...( CASE 3-2 ) Hong Kong Disneyland: Chinese Tourists’ Behavior and Disneyland’s Internationalization Strategy DISCUSSION QUESTIONS 1. Hong Kong Disneyland (HKD) experienced woes in its first year of operation due to: * Hong Kong government giving Ocean Park (the local theme park) all the needed support to rejuvenate itself from HKD’s competition * The HKD workforce demanding for equal treatment to their counterparts abroad * Ocean Park’s popularity growing even stronger as a result of the commitment to its culture – creating a tougher time for HKD to be successful. OP was a “home grown” park, where as HKD was a collaborative project with the United States * OP competing at the global level and remaining relevant to local needs * HKD failing to culturally adapt to the theme park in prelaunch stages * Mainland Chinese market not being familiar with Disney characters – American television shows not well-known by mid-aged Asians and the younger generation being brought up with Japanese cartoons * Micky Mouse and Donald Duck = foreign products to Chinese market * Tourists of Mainland China weren’t easily connected to Disney * HKD tryin to introduce Disney before the park opened but efforts failed * Chinese focusing on what they buy, eat, and take home with them rather than the actual park experience; This behavior is natural in their culture. They would rather take pictures on the beach rather than swim and sunbathe * OP = cheaper...
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...The Walt Disney Company is an American institution closely identified with Mickey Mouse and world-famous theme parks. Hong Kong Disneyland was the Walt Disney Company's third international theme park outside America, after Tokyo and Paris. Interesting enough, both the Hong Kong and Paris theme parks had its chief replaced in less than a few months after the park's opening, if these corporate moves were anything but indicative. In September 2006, the Hong Kong theme park announced it had missed its first year attendance target of 5.6 million. Often criticized as the smallest Disneyland in the world, the Hong Kong theme park had been tipped as a "stepping stone" for the American company's entry into mainland China. If it was indeed to serve as a prototype for another Disneyland in China, it would be critical for the management of Hong Kong Disneyland to come up with a recovery plan and realign its strategy to improve its image, boost attendance and deliver its revenue target. This case can be used to explore what could be done to enhance the smooth delivery of the American fantasy in the alien culture of the Middle Kingdom. (Bennett Yim Josephine Lau). Moreover, Hong Kong Disneyland is one of the world largest entrainment businesses of the world. During the 1920s and 1930s Disney just had studio and theme park but at the end of the 20th century it had several TV networks, several theme park a cruise lines, malls, airports, hotel resorts and so many other entrainment units which...
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...more than its nearest competitor. Years of leading performance in the field of syndicated finance has led JPMorgan Chase a world’s well-known expertise in arranging large volume syndicated loans and thus significantly improved its returns as an underwriter, and its credit exposure as a lender, which reflect its high criteria of service. In addition to the great reputation, Chase has established relationships with many of the world’s famous companies and groups, which will bring it lots of business opportunities. It had over 400 professionals in its Global Syndicated Finance Group with offices in New York, London, Hong Kong, Tokyo, and Sydney. Each office had structuring and distribution teams. These abundant professional resources have been the solid foundation to sufficiently support Chase’s commissions all over the world. In its 30-person Hong Kong office, Matt Harris led structuring while Charles Pelham led distribution. As Matt Harris described it, “We have by far the largest syndicated lending...
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...Disadvantages • The pricing and fees would be less profitable due to the aggressive competition. • Might need to decide the agent role BID TO LOSE STRATEGY Advantages • Stay in the bidding and wait for the deal becomes more attractive • Preserve some flexibility on price/terms and no need to bid at the most aggressive level • Show the respective to the important client Disadvantages • Might lost a profitable deal • Still takes time and money to do the research Q2. Why does Chase decide to “bid to lose” on the Hong Kong Disney transaction? The deal did not seem that attractive to Chase initially due to the following reasons. It had a long tenor (15 years) which banks don’t like. The sponsors wanted to mandate as many as three lead arrangers which would hurt Chase’s economics. The pricing and fees would be less profitable due to the aggressive competition of Local banks like Bank of China and Hong Kong Shanghai Banking...
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...Case Study: HONG KONG DISNEYLAND George Koduah UMUC Case Study: HONG KONG DISNEYLAND George Kofi Koduah, UMUC AMBA 660, May 2013 The Hong Kong Disneyland case study is an example of the global necessity for profitability and brand recognition across international boundaries. The case sheds light on the important roles of culture, legal, economic and practical management strategic decision-making in the success of Multi National Companies. Disney’s strategic mode of entry into the Hong Kong market and the marketing mix and strategies employed for operations are analyzed against the cultural, economic and competitive conditions prevailing on the Hong Kong leisure landscape. Alternative strategies have been suggested taking into consideration the nature of the brand, competition and the society in which it has to operating. Analysis The two major issues and management problems Strategy/mode of entry: Disney’s major challenges for entering the Hong Kong market centers on its strategic mode of entry into the Hong Kong leisure market and failure to device appropriate marketing systems that will make it acceptable and profitable. According to Daniels, Radebaugh, & Sullivan (2013) strategy is “management’s idea on how to best attract customers, operate efficiently, compete effectively, and create value that builds and sustains a company’s position within its industry (p. 809). Globalization and the need to broaden product and market coverage for increased profit and...
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...Global Banking and Capital Markets Hong Kong Disneyland HK$3.3 bn project loan Prof. Ingo Walter 1 Hong Kong Disneyland Borrower Project Cost Infrastructure Start Construction Start Opening HKTP Structure Hong Kong International Theme Parks Limited (HKTP) - owner & operator HK$14 Billion End-2000 End-2002 2005 - HK government 57% plus conversion rights into common for infrastructure development (up to 75% ownership if exercised) - HK$ 3.25 billion - Disney 43% - HK$2.45 billion - HK government sub-debt with repayment starting in Year 16 - HK$6.1 billion - Bank Loan - HK$2.3 billion 15-year non-recourse loan plus HK$1 billion non-recourse revolving working capital loan post-construction – HK$3.3 billion. 2 Mandate - Seeking Disney acting on behalf of HKTP, asks 17 banks to bid and it could mandate upto 3 banks to lead the deal Chase options: No bid Bid to win Bid to lose 3 Chase Options No bid 1. Joint mandate (fee split) 2. Aggressive competition (especially from Bank of China and HSBC) 3. Bad track record (Eurodisney) 4. Credit Issues: 15-year maturity No collateral other than site yet to be built Non-subordination of management fees Desire to use cash flows to grow the project Market risk Force majeure risk 5. Need for fully underwritten deal 4 Chase Options Bid to win 1. Disney important client 2. Marquee deal for the region 3. Chase not a top-10 player in Asian project loans Exh.6a (weak...
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...Hong Kong Disney: the good and the bad Introduction:Disney Disney was founded on October 16, 1923, by Walt and Roy Disney as the Disney Brothers Cartoon Studio, and established itself as a leader in the American animation industry before diversifying into live-action film production, television, travel, and theme parks (The Walt Disney Company, 2012). Disney went on to construct theme parks in California, Florida, Tokyo, Paris, and Hong Kong. Today Disney is the largest media conglomerate of the world and their theme parks alone generate almost $13 billion reported in 2012 in annual gross revenues (The Walt Disney Company, 2012). The Disney parks in the United States had been very successful and that is why Disney expanded into Tokyo. This was a wonderful idea, because Asian love fantasy and Disney is all about fantasy; moreover Asians were excited about the Disney Park. Disney Tokyo was constructed and opened with much success; however, Disney did not own the Tokyo location and they only received royalties from that location, but they soon realized the possibilities that could come with expansion. Disney decided to spread their wings again since Tokyo had been very successful, but they chose the wrong location for the next undertaking; Disney Paris. Who in their right mind would choose Paris as a site for a huge American themed park? Parisians hate Americans, this is a very well known fact. They hate us when we visit their city and they hate the way we live, so...
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...PESTEL Analysis Political Factor: Hong Kong was run as a laissez-faire economy under British colonial rule, and Hong Kong government continued using this system after the territory reverted to Chinese rule in 1997. The government announced the development for five tourism clusters to increase the attractiveness of Hong Kong to tourists including of Ocean Park. The mandate of Ocean Park Corporate was to manage Ocean Park as a public and recreational park and to provide facilities for education, recreational and conservation activities to the public on a self-financing basis. The Chinese government launched the individual Visit Scheme (IVS), lifting restrictions on the travel of mainlanders to Hong Kong in response to the impact of SARS. The scheme allowed mainlanders from designated cities to travel to Hong Kong in an individual capacity rather than only on a business visa or in a group tour as before. The government also reshuffled the Park’s board of directors and appointed new members to replace half of the board. Economic Factor: The park was dealt with the outbreak of the Severe Acute Respiratory Syndrome (SARS). As tourists shunned Hong Kong and Hong Kongers stayed home as much as they could, attendance at the Park fell by about 70%. Investors in the theme park industry had increasingly turned their eyes to Asia. Analysts forecasted industry growth for Asia at 5.7% between 2005 and 2009. Asia has population of more than 3.7 million. The management saw...
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...1. Learning from its mistakes with Disneyland Resort Paris, Disney paid special attention to cultural issues pertaining to Hong Kong Disneyland (HKD). Feng shui was consulted for advice on the park layout and design. The Chinese people were also very superstitious so that the 4th floor (4 sounding like death in the Chinese language) was skipped in hotels and one of the main ballrooms measured 888 square meters (8 being an auspicious number). Employees spoke English, Cantonese, and Mandarin so that communication would be easier. Also, signs were in English and Chinese. Restaurants served a variety of Asian and Western food, catering to the different preferences of its customers. However, with all these mechanisms in place, HKD did not do so well because it still had a lot to learn about the Chinese culture, as shown in the example with the Chinese New Year fiasco (see below). There was just too much negative publicity about the park that they overshadowed the promised magical experience at HKD. 2. (a) Managing guest attendance: The daily capacity limit of 30,000 visitors for the park was too high. With approximately 29,000 visitors, the average queuing time was 45 minutes at the restaurants and more than two hours for the rides. Instead of lowering the daily capacity, Disney extended opening time by an hour and encouraged visits during the weekdays by offering discounts. Obviously, Disney wanted to generate the maximum revenue from ticket sales, food and beverages, and merchandise...
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...Apple and Disney Case Studies April 2015 Introduction Different consumers all across the world have different preferences with regard to new and existing products. In this regard, this paper seeks to analyze different cultural perspectives portrayed by consumers. It will address the manner in which the Japanese market reacted to the introduction of Apple’s IPhone which was considered as genius products in some parts of the world. On the same note, the paper will focus on how Hong Kong consumers received the conservative shark’s fin soup. IPhone in Japan While introducing the product (IPhone) to the Japanese market, Apple, the company banked on the success stories of other products that had performed relatively well in that country. These were IPods and computers. Furthermore, projections had placed the sales at more than a million products. However, that did not happen. The products were not positively received in the country despite good features that manufacturer thought would suit the Japanese market (Kane, 2008). One of the biggest mistakes made by Apple was the reliance on the 3G platform that the product had. Japan conventionally had been accustomed to phones that offer 3G internet. This meant that all other phones in the market had been installed with the 3G internet and IPhone did not amuse them. Another flop was evident in the touch screen concept installed in the IPhone. According to Japanese consumers, that feature was cumbersome to use. The reality within...
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...Euro Disney’s poor performance in the first year. Chinese people lack of knowledge of Disney characters. Size of the park. Not exciting or similar to Chinese amusements parks are the factors for the Disney venture’s loss in Hong Kong. Q2. These factors are foreseeable and controllable. The proper market research could avoid many of the factors. When exploring international markets the cultural aspects must be considered. For example French have their own cartoon characters, promoting them along with the existing Disney mark characters could bring the locals close to the project. Economic situation of the marketing segment should have been taken into consideration to avoid the migration of customers. There should be something exciting in such parks to draw the customers in a new launch. In Hong Kong this is the first mistake which is not addressed. Ignoring self-reference criterion and Ethnocentrism is what seems to me is the major fault. This can be rectified; it is evident from the Paris Disney improvement. Q3. Ethnocentrism is the main issue in Euro Disney development. The above factors depict the lack of knowledge on French culture. Assumptions on the Euro Disney proved wrong. I don’t understand how a company of this stature could ignore this. The success of Disney in many parts of the world doesn’t mean it could ignore the factual research. Q4. Cross culture marketing skill of Disney...
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...DISNEY SHANGHAI SWAT Strengths: 1. Shanghai Disneyland can attract a large quantity of Chinese consumers who have not visit Disneyland. Shanghai Disneyland is the first Disneyland in mainland China. Although Hong Kong has a Disneyland already, people of mainland China still need Hong Kong-Macau laissez-passer in order to travel in Hong Kong, which is a main factor that causes many Chinese Children who want to have a good time in Disneyland have not arrive in Hong Kong Disneyland. After Shanghai Disneyland opening, Chinese children and parents can’t wait to visit this fantastic theme park. 2. Shanghai Disneyland can attract a large quantity of consumers who have visit Disneyland. The first period construction of Shanghai Disneyland covers 390 hectares and Hong Kong Disneyland is with an area of 126 hectares (Travel China Guide.com, “Shanghai Disneyland”), which means Shanghai Disneyland is at least three times as large as Hong Kong Disneyland. Thus, there will be much more entertainment facilities in Shanghai Disneyland than Hong Kong Disneyland. In addition, Shanghai Disneyland will have the biggest Disney castle in the center of the magic Kingdom. Thus, Shanghai Disneyland still have much attraction for people who have already visited other Disneyland. http://www.travelchinaguide.com/attraction/shanghai/disneyland-park.htm Weakness: 1. Some Chinese dislike the Disneyland. For Chinese, traditional cartoons are basic on Chinese Ancient Fiction, such as Journey...
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...Hong Kong Disney Land Marketing Plan Executive Review Hong Kong Disneyland (HKD) vision is to be Asia’s premier resort destination creating magical memories for our guests, cast and community HKD resort’s mission is to inspire happiness and deliver a world class experience through creativity, great leadership and a passionate cast HKD has made a start that was not as successful as expected in the beginning of 2005, as the annual attendance was 5 million short of the expectations. This unsuccessful start was partly due to some misunderstandings of the Chinese culture, some operational problems that resulted in long queues and dissatisfied employees along with dissatisfied customers as well, which resulted in a negative publicity about HKD In 2006, HKD aims to achieve an annual attendance of 12 million visitors and to turn around the negative publicity that occurred in 2005. These optimistic goals will be achieved by modifying the product offer, the way it is offered and the employee offering it. Also corrective measures should be taken to improve HKD publicity Situational Analysis Macro environment Analysis Political/Legal Situation: Hong Kong is a Chinese Special Administrative Region which gives the opportunity of implementing the policy of "one country, two systems". The government is economically liberal but currently lacks universal suffrage except for District Council elections and Legislative council seats for geographical constituencies Hong Kong Legislative...
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...Hong Kong is an affluent free market economy with nearly no import tariffs, a net food importer with a high value food and beverages market and a good showcase and test market for foods from China and other parts of Asia. Its food trends are driven by food safety, increasing health consciousness, altering demographics and busy lifestyles and its trend in food consumption include organic, functional, convenience and snack food, chilled and frozen meat and food for gifts. The major food retail outlets in Hong Kong are supermarket chains and department stores, specialty stores, traditional markets and convenience stores. Hotels, restaurants, airlines and hospitals comprise the food service sector in Hong Kong and there is a trend toward quality food and non-Chinese restaurants like Japanese food, fast food, coffee and snacks and casual dining restaurants.[1] Hong Kong consumers are typically sensitive to price and not loyal to brands and prefer small and convenient packaging, with middle and high income young groups favoring premium Western food products. The qualities of clean and green production environments and high safety standards in connection with foods are seen as competitive advantages. Australian and Victorian producers in the Hong Kong market are particularly well-served in in-store promotion, alongside international trade shows and menu promotions of their products. Hong Kong is lenient in import regulations and standards, food labeling, organic certification and...
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...Disney Case Write-Up Notes Problem: Walt Disney and its joint venture partner, Hong Kong gov’t. are struggling with Hong Kong park less successful than plan. Attendance lower than expected for three years since opening. Must come up with a plan to turn things around, with or without increased capital investment. Context to problem includes Disney’s mixed results with parks outside US (Paris and Tokyo) and importance of HK park given Disney’s plan for a park in Shanghai. Analysis: Need to look at reasons behind poor performance in order to come up with a plan. Could organize the problems several ways (look at planning vs. tactical problems or 5 C’s, 4 P’s, etc.). Issues include: * Small size * Site problems (environmental issues, too short an evaluation period) * Mismatch between product and target market (local and Mainland visitors * Seasonality issues * Pricing issues * Neglected importance of travel agents * Poor PR * Decision-making power primarily with American expats * Employee relations issues * Underestimated ability of Ocean Park to compete effectively * Poor environmental policies (fireworks) * Opened when not really ready * Poor capacity planning * Culturally tone-deaf * Poor employee relations Should look at what fixes would require capital investment and what could be done with current funds Should discuss issues of standardization and adaptation. What aspects of the Disney experience should...
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