Hong Kong Disney Case Study Summary
In negotiations between the Hong Kong government and Disney, we have established measures we would like to observe going forward. The most important matter included is job creation and economic boost to Hong Kong and the surrounding areas. Both parties (Hong Kong and Disney) can create value and gain favorable returns. Our negotiations are not limited and will be open to different plans. From a cultural perspective, negotiations with the Hong Kong government are much easier than mainland China’s government.
Saving time, money, and starting the projects faster will allow Disney to realize their desired profits. The government of Hong Kong would like Disney to be fully involved with this project. A joint venture appears as the best option for this type of deal. With Disney and Hong Kong fully involved in day-to-day business operations, both parties would assume similar risks. Hong Kong provides a large work force and land to accommodate such a large company. On the other hand, Disney brings its expertise and management skills.
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As a joint partner, both entities can create a profitable business model. To keep consumer confidence high and competition low, Hong Kong would not allow any additional construction in regards to theme park attractions within the region. We would also like Disney to help ensure a favorable revenue stream for both parties by agreeing to not construct any additional theme parks in the region. We estimate about 25 years to realize true profits and consistent returns.
After this period, terms of the arrangement between the Hong Kong government and Disney will be negotiable again. After phase 1 has been implemented and has proved to be successful, phase two of the project can also be negotiated. The government would like set benchmarks before phase two of the project can be completed. If Disney were able to provide desired investment amounts and attain certain benchmarks, expanding the attraction would not be an issue. Setting certain benchmarks is a great incentive for Disney to work harder and meet certain standards.
The largest asset the government currently holds is Penny’s Bay, which is a very important location for both Disney and the Hong Kong government. For the government, there are a number of profitable ways this land can be developed and utilized. Providing this land to Disney at a subsidized rate would be the best way for Hong Kong and Disney to make use of the bay. A number of political factors do not allow the government to provide the land at no cost; however, there are other options available which can benefit both parties favorably.