INTRODUCTION

This report analysis on the business organization of Disneyland Hong Kong (Disney, for brevity). Disneyland Hong Kong was the second theme park of Walt Disney Company in Asia; the first was located in Tokyo, Japan. The flow of the presentation is as follows: a brief background about Disney, a SWOT (strengths, weaknesses, opportunities, and threats) analysis of the organization of Disney; an analysis on the options for future development taking into consideration the resource-led strategic development and market-led strategic development; the author will also provide for the relative merits of potential future strategies, which will focus on the suitability, feasibility and acceptability of such strategies; the discussion will end with a recommendation, pointing out the critical success for the organization. The SWOT analysis will be presented in a diagram to be followed by a discussion.

BACKGROUND

Hong Kong Disneyland is built and operated by a new-joint venture company, the Hong Kong International Theme Parks Ltd (HKITP), as formed by the Hong Kong Special Administrative Region Government and the Walt Disney Company. It is the fifth (5th) Disneyland style Park, which located on a reclaimed area in Pennys Bay, Lantau Island. According to Watts (2005), it was opened last September 12, 2005, as considered a good date by Chinese Almanacs for opening of new business.

STRENGTHS, WEAKNESSES, OPPORTUNITIES, AND THREATS

INTERNAL FACTORS STRENGTHS

EXTERNAL FACTORS OPPORTUNITIES

2nd established Walt Disney Theme Park In Asia

The number of growing population, which is mainly in their target age market

The Hong Kong government is the largest stockholder The place that Asians will constantly visit Has a capacity of 34,000 persons a day Open interest of children

Asian-neighboring countries flew into the country to visit the park

There Chinese

are from

number

of

Mainland

China who will be amazed Has the lowest value on entrance with the park tickets

It is family-oriented

Staff may speak English or

Cantonese

Integrated into the their system the necessity to follow Chinese beliefs and traditions WEAKNESSES THREATS

Reported

to

have

been

The success of Japanese animation

experiencing below visitors target

Still on-going expansion

Fall of the world economy

Small space, hence, tends to have overcrowding

Criticisms

of

the

Conservative Chinese

Lack of rides

Food poisoning case

Fewer

number

of

themed

attractions as compared to other Disney park

The diagram enumerated the strength, weaknesses, opportunities of the Hong Kong Disneyland. Disney is a worldwide business company, hence, the strengths are more than the other categories because threats may have been considered and studied by the company in order to prevent or control such.

As enumerated the strengths of the company, will be discussed. Disney in Hong Kong is the second Disney themed park established in Asia. On this note in can be inferred that as a second theme park, it opened the interest of the people to go and experience its offered new attractions. As aforementioned, Disney is partly owned by the government of Hong Kong, which is holding the biggest part of the stocks, representing 57% while Walt Disney has only 46%. The other strengths were all attributed to the park that it was created to attract children and to bring family together.

The weaknesses of Disney are basically problems that were not foreseen by the management. According to Associated Press (2007), it has a target of 5.6 million visitors in a year however, it fell short, and only 5.2 million came in 2005. In 2006, only 4 million was reported who visited the company. According to Boland (2005), there are still a lack of rides and attractions and rides and this is due to the fact that the company is currently expanding. Because of this kind weakness, there were disappointed visitors and some expressed their disgust of not coming back again. The food poisoning incident in 2005 had been a great failure with the company, added to the fact that there has been an issue as to the investigation visit by one of the representative of the government. According to Leung (2005), the public perceived that Disney has been receiving a favorable treatment because of the incident that one of the Food and

environmental Hygiene Department was prevented by the director of the park to carry out their duties. There are number of criticisms saying that Disney must be prosecuted for such conduct. According to Wiseman (2008), Hong Kong residents, many of whom who have visited Disneyland in Tokyo or Anaheim, California, were unimpressed with the pint-sized version of Disney. The weaknesses of Disney as enumerated were all, as perceived by the author, attributed to the fact that the company is still in the state of being new in the business.

The Opportunities enumerated were not specific in details because the author perceived that the company has a long-term plan for its development. According to the report of Watts (2005), there are sightseers from the mainland China who compared the park favourably to the Great Wall and the Forbidden City. Zhao Shiyong, a 25-year-old arts teacher, said that Disney is the best and perfect. Zhiyong came from China and it was her first trip outside the mainland. The opportunity for the progress of Disney is enormous as its target is children and its theme is family-oriented, hence, as the population grows, it will lose its target market.

As regards to its threats, those were mainly to the threats coming from the people of Hong Kong. As Hong Kong citizens were conservative, the introduction of other stuffs into the company has been and will always be subject to criticisms. Furthermore, according to the report of Wiseman (2008), Disney has alienated the community of China with a series of highly publicized blunders as it closed the gates on tourists from the Chinese mainland were the park was filled.

Also, according to the report of Watts (2005), Professor Lui Tailok of the Chinese University if Hong Kong said that he is not convinced that there is Disney mania in Hong Kong concluding that the people under thirty five (35) years old are more familiar with Japanese animations and manga than Disney, because for them Winnie the Pooh is an alien. Hence, in terms of appreciation of the cartoon animation, Hong Kong Chinese citizen is still more into the Japanese creation that they can relate and not cartoons made in the western countries. Furthermore, one of the threats that Disney may encounter is the fall of economy in the world perspective. According to the United Nation (2008), in its World Economic Situation and Prospects 2008, the world economy is facing serious challenges in sustaining the strong pace of economic growth. It has been attributed to the risks associated with the bursting of the housing bubble in the United States, the related unfolding credit crisis, the decline of the dollar, large global imbalances and high oil prices are all pointing to the downside. Hence, it can be inferred that that in case that there would be a downfall with the world economy, number of people will not consider going Disney as one of its priority.

FUTURE DEVELOPMENT OF THE COMPANY

RESOURCE LED STRATEGIC DEVELOPMENT

The Disney Company depend its strategy with the development of its resources. This portion of the paper will discuss about the options, which may be use by the subject company in its future development. According to Porter (1980), three generic

strategies can be used singly or in combination to create the best position and to outperform competitors. Such strategies were generic because they are applicable to a large variety of situations and context. These strategies are overall cost leadership, differentiation, and combination. The writer would like to use and combined both strategies.

Over all low cost leadership, strategy means that a company must enact and implement policies to become the lowest cost producer in the industry. Differentiation on the other hand is the strategy wherein it is necessary for a business to create something about its products. The writer would want to use and combine these two strategies in order that Disney may focus into being a competitive one in its field of industry. Taken into consideration the subject company, Disney has no rivalry in terms of classification as a theme park; however, in Hong Kong one of the first tourist spot is Ocean Park, which has been implementing means in order not to face bankruptcy. According to Wiseman (2008), after Hong Kong entrepreneur Allan Zeman took over the management of Ocean Park, it beat the Disney. The report showed that Disney did not reach its target visits for almost three (3) years in a row. Thus, it can be inferred that Disney has not been leading in the market. Although Disney and Ocean Park are two different theme park in terms of what it offers to the market it must develop means in order to become one of the tourist spot.

It is the perception of the writer to have tie ups, specific promos and to further its ride accommodations with regard to the number of people visiting them. As one of its weaknesses is its small space which tend to create overcrowding, the writer would like

to recommend that they issue tickets which would tend to result to over issuance of the tickets and hence people will tend to pile up if in case. Updating their ticketing system is necessary. Furthermore, as Ocean Park is offering live performance of animals, which attract tourist, more than the Westernized Disney, its attraction must not lose its touch to the real sense of things. Specific promos must be shown to the public regularly in order not to make it appear that it only offer its service and product to those people who have more income. Lastly, although price in Disney is considered to be the lowest price ticket offered in organization of all Disney themed parks, it is necessary that it offer its service and product relatively the same as other theme parks located in the vicinity. Ocean Park was still chosen by some of the people because of its educational purposes, lower price, however, if Disney will offer its Fantasy World, and simultaneously create advertisement that will shift the attention of the people to what it may offer and tell the public that Fantasy is not as expensive as what other may think then the public may surely would want to be in a fantasy of an affordable price.

MARKET LED STRATEGIC DEVELOPMENT

PRODUCTS CURRENT MARKETS CURRENT MARKET PENETRATION NEW PRODUCT DEVELOPMENT

MARKET NEW DEVELOPMENT

DIVERSIFICATION

Ansoff Matrix Market Model

In order to provide options for future development as regards to the market led strategic development, the writer used the Ansoff Matrix Market Model, in order to give readers a comprehensive illustration of the matter. First is Market penetration, this type of strategy requires a company to focus on regular clients in order by giving them incentives and other complimentary promos hence, trying to sell more to the same people. Today, Disney has a created an Annual pass, which will entitle the holder to a year round entrance to the park. It offer hotel discounts, breakfast discounts base on early reservation. Furthermore, as it is a family oriented theme park, it also offers Disney youth programs, which is basically created for students in order to enhance their creativity; another one is the magic musical days, which sets the stage for young musicians in order for them to enhance their magical skills. Also, as part of it family orientation, it has wedding packages which open the park to those couple who would

want to get married in the magical world. Disney is also offered by many ticketing agencies around the world in order to promote its company.

Next, is the product development wherein it basically means selling the same things more to the same people. This has been adopted by the subject company, Disney has been selling other Disney related products in the market. It offers different kinds of attractions that will be seen as a new for the people; hence, such attractiveness will relatively bring them to Disney.

Next is Market Development, in this matrix the company targets new market in order to sell it the same things. Although this may have been the constant attraction of several theme parks, the necessity to improve this scheme is necessary. Disney may have been operating as family oriented it is still open to al. The necessity to create a new line of marketing strategy to attract other people other than its target market is not necessary because Disney has been attracting all people, of all different ages. It may be for the fact that it is a theme park and everyone is still kid at heart. As perceived by the author, it is necessary that in order to attract more consumers it must constantly amend and create programs that will surely be positive on its aim.

Last is the Diversification, this is often risky because companies will sell different products to different people. The author would like to say that Disney is also in this Matrix, because of its Wedding packages, which open its park to those who would want to get married. This is risky, as perceived by the author, because its target market are couples who are planning to settle down, only a minority would spend money to experience this magical wedding. Furthermore, Disney may be subject to future lawsuit

as against those who ended up in divorce. Disney has no notice that marriages solemnized in Hong Kong may be subject to divorce.

Thus looking at the strategies conducted by Disney it can be inferred that they conduct their business in a nice way. The only problems is on the part of it prices, as to what other tourists attractions offered in Hong Kong. Disney must choose and decide to make its price lower than what it offers to the public in order to attract more people.

RELATIVE MERITS OF POTENTIAL FUTURE STRATEGIES

According to Merrill Lynch & Co., the process of risk management function is focused upon motivating two key management practices, which are learning from mistakes and assessing the adequacy of controls for the risk to take. Furthermore, it was also said by the aforementioned authority that the implication is that the key criteria in determining the methodology for allocating capital for Process Risk is that it provide the proper incentives for business units within the firm to adopt these management practices. Taking this into consideration, the main problem that has been suffering by Disney is its fall behind its target number of visitors. Disney has never reached it target market. This is attributed to the fact that there are Chinese people who still consider other mainland attraction than the Disney and also to the fact that its price is relatively high. Disney must have conducted a study in order to meet the real capacity of its Hong Kong customers, especially other Asian countries.

In assessing the quality of controls in order to meet the risk present, a study is needed whether it can withstand the need to lower its price. Furthermore, if Disney cannot in any way lower its price it must nevertheless lower its operating expenses without sacrificing the need to cater its magical world to people. If Disney would not do this, other theme parks will take in its market.

RECOMMENDATION

The author has no recommendations so as to change Disney. What the author highly recommends is to answer the call to lower its price. As Disney was strategically located in order to attract tourist from other Asian countries, as the Hong Kong government view that Disney will boost the countrys economy, as the company is a family oriented theme park, it is necessary that it change its price in a price lower than it was offering right now, a price that other people will be able to pay and price that will be necessary to be the peoples top priorities.

The previously mentioned recommendation may seem to be easy but nevertheless is it the point of view of the author that a constant construction and reconstruction of its strategic policies will make Disney a leading company in its industry.

BIBLIOGRAPHY

PERIODICALS/ELECTRONIC RESOURCES

Associated Press. (2007, December 18). Hong Kong Disneyland Fails to hit Target. Retrieved at < http://www.fool.com/news/associated-press/2007/12/18/hong-

kong-disneyland-fails-to-hit-target.aspx>. 19 May 2008

Boland,

R.

(2005).

Disneyland

Hong

Kong.

About.com.

Retrieved

at

<http://gohongkong.about.com/od/whattoseeinhk/gr/HKDisneyland.htm>. 19 May 2008.

Hong

Kong

Disneyland.

Retrieved

at

<

http://park.hongkongdisneyland.com/hkdl/en_US/special/listing?name=SpecialOff ersOverviewPage>. 19 May 2008

Leung, W. (2005, November 10). Wong under fire as Disney escapes action in FEHD case. The Standard Hong Kong.

Merrill

Lynch

&

Co.:

Process

Risk

Management

Program.

Retrieved

at

<http://www.stern.nyu.edu/om/courses/ofs/download/lively.pdf>. 19 May 2008

The Ansoff Matrix. Mind Tools: Essential skills for an excellent career. Retrived at < http://www.mindtools.com/pages/article/newTMC_90.htm>. 19 May 2008

United Nations. (2008). United Nations Development policy and Analysis Division. Retrieved at < http://www.un.org/esa/policy/wess/wesp.html>. 19 May 2008

Watts, J. (2005, September 12). Mouse Zedong? Disney opens its gates in Hong Kong. REtrieved at <guardian.co.uk>. 19 May 2008.

Wiseman, P. (2008 May 19). Ocean Park takes on Hong Kong Disneyland. USA Today.

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SWOT

. SWOT Analysis

5.1 Strengths

i) Strong financial background

First, Disney store has a very strong financial back up by Disney. It is very important for Disney Store to have market development and store improvement.

ii) Exclusive for Disneys products

Second, Disney Store is an exclusive agency for selling Disneys products: Toys, clothing, stationary and gift items etc. It provides many choices for the customers and satisfies their needs. Customers might think of Disney Store immediately when they want to buy Disneys items.

iii) Well-known brand

Disney is a well-known brand all over the world. The image of Disney is very healthy and positive. It is welcomed easily accepted by its target segments.

5.2

Weaknesses

i) Unchanged visual merchandising

One of the weaknesses is that the visual merchandising is not changed regularly; the window display is the same for many years. In this way, customers will feel boring because no stimulation and attraction for them.

ii) Stores are lack of theme decoration

Monotonous decoration in every Disney store fails to attract customers. Because there is no excitement, customers tend to stay in the store for short time.

iii)

Passive staffs attitude

Staff are seldom greet and farewell customers. Although they answer enquires from customers, few of them introduce products and new information to customers proactively. Therefore, they fail to identify customers needs.

5.3 Opportunities

i) Solo Tour

The practice of Solo Tour has brought a significant economic benefit to retail industry in Hong Kong. 3 more provinces will be listed on Solo Tour. It is estimated to generate 43 million of traffic flows and every visitor would spend around HK 5,600 in Hong Kong. The benefit to Disney store is that more visitors will familiar with the Disney products and generate sales. Increasing awareness of Mainland people towards Disney stores in Hong Kong may be the opportunity for Disney to further develop the China Market.

ii)

Opening of Hong Kong Disneyland

Disney has been a hot gossip among the mass. The awareness of Disney, no matter the store or the theme park, has been increasing a lot. It attracts both Disney fans and

non-Disney fans. Disney store could be the supplement of the theme park. As the result, the demand for Disneys product has becoming larger.

5.4 Threats

i) Competition with the Disney Store in the theme park

After the establishment of theme park, the competitive force of Disney store might not as large as the stores in the park. Customers might prefer to buy souvenirs in the park rather than the outlets.

ii)

Decreasing birth rate

The trends of late marriage and family planning result in shrinking the market size of Disney store, and gradually lower the demand for Disney products.

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