Supply Chain

The Sustainable Value of "Brand Disney":
Strategic Implications of Its Withdrawal from Bangladesh

I do not speak Bangla. But I do know that if I walk up to an eight-year-old kid in the streets of Dhaka or Kolkata and show him a picture of Mickey Mouse, he will bond with me instantly. Such is the global power and influence of love, joy and friendship that beloved Mickey has been exercising for decades.

By Aarti Sharma | Published 11 years ago | About a 5 minute read

In its 2012 Citizenship Summary, the Walt Disney Company voiced its goal to be the world’s “most admired company,” its mission centered on “promoting the happiness and well-being of kids and families” and “inspiring them to join” the company “in creating a brighter tomorrow.” The Annual Report featured Chairman and CEO Robert Iger stating that “acting responsibly is an integral part of our brand,” and that the company is committed to creating “shareholder value.”

Disney’s global corporate citizenship performance, along with that of other multinationals, has come under scrutiny following the recent deaths of over 700 factory workers in the collapse of the Rana Plaza factory in Bangladesh. Following the collapse, the company announced that it was stopping its branded merchandize production in the country, a decision that it had made in March, before the tragedy. Indeed, labor practices in Bangladesh’s garment factories do not meet Disney’s standards; there have been growing violations of occupational health and safety, and human rights standards, including forced labor practices, in Bangladeshi factories. However, Disney’s decision to wash its hands of the country does not speak highly of a corporation that ranks in Fortune’s top ten “World’s Most Admired Companies” for 2013. And its decisions may have severe implications for its corporate sustainability and the sustainable development of South Asia.

First, the company is putting its own brand, reputation, credibility and future growth at stake. Moving out of countries in the South Asian region may impede Disney’s current growth ambitions and future plans for business in emerging markets, including India. It is also sending a wrong signal about the level of importance the company gives to human relationships. A company earns global admiration not on the basis of its shareholder value, but on the basis of its mutually nurturing relationships with stakeholders and the “sustainable value” generated. Sustainable value is the long-term and higher wealth for shareholders and well-being for stakeholders, which a company “co-creates” by engaging with different stakeholders, directly or indirectly, on a range of issues constituting the company’s value chain.

When Disney outsourced its production to one of the poorest countries in the world, encountering social inadequacies and malpractices should not have come as a surprise. The bigger question is: As the company entered Bangladesh, what did it do as an industry leader and corporate citizen to empower the poorest of the poor there? How did it contribute to enriching the physical infrastructure and human resource skills and capabilities to provide a better life and livelihood to Bangladeshis, and influence their adoption of international labor standards at its suppliers’ factories?

The decision to stop production in Bangladesh demonstrates the company’s lack of genuine commitment to its founder’s values and corporate mission. Is the company’s mission to “promote happiness and well-being of kids and families” restricted only to kids and families who can afford Disney products and services? Does it not have an obligation to take care of the some of the most deprived kids in the world, and especially kids whose families have been making the company’s merchandize and have contributed to its growing wealth? Are its desires “to brighten the world” confined to lives of only those whose world is already bright?

According to the World Bank’s 2013 World Indicator Report, 50.5% of Bangladesh’s population lives below $1.25 a day. If other western corporations start following Disney’s footsteps, Bangladesh’s economy, including its $19 billion export-oriented garment industry, may collapse. Incidents of crime, including female and child rape and sex trade, drugs and animal trafficking will rise in this poverty-stricken country. The problem of illegal cross-border migration of Bangladeshis into neighboring India will worsen. And these problems will further aggravate problems of environmental degradation, and breed more hatred in the world for rich individuals and developed nations. We are seeing how socio-economic and environmental issues are globally interconnected.

However, expecting Disney and other western corporations to be the “saviors” of Bangladesh is also unreasonable. Bangladeshi government and citizens must adopt higher consciousness and greater responsibility to eliminate corruption and inhumane labor practices. Western corporations will “stay” and invest, and help poor countries prosper, if they are given safe and sustainable, and not risky, grounds of business operations.

The true test of Disney’s global corporate citizenship depends on how it helps to reduce the growing disparities in the world, not further aggravate those in the lust for more money. The company also has an obligation to its own celebrity cartoon characters, ensuring that those characters continue to be loved and cherished. The timeless stories of love, courage, peace, kindness and justice that for example, Nemo, his father and friends tell our children will lose credibility. Disney has to practice and not preach those values, if it truly wants to win the loyalty and admiration of its customers and create a more sustainable brand.

Based on my experiences of growing up in India and living in different parts of the world, I recognize that there are still a lot of people in the world who think USA is Disneyland, and Mickey is the American gift of love, laughter and friendship for the rest of the world. This tragedy is a transformational leadership opportunity for Walt Disney Company to create a happier world. I hope the company reconsiders its decision and leads a global business dialogue with the government and people of Bangladesh to help them solve their labor and economic problems locally. In doing so, not only will it prevent the image of Mickey Mouse and its own brand from deteriorating, the company will co-create sustainable value and truly earn its place as the world’s most admired company.