Hong Kong's Disneyland and Ocean Park - Essay Example

Hong Kong Disneyland (A The Walt Disney Perspective With any project of this magnitude, it is necessary to take into account the degree of uncertainty surrounding the outcome of the project. Please conduct a sensitivity analysis to estimate the risks associated with the uncertainties. To do this, list the things that could possibly go wrong now and in the future and how these things would affect the overall cost or benefit of the project. You dont have to quantify the impact precisely, merely what would be affecting: for example, attendance, ticket prices, revenue, profits, capital outlay, etc. a. Changes in customer tastes and preferences Walt Disney mainly focuses its activities on fantasy by producing movies and owning intellectual properties. However, there is an uncertainty that its customers may change their tastes to demand more of products and services that focus on nature and reality. This will see the company record a sharp drop in its attendance, revenues and profits. b. A drop in the price for properties in Hong Kong The Hong Kong economy has been stable because of its dependence on high property prices. A drop in the prices of prices would result in the economy experiencing a recess. Many people will be unemployed hence they will not afford money for leisure and entertainment. There will be low attendance and the firm may be forced to reduce ticket prices in order to attract customers. c. Escalating rates of interest This will increase the cost of borrowing for the company hence limit the capital outlay for investment. This is majorly because the company depends on borrowing to supplement its capital for investments. d. Increased activities of lobby groups against Walt Disney Lobby groups include environmentalists and labor organizations. The activities of such groups against Walt Disney may result in negative publicity for the business. This is because lobby groups may incite the public against visiting facilities owned by Walt Disney for a number of reasons. One of the reasons for the campaigns may be the violation of the laws of the environment. The overall effect of such activities is a reduction in the level of attendance. e. Low customer response Walt Disney is planning to make a new entrance into the Hong Kong market. Customers may be reluctant to respond to the new products introduced by Disney hence leading to low attendances and losses for the business. Hong Kongs Ocean Park: Taking on Disney 2. What were the goals of Ocean Parks re-engineering and what were the difficulties involved in implementing the re-engineering? Goals of Ocean Parks re-engineering a. Brand repositioning Ocean Park was having a problem with its brand and logo. The problem was that its brand image was very poor and could not attract customers to its businesses. This is attributed to the fact that the firm had an unattractive brand logo that had a very low visibility and weak association to the park. The symbol for the company was in form of a seahorse logo that did not represent the interests of the customers. The firm’s re-engineering was aimed at identifying a new icon that could easily relate to the customers as well as the activities of the company. The firm was able to identify a sea lion as its new brand image. The new brand was named whiskers. b. Product updates The goal of Ocean Park’s re-engineering was also to update its line of products so as to support a new brand image. The firm was to introduce new attractions and events in its theme parks around the country. It was able to introduce festival events that varied with different seasons of the year. There was also the introduction of the Abyss Turbo Drop thrill ride and interactive activities with animals. Visitors were able to have meals with animals such as lions hence making their theme parks more fun. Difficulties involved in implementing the re-engineering The main challenge that the organization faced in implementing the re-engineering program was employee resistance to change. The process of re-engineering involved a change in the firm’s remuneration plans and other policies relating to its human resources. However, the employees were reluctant to accepting the new changes because they were worried that the changes would bring new challenges. There was also the challenge of stiff competition from Disney. Disney was also introducing new products hence giving Ocean Park a hard time getting customers for its new products. Funding its plan was another challenge for the company. Ocean Park did not have adequate funds for the implementation of its re-engineering plan hence it was forced to take a bank loan that was very expensive to service. Hong Kongs Disneyland: Where is the Magic? 3. Why was Disney successful in Japan but not in France nor in Hong Kong? If Disney Corporation learned its entry-strategy lessons by its poor performance near Paris with Euro Disney, and if they adapted their Hong Kong operation to the cultural tastes of the Chinese, why did they make so many mistakes with Hong Kong Disneyland? What is it about Disney management that leads to so many problems? Disney was successful in Japan unlike in France and Hong Kong because the firm was owned and managed by an indigenous firm in Japan. The role of Disney in its Japan firm was to collect licensing fees only. The Japanese firm owning and managing Disney was Oriental Land Company. However, its company in France was majorly managed by Disney and had a heavy debt burden that made its operations very difficult. The company was also faced with the challenge of having an ambitious capacity that could not generate maximum profits. In Hong Kong, Disney faced a number of challenges that affected its operations. One of the main challenges was that the firm had bad publicity. Japanese government officials accused the firm of discriminating against residents from Hong Kong. They noted that the residents were discriminated against because they were not responding to a new idea introduced by the company. The residents of Hong Kong felt that the company had started introducing foreign ideas. Disney had introduced a new fireworks display technology at its theme park. There was also some concern by the public over the ownership of the park. The public doubted that the government had an equal ownership in the venture. Disney made so many mistakes with Hong Kong Disneyland because the firm failed to satisfy the needs of its customers. In any business, customers are paramount and addressing their needs always results in the success of the business. The entry of Hong Kong Disneyland saw the company only responding to cultural issues while ignoring customer satisfaction. Hong Kong Disneyland was unable to make its customers happy because it charged high prices, offered small space for recreation and had an inconsistent management team. The firm was charging twice the price of its main rival for its admission fees. Its price structure was uncompetitive given the fact that most of its customers were expecting a relatively lower price as an entrance strategy. The firm also had a poor corporate social responsibility that saw many locals disapprove its business activities citing poor working conditions. The management of Hong Kong Disneyland had an inflexible management culture that caused a lot of problems for the firm. The management of the firm was unable to handle most of the problems they faced. This is because they ignored most of the problems and often labeled them as merely teething problems. Moreover, the management of the firm failed to deliver its target leading to its reshuffling in the early periods of its operation. The reshuffling of the company management implied that Hong Kong Disney was unable to handle its internal challenges. Ocean Park: In the Face of Competition from Hong Kong Disneyland. 4. Using the information in this case as well as the other three, do a SWOT analysis for Ocean Park and a SWOT analysis for Hong Kong Disney. SWOT Analysis for Ocean Park Strength Competitive pricing- Ocean Park offers one of the lowest prices for its services in the market. This has made it affordable to its customers hence enabling the company create a competitive advantage over its main rivals like Disney. For instance, Ocean Park charges almost half the price of what Hong Kong Disney charges for its services. Strong Brand- Ocean Park also has a very strong brand in the Hong Kong domestic market. It is considered as a home grown brand and a lot of people take a lot of pride in the brand. Unique master plan- the firm has a unique master plan that has seen it grow in size and improve its operations. The firm has also revamped its Park to include new attractions that will see the company increase its attendance and revenue. The plan also projects the growth and expansion of the business in the coming years. Focus on reality- the firm has its operations focusing on reality. Its business activities are based on animals and nature hence making it easy for its customers to connect with nature. This is totally different from its main rival that mainly focuses on fantasy. Weakness Poor service excellence- the firm has been recording high levels of customer complaints. This is a clear indication that the company is offering poor services. Inadequate capital- the firm has a unique master plan but has inadequate funds to fund the projects that have been identified in the plan. This has seen the company seek for huge loans that are very expensive to service. Opportunity Customer loyalty- the company was recording steady attendance because most of its customers were loyal to the business. This was despite the entrance of Disney into the Hong Kong market. The loyal customers have ensured that the business remains profitable for a long time. Threat Entry of Disney into the Hong Kong market- this is a significant threat to the company because Disney has an international presence and had the capability of attracting some of its customers. The result is the company may lose a sizeable portion of its market share to Disney. SWOT Analysis for Hong Kong Disneyland Strength Internationally recognized products- Hong Kong Disneyland was dealing in the production of well recognized characters such as Donald Duck, Winnie the Pooh and Mickey Mouse. These characters are household names around the world and may attract a significant number of new customers in Hong Kong. Large size of the business- Disney has grown to be the biggest entertaining company in the world and has acquired adequate resources that have seen it grow larger day by day. This means that the firm has adequate resources to invest in Hong Kong. Business operations based on fantasy- the operations of Disney are based on fantasy such as movies and intellectual properties. This gave its customers a unique experience because most of the theme parks are based on reality. Weakness Uncompetitive pricing- Disney was charging very high prices as entrance fees compared to its main rival. It was charging almost double the price charged by Ocean Park and this did not go well with its customers who were expecting relatively lower entrance fees to the Disney Park. Opportunity Growing tourism industry in Hong Kong- statistics indicate that the Hong Kong tourist market has been growing steadily on a yearly basis. This creates new markets for the firm hence allowing it to expand its operations in Hong Kong. Threat Incompatibility with the Chinese culture- services provided by Disney have received a lot of resistance from customers because they feel that the company has is trying to import the American culture into Hong Kong. For instance, Disney Hong Kong made most of its communications and announcements in English as opposed to using the Chinese language. Intense competition from Ocean Park- Ocean Park has had a long business experience in Hong Kong because it has operated in the country for very many decades. This creates an intense competition between Ocean Park and Disney with Disney risking to lose the battle because it is a new entrant into the market. 5. How would you evaluate the market positioning of Ocean Park? What did they do and why was it right? Ocean Park has a strategic market positioning that is very unique. The firm has positioned itself as a home grown theme park in Hong Kong thereby differentiating its products and services from Hong Kong Disneyland. Disney is an American brand and is Ocean Park’s main competitor in Hong Kong. The other market positioning for Ocean Park is that it focuses its operations on reality by providing theme parks relating to animals and nature. This is totally different from its main rival that focuses on fantasy. This is a good market positioning for the company because it is able to create a competitive advantage by offering unique products and services in the market. Read More