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Written by Gary F. Smith
Publish Date: 2024-10-03

Harvard Case - The Walt Disney Company: Mickey Mouse Visits Shanghai

"The Walt Disney Company: Mickey Mouse Visits Shanghai" Harvard business case study is written by Elliott N. Weiss, Gerry Yemen, Stephen E. Maiden. It deals with the challenges in the field of Operations Management. The case study is 11 page(s) long and it was first published on : Feb 10, 2016

At Fern Fort University, we recommend that The Walt Disney Company (Disney) implement a comprehensive strategy for its Shanghai Disneyland Resort, focusing on operational excellence, cultural sensitivity, and long-term sustainability. This strategy should involve a combination of strategic planning, operations and supply chain management, marketing, and technology.

2. Background

The case study focuses on Disney's ambitious expansion into China with the opening of Shanghai Disneyland, its first theme park in mainland China. The project faced numerous challenges, including:

  • Cultural differences: Understanding and adapting to Chinese cultural norms and preferences.
  • Operational complexities: Managing a large-scale project with intricate logistics and supply chain management.
  • Competition: Competing with other theme parks and entertainment options in China.
  • Economic uncertainty: Navigating the volatile Chinese economy and potential political risks.

The main protagonists of the case study are:

  • Bob Iger: CEO of Disney, responsible for overseeing the Shanghai Disneyland project.
  • Thomas Staggs: Chairman of Walt Disney Parks and Resorts, responsible for the park's development and operations.
  • Andy Bird: Chairman of Walt Disney International, responsible for overseeing Disney's international expansion.

3. Analysis of the Case Study

This case study can be analyzed using the Porter's Five Forces framework to understand the competitive landscape and the SWOT analysis to identify Disney's strengths, weaknesses, opportunities, and threats in the Chinese market.

Porter's Five Forces:

  • Threat of New Entrants: High, due to the growing Chinese entertainment market and the potential for new competitors entering the theme park industry.
  • Bargaining Power of Buyers: Moderate, as consumers have choices in entertainment options, but Disney's brand recognition and unique offerings provide some bargaining power.
  • Bargaining Power of Suppliers: Moderate, as Disney relies on local suppliers for construction materials and services, but its large scale provides some leverage.
  • Threat of Substitute Products: High, as consumers have various entertainment alternatives, including online gaming, movies, and other attractions.
  • Competitive Rivalry: High, with existing competitors like Universal Studios and local theme parks vying for market share.

SWOT Analysis:

Strengths:

  • Strong brand recognition and global reputation: Disney's brand is synonymous with family entertainment, providing a strong foundation for success.
  • Experience in theme park development and operations: Disney has extensive experience in building and managing successful theme parks worldwide.
  • Innovative and engaging content: Disney's strong portfolio of intellectual property provides a unique selling proposition.

Weaknesses:

  • Cultural differences: Understanding and adapting to Chinese cultural norms and preferences can be challenging.
  • Language barriers: Effective communication with Chinese staff and visitors is crucial.
  • Limited experience in the Chinese market: Disney's lack of prior experience in China could pose challenges.

Opportunities:

  • Growing Chinese middle class: The expanding Chinese middle class represents a significant potential customer base.
  • Increasing disposable income: Rising disposable income allows Chinese consumers to spend more on entertainment.
  • Government support for tourism: The Chinese government is actively promoting tourism, creating favorable conditions for theme park development.

Threats:

  • Economic uncertainty: The Chinese economy is subject to fluctuations and potential political risks.
  • Competition from local players: Local theme parks and entertainment options are increasingly sophisticated.
  • Environmental concerns: Sustainability and environmental impact are becoming increasingly important considerations for Chinese consumers.

4. Recommendations

To achieve long-term success in the Chinese market, Disney should implement the following recommendations:

1. Operations and Supply Chain Management:

  • Optimize supply chain: Implement a robust supply chain management system to ensure efficient procurement, logistics, and inventory control. This should include demand forecasting, capacity planning, materials requirements planning (MRP), and enterprise resource planning (ERP) systems.
  • Lean manufacturing: Adopt lean manufacturing principles to minimize waste and optimize production processes. This can involve value stream mapping, bottleneck analysis, and cycle time reduction.
  • Local sourcing: Utilize local suppliers whenever possible to reduce costs, support the local economy, and foster positive relationships.
  • Quality control: Implement rigorous quality control measures throughout the supply chain to ensure high standards and customer satisfaction.
  • Inventory management: Implement an effective inventory management system to minimize holding costs and ensure timely availability of supplies.

2. Marketing and Cultural Sensitivity:

  • Targeted marketing: Develop targeted marketing campaigns that resonate with Chinese consumers, considering their cultural preferences and values.
  • Cultural adaptation: Adapt the park's offerings, attractions, and experiences to align with Chinese cultural norms and sensitivities.
  • Local partnerships: Collaborate with local businesses, cultural institutions, and media outlets to increase awareness and build trust.
  • Language support: Provide comprehensive language support, including signage, website translation, and multilingual staff.
  • Cultural training: Provide cultural sensitivity training to all staff to ensure they understand and respect Chinese customs and traditions.

3. Technology and Innovation:

  • Digital transformation: Embrace digital transformation to enhance customer experience, improve operational efficiency, and leverage data analytics.
  • Mobile technology: Develop a robust mobile app that provides information, booking services, and interactive experiences.
  • Data analytics: Utilize data analytics to understand customer preferences, optimize operations, and personalize experiences.
  • Artificial intelligence (AI): Explore the use of AI for tasks such as customer service, queue management, and personalized recommendations.
  • Innovation: Continuously invest in research and development (R&D) to create innovative attractions and experiences that attract and engage Chinese visitors.

4. Sustainability and Environmental Responsibility:

  • Green operations: Implement green operations practices to minimize environmental impact, including energy efficiency, waste reduction, and water conservation.
  • Sustainable sourcing: Source materials and products from sustainable suppliers.
  • Community engagement: Engage with local communities to address environmental concerns and promote sustainable practices.
  • Environmental education: Educate visitors about environmental issues and encourage responsible behavior.

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, theme park development, and innovation. They also support Disney's mission to create magical experiences for guests of all ages.
  • External customers and internal clients: The recommendations prioritize customer satisfaction and employee engagement, ensuring a positive experience for both internal and external stakeholders.
  • Competitors: The recommendations address the competitive landscape by focusing on differentiation, innovation, and customer experience.
  • Attractiveness ' quantitative measures: The recommendations are expected to enhance operational efficiency, increase customer satisfaction, and drive revenue growth, ultimately contributing to a positive return on investment.

6. Conclusion

By implementing a comprehensive strategy that focuses on operational excellence, cultural sensitivity, and long-term sustainability, Disney can achieve lasting success in the Chinese market. This strategy should leverage Disney's core competencies, adapt to the local market, and embrace innovation and technology.

7. Discussion

Other alternatives not selected include:

  • Joint venture: Partnering with a local company to share resources and expertise. This could provide access to the local market and cultural insights, but could also lead to conflicts of interest and challenges in decision-making.
  • Limited scope: Opening a smaller, less ambitious park with fewer attractions and experiences. This could reduce initial investment costs, but could also limit the park's appeal and potential for growth.

Risks and Key Assumptions:

  • Economic uncertainty: The Chinese economy is subject to fluctuations and potential political risks.
  • Competition: Local competitors could emerge and challenge Disney's market share.
  • Cultural adaptation: Successfully adapting to Chinese cultural norms and preferences is crucial for success.

8. Next Steps

To implement these recommendations, Disney should:

  • Form a dedicated task force: Assemble a team of experts to oversee the implementation of the strategy.
  • Develop a detailed implementation plan: Outline specific actions, timelines, and resources required for each recommendation.
  • Monitor progress and adjust as needed: Regularly track progress, measure key performance indicators (KPIs), and make adjustments as necessary.
  • Continuously improve: Embrace a culture of continuous improvement and innovation to stay ahead of the competition and meet the evolving needs of Chinese consumers.

By taking these steps, Disney can ensure that Shanghai Disneyland becomes a successful and sustainable venture, contributing to the company's long-term growth and expansion in the Chinese market.

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Case Description

The strategic and tactical problems of managing the operations function in a service environment can be examined through the context of the Walt Disney Company (DIS) opening Shanghai Disneyland. The company and its investors were excited about the Shanghai opening for a good reason: demographics. The resort would be located in the Pudong district of Shanghai, easily the wealthiest of all of China's districts. A massive 330 million people lived with a three-hour driving radius of the resort site, compared with 19.6 million who lived within the same radius at DIS's most profitable park, Walt Disney World in Orlando, Florida. Still, risks remained. Construction complications had delayed the opening almost a year longer than expected and cost overruns and alterations had increased the final price tag of the project. The Chinese economy had also hit a rough patch following the Chinese stock market slump in the summer of 2015. With the world watching, could the classic Disney theme park experience be delivered with the right cultural balance to appeal to its largely Chinese customers? Could DIS get it right?

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