Walt Disney`s Management of Diversity and Its Challenges - Case Study Example

? WALT DISNEY’S MANAGEMENT OF DIVERSITY AND ITS CHALLENGES By ID Number Module and Number of Submission WALT DISNEY’S MANAGEMENT OF DIVERSITY AND ITS CHALLENGES Introduction “The Walt Disney Company, together with its subsidiaries and affiliates, is a leading diversified international family entertainment and media enterprise” (Disney, 2012). The North American company has five business segments including media networks, parks and resorts, studio entertainment, consumer products, and interactive media. Working closely together, each segment is involved in the international market. In 1923, Walt Disney founded Studio Entertainment, using animated features and live action motion pictures “based on story telling and entertainment experiences” (Clarke and Chen, 2012, p.321). Associated with several international film companies, the company diversified to open the Disneyland Theme Park in California in 1955. The second Theme Park, with resorts, opened in Florida in 1971. Disney’s other key theme parks include the EPCOT Centre opened in 1982 and Animal Kingdom in 1998 in Florida; as well as Tokyo Disneyland in 1983; and Disney Paris in 1992 (Clarke and Chen, 2012). Thus, “today, Walt Disney’s Parks and Resorts operates or licenses 11 theme parks on three continents” (Clarke and Chen, 2012, p.322) including North America, Asia and Europe, and a twelfth is proposed for Shanghai in China. Merchandising in park attractions was introduced in 1987, and the company offered time-share ownerships in the park resorts from 1991. Walt Disney World further diversified its business into Education in 1996, and fitness, Sports Training and Events in 1997, besides filming, recording, network, broadcasting, cruising, and other projects. The Walt Disney Company’s entry into the international market in Europe and Asia required its use of types of diversity management in operating their products in new cultural environments. Its French subsidiary, the Euro Disney SCA (societe en commandite par actions) formed a limited partnership with the host country. Walt Disney Company’s multinational business operations necessitates the company’s management of a diversity of people from different cultural backgrounds in its workforce (Clarke and Chen, 2012). Thesis Statement: The purpose of this paper is to investigate Walt Disney’s management of diversity and related challenges in the organisation. Walt Disney Company’s Diversity Management According to Clarke and Chen (2012), diversity takes into account the differences between individuals. Diversity management requires an adaptation of executive skills and styles for successful outcomes in managing a diverse workforce. Effective diversity management “reduces resistance to working with members of another ethnic, racial, or cultural group” (Clarke and Chen, 2012, p.340); it also lowers the risk of miscommunication, and promotes unity among the members of the global multinational giant. Thus, the Walt Disney company is required to be knowledgeable about the behaviour, beliefs and habits of the different cultures of the host countries. At the same time, the culture of the parent company also plays a vital part in diversity management. Although some researchers such as Gerhart and Fang (2005) have opposed the emphasis on national culture and the overlooking of organisational differences in diversity management, multinational companies’ country of origin is acknowledged as an important element, in most research undertaken in this domain, as reiterated by Harzing and Sorge (2003). The broad basis for the conceptual framework for diversification examines key factors such as cultural differences, institutional differences, organisational differences and their mutual dynamics (Schuler et al, 2002). One of the critical challenges facing multinational companies is balancing the need for global integration and local adaptation. The national origin of MNCs is found to have a crucial impact on this balance (Thite et al, 2012). Further, as opposed to Ohmae’s (1990) theory of a borderless world and nationless corporations, cultural and institutional determinants in the countries where subsidiary companies are located, have been found to be significant factors emerging from a business’ context. For example, the Disney Corporation’s much acclaimed French venture, ‘Euro Disney’ theme park, initially failed because of stereotyping of the European culture by the company. This was undertaken, because the same model had worked for establishing Walt Disney theme parks in the two distinctive cultures of America and Japan. However, Disney’s setback in France was due to particular cultural facts that the company overlooked in its preparations. Disney’s use of lawyers instead of executives was considered by the host country’s representatives as a sign of mistrust and rejection of French business practices. In France, lawyers are used only if all other methods fail. Further, the employees in Disney’s French theme park considered their choice of apparel to be a mark of individuality, and found it difficult to accept the strict dress code imposed by the Disney parent company. Similarly, the inadequate provision of seating in the dining areas, based on the American company’s knowledge of French commuters on workdays, created overcrowding and tourists’ dissatisfaction. Several other such stereotyping mistakes compelled the Walt Disney company to make cultural adjustments. This indicates that “managing cultural diversity is not only a legal, social, or moral need, it is a business need as well” (Bhatia and Chaudhary, 2003). On the other hand, Gamble (2003) observes that in diversity management, the country of origin was the main influence on the multinational company’s effort to exert control to some extent over its foreign subsidiary. Hence, the American theme park of Walt Disney’s in Asia and Europe would reflect the parent company’s culture, while including some modifications for local characteristics. This is reiterated by Harzing and Sorge (2003), who add that although multinational companies are highly internationalised, their organisational coordination and control practices at the international level are usually influenced by their country of origin (Thite et al, 2012). Cultural differences are frequently related to human behaviour pertaining to “communication, beliefs, religion, social grouping, customs, actions, language, values, and ethnic backgrounds” (Clarke and Chen, 2012, p.340). Differences in these key issues arising in working environments can lead to conflict between people or with the organisation. For managers to ensure that all members of the work team have a sense of belonging to the team and to the organisation, it is essential that managers are educated and trained about different cultures and religions. The Disney University conducts a three-day course for every new member of staff, in order to acclimatise them to the culture of the international company. This on-site course also offers languages and communication, to drive cultural awareness among all members of the staff. “Western socialization regards emotions as individual, voluntary, and intentional. The standardisation of service smiles has therefore depreciated their value” (Raz and Rafaeli, 2007, p.202). This has resulted in a negative meaning to the term ‘smile training’ in the United States. The Disney University was similarly considered as wrong for training employees in the modern North American art forms of the frozen smile and the standard answer delivered in an appropriately spontaneous manner. In fact, some North American workers consider ‘smile training’ to be a type of deskilling promoting alienation. Similarly, critical North American sociologists regard service management as a hegemonic program that imposes organisational structure and instrumental rationality to individuality and emotion (Raz and Rafaeli, 2007). Contrastingly, ‘smile training’ was regarded as beneficial, and readily undertaken by both Japanese managers and workers. It is likely that this is caused by a local, pre-existing cultural concept of ‘the smile’ as the primary expression of emotion. The Japanese responded to the concept as being too weak, rather than too strong, and did not consider it as shallow and infantile. Trainers and managers do not consider service culture as important, and “criticize North American service manuals as lacking discipline and formal character training” (Raz and Rafaeli, 2007, p.202). At the same time, however, because of globalisation, managers and trainers in the Japanese service industry continue to access and use service manuals. This also indicates the Japanese inclination towards cultural hybridisation and integration. The service manual was changed to fit the local cultural environment in Japan. Thus, the smile has become a standard hallmark of global service culture; hence “cultural differences in the motivation and social structuring associated with it have been ignored” (Raz and Rafaeli, 2007, p.203). The authors found that sociological and managerial cosntructs of emotions at work, such as ‘emotional dissonance’ and the ‘false self’, are not universal responses to the commercialisation of human feelings. On the other hand, they are cultural responses conditioned on other discourses (Raz and Rafaeli, 2007). In undertaking its theme park project in Shanghai, China, Walt Disney company will be required to consider the popularity of amusement parks in the area. Over 2000 amusement parks built in China from 1994 to 1999 performed poorly. The reasons for the failure include a lack of interest for theme parks in the area, a saturation of the market, or that they were not of the same standard as a Disney theme park. According to the Disney company, its new theme park at Shanghai will continue to maintain its American feel; however the hotels and restaurants will be authentically Chinese. Disney’s entrepreneurship in China will reflect its position as a large multinational company, state Clarke and Chen (2012). Thite et al (2012) reiterate that the dynamics between national and organisational culture have a significant influence on the success of diversity management across nations. For example, Cao and Zhao (2009) report their evidence from research indicating that a significant proportion of China’s foreign-invested-enterprises localise their labour practices by adopting Chinese-style structures, and “the extent of localisation is shaped by both institutional processes and strategic considerations” (Cao and Zhao, 2009, p.165). The researchers found that the Chinese style structures effectively reduced tension and conflict between labour and management, whereas the two western style structures did not serve this function. The findings emphasize the high potency of the Chinese institutional environment, and demonstrates the interaction of organisational interests with institutional forces. This creates a uniquely local mixture of managerial structures and practices in the era of globalisation. Multinational companies are under dual pressure for the need to conform to home country and host country institutional environments when planning and implementing human resource management strategies and practices, state Hillman and Wan (2005). This is reiterated by the evidence from research conducted by Farley et al (2004). Although there is increasing globalisation of trade and commerce resulting in cross-national integration, there are considerable variations in implementing business activities and in employee management (Brewster et al, 2005). This is because universalistic models of international human resource management focusing on a single best way has limitations, asserts Hofstede (2000). Thus, each multinational company has to develop distinctive human resource management practices and policies, based on its unique cultural and institutional factors. Diversity and multiculturalism are theories that are widely accepted and promoted by various social movements, through policies and practices of states, businesses, schools, and other organisations across the globe. According to Boli and Elliott (2008), these concepts both celebrate and protect group differences, and reinforce the differences, by forming mask-like facades to cover the individual nature of world society. Underlying this process is cultural and organisational globalisation of the individual, that forces the construction of personal identities as both authentic and distinctive. Collective identity features become the indications of personal differences and uniqueness. However, the nature of these collective identities is rapidly changing; and the factors that emphasize differences such as rising individualism, requirement for equality, formation of identity, and distinctiveness, form the basis for reducing the differences in collective identities. These change corporate collectivities once deeply rooted in geographic, ethnic, linguistic or ancestral ties, into categorical groups that provide identity volitionally to groups of individuals. The authors state that corporate identities may continue to be present, but with their transformation into categorical identities, “they become facades behind which the depth of differences among the world’s cultures and subcultures is diminishing rapidly” (Boli and Elliott, 2008, p.540). Crail (2003) states that more than 60,000 people work at Walt Disney World, Florida. The company’s culture has been planned and developed. The labour unions although 26 in number, have never held a strike in all these decades since the inception of the Theme Park. The company’s management designed the culture, and the labour union had no part in it, unlike in other workplaces with weak managements. Further, the company strongly emphasizes its heritage and traditions, celebratig its history all the way back to the founder brothers Walt and Roy Disney. This is because of the importance given to openness, respect, honesty, integrity and balance, by the company’s management. Part of the firm’s culture is the maintenance of a common language, with a first-name custom for all Disney employees, including the chief executive. Moreover, using the term ‘cast member’ instead of ‘employee’ underlines the fact that each individual has an important part in the organisation’s functioning, and it was not merely a job they performed. This culture of commitment has been transmitted to cast members through the four-part model of selection, training, communication and day-in, day-out care for the company’s employees (Crail, 2003). The values that form organisational culture, are shared collectively among members of a company. They are categorised in seven dimensions including “innovation, stability, respect for people, outcome orientation, detail orientation, team orientation, and aggressiveness” (Liu, 2004, p.505). While some companies have extremely strong cultures which are uncompromisingly fixed, and the subsidiaries have to make changes to adjust to the cultural elements of the main organisation, the organisational cultures in other companies may be weak. Significantly, the transfer of practices is impacted by the compatibility of the organisational cultures of the two organisations involved in the alliance, as a part of the multinational company and its subsidiaries, or those firms undertaking a merger or acquisition. Grover (2007) examines how Robert Iger, Walt Disney company’s new chief executive brought about a transformation in the company’s culture, and dramatically improved corporate performance. The executive’s 2006 success story is attributed to his implementing a less centralized organisational framework, and his creation of a team spirit in the company. Iger’s managerial style was found to be completely different to that of his predecessor Michael Eisner. Among several achievements, a notable success was that Iger was able to win over the Pixar crew now in charge of Disney animation unit. It is reported that Iger planned to increase the company’s online benefits by “developing a direct link with consumers on the web to supplement the company’s existing deals with cable and satellite providers” (Grover, 2007, p.74). The evidence indicates that during diversification, corporate culture change is effectively carried out by using a change process that accounts for all its different dimensions. Ford et al (2008) propose a ‘5-P’ framework for undertaking change. They apply the framework to the operations at the Swan and Dolphin Hotels at Walt Disney World, as an example. The five ‘Ps’ include purpose, priorities, people, process, and proof. This implies that change should have a stated objective, the specific aims of change should be identified and highlighted, and people likely to be impacted by the change should be identified and included in the change process. Further, the “process should use appropriate levels of direction, participation, and consultation” (Ford et al, 2008, p.191), and the outcome should prove clearly the benefits achieved by the change. Although the Swan-Dolphin complexing was not smooth, ‘5-P’ model helped to achieve a successul change in the corporate culture of the two hotels at Walt Disney World, saving $4 million annual expenditure. In its business operations and diversification, the multinational giant Walt Disney followed a simple formula into the 1990s. Consequently, it achieved a 20 percent compound growth from Tokyo Disney, Beauty and the Beast, and Disney Store. Through the downward spiral of the late 1990s, Disney again achieved a growth of 18 percent. This was accomplished because of the introduction of new technology to drive the company’s subsidiary Pixar, resulting in good performances in its key film markets. Disney’s start-ups in retail also did well, compensating for adverse outcomes in its live entertainment business. While September 11, 2001 affected its tourism-related businesses for a short while, “home entertainment products sold well, proving the worth of diversification” (Emerald, 2007, p.21). Conclusion This paper has highlighted the multinational Walt Disney Company’s diversity, and investigated the company’s management of diversity and associated challenges. The importance of prioritising cultural management in organisations, particularly in large companies such as Disney with subsidiaries on other continents, is evident. It was found that besides its production of films, and development of theme parks, the company has also globally diversified into several other business spheres including sports, education, recording, and product manufacture and retailing. Further, its establishment and operation of Disney theme parks in America as well as in Asia and Europe, and other diversification projects are based on cultural transmission as well as adoption of local culture to some extent. As in most multinational organisations, the culture of the Disney’s country of origin is the dominant one at the company’s theme parks in Japan and Paris, and at Shanghai in China. However, several local cultural elements of the host country were taken into account, in establishing the subsidiaries. Transfering human resource management practices across borders is a key issue in multinational companies. This diffusion has to take into consideration the local culture and institutional context, as well as ensure the carrying out of best practice in diversity management by local managers (Thite et al, 2012). Diversification is considered as the outcome of business strategy. The chances of good results are maximised through a willingness to take risks, balanced by practicality, and acumen. Strategies that successfully helped in managing uncertainty include reacting to internal events to develop new opportunities; greater understanding of dangers, and a readiness to eliminate losses and to change course (Emerald, 2007). It is concluded that Walt Disney is successful in its growth and diversification projects; it is learning to overcome cultural hurdles, and is beneficially operating theme parks in other countries, and establishing its different business products and trade processes across the globe. Bibliography Bhatia, S.K. and Chaudhary, P. 2003. Managing cultural diversity in globalisation: Key to business success of global managers, insights and strategies. New Delhi: Deep and Deep Publications. Boli, J. and Elliott, M.A. 2008 July. Facade diversity: The individualisation of cultural difference. International Sociology, 23(4), pp.540-560. 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Journal of World Business, 47(2), pp.251-258. Read More