Harvard Case - How Park24 Created a Brand-new Billion-Dollar Parking Market in Japan
"How Park24 Created a Brand-new Billion-Dollar Parking Market in Japan" Harvard business case study is written by W. Chan Kim, Renee Mauborgne, Tomoko Kawakami, Mi Ji. It deals with the challenges in the field of Strategy. The case study is 17 page(s) long and it was first published on : Oct 29, 2018
At Fern Fort University, we recommend Park24 to continue its aggressive expansion strategy with a focus on digital transformation and globalization. This strategy should be underpinned by a strong commitment to corporate social responsibility and environmental sustainability, further solidifying Park24's position as a leader in the parking industry.
2. Background
Park24, founded in 1999 by Kazuyoshi Yoshizumi, revolutionized the Japanese parking industry by introducing a novel business model based on technology and analytics. Park24's success lies in its ability to leverage technology to optimize parking space utilization, provide convenient payment options, and offer value-added services.
The case study highlights Park24's journey from a small start-up to a billion-dollar company, emphasizing its disruptive innovation in an industry previously dominated by traditional parking lot operators. The company's success can be attributed to its strategic planning, market segmentation, and product differentiation strategies.
3. Analysis of the Case Study
Porter's Five Forces Analysis:
- Threat of New Entrants: The parking industry has low barriers to entry, but Park24's technology-driven competitive advantage and established brand loyalty create a significant hurdle for new entrants.
- Bargaining Power of Buyers: Customers have limited bargaining power due to the limited availability of parking spaces, especially in urban areas.
- Bargaining Power of Suppliers: Park24 has a strong bargaining power over suppliers due to its large scale and ability to negotiate favorable terms.
- Threat of Substitutes: Public transportation and ride-sharing services pose a threat, but Park24's value proposition of convenience and accessibility remains strong.
- Rivalry Among Existing Competitors: The Japanese parking industry is fragmented, but Park24's dominant market share and strong brand recognition give it a significant competitive advantage.
SWOT Analysis:
Strengths:
- Strong brand recognition: Park24 is a well-known and trusted brand in Japan.
- Technology-driven business model: Park24's innovative use of technology provides a competitive advantage.
- Large scale and market share: Park24 holds a dominant market share in Japan.
- Strong financial performance: Park24 has a strong track record of profitability.
Weaknesses:
- Dependence on Japanese market: Park24's revenue is heavily concentrated in Japan.
- Limited international presence: Park24 has limited operations outside of Japan.
Opportunities:
- Expansion into new markets: Park24 can leverage its expertise to expand into new markets, particularly in Asia and other urban centers.
- Development of new services: Park24 can develop new services, such as electric vehicle charging stations and car sharing, to diversify its offerings.
- Increased adoption of technology: Park24 can capitalize on the growing adoption of mobile payments and smart city technologies.
Threats:
- Economic downturn: A recession could impact demand for parking services.
- Increased competition: New entrants and existing competitors could challenge Park24's market position.
- Regulatory changes: Government regulations could impact Park24's operations.
Value Chain Analysis:
Park24's value chain is characterized by its efficient operations, technology-driven innovation, and customer-centric approach. The company's core competencies lie in its ability to:
- Acquire and manage parking spaces effectively
- Develop and implement innovative technology solutions
- Provide exceptional customer service
- Maintain strong financial performance
Business Model Innovation:
Park24's success is a testament to its business model innovation. By leveraging technology, the company has:
- Disrupted the traditional parking industry
- Created a new market for parking services
- Enhanced customer convenience and satisfaction
4. Recommendations
Accelerate Digital Transformation: Park24 should invest heavily in AI and machine learning to optimize parking space utilization, improve pricing strategies, and enhance customer experience. This includes developing a robust digital platform for online booking, payment, and parking management.
Expand Globally: Park24 should pursue global expansion through strategic partnerships, mergers and acquisitions, and joint ventures. Focus on key urban centers in Asia and other emerging markets with high parking demand.
Diversify Product Offerings: Park24 should diversify its offerings by developing new services such as electric vehicle charging stations, car sharing, and parking-related insurance products. This can be achieved through product development, strategic alliances, and vertical integration.
Embrace Corporate Social Responsibility: Park24 should strengthen its corporate social responsibility initiatives by promoting sustainable practices, supporting local communities, and contributing to environmental sustainability. This will enhance brand image and attract environmentally conscious customers.
Strengthen Organizational Culture: Park24 should foster a culture of innovation, collaboration, and customer focus. This can be achieved through leadership development, employee empowerment, and continuous improvement programs.
5. Basis of Recommendations
These recommendations are based on the following considerations:
Core Competencies and Consistency with Mission: The recommendations align with Park24's core competencies in technology, customer service, and operational efficiency. They are consistent with the company's mission to provide innovative and convenient parking solutions.
External Customers and Internal Clients: The recommendations are driven by the needs of external customers seeking convenient and affordable parking options and internal clients who require a supportive and innovative work environment.
Competitors: The recommendations aim to strengthen Park24's competitive advantage by leveraging technology, expanding globally, and diversifying its offerings.
Attractiveness: The recommendations are expected to generate significant returns on investment through increased market share, revenue growth, and improved profitability.
6. Conclusion
Park24 has successfully disrupted the Japanese parking industry and created a billion-dollar market. By continuing its focus on digital transformation, global expansion, and corporate social responsibility, Park24 can solidify its position as a global leader in the parking industry.
7. Discussion
Alternatives:
- Organic growth: Park24 could focus on organic growth within the Japanese market. However, this would limit its potential for significant growth and expose it to increased competition.
- Acquisition of a competitor: Park24 could acquire a competitor to gain market share and expand its geographic reach. However, this could be a costly and complex undertaking.
Risks and Key Assumptions:
- Economic downturn: A recession could impact demand for parking services, reducing Park24's revenue.
- Competition: New entrants and existing competitors could challenge Park24's market position.
- Regulatory changes: Government regulations could impact Park24's operations.
8. Next Steps
- Develop a detailed strategic plan: This plan should outline the specific goals, strategies, and resources required to implement the recommendations.
- Invest in technology and innovation: Park24 should allocate significant resources to develop and implement new technologies.
- Explore global expansion opportunities: Park24 should conduct thorough market research and due diligence before entering new markets.
- Develop a robust corporate social responsibility program: This program should address environmental sustainability, community engagement, and ethical business practices.
- Foster a culture of innovation and collaboration: Park24 should invest in leadership development and employee training programs to promote a culture of innovation and collaboration.
By taking these steps, Park24 can effectively implement its strategic plan and secure its position as a global leader in the parking industry.
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Case Description
The case reviews how the Japanese company Park24 reinvented the short-stay parking industry in Japan and expanded it over the years, establishing itself as the unchallenged market leader. Hitherto short-stay parking in Japan was largely provided as a public service. Shortage of land and the high price of real estate explained the severe shortage of city parking space was due to land scarcity and lofty prices of land resources. Park24 saw that the solution was not building gigantic multi-storey car parks but making parking lots available everywhere people went and accessible anytime of the day. Drawing insights from the convenience store industry, Park24 looked for small plots near popular destinations and launched a low-cost, secure and automated parking service called Times. Rolled out rapidly across Japan, it fundamentally redrew the landscape of the short-stay parking industry. Park24's blue ocean move shows how a nondisruptive market-creating approach can open up new value-cost frontiers, new demand and high growth. The case comes with a teaching note, a first-hand interview with Koichi Nishikawa, Park24 President, and lecture slides. The slides and videos can be downloaded for teaching purposes from https://www.blueoceanstrategy.com/teaching-materials/park24/
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