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Homework answers / question archive / Organizational Behaviour: Case on Organization Culture CLUB PENGUIN   Club Penguin is a multiplayer online role-playing game for children 6 to 14, who use cartoon penguin avatars to play in a virtual winter world

Organizational Behaviour: Case on Organization Culture CLUB PENGUIN   Club Penguin is a multiplayer online role-playing game for children 6 to 14, who use cartoon penguin avatars to play in a virtual winter world

Management

Organizational Behaviour: Case on Organization Culture

CLUB PENGUIN

 

Club Penguin is a multiplayer online role-playing game for children 6 to 14, who use cartoon penguin avatars to play in a virtual winter world. It seized immediate popularity due to a combination of engaging activities, no advertising, and free membership availability (revenue comes through an enhanced paid membership). A major feature of the game that satisfies parents is safety – achieved through filtering that prevents swearing and revealing personal information, and through moderators who patrol the game. French, Portuguese and Spanish versions of the game have been created and satellite offices now support players in over 190 countries.

The Kelowna company behind Club Penguin was founded by three work colleagues who wanted a safe social networking site for their own children. Financing the project themselves, Merrifield, Priebe and Krysko developed and tested Club Penguin for two years. Released in 2005, it had acquired almost 4 million users by 2007 when it was bought out by Disney for $350 million. The founders had gone looking for a large partner with technical and business expertise and an international infrastructure to help them manage the incredible success of their creation. Despite several interested potential buyers, the Club Penguin founders chose to go with Disney, to a great extent because of their philosophical alignment.

Most of the financial elements we left to the lawyers and bankers to work out, because we didn’t want to muddle with what we felt really mattered, which was making sure those philosophical points were there. And it’s been encouraging to see that not only did they echo and agree to those, but they’ve modified some of their games, and some of their virtual worlds, to reflect the kinds of methods we had been passionate about.[1] 

Disney also accepted key conditions in the negotiations: the business would continue to be based in Kelowna where the founders’ young families were; Merrifield, Priebe and Krysko would maintain control of the company; and 10% of profit would continue to go to charity.

The tithing condition raised a lot of eyebrows amongst potential partners, surprised at the desire to give away so much money. But it has been an essential part of the Club Penguin company from the start. On founding the company, the three men all agreed to direct 10% of profit to child-focused charitable organizations. Their foundation currently sponsors Adopt a Village projects (helping build and equip schools, implement sustainable, clean water projects, provide health care and develop alternative income programs in developing countries) and micro financing projects for Ethiopian women. Their local community also benefits, with the company sponsoring activities like soccer teams and a ski hill in the Okanagan Valley.

This belief in global citizenship has also made its way into the Club Penguin game. Each year for a limited time, the game sets up a ‘Coins for Change’ campaign where children donate virtual coins earned playing the game as votes for how Club Penguin should allocate $1 million to charity. Club Penguin chooses a charity in each of three areas (e.g., to support the environment, children's health or children in developing countries) and the players’ virtual coin donations affect how the money is divided amongst the charities. Social responsibility also enters into the game through game activities like the April, 2010 celebration of Earth Day’s 40th anniversary. Club Penguin launched a special online party and new ways for its players to consider making the world a better place - the online penguin community now includes a recycling depot and community garden, which players are responsible for maintaining; and players can help plant and nurture a community tree, which becomes part of the virtual island’s snow-covered landscape. Club Penguin practices what it preaches by sponsoring a ride-share matching program to support carpooling for its own employees.

Has the Kelowna company been able to protect its ways since becoming part of a huge corporation?

Integration is around back-office type things that are very important, like integrating customer care. But integration is not going to be done to the extent that we would blur the integrity...of what makes products work.[2] 

They were quite passionate about not getting in the way...Disney would love to see us grow as much as we feel we need to. And there definitely haven’t been any issues with us operating up here. In fact, they see it as a huge benefit to be in B.C. We’re in a little bit of a bubble, kind of an incubator, up here that allows us to keep focused on what we need to stay focused on and not get distracted with everything else that’s going on down there.[3] 

There are minor challenges here and there, but Disney’s worked very hard to insulate us to some extent and keep us thinking entrepreneurially. So it really has been the best of both worlds for us. We get to keep doing what we love – we just have a lot of new tools to work with now.[4]

Has success changed the founders? Merrifield may now employ 400 people in Kelowna and be the Executive Vice President of Disney Online Studios liaising daily with Los Angeles, but he still leaves work at 5:30 to go home and have dinner with his family.

 

 

References: S. Ghosh, The $350-million penguin, The Globe and Mail Report on Small Business magazine, Novemeber 18, 2009, http://www.theglobeandmail.com/report-on-business/your-business/exit/selling-your-business/the-350-million-penguin/article1368439/ (accessed August 2, 2010); D. Jordan, Lane Merrifield, BCBusinessOnline, April 1,2008, http://www.bcbusinessonline.ca/bcb/people/2008/04/01/lane-merrifield (accessed September 13, 2010); J. Thomson, Club Penguin: Part One, John Thomson Report, June 8, 2010, http://www.castanet.net/news/John-Thomson/54894/Club-Penguin-Part-One (accessed September 4, 2010); A. Mlynek, Q&A: Club Penguin’s Lane Merrifield, Canadian Business magazine, April 25, 2008, http://www.canadianbusiness.com/managing/ceo_interviews/article.jsp?content=20080428_198723_198723 (accessed September 213, 2010); ); J. Thomson, Club Penguin: Part Two, John Thomson Report, June 9, 2010http://www.castanet.net/edition/news-story-54896-13-.htm#54896 (accessed September 4, 2010); ); J. Thomson, Club Penguin: Part Three, John Thomson Report, June 10, 2010, http://www.castanet.net/news/John-Thomson/54898/Club-Penguin-Part-Three (accessed September 4, 2010)

 

 

DISCUSSION QUESTIONS

 

  1. Describe the basic functions of an organization’s culture by using Club Penguin (CP) as an example.

 

  1. If you were interested in doing research to determine whether Club Penguin has a strong corporate culture, what characteristics would you look for?

 

  1. Describe how founders Krysko, Priebe and Merrifield demonstrate the role of leaders in shaping culture.

 

  1. Discuss why the acquisition of Club Penguin by Disney has been so successful from a cultural point of view.

 

 

QUIZ QUESTIONS

 

True/False

 

_____1. Most mergers and acquisitions are as successful in dealing with cultural differences as Club Penguin and Disney’s experience.

 

_____2. Club Penguin’s culture was shaped primarily by the competitive environment.

 

_____3. The Club Penguin culture is likely to have some subcultures within it.

 

_____4. Club Penguin employees may be unconscious of the basic assumptions that guide their behaviour.

 

_____5. Club Penguin’s penguin symbol is an illustrative artifact of the culture.

 

Multiple Choice

 

  1. Which of the following is an example of personal enactment?
    1. Merrifield goes home at 5:30 for dinner with his family.
    2. Stories are told about the negotiations with Disney.
    3. Employees use first names in all communications.
    4. Club Penguin gets children involved in environmentally responsible activities in their role-playing.

 

  1. What would the ‘strong culture perspective’ expect to happen if Club Penguin’s culture is characterized as strong?
    1. It will spawn multiple rebellious subcultures.
    2. It will perform better than competitors with weaker cultures.
    3. It will be insular and therefore insensitive to environmental changes.
    4. It will have difficulty attracting achievement-oriented individualistic employees.

 

  1. What does the ‘fit perspective’ say would be a good reason to consider changing Club Penguin’s culture?
    1. If the culture did not fit the firm’s strategy.
    2. If the culture did not fit the expectations of young workers.
    3. If the culture did not fit the way a key competitor does business.
    4. If the culture did not fit with the average Canadian company.

 

  1. What would the ‘adaptation perspective’ indicate is the kind of culture that would lead to success for Club Penguin?
    1. It should encourage employees to focus on themselves rather than the company as a whole.
    2. It should focus on effective political manoeuvring within the corporate environment.
    3. It should encourage confidence and risk taking among employees.
    4. It should encourage cautious protection of its interests.

 

  1. What stage of socialization at Club Penguin has the following key concerns: realism, congruence between skills and role demands, and congruence between the individual and the organization?
    1. Anticipatory
    2. Encounter
    3. Change and acquisition
    4. Integration

 

  1. If Club Penguin employees are highly socialized, which of the following is a likely outcome?
    1. High conformity but low creativity
    2. High turnover
    3. High role ambiguity
    4. High job satisfaction

 

  1. Suppose you assess Club Penguin’s culture by interviewing individuals, surveying employees, and observing employee interaction over an extended period. What method have you used?
    1. Culture Empowerment Examination
    2. Kilmann-Saxton Culture-Gap Survey
    3. Organizational Culture Inventory
    4. Triangulation

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