#81 Здравствуйте, Mickey!
As has been announced a few days ago, Walt Disney is plunking down about $300 mio to acquire a major stake in the Russian Channel Seven with the objective of entering the Russian market. This is their second attempt. About three years ago, Disney had plans to acquire a 49 percent stake in Russian Media-1 TV. Back then, the acquisition was not approved by the Russian Antitrust Agency which cited “problems with Disney’s paperwork”. It looks like Disney has learned an important lesson about Russian culture and has figured out how to work with the country’s bureaucracy. Why is Disney so eager to enter the Russian market? Is it a case of cultural imperialism that US companies are often accused of? Very unlikely. The simple fact is that growth rates in Russian TV advertising are between 20-30% whereas they have been relatively slow in the West. After a Swedish and a Luxemburg-based group, Disney is now the third foreign investor in Russian TV.
November 13, 2011 @ 7:18 am
With the oil revenue projected to decline over the next 10 years, Russia has become more open to foreign investors. In the Disney case specifically there are also other benefits for Russia. The country is interested in cultivating its own entertainment industry and could leverage Disney’s expertise. Those may be some of the reasons why the government approved Disney’s purchase of a Russian channel. Disney will offer free programming which will reach 75% of the country’s TV market, or around 40 million households. The channel will offer programming for the entire families to watch together. It will be interesting to see how the American family model and values will align with those of the Russian families. Each of the cultures builds on different values and creates different dynamics within the group of people. Americans are characterized by very low power distance with the family members interacting in a very casual way regardless of an age, family relations, status, etc. In this type of environment a child may question a parent on their decision, argue with them and the parent may be more flexible when executing on their decision, punishment, etc. On the other hand Russia is considered to be a very high power distance country with rigid rules and traditions. There are certain expectations of younger generations when interacting with other members of the community who are more senior, may have higher status, etc. There is a significant level of respect that is expected and decisions made by parents are not to be questioned. Another challenge in how the programming is received may be caused by the individualistic versus collectivistic attitudes. U.S. being highly individualistic may encourage behaviors amongst young Russian viewers that will not be received well by their peers. If a child or a teenager is taught to make decisions based on their individual needs and has an “I” mentality, they may be considered selfish and not fitting into the Russian group/community, which is more collectivistic in its approach. Those are some of the challenges that Disney may run into when entering Russian market. Additionally a mix of original Disney programming and Russian classic may clash and may not deliver a cohesive message to growing-up individuals.
November 20, 2011 @ 5:08 am
The idea of a large corporation such as the Walt Disney Company wanting to expand its international targeting area is nothing surprising. However, Disney’s track record of intercultural integration has been less than pristine (with prominent regards to the assimilation troubles that the company encountered with Disneyland Paris / Euro Disney), and goes to show just how important researching and conducting the proper due diligence on a prospective foreign culture is to a company’s international business methods. While Disney is acquiring a Russian television channel, which is nowhere near as large and demanding as a theme park, the number of local employees that will be under the company’s wing will still be vast. Has Disney learned from its past mistakes? According to the Geert Hofstede™ Cultural Dimensions comparison between Disney’s home culture (United States) and the Russian host culture, the two are at odds in all five dimensions. While the United States favors individualism, for example, Russia is deeply rooted in collectivism. There is also a much higher Uncertainty Avoidance Index in Russia, as well as an even more extreme difference in the Power Distance Index (the United States ranks at 40, while Russia ranks at about 93). What does this mean? Russian employees will not be quick to accept new ideas and other such ambiguity, but they will also be more prone to do whatever their superiors tell them to do and carry out those orders in the exact way that their bosses want them to be done. This can very well result in the obstruction of creativity and ingenuity… two words that are usually synonymous with Disney itself. Of course, this is nothing against the citizens of Russia, or those of Russian heritage. It just means that Disney will have to spend a more-than-adequate amount of time in visualizing how the acquisition of the Russian television station will affect intercultural relations (i.e., how to motivate employees in a Russian setting, daily business methods, employee incentives [verbal vs. materialistic], etc.) as well as company objectives, and how to ethically respond to those changes. As a matter of fact, Russian and French culture seem to be more alike than Russian vs. the United States, referring back to the Geert Hofstede™ Cultural Dimensions model. Will history repeat itself… or is the similarity only purely ironic? Time will tell. As George Bernard Shaw once said, “Success does not consist in never making mistakes, but in never making the same one a second time.”
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Referenced Geert Hofstede™ Cultural Dimensions website:
http://www.geert-hofstede.com/hofstede_dimensions.php?culture1=95&culture2=73#compare
December 22, 2011 @ 11:23 am
As Disney in a best practice example for many marketing topics, I find it very interesting that Disney wants to jump into the Russian Media Market. 49 percentage stake in Russian Media-1 TV are really high, so Disney had to invest a lot of time in analyzing the Russian market to be sure, that they can reach their targets. But personally speaking, I think that only a few number of companies who wants to enter in a new market, do overlook at least one important difference between the home market and the new one. As a result, they find out that one of the most important factors is the Russian bureaucracy.
Fact is that Russian business is largely hierarchical. Russians like to dress up formal and their workplace is their second home. Moreover, Russia is a country with high masculinity, such as only men are in high management positions. More powerful people have a great importance of status symbols. Moreover, Russia is one of the most power distant societies in the world, cause by the country size and the centralization. As Russians have a collective thinking, family and friends are extremely important to them. Therefore, relationships in business have the same importance to them. For successful negotiations companies should focus on tasks and build on a careful to the recipient. In addition to this, the uncertainty avoidance in the Russian society is huge as well as it is one of the most complex bureaucracies in the whole world.
It is always essential when entering a new market in another country to have knowledge of the traditional roles, perspectives, ambitions and the cultural heritage. And to recognize the cultural diversity, to understand them and to take the right marketing decision due to this facts.
November 12, 2013 @ 3:30 pm
Disney already made some mistakes in its task to enter new markets. For example, Euro Disney Land in Paris, France announced a loss of €55.6m in 2011 while celebrating its 20th birthday. Why? Because Europeans are different. While Americans go to the Theme Parks in California and Florida and stay there for a full vacation, buy lots of merch stuff and also, the movies are much more celebrated and hyped, Europeans visit the Park to experience it once, ride the coasters and leave. It’s a cultural thing. The Parks are built on the idea that people will not only buy a ticket but also buy mechandise and eat there and stay in the hotels inside the park. This works in America but somehow the Europeans don’t play along really well. I’ve been to Disney California Adventure in Anaheim and eventhough i wanted to go there since i was a little kid, i was kind of dissapointed by my visit. I had to face the fact that it is simply made for kids. So i was there, took a few photos, rode a few coasters and left. Without buying merch or food, because it’S just too expensive. 10$ for a picture of yourself riding a coaster? No thanks!
But to come back to the Russian TV. What first came to my mind was: Cold War. But i guess and hope people are finally over it. But still there are huge differences between the two cultures. The values that are transfered through disney movies might not match the values that are taught to russian children. Of course Disney needs ro expand and to enter new markets, but is Russia really the right choice? I don’t thinks so. The cultures are just too different. Compare the russian fairytales to disney fairytales. There are different topics and values that are treatened. One thing i really like to point out is the Movie “Planes”. A movie about planes obviously that features american warplanes aswell as planes from other countries. The whole movie is made “politically-correct” so it can be sold in china aswell as in russia for example. BUT, the movie, even though it’s for children, frankly fogs real circumstances such as previous wars between countries that are featured in the film. Some kind of propaganda for the american war machine. Back in the days of the cold war, disney also made short films about russia and america, with having the americans always winning or standing out as the good ones. Same thing in WW2.
March 25, 2014 @ 12:03 pm
It is very interesting that companies like Disney which are already multinational active and have experience in expanding to other markets fail. As described in the blog, Disney is now preparing the second try because things went wrong the first time. When entering a new market several things have to be evaluated upfront. First of all I think that the cultural differences have to be considered and evaluated because the acceptance on the foreign market has major influence on the success of the implementation of a new product which in this case is a TV channel of Disney. The business culture has to go align with the culture of the country they want to expand to. Disney is an American company with American attitudes and values. These values often do not go align with the demands of the country they want to expand, like in this case Russia. If Disney wants to expand their business they have to be aware that the market in Russia is different and that the market and the customers ask for different values as in the home market. Therefore it is necessary to find out what the market wants and what the customers require. I would suggest an intense market research of the TV market in Russia before creating the further strategy for entering the market and launch the new product. It is just not that easy to enter new markets with a different culture, also not for a company like Disney. An adoption of the values, the habits and the culture often is essential to have success in the new market and the key word therefore is customization. Disney may have to customize their product and has to make changes in their culture and have to think outside the box. They have to customize their products, their strategies and their attitude towards the requirements of the customer Russia.
After this evaluation of the culture Disney should follow the framework for market expansion process which concludes the following 4 phase: corporate readiness, product readiness, target market selection and the choice of the entry mode. In my opinion Disney should have the main focus on phase 1 the corporate readiness at it is mainly dealing with the adoption of changes within the organization and because it already went wrong the first time. To briefly describe Phase , it is about the evaluation of the corporate readiness and concentrates on the current situation of the company concerning their ability to go international or the tap into new markets. In this phase Disney has to evaluate the ability of the organization to adopt changes to coup up with the demands of the Russian market. Disney should have a very strong focus on this phase, as Russia has a different culture and changes have to be made to reach success. Disney’s strategy, vision and mission has to go align with those of Russia. Furthermore this phase includes the analysis of the core motivation of the market expansion which in this case is clear, as the growth rates in Russian TV advertising are between 20-30% which is very high in comparison to the western market. If Disney makes a very intense research of the market upfront they will find out if a market expansion will have success and could take further steps to go international.
March 26, 2015 @ 12:45 pm
Even if the Russian market with a potential of 150 million customers is very difficult to approach, there was no way for an organization like Disney to ignore it. According to a target market selection, where risk and attractivness are compared, the Russian market is considered as an emerging market with expected high growth rates in the futre, Disney has chosen a pro-active approach for internationalization, which is shown in successful implementation of Disney Channel in well selected countries in Eastern Europe. In my opinion that has proved their corporate readiness for Russia. The organizational challenges in the past years seems to be solved, furthermore, they have learned their lessons from a first approach a few years ago. Disney is financially well settled and has a huge intangible assets. For the entry, they have chosen to take over the licence of another channel. In order to attract customers, they have chosen only Russian language for broadcasting the shows, which is in opposite to their global strategy to use English with sub titles.
Overall, I think that Disney in Russia is now a success story – especially because they have learned from internationalization errors that happend in the past. The mix of local shows with classic Disney program seems to gain attention from the audience.