Introduction The purpose of this paper is to analyze the Walt Disney Company and their expansion into Hong Kong with the theme park Hong Kong Disneyland (HKD). The Walt Disney Company was founded in 1923 by Walt Disney. It was a company founded upon as an entertainment experience for people of all ages starting out with short films and then moving into full length motion pictures. Since its inception the Disney Company has grown into a worldwide organization and is made up of four major areas.
Those areas are studio entertainment, consumer products, media networks, and parks and resorts. As of 2005 only two of these four areas were profitable, those being media networks and parks and resorts. Up until the opening of HKD, Disney had only four other theme parks throughout the world. The original park, Disneyland Resort, opened in 1955 in Anaheim, CA. The second park opened nearly twenty years later in Lake Buena Vista, FL and was called Walt Disney World Resort.
In 1983 Disney went international opening up a park in Tokyo called Tokyo Disney Resort. This park was very successful and brought about the opening of Disney’s second international park in Paris called Disneyland Resort Paris, which opened in 1992 (Phatak p. 149-150). Disney Resort Paris was the least successful of the four parks for many different reasons, which leads us into the opening of Hong Kong Disneyland, which took place in 2005. Disney’s Strengths and Weaknesses As with any other company Disney has a long list of strengths along with weaknesses.
The strengths that Disney possessed in terms of the Hong Kong park is that it is the second the established park in Asia, the government is the largest stakeholder, potential for neighboring countries to fly in and visit park, has the lowest ticket price of all parks, the staff speaks English, Chinese, and Cantonese, and they took into account the Chinese beliefs and traditions (Phatak 152-156). The last strength listed, taking into account the beliefs and traditions of the Chinese is a huge factor in the success of this park. This is one area where Disney fell short in when it came to the park in Paris.
The major weaknesses that took away from the initial success of the park were the amount of visitors were below the initial target, the park was built in a small space which led to overcrowding, lack of rides and attractions (only 22- 18 fewer than any other park), the food poisoning case, and the debacle with the lunar new year (Phatak p. 155-158). During the lunar New Year HKD failed to take into account that the two days following this holiday were public holidays in mainland China therefore there was an influx of visitors on these days that the park could not handle.
They were forced to literally close the gates on thousands of people which caused a riot outside of the park. Disney’s Opportunities and Threats There were a number of opportunities that Disney would be able to take advantage of with the opening of HKD. Those opportunities were the growing population in around the area of Hong Kong and China in general, it would be a place that people in China and all of Asia would visit over and over again, the interest that the park would gain from the large population of children, and the “wow” factor that it would bring to the people of China.
With these opportunities also come threats. The threats that HKD faced were the fall of the world economy, the negative reviews of the conservative Chinese people, and the other local attractions that were already very popular in Hong Kong. The biggest threat in terms of the already established local attractions was Ocean Park. Ocean park had been rated as one of the top ten amusement parks in the world by Forbes magazine and essentially held a monopoly in Hong Kong as the only amusement park in the area (Phatak p. 53). Analysis of Disney’s Corporate Strategy Disney’s corporate strategy in regards to HKD was to provide a family oriented, entertainment atmosphere at an affordable price. Disney and all of its theme parks across the world symbolizes happiness and fantasy and the goal is to provide an experience like no other to all visitors of any of the parks. This idea was no different with the establishment of HKD. Aside from this worldwide perception that Disney has HKD sought to bring visitors for other reasons as well.
One of the main strategies was to offer this experience at a very affordable rate. The price for a one day was $295 in Hong Kong which is equivalent to $38 in the United States. Along with these low rates there were also many special offers that were constantly available to visitors. These offers included special rates for certain occasions, discounted rates for children and senior citizens and the ability to purchase packages through travel agencies. In fact HKD encouraged the purchase of tickets through travel agents and on their website.
They limited the number tickets that were able to be bought by walk up visitors to keep the wait to enter the park at a minimum. Another corporate strategy was the emphasis that Disney put on their employees or cast member as they refer to them as. Every employee that was hired was sent to the Walt Disney Park in Orlando for training to get accustomed to the expectations of a Walt Disney employee. Along with this extensive training each employee was required to speak multiple languages in order to cater to all guests that may be visiting the park.
With that being said the corporate strategy for Disney, and specifically that of HKD, does effectively reflect the SWOT analysis. The corporate strategy reflects that of its strengths while at the same time attempts to limit its weaknesses as much as possible. The corporate strategy is also in line with the opportunities and threats that Disney faced with the opening of HKD. The most important way went about facing the threats was to take into account the beliefs and traditions of the Chinese people.
By focusing on the little things such as the food that was served in the park, skipping the fourth floor in the hotels, in Chinese culture the number 4 is associated with bad luck, and constructing a ball room that was 888 square meters, the number 8 signifies good fortune, Disney showed they cared about the culture of the people this park was built for (Phatak p. 156-157). They even went as far as consulting a feng shi master in the layout and design of the park (Phatak p. 156). Considerations Raised in the Case Write-up
With the development and opening of Hong Kong Disney, Disney did an outstanding job of focusing on and understanding the different dimensions of the Chinese culture. With the experiences they had with their previous park in Paris, Disney was able to learn from their mistakes and understand that they would have to change the overall operating procedures to account for the different culture of the Chinese people. With Disneyland Resort Paris it seems that they essentially tried to build a park as if they were putting it in America and simply drop it into another country.
They quickly found out that this idea was not well received with the French people with the negative feedback that was received. The main issues were not with the physical nature of the park, but that of the rules and regulations that Disney Resort Paris had invoked. One of the major issues that came about with this park was the banning of serving alcoholic beverages (Phatak p. 150). In the French culture it is customary to drink with wine with almost every meal and the fact that the French people were not able to do this in an amusement park in their own country was an outrage.
Disney did not serve alcohol in any of its other parks and was very adamant about continuing this with Disneyland Resort Paris. For all intents and purposes Disneyland Resort Paris was a learning experience for Disney and it was very evident that they were not going to make the same mistake with Hong Kong Disney. By understanding the cultural dimensions of the Chinese people and adapting the park to the Chinese culture Disney was able to avoid many of the cultural issues it had experience in Paris.
With the exception of the Lunar New Year fiasco the majority of the issues that visitors had with the park were not culturally related. By making human resource management a major priority many of these issues were avoided. The extensive training that all of the employees went through, along with their knowledge of the culture already, it allowed for the visitors to feel like they were still in China, but yet still have a fantasy like experience with some American influence. Questions Asked in the Case
The culture differences that China offered were far different from those experienced with any other park that Disney had opened. In order for this park to be a success Disney had to address all of these differences and then some in order to make the Chinese people happy and ensure that they enjoy their time while at the park. Many of the major issues were addressed with the layout and construction of the park. However, one huge mistake, the Lunar New Year incident, led to years of negative publicity by the Chinese people.
That event had the potential to doom the park forever however; Disney was able to overcome it with promises that something like that would never happen again. Overall Disney did a pretty good job of achieving its goal of translating its strategic assets to the Chinese cultural context. They attempted to take into account the Chinese traditions and beliefs that seemed to mean the most to the culture and incorporate them into the park. This showed with the consultation of the feng sui master and eliminating the fourth floor of the hotels.
While these may seem like little things these are areas that could have led to the failure of the park if they were not addressed properly. There are many things that Disney could do to rescue the park from the negative publicity they were receiving. Some of the major issues that were behind this negativity was the how the staff was treating people and the size and lack of attractions at the park. Disney must show the Chinese people that they are actively working to improve these issues. One way is to continue to expand the park as much as possible and continue to add new attractions.
This is something that the people can physically see happening and it will allow them to see that Disney actually does care about what they think. Recommendations for What the Company Should do Next As previously mentioned Disney needs to continue to add to the park and create new attractions for the visitors. Hong Kong Disney must be a destination that people will want to visit over and over again. Not only do they need to continue to make improvements to the park, but they need to continue to sell the park as a vacation destination, not just a one day visit.
The more people that they can get to visit the park for more than one day the better off the park will be in the future. Another thing that Disney must do is continue to adapt to the Chinese culture while still providing an American flavor. While the Chinese people want to feel at home when they visit the park they still want to feel like they are in a fantasy land, as all people do when they visit a Disney theme park. Some people visit the park for the American feel they are able to receive. Finally it is very important that HKD continue to make human resource management a high priority.
Without the cast members, or employees, a Disney theme park is just another theme park with no real uniqueness. Many of the visitors come to see Mickey and all of the other characters and shows that are put on by all of the cast members. It is very important to keep this a staple of the operation and to continually train the cast members and make them aware how important they are to the success of the park. References Phatak, A. V. , Bhagat, R. S. & Kashlak, R. J.. (2009). International management Managing in a diverse and dynamic global environment (2nd ed. ). Boston: McGraw-Hill Irwin.
