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The purpose
Internet pose of the report is to undertake a feasibility study of countries in Africa, the Middle East, and Asia to establish their suitability for the establishment of Disney Studio. Owing to the increasing costs in developed countries, Disney Studio seeks to expand its operations into developing countries in Africa, the Middle East, and Asia.
Disney studio searches for developing countries, which have minimal barriers to actors and directors in the film industry, offer cheap skilled labor, have stable and reliable sources of energy, have no legal barriers, have a stable government, own established infrastructure, and uphold favorable human resource policies. The objective of the report is, therefore, to analyze five countries in Africa, the Middle East, and Asia that meet the stated criteria that Disney requires.
The Selection of Countries
To select these countries, the report examined the film industry and assessed the degree of competition. Since competition is a major factor that would influence the feasibility of the studio, the report chose countries, which offer minimal competition to Disney Studio. Moreover, the report selected countries that have well-established legal and physical infrastructures that support international enterprises. The report also considered technology level and economic growth in the selection of these countries.
The objective of this report is to outline the profile of South Africa, Kenya, the United Arab Emirates, Malaysia, and the Philippines with a view of undertaking feasibility for the establishment of Disney Studio and finally offer a final recommendation as to which country is the most suitable.
South Africa
Search criteria
The report used the following steps in selecting South Africa as one of the countries in Africa. The search criteria that lead to the selection of South Africa is that Disney requires a country in Africa, which is on the robust economic path to development.
The country must have stable economic and political environments that support the establishment of multinational companies. Regarding pertinent resources, the country must have adequate skilled labor for the film industry, advanced technological development, and established communication infrastructure. The country must also have enough and reliable sources of energy to drive the film industry.
South Africa meets the above criteria because it is an economic hub in Africa with bustling film industry and an impeccable investment portfolio. The economic state of South Africa is favorable because its economic growth is robust and favorable to multinational companies. England states that the film industry is booming in South Africa because investors have flooded the lucrative film industry (par. 10). In essence, South Africa has produced many major films, therefore, making it a favorable and a lucrative choice for Disney.
In the legal aspect, South Africa offers limited barriers to investors, and the government supports foreign investments. In the aspect of labor, South Africa has highly skilled labor in the film industry owing to the advancement of the film industry. Moreover, the country has adequate infrastructure, advanced technical capacity, and favorable weather all year round.
General stability analysis
Currency inflation issues
The inflation rate in South Africa fell to 3.9% in February 2015. The country has heavily invested in an effective regulatory infrastructure, financial market, and financial institutions to mitigate the negative effects of inflation and encourage investments.
Political map and potential problems
South Africa has a relatively stable political situation characterized by an effective democratic system considered as the best in Africa. It has an advanced legal infrastructure, which supports good governance and business ethics.
Recommendation
Disney should have a legal adviser to ensure that it operates within the confines of prevailing business laws and regulations.
Entry and strategic decisions
South Africa offers a tax reduction of 20% for film production costs of about $1.3 million and a further tax reduction of between 22.5% and 25% in post-production costs exceeding $166, 000. Therefore, these offers form an easy entry point for Disney in terms of the initial investment.
Input scarcities
Skilled employees
The number of skilled employees is insufficient because the South African film industry relies heavily on foreign filmmakers, who have enormous projects (England par. 22). Thus, the scarcity of employees is a challenge that Disney Studio would face.
Pertinent resources
Given that South Africa is a newly developed country, it experiences scarcities in pertinent resources such as advanced equipment, modern studios, and reliable internet, which hinder the growth of the film industry.
Energy Issues
Increasing demand for coal and fossil fuel in generating electricity and the unsustainability of these sources are the energy issues that South Africa is struggling to overcome. These energy issues would affect the establishment of the Disney Studio in South Africa.
Infrastructural Issues
Inadequate transport infrastructure is a major issue that affects economic progress in South Africa. Moreover, insufficient housing and offices for businesses is a hindrance to the establishment of Disney Studio.
Human Resources Management
Given that skilled employees are limited, human resource management requires to hire expatriates to supplement the local labor force. The human resource management must comply with the requirements of the minimum wage, as well as other related regulations such as minimum working days, annual holidays, maternity leave, and other time offs.
Kenya
Search criteria
To pick Kenya, the report used search criteria, which consider the economic stance of Kenya in Africa. Moreover, the report considered the availability of skilled labor, which Disney can recruit and maintain cheaply.
Since regulations influence the establishment of businesses, the report considered favorableness of business laws. Infrastructural facilities such as communication networks, transportation networks, and availabilities of offices are other criteria that the report considered. Ultimately, the report used the criterion of the developmental stage of the film industry.
Analysis of the search criteria stated above shows that Kenya meets them. Essentially, Kenya is a lucrative country and an economic hub in East Africa. Kenya meets the search criteria because it has no stringent laws and regulations, which restrict the movements of people.
As a middle-income economy, Kenya encourages foreign investors to invest in the country and offers incentives to potential investors. In addition, facility acquisition is quite easy and cheap. The local film industry is in its formative stages, and thus, the labor market is potentially untapped. In this view, Disney can obtain enough labor and experience minimal competition.
General stability analysis
Currency stability issues
The inflation rate in Kenya fell to about 5.61% in February 2015, which shows that the country is set on the path to economic development. The Kenyan currency is relatively stable and supports foreign investments at minimal risk.
Political map and potential problems
Kenya has a relatively stable political environment when compared to other African countries because it respects human rights and offers freedom of speech. The government has made the investment process simple and transparent, as it is keen on attracting foreign investors at all costs.
Recommendation
Nonetheless, hiring a lawyer to offer legal advice is vital in ensuring compliance with all business requirements.
Entry and strategic decisions
Undoubtedly, Kenya has a huge base in the workforce because of the advancement in the education system. Therefore, investment in the country inclines towards a capital-intensive approach, where a lot of resources are necessary for the acquisition of facilities, equipment, machinery, and vehicles.
Input scarcities
Skilled labor
Kenyan has a scarcity of skilled employees because it is a developing country with few learning institutions that support the film industry. Moreover, expatriates are scarce because they are in high demand.
Pertinent resources
Since Kenya is a developing country with competitive markets, Disney will experience some input scarcities in pertinent resources in the aspects of technological equipment, appropriate tools for the film industry, and reliable internet.
Energy issues
Kenya relies on fossil fuels and hydroelectricity as the major sources of energy (Onuonga 307). These sources of energy are prone to be scarce because fossil fuels are subject to global markets, while hydroelectricity depends on the availability of rain.
Infrastructural issues
Poor transport infrastructure, scarcity of strategic offices, vulnerable energy infrastructure, and meager internet infrastructure are some of the infrastructural issues that Disney is likely to experience.
Human resource management
In Kenya, Disney would require to hire expatriates to supplement the local skilled workforce. Kenya has complex and stringent laws and regulations of employment. Employees must earn a minimum wage as directed by the government, as well as receive various benefits, including social security and health benefits. Moreover, employees are entitled to an annual leave of thirty days on a yearly basis.
The United Arab Emirates
Search criteria
In the selection of the UAE, the report compared the countries in the Middle East and used the criterion of economic development. In essence, the report selected the UAE based on the level of economic development, the degree of infrastructural development, the availability of skilled labor, political stance, legal structures, and the capacity to support foreign investments. Moreover, the report considered the availability of reliable and adequate sources of energy and technology advancement.
Based on the aforementioned criteria, the UAE qualifies one country in the Middle East. Evidently, the UAE is one of the richest countries in the Middle East, which drives the global economy. Assessment of infrastructure shows that the UAE has a modern infrastructure of transport and communication.
Regarding skilled labor, the UAE owns a large number of expatriates in the film industry. Owing to the monarchical system, the political environment is calm and stable. Moreover, Dubai is a global hub of investments because of the strategic and lucrative business opportunities.
General stability analysis
Currency stability issues
As of January 2015, the inflation rate of the United Arab Emirates was at 3.7%. The country is economically stable with no major disturbances in the financial market and institutions, thus making it a viable country for investment.
Political map and problems
The political climate is quite calm because it is under a monarchical system, which offers limited political rights and civil liberties. Hence, Disney has to operate within stringent regulations and laws.
Recommendation
To survive in a manageable environment, Disney should consult a local lawyer who will be able to offer the right advice on issues related to human resources.
Entry and strategic decisions
Investment in the United Arab Emirates is labor-intensive because a high percentage of the workforce comprises expatriates.
Input scarcities
Skilled labor
The United Arab Emirates is a developed country with skilled local labor and a large set of expatriates, who occupy a considerable part of the labor market.
Pertinent resources
The UAE has scarcities in pertinent resources such as housing, offices, and the internet.
Energy issues
Fossil fuel, which is a non-renewable source of energy, is the major source of electricity. However, the UAE has enough and reliable electricity.
Infrastructural issues
The UAE has a well-developed transport infrastructure in terms of roads, railways, and airports (Amrik, Brian, and Hawas 502). However, congestion owing to the overwhelmed transport system is an issue. Additionally,
Human resource management
Disney requires to hire expatriates because they are highly skilled. However, the importation of labor complicates the employment process, as obtaining visas, work permits, accommodation, and transportation are difficult. Employment laws indicate that employers must provide all these requirements for the employees, thereby making the process quite expensive.
Malaysia
Search criteria
In the selection of countries in Asia, the report searched for a country that stabled economically and politically. Moreover, the report considered a developing country with a favorable investment climate for foreign investments. The availability of adequate labor was also a factor that the report considered in the selection of the country.
Since infrastructure plays an important role in the film industry, the report considered the transport and communication infrastructure. Technological advancement and the state of the film industry were other significant criteria that the report used in selecting a favorable country.
Analysis of countries in Asia using the above criteria indicates that Malaysia qualifies. Fundamentally, Malaysia is one of the most vibrant economies in South-East Asia, which is politically and economically stable with considerable industrial growth. Malaysia has a favorable business environment because it is an economic powerhouse in the region, which has an open market that attracts foreign investors and has no major restrictions on border control. The film industry is developing, thus providing an opportunity for Disney to exploit.
General stability analysis
Currency instability issues
In February 2015, the inflation rate in Malaysia was 0.1%. Such an inflation rate means that it has a credible level of economic stability, which is quite suitable for investment. As the Malaysian government encourages film production and content development, it offers various incentives to both local and international film producers in a bid to turn Malaysia into a film production center.
Political map and problems
Malaysia exercises a monarchical political system, whereby a monarch comes only from the nine Sultans and rules using both common law and sharia law.
Recommendation
Compliance with common law and sharia law is necessary, for they stipulate business regulations and ethics.
Entry and strategic decisions
Disney requires to invest intensive capital because of the competitive Malaysian markets. However, it is relatively easy to set up a studio in the country due to the availability of a highly-skilled labor force, as well as the modernized infrastructural base.
Input scarcities
Skilled labor
Although skilled labor is sufficient, emerging competition in the global labor markets is likely to cause a scarcity of skilled employees in Malaysia.
Pertinent resources
Developing a communication network, insufficient housing, and competitive strategic offices are some of the pertinent resources Disney would be struggling to achieve.
Energy issues
Although Malaysia produces sufficient electricity, it is dependent on fossil fuels, which are subject to fluctuating global forces of the economy (Oh, Pang, and Chua 1246).
Infrastructural issues
Malaysia is still grappling with infrastructural issues such as poor road networks, evolving communication infrastructure, and inadequate housing.
Human resource management
Malaysia has a relatively sufficient skilled labor force; however, it is a multi-cultural society with different rights to the employees. Hence, it is very important to include cultural and religious issues when dealing with human resources.
Philippines
Search Criteria
The report considered the level of economy in selecting a country in Asia, which Disney can establish its studio. Given that infrastructure in terms of transport, communication, and housing are pertinent resources for Disney, the report used them in selecting a favorable country. Moreover, the report considered the availability and reliability of electricity as a driver of information technology. The availability of adequate skilled labor is another criterion that the report used in choosing the appropriate country in Asia.
Among other countries in Asia, the Philippines meets the above criteria. Essentially, the Philippines is a flourishing economy with a notable business hub, which attracts investors. The Philippines also has advanced infrastructure in transport, communication, and housing, which are pertinent resources for Disney. Since the thriving film industry has been in existence for many generations, it has created a pool of skilled labor. The Philippines produces various major films and short stories enjoyed throughout Asia and other regions.
General stability analysis
Currency stability issues
The inflation rate in the Philippines fell to 2.5% in February 2015, making it a favorable location for foreign investment.
Political map and problems
The political system of the Philippines is democratic, but it has unfavorable rules and regulations, which support high taxation rates and exploitation of employees.
Recommendation
Human resource issues in the Philippines that require consideration include tax-exempt, compensation programs, trade unions, and collective bargaining.
Entry and strategic decisions
Disney should take advantage of the highly skilled labor force, as well as an advanced infrastructural level, which supports the film industry. The film industry enjoys a lot of support from both the government and the public.
Input scarcities
Skilled labor
The Philippines have challenges in the recruitment and retention of highly skilled labor, particularly in the film industry, because of immense job opportunities.
Pertinent resources
The Philippines has scarcities in pertinent resources such as the internet, housing, technology, and modern equipment for the film industry.
Energy issues
The Philippines experiences a frequent shortage of energy, which has created an energy crisis in the past few years. Moss (4) reports that the shortage of electricity owing to increasing demand led to the energy crisis in 2014.
Infrastructural issues
As a developing country, the Philippines still grapples with infrastructural issues such as poor roads, inadequate housing, and developing communication infrastructure.
Human resource management
Since the Philippines have a highly skilled workforce, human resource management should offer an attractive package to recruit and maintain employees according to the prevailing stringent rules and regulations.
Final Recommendation
South Africa is the best choice for the establishment of Disney Studio. The country enjoys a very stable economic and political situation that is highly conducive for investors. In addition, South Africa has a highly skilled set of film crews, actors, technicians, and other relevant technical operators. The country has advanced technical capacity, adequate infrastructural level, and favorable weather all year round. South Africa has produced many major films, therefore, making it a favorable and a lucrative choice for Disney.
Works Cited
Amrik, Moza, Sohal Brian and Fildes Hawas. “Transportation infrastructure development in the UAE.” Construction Innovation 12.4 (2012): 492-514. Print.
England, Andrew. Booming film industry boosts South Africa’s economy. Financial Times. 2014. Web.
Moss, Trefor. “Philippines power crisis: The battle to keep the lights on.” The Wall Street Journal 112.33 (2014): 1-8. Print.
Oh, Tick, Shen Pang, and Shing Chua. “Energy policy and alternative energy in Malaysia: Issues and challenges for sustainable growth.” Renewable and Sustainable Energy Reviews 14.4 (2010): 1241-1252. Print.
Onuonga, Susan. “The relationship between commercial energy consumption and gross domestic income in Kenya.” The Journal of Developing Areas 46.1 (2012): 306-314. Print.
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