Risk Analysis

Now is a good time for Disney to take risks. With growing popularity, revenue and newly upcoming attractions and movies the company is perfectly positioned to take on some risk. The largest identified expansion that has been discussed is Avatar which is a very expansive addition to Animal Kingdom.

psu edu

Source:(PSU.edu)

As seen above, the Animal Kingdom does not draw as many guests as the other parks. This is one of the primary reasons for the Avatar addition. If the draw of Animal Kingdom does not increase as expected due to the addition, Disney may never see an acceptable return on its investment which will be close to 200 million dollars. The following decision tree clarifies the risks involved:

decision data

The Expected monetary value is 226 million. A strong monetary value expectation signifies that there is a good possibility of a successful investment and therefore Avatar should go forward. Overcrowding, competitive drive and increasing demand are all good problems to have. How Disney deals with the decisions involved with them will be critical to success over the next 5 years and beyond.

 

References:

PSU.edu. (2015) Walt Disney World – Can we expect a fifth park in the near future? Retrieved September 20, 2015, from http://sites.psu.edu/emilysguidetodisney/2015/02/26/walt-disney-world-can-we-expect-a-fifth-park-in-the-near-future/

 

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