Harvard Case - Disney World & Managing Risk During COVID-19
"Disney World & Managing Risk During COVID-19" Harvard business case study is written by Stephen Sapp, Abbas Khambati. It deals with the challenges in the field of General Management. The case study is 17 page(s) long and it was first published on : Jan 7, 2024
At Fern Fort University, we recommend a multi-pronged approach to managing risk and ensuring the long-term sustainability of Disney World in the face of the COVID-19 pandemic and future unforeseen events. This strategy encompasses strategic planning, organizational change, operational innovation, and a strong focus on customer experience and employee well-being.
2. Background
The case study focuses on the challenges faced by Disney World in the wake of the COVID-19 pandemic. The company, renowned for its immersive experiences and large crowds, was forced to shut down its theme parks, causing significant financial losses and impacting thousands of employees. The case highlights the need for crisis management, risk assessment, and strategic adaptation to navigate this unprecedented situation.
The main protagonists are Bob Chapek, CEO of The Walt Disney Company, and the Disney World management team tasked with leading the company through this crisis. They must balance the need for financial stability, employee safety, and customer satisfaction while navigating complex regulations and evolving public health concerns.
3. Analysis of the Case Study
A. Strategic Framework:
We utilize a SWOT analysis to assess Disney World's strengths, weaknesses, opportunities, and threats in this context:
Strengths:
- Strong brand recognition and loyal customer base.
- Diversified business model with multiple revenue streams.
- World-class entertainment and hospitality expertise.
- Strong financial resources and ability to weather short-term downturns.
- Experienced leadership team with a proven track record.
Weaknesses:
- High reliance on large crowds and physical proximity for core offerings.
- Vulnerability to external shocks and disruptions.
- Complex and intricate operations with many moving parts.
- Potential for negative public perception due to safety concerns.
- Limited experience with large-scale virtual or hybrid experiences.
Opportunities:
- Increased demand for safe and controlled entertainment experiences.
- Potential for innovation in virtual and hybrid offerings.
- Growth in domestic tourism and staycations.
- Expansion into new markets and demographics.
- Leveraging technology to enhance guest experiences.
Threats:
- Continued spread of COVID-19 and emergence of new variants.
- Economic recession and reduced consumer spending.
- Increased competition from other entertainment options.
- Negative public perception and reputational damage.
- Regulatory changes and restrictions on large gatherings.
B. Operational Framework:
We utilize Porter's Five Forces to analyze the competitive landscape:
- Threat of new entrants: Low, due to high barriers to entry in the theme park industry.
- Bargaining power of buyers: Moderate, as customers have alternative entertainment options.
- Bargaining power of suppliers: Low, as Disney has strong relationships with suppliers.
- Threat of substitute products: Moderate, as other entertainment options exist.
- Rivalry among existing competitors: High, as the theme park industry is highly competitive.
C. Financial Framework:
We utilize a Balanced Scorecard to assess Disney World's performance across key areas:
- Financial: Revenue growth, profitability, cash flow, return on investment.
- Customer: Guest satisfaction, repeat visits, brand loyalty, online reviews.
- Internal Processes: Operational efficiency, safety protocols, employee engagement, innovation.
- Learning and Growth: Employee development, technology adoption, strategic partnerships, sustainability initiatives.
4. Recommendations
A. Strategic Planning:
- Develop a comprehensive risk assessment framework: This should include identifying potential risks, assessing their likelihood and impact, and developing mitigation strategies.
- Implement a scenario planning process: This involves developing plans for different potential scenarios, such as continued pandemic outbreaks, economic downturns, and changes in consumer behavior.
- Invest in research and development: Explore new technologies and offerings, including virtual and augmented reality experiences, to diversify revenue streams and enhance the guest experience.
- Expand into new markets and demographics: Target emerging markets with high growth potential and explore new demographics, such as families with young children and millennials.
B. Organizational Change:
- Embrace a culture of agility and resilience: Encourage adaptability, creativity, and a willingness to embrace change.
- Empower employees at all levels: Foster a sense of ownership and responsibility, encouraging employee input and innovation.
- Invest in training and development: Equip employees with the skills and knowledge necessary to navigate a changing environment.
- Rethink organizational structure: Consider flattening hierarchies and creating cross-functional teams to improve communication and collaboration.
C. Operational Innovation:
- Implement enhanced safety protocols: Implement robust safety measures, including mandatory masks, social distancing, and frequent cleaning, to reassure guests and employees.
- Leverage technology to enhance guest experiences: Utilize mobile apps, digital ticketing, and contactless payment systems to streamline operations and improve guest convenience.
- Optimize park capacity and flow: Implement dynamic pricing strategies and adjust park hours to manage crowds and ensure social distancing.
- Develop virtual and hybrid experiences: Offer online experiences, virtual tours, and interactive content to expand reach and engage audiences beyond physical parks.
D. Customer Experience and Employee Well-being:
- Prioritize guest safety and satisfaction: Implement clear communication channels, provide regular updates, and address concerns promptly.
- Offer flexible and personalized experiences: Cater to diverse needs and preferences by offering flexible ticketing options, personalized itineraries, and inclusive experiences.
- Invest in employee well-being: Provide competitive compensation, comprehensive benefits, and support programs to ensure employee satisfaction and retention.
- Foster a culture of inclusivity and diversity: Create an environment where all employees feel valued and respected, regardless of background or identity.
5. Basis of Recommendations
These recommendations are based on a thorough analysis of Disney World's strengths, weaknesses, opportunities, and threats, as well as the evolving competitive landscape and consumer behavior. They align with Disney's core competencies in entertainment, hospitality, and innovation, while addressing the critical need for safety, flexibility, and customer satisfaction in the post-pandemic world.
The recommendations are also supported by quantitative measures, including:
- Increased revenue from new offerings: Virtual experiences, online merchandise sales, and expanded market reach.
- Improved guest satisfaction: Enhanced safety protocols, personalized experiences, and technology-driven convenience.
- Increased employee engagement: Competitive compensation, comprehensive benefits, and opportunities for growth and development.
6. Conclusion
By embracing a multi-pronged approach that combines strategic planning, organizational change, operational innovation, and a focus on customer experience and employee well-being, Disney World can emerge from the COVID-19 pandemic stronger than before. The company has the resources, expertise, and brand recognition to navigate this challenging period and emerge as a leader in the evolving entertainment industry.
7. Discussion
Alternatives:
- Complete closure of theme parks: This option would minimize financial losses but could lead to long-term brand damage and loss of market share.
- Limited reopening with strict restrictions: This option would be less risky but could limit revenue and guest satisfaction.
- Focusing solely on virtual experiences: This option could be cost-effective but may not appeal to all customers and could limit long-term growth.
Risks and Key Assumptions:
- Continued spread of COVID-19: This could lead to further disruptions and impact revenue.
- Economic recession: This could reduce consumer spending and impact demand for theme park experiences.
- Competition from other entertainment options: This could erode market share and limit growth potential.
- Technology adoption: The success of virtual and hybrid experiences depends on consumer adoption and technological advancements.
Options Grid:
| Option | Advantages | Disadvantages | Risks |
|---|---|---|---|
| Multi-pronged approach | Balanced approach, addresses multiple needs, long-term sustainability | Requires significant investment and effort | Continued pandemic, economic downturn, competition |
| Complete closure | Minimizes financial losses | Brand damage, loss of market share, employee morale | Long-term impact on business |
| Limited reopening | Less risky | Limited revenue, guest dissatisfaction | Continued pandemic, limited growth |
| Focusing on virtual experiences | Cost-effective | Limited appeal, potential for brand dilution | Technology adoption, competition |
8. Next Steps
Timeline:
- Short-term (0-6 months): Implement enhanced safety protocols, optimize park capacity and flow, develop virtual and hybrid experiences, and invest in employee training.
- Mid-term (6-12 months): Expand into new markets and demographics, develop new offerings, and refine operational processes.
- Long-term (12+ months): Continue investing in research and development, build strategic partnerships, and monitor the evolving competitive landscape.
Key Milestones:
- Q1 2024: Implement enhanced safety protocols and begin reopening theme parks.
- Q2 2024: Launch virtual and hybrid experiences, optimize park capacity, and expand into new markets.
- Q3 2024: Invest in employee training and development, refine operational processes, and monitor customer feedback.
- Q4 2024: Evaluate the effectiveness of implemented strategies and adjust plans as needed.
By taking decisive action and embracing a culture of innovation and adaptability, Disney World can not only navigate the challenges of the COVID-19 pandemic but also position itself for long-term success in the evolving entertainment industry.
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Case Description
Reeling from the economic effects of closures wrought by the coronavirus pandemic, the Walt Disney Company (Disney) was at a pivotal junction. Even though COVID-19 case counts were rising in Florida, the state government had announced numerous reopening measures and guidelines for theme parks and resorts, indicating the state's desire for businesses to start returning to "normal." On May 21, 2020, the Universal Orlando Resort-one of Disney's major competitors in theme parks-announced that it would be following the guidelines and reopening on June 5, 2020. Consequently, Disney had to decide when and if to reopen its Walt Disney World Resort, also based in Orlando, despite rising case counts.
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