Chapter 1 Solution

DI SCUSSI ON CASE
A BRAWL IN MICKEYS BACKYARD
1. What is the focal organization in this case, and what is the main issue it
faces?

The case is challenging for students, 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 developers plan was build around 1,500 condominiums on the site, with 15 percent
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 SunCals site.

2. Who are the relevant market and nonmarket stakeholders in this
situation?

The term stakeholder refers to persons and groups that affect, or are affected by, an
organizations 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 direct
economic exchange with the firmare 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)

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)

After listing these on the board, the instructor may wish to bring out these points:

There are two business organizations in the caseSunCal and Disney. SunCal is the
focal organization, because the focus of the case is whether or not SunCal will be
permitted to develop its property. As an organization that will be affected by whether
or not SunCal proceeds, Disney is actually a stakeholder here, rather than the focal
organization.
Individuals can hold multiple stakeholder roles at the same time. For example,
Disney employees are also potential customers of SunCal (if they would like to
purchase or rent housing in SunCals development).

Not all stakeholders are relevant to this particular situation. For example,
stockholders are an important market stakeholder, but SunCal stockholders may not
care whether or not SunCal develops this particular parcel, so long as it continues to
make money.

Market stakeholders are not necessarily less important than market stakeholders. In
this case, all of SunCals stakeholders are nonmarket, but they may well have the
power to block the companys plans completely.

3. What are the various stakeholders interests? Please indicate if each
stakeholder is in favor of, or opposed to, SunCals proposed development.

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 tht the public should not see the world they
live in while theyre in Disneyland. I want them to feel theyre 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
Disneys theme parks, supported Disney in its opposition to SunCals development.

Affordable housing advocates and other community activists (NM)

FOR: Affordable housing advocates backed SunCals proposal, because it included
included provisions for 15 percent 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. The case implies
that environmentalists might supporteSunCal, because local affordable housing would
reduce freeway congestion (and associated pollution).

4. What sources of power do the relevant stakeholders have?

Disney employees and unions representing them (M to Disney; NM to SunCal) political
power (protest skit in front of City Hall is aimed at influencing Council members).
Normally, employees and unions have economic power, but in this instance their
adversary is not their employer (Disney).

Disney company (NM to SunCal) political power (as a major taxpayer, can influence
local politicians); legal power (to block SunCal on the grounds that development would
violate local ordinances restricting development in the resort area)

City of Anaheim and local government officials, e.g., members of the City Council (NM)
political power, through their authority to grant or deny permits to SunCal

Chamber of Commerce and local businesses (NM) political power, through their
influence on the local politicians

Affordable housing advocates and other community activists (NM) political power,
through their influence on local politicians and in alliance with other activists

5. Based on the information you have, draft a stakeholder map of this case?
What conclusions can you draw from the stakeholder map?
A stakeholder map is a useful tool, because it enables managers to see quickly how
stakeholders feel about an issue and whether salient stakeholders tend to be in favor or
opposed. It also helps managers see how stakeholder coalitions are likely to form, and
what outcomes are likely. In this example, SunCal executives might conclude from the
stakeholder map that those supporting the housing projectDisney employees and their
unions, environmentalists, some public officials, and affordable housing advocateshave
the lower salience than those opposing the projectDisney, the chamber of commerce,
many local businesses, and some local officials. In particular, Disneys significant power
as the communitys leading taxpayer may easily overwhelm the power of other
stakeholders.

6. What possible solutions to this dispute might emerge from dialogue
between SunCal and its stakeholders?
The stakeholders who oppose the SunCal development have the power to block the
developers plans through a lawsuit or political pressure to block the granting of a permit.
Therefore, it is to SunCals 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 companys 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.
Students should be asked to brainstorm creative solutions to the issues posed in this
dispute.
These might include:

Disney subsidy to its workers to pay for nearby housing.
Disney subsidy of dedicated housing for its workers.
Disney providing shuttle buses or other forms of transit for its workers.
SunCal agreement to scale down the development so it is more aesthetically
pleasing to Disney.
City subsidy to other affordable housing units in the area.
Business development at the site as part of the housing project.
Disney agreement to buy SunCals site, so SunCal could generate funds for a
comparable development elsewhere.

After generating such a list, the instructor may wish to point out that students need not
select among these options; the take-away point is simply that a process of dialogue can
produce solutions that may be able simultaneously to meet multiple stakeholder interests
in creative ways.

Epilogue
SunCals plan to develop housing on the site collapsed in the face of concerted
opposition. In November 2007, the City Council voted against allowing housing
development in the resort district. SunCals opponents then withdrew a proposed voter
initiative, and Disney withdrew a lawsuit it had filed.