BGS 743: Assignment 1: Case Study: A Brawl in Mickey’s Backyard Outside City Hal
ID: 394480 • Letter: B
Question
BGS 743: Assignment 1: Case Study: 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 cost 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 Sun Cal 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.) Sun Cal’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 Sun Cal’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 Sun Cal’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; ……….
Be precise and to the point:
What is the issue in this case?
Who are the relevant market and nonmarket stakeholders in this situation?
What are their interests? Please indicate if each stakeholder is in favor of, or opposed to, SunCal’s proposed development.
What possible solutions to this dispute might emerge from dialogue between SunCal and its stakeholders?
Explanation / Answer
Answer 1:-
The case is challenging because it involves two business organizations—SunCal, a real estate developer, and the Walt Disney Company. Astute students will recognize that SunCal is the focal organization in the case since the key issue is whether or not it can develop its land.
SunCal owned and wished to develop a 26-acre parcel of land in Anaheim, California. The developer’s plan was built around 1,500 condominiums on the site, with 15 per cent of the units set aside for below-market-rate rental apartments. Because the site was in a designated resort district, the developer required special permission from the city council to proceed. The developer faced challenges in obtaining the permit because its plans were opposed by the Walt Disney Company, which hoped to expand its theme park across the street from SunCal’s site.
Answer 2:-
The term stakeholder refers to persons and groups that affect or are affected by, an organization’s decisions, policies, and operations. Market stakeholders are those that engage in economic transactions with the company. Nonmarket stakeholders, by contrast, are people and groups are those who, although they do not engage in a direct economic exchange with the firm—are nonetheless affected by or can affect its actions.
The stakeholders of SunCal mentioned in the case are (M refers to market; NM to nonmarket):
Disney employees and unions representing them (NM) (note: M stakeholder to Disney)
The Walt Disney Company (NM)
The city of Anaheim and local government officials, e.g., members of the City Council (NM)
Chamber of Commerce and local businesses (NM)
Affordable housing advocates and other community activists (NM)
Answer 3:-
Disney employees and unions representing them
For: they need affordable housing near work
The Wal Disney Company
AGAINST: Disney argued that the land should be used only for tourism-related development. Walt Disney held the view that the public should not “see the world they live in while they’re in Disneyland. I want them to feel they’re in another world.” The company was also concerned that the SunCal development in the resort area would set a precedent for others.
City of Anaheim (NM) and local government officials (NM), e.g., members of the City Council (NM)
MIXED: The City Council was split on the issue. The city had an interest in affordable housing for its citizens and local employees. It also had an interest in meeting the needs of its largest taxpayer (Disney) and in promoting economic development.
Chamber of Commerce and local businesses (NM)
Against: Local businesses, which were heavily dependent on tourism associated with Disney’s theme parks, supported Disney in its opposition to SunCal’s development.
Affordable housing advocates and other community activists (NM)
FOR: Affordable housing advocates backed SunCal’s proposal because it included provisions for 15 per cent of the units to be priced below market. Housing in and near Anaheim was very expensive, and many local workers could not afford to live there.
Answer 4:- The stakeholders who oppose the SunCal development have the power to block the developer’s plans through a lawsuit or political pressure to block the granting of a permit. Therefore, it is to SunCal’s advantage to attempt to work with them collaboratively to address their concerns. This might allow SunCal to move forward and would have the side benefit of enhancing the company’s reputation as a good corporate citizen. The disadvantage of this approach is that it might require SunCal to make concessions that it might not otherwise have to make.
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