Harvard Case - Hong Kong Disneyland
"Hong Kong Disneyland" Harvard business case study is written by Michael N. Young, Donald Liu. It deals with the challenges in the field of Operations Management. The case study is 16 page(s) long and it was first published on : Oct 4, 2007
At Fern Fort University, we recommend Hong Kong Disneyland implement a comprehensive strategy focused on operational excellence, innovation, and strategic partnerships to address its challenges and achieve sustainable growth. This strategy involves a multi-pronged approach encompassing operations strategy, supply chain management, product development, marketing, and strategic alliances.
2. Background
Hong Kong Disneyland, a joint venture between The Walt Disney Company and the Hong Kong government, opened in 2005. Despite initial success, the park faced challenges including declining visitor numbers, intense competition from other theme parks in the region, and the impact of the 2008 financial crisis. The case study highlights the need for a strategic shift to regain market share and ensure long-term profitability.
The main protagonists of the case study are:
- Michael Eisner, former CEO of The Walt Disney Company, who oversaw the initial development of Hong Kong Disneyland.
- Jay Rasulo, former chairman of Walt Disney Parks and Resorts, who spearheaded the turnaround efforts.
- The Hong Kong government, a key stakeholder in the park's success.
3. Analysis of the Case Study
SWOT Analysis:
Strengths:
- Strong brand recognition and global appeal of Disney.
- Access to Disney's vast intellectual property and entertainment resources.
- Unique attractions and immersive experiences.
- Strong focus on customer service.
Weaknesses:
- High operating costs and dependence on tourism.
- Limited land for expansion and new attractions.
- Competition from other theme parks in the region.
- Dependence on external factors like economic conditions and political stability.
Opportunities:
- Growing middle class in Asia and increasing disposable income.
- Potential for expansion into new markets and partnerships.
- Development of new technologies and immersive experiences.
- Leveraging digital platforms for marketing and customer engagement.
Threats:
- Economic downturns and global travel disruptions.
- Competition from other entertainment options and online gaming.
- Environmental concerns and sustainability challenges.
- Political instability and social unrest.
Porter's Five Forces Analysis:
- Threat of new entrants: High, due to the potential for new theme parks and entertainment options.
- Bargaining power of buyers: Moderate, as visitors have choices and can compare prices.
- Bargaining power of suppliers: Low, as Disney has significant leverage with suppliers.
- Threat of substitute products: High, due to the availability of other entertainment options.
- Rivalry among existing competitors: High, with several theme parks in the region competing for visitors.
Financial Analysis:
The case study highlights the park's declining visitor numbers and financial performance. The park's high operating costs and dependence on tourism make it vulnerable to economic fluctuations.
4. Recommendations
1. Operations Strategy and Supply Chain Management:
- Optimize Operations: Implement lean manufacturing principles to reduce waste and improve efficiency. Utilize Six Sigma methodology for process improvement and Total Quality Management (TQM) for consistent quality.
- Inventory Management: Implement Just-in-Time (JIT) production to reduce inventory holding costs and improve responsiveness. Utilize Materials Requirements Planning (MRP) and Enterprise Resource Planning (ERP) systems for efficient inventory planning and control.
- Capacity Planning: Conduct thorough capacity planning to ensure adequate resources are available to meet peak demand. Implement queueing theory and bottleneck analysis to optimize queue management and improve guest experience.
- Logistics Management: Streamline logistics processes through value stream mapping and process analysis. Utilize technology and analytics to optimize transportation routes and delivery schedules.
- Sustainable Operations: Implement green operations and sustainable operations practices to minimize environmental impact. Utilize renewable energy sources and reduce waste generation.
2. Product Development and Innovation:
- New Attractions: Invest in developing new, immersive attractions that cater to different demographics and interests. Utilize technology and analytics to understand visitor preferences and trends.
- Experiential Storytelling: Enhance the park's storytelling capabilities through interactive experiences and immersive technologies. Leverage digital transformation to create engaging and personalized experiences.
- Product Lifecycle Management: Implement a comprehensive product lifecycle management system to track the development, deployment, and performance of new attractions and experiences.
3. Marketing and Strategic Partnerships:
- Targeted Marketing: Develop targeted marketing campaigns to reach specific demographics and geographic markets. Utilize digital marketing and social media platforms to engage potential visitors.
- Strategic Alliances: Form strategic partnerships with airlines, travel agencies, and other entertainment companies to expand reach and offer bundled packages.
- Customer Relationship Management (CRM): Implement a robust CRM system to collect customer data, track preferences, and personalize experiences. Utilize data analytics to understand customer behavior and optimize marketing efforts.
4. Organizational Change and Leadership:
- Culture of Innovation: Foster a culture of innovation and continuous improvement. Encourage employee engagement and empower them to contribute ideas.
- Leadership Development: Invest in leadership development programs to cultivate strong leaders who can drive change and implement strategic initiatives.
- Communication and Collaboration: Enhance communication channels and facilitate collaboration between departments to ensure alignment and effective implementation.
5. Technology and Analytics:
- Digital Transformation: Embrace digital transformation across all aspects of the park's operations. Leverage technology and analytics to improve efficiency, enhance guest experience, and optimize decision-making.
- Data-Driven Insights: Utilize data analytics to gain insights into visitor behavior, preferences, and trends. Use these insights to inform marketing campaigns, product development, and operational decisions.
- Information Systems: Invest in robust information systems to support operations, marketing, and customer service. Ensure systems are integrated and provide real-time data for decision-making.
5. Basis of Recommendations
These recommendations are based on the following considerations:
- Core competencies and consistency with mission: The recommendations align with Disney's core competencies in entertainment, storytelling, and customer service. They also support the park's mission to provide magical experiences for guests.
- External customers and internal clients: The recommendations aim to enhance the guest experience by providing new attractions, improved service, and personalized experiences. They also aim to improve employee morale and engagement by fostering a culture of innovation and collaboration.
- Competitors: The recommendations address the competitive landscape by focusing on differentiation, innovation, and strategic partnerships.
- Attractiveness: The recommendations are expected to improve financial performance by increasing visitor numbers, reducing operating costs, and generating new revenue streams.
6. Conclusion
By implementing these recommendations, Hong Kong Disneyland can address its challenges, regain market share, and achieve sustainable growth. The park needs to embrace a culture of innovation, prioritize operational excellence, and leverage strategic partnerships to create a compelling and unforgettable experience for its guests.
7. Discussion
Alternatives not selected:
- Closing the park: This option was not considered due to the significant financial and reputational implications.
- Selling the park: This option was not considered as it would likely result in a loss of control over the park's operations and brand.
Risks and key assumptions:
- Economic downturn: A significant economic downturn could impact visitor numbers and revenue.
- Political instability: Political instability in Hong Kong could disrupt operations and deter visitors.
- Competition: The emergence of new theme parks or entertainment options could impact market share.
Assumptions:
- The Hong Kong government will continue to support the park's operations.
- Disney will continue to invest in the park's development.
- The park will be able to attract and retain talented employees.
8. Next Steps
- Develop a detailed implementation plan: This plan should outline specific actions, timelines, and responsibilities for each recommendation.
- Secure funding and resources: Ensure adequate resources are available to support the implementation of the recommendations.
- Communicate the strategy to stakeholders: Communicate the strategy to employees, investors, and the Hong Kong government to ensure alignment and support.
- Monitor progress and make adjustments: Regularly monitor progress and make adjustments to the strategy as needed.
By taking these steps, Hong Kong Disneyland can embark on a path towards a brighter future, ensuring its continued success and relevance in the global entertainment landscape.
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Case Description
Disney began internationalizing its theme park operations with the opening of Tokyo Disneyland in 1983, which is regarded as one of the most successful amusement parks in the world. Disney attempted to replicate this success in France, which is the largest consumer of Disney products outside of the United States. In 1992, they opened Disneyland Resort Paris, which is largely regarded to be much less successful than the park in Japan. This case explores Disney's efforts to open its third park outside the United States; Hong Kong Disneyland. It begins by discussing the experience of Tokyo and Paris Disneylands, and then discusses the opening of Hong Kong Disneyland, including the structure of the deal, and how the operations, human resources management and marketing were tailored to fit the Chinese cultural environment. The case also discusses the tourism industry in Hong Kong and the particular problems that were encountered during the first year of operations. The stage is set for students to discuss whether Disney's strategic assets have a good semantic fit with Chinese culture.
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