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Harvard Case - Roppongi Hills: City Within a City

"Roppongi Hills: City Within a City" Harvard business case study is written by Anita Elberse, Andrei Hagiu, Masako Egawa. It deals with the challenges in the field of Strategy. The case study is 24 page(s) long and it was first published on : Nov 3, 2007

At Fern Fort University, we recommend that Mori Building Company (MBC) continue its strategy of developing Roppongi Hills as a mixed-use, urban regeneration project. This strategy should be further refined by leveraging a blue ocean strategy, focusing on disruptive innovation in the areas of sustainability, technology and analytics, and community engagement. This will allow Roppongi Hills to maintain its competitive advantage and become a model for future urban development projects globally.

2. Background

Roppongi Hills is a massive mixed-use development project in Tokyo, Japan, spearheaded by Mori Building Company. It encompasses office buildings, residences, hotels, retail spaces, museums, and public green spaces, creating a self-contained 'city within a city.' The project aims to revitalize the Roppongi district, attract international businesses and residents, and establish a vibrant cultural hub.

The case study focuses on MBC's challenges in maintaining Roppongi Hills' success in a rapidly changing urban landscape. The key protagonists are:

  • Mori Building Company (MBC): The developer and operator of Roppongi Hills, responsible for its strategic direction.
  • Shunzo Mori: The chairman of MBC, who is passionate about creating a sustainable and vibrant urban environment.
  • The Residents and Businesses: The stakeholders who rely on Roppongi Hills for their daily lives and economic activities.

3. Analysis of the Case Study

To analyze Roppongi Hills' situation, we will employ a combination of frameworks:

Porter's Five Forces:

  • Threat of New Entrants: High, due to the increasing competition from other urban regeneration projects in Tokyo and globally.
  • Bargaining Power of Buyers: Moderate, as residents and businesses have choices within Roppongi Hills, but the unique offerings provide some leverage.
  • Bargaining Power of Suppliers: Moderate, with a balance between the need for high-quality services and the availability of options.
  • Threat of Substitutes: Moderate, with alternative urban areas and online shopping posing some threat, but Roppongi Hills' unique blend of offerings mitigates this.
  • Competitive Rivalry: High, as Roppongi Hills competes with other urban regeneration projects, both in Tokyo and internationally.

SWOT Analysis:

Strengths:

  • Unique Mixed-Use Concept: Offers a diverse and integrated environment for living, working, and leisure.
  • Prime Location: Situated in a central and well-connected location in Tokyo.
  • Strong Brand Reputation: Recognized as a symbol of urban regeneration and innovation.
  • Strong Financial Backing: MBC has the resources to invest in ongoing development and maintenance.

Weaknesses:

  • High Rental Costs: Can be a barrier for some businesses and residents.
  • Limited Public Transportation Access: Some areas are not well-served by public transport.
  • Potential for Overcrowding: Managing large crowds during peak hours can be challenging.
  • Dependence on Tourism: The project's success is partly reliant on tourism, which can be volatile.

Opportunities:

  • Growing Demand for Urban Regeneration: Global cities are increasingly looking for sustainable and integrated urban development models.
  • Technological Advancements: Utilizing technology to enhance the resident and business experience, improve efficiency, and promote sustainability.
  • Emerging Markets: Expanding Roppongi Hills' model to other cities in Asia and beyond.
  • Focus on Sustainability: Implementing green building practices and promoting sustainable lifestyles.

Threats:

  • Economic Downturn: A global economic downturn could negatively impact demand for Roppongi Hills' offerings.
  • Competition from Other Urban Regeneration Projects: The increasing number of similar projects could erode Roppongi Hills' market share.
  • Changing Consumer Preferences: Shifts in consumer behavior and preferences could necessitate adjustments to Roppongi Hills' offerings.
  • Natural Disasters: Japan's susceptibility to earthquakes and other natural disasters poses a risk to the project.

Value Chain Analysis:

MBC's value chain can be broken down into:

  • Inbound Logistics: Procurement of materials and services for construction and maintenance.
  • Operations: Managing the construction, operation, and maintenance of the various facilities.
  • Outbound Logistics: Providing services and amenities to residents, businesses, and visitors.
  • Marketing and Sales: Promoting Roppongi Hills as a destination for living, working, and leisure.
  • Customer Service: Providing excellent customer service to all stakeholders.

Business Model Innovation:

MBC should focus on business model innovation by:

  • Developing a Subscription-Based Model: Offering residents and businesses access to a range of services and amenities through a monthly subscription fee.
  • Leveraging Data Analytics: Utilizing data to understand resident and business needs and tailor offerings accordingly.
  • Creating a Digital Ecosystem: Developing a platform that connects residents, businesses, and visitors through digital services and information.
  • Partnering with Technology Companies: Collaborating with technology companies to develop innovative solutions for urban living.

4. Recommendations

MBC should implement the following recommendations to maintain Roppongi Hills' success:

1. Embrace a Blue Ocean Strategy:

  • Create a unique value proposition: Focus on sustainability, technology, and community engagement to differentiate Roppongi Hills from other urban regeneration projects.
  • Expand the target market: Attract a wider range of residents and businesses, including those seeking a more sustainable and technologically advanced lifestyle.
  • Break the value-cost trade-off: Offer a premium experience at a competitive price by leveraging technology and operational efficiency.

2. Drive Disruptive Innovation:

  • Invest in sustainability: Implement green building practices, promote renewable energy, and reduce the project's environmental footprint.
  • Leverage technology and analytics: Utilize AI and machine learning to optimize operations, enhance resident and business experiences, and create a smart city environment.
  • Foster a sense of community: Encourage resident and business engagement through social events, online platforms, and community initiatives.

3. Implement a Balanced Scorecard:

  • Financial Perspective: Monitor financial performance, profitability, and return on investment.
  • Customer Perspective: Track resident and business satisfaction, brand perception, and loyalty.
  • Internal Processes Perspective: Measure operational efficiency, innovation, and employee satisfaction.
  • Learning and Growth Perspective: Assess the project's ability to adapt, innovate, and learn from its experiences.

4. Embrace Corporate Social Responsibility:

  • Promote ethical business practices: Ensure fair labor practices, environmental sustainability, and responsible investment.
  • Engage with the local community: Support local businesses, charities, and community initiatives.
  • Contribute to the city's development: Promote Roppongi Hills as a model for sustainable urban development.

5. Basis of Recommendations

These recommendations are based on a comprehensive analysis of Roppongi Hills' strengths, weaknesses, opportunities, and threats, as well as a consideration of the following factors:

  • Core competencies and consistency with mission: The recommendations align with MBC's core competencies in urban development and its mission to create sustainable and vibrant urban environments.
  • External customers and internal clients: The recommendations address the needs of residents, businesses, and visitors while ensuring the satisfaction of MBC's employees.
  • Competitors: The recommendations aim to differentiate Roppongi Hills from its competitors by focusing on sustainability, technology, and community engagement.
  • Attractiveness ' quantitative measures if applicable: The recommendations are expected to improve financial performance, customer satisfaction, and operational efficiency, ultimately leading to increased profitability and value creation.

6. Conclusion

By embracing a blue ocean strategy, focusing on disruptive innovation, and implementing a balanced scorecard, Roppongi Hills can maintain its competitive advantage and become a model for future urban development projects globally. This will require a commitment to sustainability, technology and analytics, and community engagement, ensuring that Roppongi Hills remains a vibrant and desirable destination for residents, businesses, and visitors alike.

7. Discussion

Other alternatives not selected include:

  • Maintaining the status quo: This would be a risky strategy, as Roppongi Hills would likely lose its competitive edge in the face of increasing competition and changing consumer preferences.
  • Focusing solely on cost leadership: This would require significant cost reductions, which could negatively impact the quality of the project's offerings and its brand reputation.
  • Expanding aggressively into new markets: This would be a high-risk strategy, as it would require significant capital investment and could lead to overexpansion.

The key assumptions of the recommendations are:

  • Continued economic growth: The recommendations assume that the Japanese economy will continue to grow, supporting demand for Roppongi Hills' offerings.
  • Technological advancements: The recommendations assume that technology will continue to advance, providing opportunities for innovation and improvement.
  • Consumer preferences for sustainability: The recommendations assume that consumers will increasingly prioritize sustainability and technology in their lifestyle choices.

8. Next Steps

To implement these recommendations, MBC should:

  • Develop a detailed strategic plan: This plan should outline the specific initiatives, timelines, and resources required to achieve the desired outcomes.
  • Establish a dedicated team: This team should be responsible for overseeing the implementation of the strategic plan and monitoring progress.
  • Communicate the vision to stakeholders: MBC should clearly communicate the vision for Roppongi Hills' future to residents, businesses, and the wider community.
  • Continuously monitor and adapt: MBC should regularly monitor the progress of the implementation and make adjustments as needed to ensure the project's long-term success.

By taking these steps, MBC can ensure that Roppongi Hills remains a leading example of sustainable and innovative urban development, setting a new standard for future projects around the world.

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Case Description

Minoru Mori is the CEO of Mori Building, which has built Roppongi Hills, an ambitious large-scale, mixed-use development in Tokyo, Japan that includes high-end retail, restaurants, hotel, office, library, and art museum. A destination site for tourists and local people, the performance of the development was strong, with the exception of the art museum, which posted losses. Also, the branding efforts by Mori was at odds with other tenants and he needed to manage "the town". Last, another competing development was in the works just blocks away and Mori needed to determine how to address this new competitor.

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