Question

SYN 960 Business Government & Society

Albright College

Application Test #1

Read the following case below and then answer the questions following the case.

Case: A Brawl in Mickey’s Backyard

Outside City Hall in Anaheim, California—home to the theme park Disneyland—dozens

of protestors gathered in August 2007 to stage a skit. Wearing costumes to emphasize their

point, activists playing “Mickey Mouse” and the “evil queen” ordered a group of “Disney

workers” to “get out of town.” The amateur actors were there to tell the city council in a

dramatic fashion that they supported a developer’s plan to build affordable housing near

the world-famous theme park—a plan that Disney opposed.

“They want to make money, but they don’t care about the employees,” said Gabriel de

la Cruz, a banquet server at Disneyland. De la Cruz lived in a crowded one-bedroom apartment

near the park with his wife and two teenage children. “Rent is too high,” he said. “We

don’t have a choice to go some other place.”

The Walt Disney Company was one of the best-known media and entertainment companies

in the world. In Anaheim, the company operated the original Disneyland theme park,

the newer California Adventure, three hotels, and the Downtown Disney shopping district.

The California resort complex attracted 24 million visitors a year. The company as a whole

earned more than $35 billion in 2007, about $11 billion of which came from its parks and

resorts around the world, including those in California.

Walt Disney, the company’s founder, had famously spelled out the resort’s vision when

he said, “I don’t want the public to see the world they live in while they’re in Disneyland.

I want them to feel they’re in another world.”

Anaheim, located in Orange County, was a sprawling metropolis of 350,000 that had

grown rapidly with its tourism industry. In the early 1990s, the city had designated two square

miles adjacent to Disneyland as a special resort district, with all new development restricted

to serving tourist needs, and pumped millions of dollars into upgrading the area. In 2007, the

resort district—5 percent of Anaheim’s area—produced more than half its tax revenue.

Housing in Anaheim was expensive, and many of Disney’s 20,000 workers could not

afford to live there. The median home price in the community was more than $600,000,

and a one-bedroom apartment could rent for as much as $1,400 a month. Custodians at the

park earned around $23,000 a year; restaurant attendants around $14,000. Only 18 percent

of resort employees lived in Anaheim. Many of the rest commuted long distances by car

and bus to get to work.

The dispute playing out in front of City Hall had begun in 2005, when a local developer

called SunCal had arranged to buy a 26-acre site in the resort district. (The parcel was directly

across the street from land Disney considered a possible site for future expansion.)

SunCal’s plan was to build around 1,500 condominiums, with 15 percent of the units set

aside for below-market-rate rental apartments. Because the site was in the resort district,

the developer required special permission from the city council to proceed.

Affordable housing advocates quickly backed SunCal’s proposal. Some of the unions

representing Disney employees also supported the idea, as did other individuals and groups

drawn by the prospect of reducing long commutes, a contributor to the region’s air pollution.

Backers formed the Coalition to Defend and Protect Anaheim, declaring that “these

new homes would enable many . . . families to live near their places of work and thereby

reduce commuter congestion on our freeways.”

Disney, however, strenuously opposed SunCal’s plan, arguing that the land should be

used only for tourism-related development such as hotels and restaurants. “If one developer

is allowed to build residential in the resort area, others will follow,” a company

spokesperson said. “Anaheim and Orange County have to address the affordable housing

issue, but Anaheim also has to protect the resort area. It’s not an either/or.” In support of

Disney’s position, the chamber of commerce, various businesses in the resort district, and

some local government officials formed Save Our Anaheim Resort District to “protect our

Anaheim Resort District from non-tourism projects.” The group considered launching an

initiative to put the matter before the voters.

The five-person city council was split on the issue. One council member said that if

workers could not afford to live in Anaheim, “maybe they can move somewhere else . . .

where rents are cheaper.” But another disagreed, charging that Disney had shown “complete

disregard for the workers who make the resorts so successful.”

Sources: “Disneyland Balks at New Neighbors,” USA Today, April 3, 2007; “Housing Plan Turns Disney Grumpy,” The New

York Times, May 20, 2007; “In Anaheim, the Mouse Finally Roars,” Washington Post, August 6, 2007; and “Not in Mickey’s

Backyard,” Portfolio, December 2007.

1. Using Disney as the focal organization, identify all the relevant stakeholders to this case.

2. For each of the stakeholders above, clear explain their respective “interest” or claim to the situation using evidence from the case. Also, indicate if each stakeholder is in

favor of, or opposed to, SunCal’s proposed development.

3. What sources of power do each of the relevant stakeholders identified above have in this case?

4. Based on the information you have included in your stakeholder analysis/map, what do you believe is the socially responsible decision for Disney? Justify your solution by applying either the ownership theory of the firm or the stakeholder theory of the firm.

           

Answer 1

Who are the relevant market & nonmarket stakeholders?
-Market: Tourists, disney employees, anyone who is involved in the tourism industry
-Nonmarket: Citizens of Anaheim, Chamber of Commerce, Council Groups, Governing Body of Anaheim

Various Stakeholder Interests? Are they in favor of or do they oppose the proposed development?
-Disney/Tourists: Oppose
-SunCal/Council Groups: In favor
-SunCal Stakeholders: In favor
-City of Anaheim: Oppose
-Chamber of Commerce: Oppose
-Advocates: In favor
-SunCal Stockholders: Probably indifferent

What sources of power do the relevant stakeholders have?
-Disney: Economic/Political
-City of Anaheim: Political/Economic
-Citizens of Anaheim: Economic

What possible solutions might emerge from dialogue between SunCal and its stakeholders?
-Possibly build condos on a large tract of land
-Not allow them to damage integrity/views of the park
-Make housing primarily for Disney employees
-Subsidize employee housing