Hong Kong Disneyland: Where Is The Magic Essay

The case study, Hong Kong Disneyland Where is the Magic, analyzed Disneys strategicalal finale to expand their product into Hong Kong. Disney entered into a joint enter with the Hong Kong politics to build their third foreign theme special K. The spare-time activity analysis reviews wherefore and how Disney entered the South-East Asian market using the CAGE analysis. We review the strategic management issues and purposes that were make as complications arose from the entry into Hong Kong market and returning of the natural Hong Kong Disney. Also, we provide the major takea focuss from Disneys entry into the South-East Asian market.Hong Kong environsBy 1999, the course of instruction of Disneys announcement, it was clear Hong Kong was in the throes of a inlet for the offset time in 20 twenty-four hour periods. Just two years earlier the Asian financial crisis swept through Hong Kong as reflected in the material drop in property prices and the 1998 contraction of the gross domestic product from first quarters 2.6% to 5.1%, 6.9%, and 5.7% in the following quarters resulting in an boilersuit reduction of 5.1%, nearly reversing in full the growth observed in 1997. The pain was matte in all celestial spheres of the economy. While wages stagnated, using up on superfluous wants dropped significantly including touristry Disneys target sector in Hong Kong. Total spending dropped 2.4% from 1997 to 1998 though inbound visitors from China crept up 13.1% over 1997. Neverthe little(prenominal), Chinas population was booming and Hong Kong was the beneficiary of their tourism dollars at a time Disney was excited to gain repoint door to the immediateest maturation country in the world.The American market for Disney was mature. They cautiously managed the evolution of their theme commonalitys in such a way that uniquely positioned them to branch out into growing markets with a seemingly circular-knit approach, which they observed in their undefeated capital of Japan endeavor. Their proprietary theme park experience was an untapped fortune in Hong Kong.Theme parks in general were not in short supply in Asia in the late 90s, highlighting their normality. Between 1994 and 99 2,000 new parks were build in China alone. Disney had the benefit of coming in with an established discoloration and product to take advantage of the popular theme park sector. Since the Disney get and all that comes with it were internationally popular and the notion of the American Dream was popular in Asia, the pagan and even language differences were thought to be by and large inconsequential. determination to Go GlobalThe American market was stagnant which made expansion into global markets an attractive option. Disney has great success operating as a holiday destination so setting up fink in a large city abroad filled with tourists would take a leak a great potential market. One of Disneys boasted strengths was their ability to frame a happy and magical place, where their guests can relive fond memories and vex inspired. Disney has been very successful using architecture, landscaping, costumes, music, entertainment, attractions, merchandise and food to create exotic, pantywaist tale like, and adventurous atmospheres within one theme park at the same time.The parks in America were extremely well managed and nonionized in which the guest routes throughout the park were pre-determined and the staff had been rigorously trained. The play along was confident with local research and occupyd expertise they could easily hold for Chinese coating differences and substantiate similar success as capital of Japan Disney. The follow planned to make a few modifications to Disneys legitimate management style to meet local expectations, such as architecture and calling card items.Disney did not see sea Park as a serious competitor and on that pointfore made few changes to their marketing plan. The park was established in 1977, and was marketed as a nature-centered park though mental process was described as lackluster and not aggressive enough where announce and product development were concerned. Disney priced tickets at nearly double the priceof Ocean Parks tickets and gave little incentive to travel agents for tickets booked.Target Hong Kong later two vastly different experiences opening international Disney parks, an ownership proceed into an Asian country was a given. Tokyo Disneyland had been extremely successful from day one with little demand for cultural assimilation Disney was ready to open their own park in Asia. In the early 2000s Hong Kong was exhibit signs of recovery from the recession. In 2004, the economy experienced an 8.1% increase in GDP and in increase in local consumer spending and confidence. That same year the area besides received an enormous number of tourists a year, some 21.8 million visitors with 12.45 from mainland China. With the expansion of the Individual Visit Schem e (IVS) the growing front man of the Chinese visitors could be counted on. It was a known fact that the Chinese enjoyed visit theme parks from the massive number built throughout the mainland in the 90s. However, the only attraction park in the region was get outdated and was no longer viewed as a main attraction. The regions disposal was interested in joining Disney in a joint venture which would ease some of the financial concerns of company expansion. With the growing presence of Chinese tourists, one take in competitor, and involvement of the regional political sympathies Hong Kong was a very attractive market opportunity.Joint Venture DecisionEntering foreign markets is accomplished via three major approaches export/import, licensing, and/or foreign investment. Disney had experience with all methods prior to entering Hong Kong with varying degrees of success. They have exported products throughout the world, used a licensing approach to enter Japan, and a take aim investm ent approach to enter France/Europe.In deciding the entry regularity to Hong Kong, past experiences may have contributed to selecting joint venture as the dress hat entry mode to Hong Kong. The overwhelming success of Tokyo Disneyland suggests licensing is not the silk hat strategy. Disney was not able to fully capitalize on the success of Tokyo Disneyland. They only collected licensing fees, thus missing out onthe opportunity to enhance revenues by limiting their stake to just licensing fees. The success of this entity was at least partially due to the aspirational quality of American culture exhibited by the Japanese.Further analysis of past market entry experience suggested direct investment may not be the best option either. Disney chose direct investment when entering the European market being a compulsive shareholder in the Euro Disney entity. Euro Disney found itself saddled with large debt struggling to survive. irrelevant the Japanese experience, the cut believed Disn ey was practicing cultural imperialism through its operation. Needless to say the French do not share the same aspirational quality of American culture as the Japanese.In looking to Hong Kong, Disney had to look at these past experiences to recall a happy medium between the success of Tokyo and the less successful entry to Europe. Thus a joint venture with the government of Hong Kong was born. This entry mode allows Disney to share more risk, unlike Euro Disney, but also reap a greater benefit in the event Hong Kong proves to be as successful as Tokyo Disneyland. The joint venture apparatus with the Hong Kong government should, in theory at least, allow Disney to avoid the cultural missteps of Euro Disney while making entry smoother and paving the way to greater profits.Having selected a joint venture as the entry method, was their entry successful? The price to enter the park was nearly double the tilt. Not unavoidably a problem until you look at survey results showing 70% of respondents expected a begin admission price. Coupled with a unfortunate commission structure for travel agents, Disney was off to a rough take over once the park opened.Even before the park opened there were problems. Public criticism was directed at the nature of the joint venture operating the park as a private entity with public patronage was not well-received. Fire ant colonies were found throughout the property. Testing of pyrotechnic displays led to complaints from area residents and local officials. In response, Disneyrefused to use a less noisy system used in other Disney properties as they argued they were following local regulations. This inflexible approach led to animosity between the company and locals. Additionally, packs of wild dogs were using the park as a location to disgorge for food leading to visitor safety concerns.Attempting to learn from their experience in France, Disney endeavored to integrate local customs and practices into park design including us ing feng shui. However, the decisiveness to offer sharks fin soup caused another problem. topical anaesthetic conservationists argued this was a status symbol and not a local custom. They pointed to the competition not go this delicacy as a good example. at once the park opened, there were further issues. Reaching park capacity, turning passel away and long queues were unforeseen operational issues resulting in further headaches for Disney. in spite of looking to their past for guidance, taken as a whole, Disneys initial entry into Hong Kong was not very successful.Lessons LearnedDisney has numerous lessons to be wise to(p) from the opening of the Hong Kong theme park, some of which were available to them before making the Hong Kong decision based on their moves into other countries. The common theme among these lessons is that Disney needed to let on understand the context of their business venture before starting, throughout the execution of instrument process and post op ening. In the case of Disney and Hong Kong, the relevant context includes competition, sustenance industries, the cultural setting, and consciousness the target customers wants and measurement of satisfaction.The first lesson the Walt Disney Company in condition(p) while expanding into Hong Kong is to understand price structure. Their main competitor, Ocean Park was more aggressive in sales on mainland China by offering better commission rates to travel agents. The university study showed expectations for adult pricing ranged would be in the range of HK$200 HK$300 while the authentic price was HK$295 on weekdays and HK$350 on weekends. This pushed potentialguests out of the Disney market to lower priced Ocean Park.The second lesson learned from the Hong Kong Disney expansion is a better understanding of the overall Honk Kong theme park food market. Disney seemed to be fighting back. They were not acting proactively towards employee union work conditions, green initiatives, ani mal rights activists and the Disney Hunters who brought to light uncouth labor practices. Disney spent a lot of time repairing its reputation from marketplace issues rather than projecting the Disney image to potential guests.The third lesson learned is an operational issue. Disney should have had smaller more manageable openings, leading to larger crowds. disruption the park to maximum occupancy for a charity event was nobleman but created only downside risk to Disney operations. They saw quickly they could not continue the crowds in every aspect. After the fact they basically blamed their customers accept the problems stemmed from a lack of understanding the flexible ticking system.The ultimately lesson learned is for Disney to be more local in all regards. First, hire local high level managers to run parts of the operation. This could have avoided several(prenominal) issues like the Chinese New Year ticketing problem, management turnover, inspections and catering menu optio ns. Also, the Hong Kong people working on the project would not have felt they were being forced to manage to the Disney policies.In summary, Disneys strategic decision to enter into the Hong Kong market via joint venture with the government was a arranged decision. Tapping into the China market, home to the worlds most populated country and a fast growing economy, Honk Kong Disneyland seem destined for success. However, as with past international expansions Disney faced a whirlwind of cultural, economic and management issues that tainted the original hallucination to spread Disney magic into South-East Asian market