.about.com/cs/taxpolicy/a/tariffs.htm
 Geographical of Cuba, Brazil, Thailand and Indonesia from http://en.wikipedia.org/wiki/Main_Page
 Tariff Rate & Population of Cuba, Brazil, Thailand and Indonesia from http://www.tradingeconomics.com
 Shyam Kemani, Merger Policy in Small vs.Large Economies, in CANADIAN COMPETITION POLICY AT THE CENTENARY 205 (R. Shyam Khemani& W.T. Standbury eds., 1991
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