I.

BACKGROUND INFORMATION

A. Global Amusement & Theme Parks Industry

The global amusement and theme park market is a part of the broad leisure industry.
This sector is expected to generate revenue of almost $32 billion by 2017, according to
research from Global Industry Analysts.
Though the industry was negatively impacted by the economic recession in 2009, it
entered into a phase of recovery in 2010 and 2011. Going forward market growth will be
fuelled by rising consumer spending on leisure and entertainment, increasing levels of
disposable income, and higher mass entertainment popularity. Urbanization in
developing countries and an expanding base of middle-class households will also drive
demand.
Theme parks involve specialized entertainment with a specific theme, offered at outdoor
sites. Traditional theme parks feature a range of games, concerts, rides and events
organized around a theme such as movies, myths and legends, countries, and fairy
tales. Theme parks are popular outings for family leisure activities and entertainment.
The US and Western Europe are established markets where theme park visitor
attendance has been stabilizing over recent years. Obstacles to market growth in this
sector mainly originate in rivalry from other entertainment options, widening deficits, and
unemployment.

B. Regional Market Share

The US amusement parks industry continues to record strong growth, with visitor
attendance forecast to grow over the coming years, reports Taiyou Research. As the US
economy continues to recover from the lows of the recession, growth in its travel sector
is expected boost amusement park revenue. Leading names in the US amusement park
industry include Six flags and Walt Disney and Cedar Fair.
IBIS World forecasts that amusement parks will attract more consumers by adding new
attractions. Growth will also be driven by improving consumer confidence due to
economic recovery, giving rise to growing demand for entertainment. Leading outfits will
concentrate on international expansion to bring in more revenue and parks across the
board will attract customers through special packages and offers in domestic sites.
With visitor attendance numbers continuing to climb, along with in-park spending,
amusement park foodservice sales in the US have exceeded prerecession levels, with
continued growth expected through 2014, reports Packaged Facts. Amusement park
foodservice strategies are influenced by domestic restaurant brand opportunities,
demand for healthier foods, entertainment district growth, and evolving marketing
tactics. Companies focus on finding the right foodservice solution for the specific food

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preferences and habits of each specific amusement park and its guests. Amusement
park outfits research park visitation behavior, attendance trends and guest
demographics to boost foodservice revenue.
While the US leads the global amusement and theme parks market, Asia-Pacific
represents a region recording strong growth. Global Industry Analysts forecast AsiaPacific amusement park growth will exceed a yearly rate of 6% over the coming years.
Factors contributing to Asias rapid growth in this sector include rising levels of
discretionary income, higher income levels in general, improving standards of living, and
rising spending on leisure and entertainment. Theme park attendance and visitor per
capita spending is expected to improve in countries such as Hong Kong, Korea, India,
Taiwan and China due to state-based focus on promoting tourism and entertainment.
The EU theme park industry is faring well despite the prevailing debt crisis, according to
research from Global Industry Analysts. The EU tourism sector is witnessing a growing
number of visitors due to depreciation of the Euro and the Euro zone debt crisis. The
number of middle class Asian tourists visiting the EU is expected to continue rising,
particularly if the Greek crisis further compromises the Euro making EU luxury goods
cheaper. Asian visitors, and Chinese visitors in particular, will flock to the EU to avail of
cheaper luxury shopping.

C. The Walt Disney

Walt Disney Company is the world's largest park operator. In addition to the usual rides,
games and food, it runs all its parks as theme parks - amusement parks that focus on a
particular motif such as cartoon character or animals. Disney has five theme parks
outside the United States namely:
Tokyo Disneyland, Tokyo DisneySea, Disneyland Paris, Hong Kong Disneyland and
Walt Disney Studios (a movie theme park adjacent to Disneyland Paris).
Disney operates seven of the world's ten most attended amusement parks. Opened in
Hong Kong in 2005 and in Tokyo in 1983 - which is the most attended of all parks today.
Disney is motivated to set up parks worldwide to increase its sales of goods as well as
attendance to their theme parks. After lunched Hong Kong Disneyland in 2005, Disney
has signed a letter of intent to create another park in Shanghai China in 2008 to attract
tourist to visit Shanghai.

II. STATEMENT OF THE PROBLEM

1. How Walt Disney will be able to adjust to the local culture, norms, and even climate,
in their operating regions?
2. For the Shanghai Project, How will Disney be able to compete head to head with the
thousands of other operating amusement parks in China?
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III. ALTERNATIVES
For Shanghai Project

Since more people go to city in east of China for the vacation, Disney could set
up the theme park to other city in east of China;

Add Chinese culture element to the goods and building.

IV. DETAILED RECOMMENDATION

Conduct careful study of the potential market which includes: Risk, Behavior,
Cultures, Economic conditions, Government policies and political situations,
Business operations strategies;

Focus on regions that are great potential market;

Adjusting the brand to suit local taste without compromising it;

Disney needs to adjust to the climate issues by installing fireplaces, protecting

waiting lines and placing a dome over the tea cup ride

V. ANSWER TO QUESTIONS
1. What do you think motivated Disney to set up parks abroad and what
might be the pros and cons for the Walt Disney Company.
Answer:
Like any other businesses, the primary goal of all for-profit organizations is to
gain profit. It is inherent for any businesspeople - small scale or big scale- to
expand when he sees things are doing well - the existence of a potentially
sustainable market and growing demand for a product or a service. As for
Disney, expansion of operations abroad meant a larger market base, hence
larger profits. The presence and recognition of Disney's branding abroad also
creates following for its future products/campaigns ensuring profits for the
company.
Also, the creation of jobs and other indirect businesses in the host country is
another notable advantage. However, like any other multinational companies,
Disney had to face a lot of challenges when it expanded internationally. The
management has to take a lot of failures/adjustments to ensure the sustainability
of its operations abroad. For instance, the culture of the people of the host
country was not carefully studied. This led to a lack of support from the locals of

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that host country which led to Disney's failure at the onset. Also, Disney's
decision to stick to the branding worsened the locals' lack of support.

2. Why do you suppose Disney made no financial investment in Japan, one

in $140 Million in France and one of over $300 Million in Hong Kong?
Answer:
The management of Disney probably projected the brand's profitability based on
the perceived value of the people in Disney services/products in each country. In
Japan, for example, since it has its own brand of cartoons (anime), the
management may have not thought that Disney will be successful. In France and
Hong Kong, on the other hand, Disney based its projections on the number of
people visiting the location each year without considering the profile of these
visitors. This then led to failure of expectations of profitable operations in these
countries.

3. What factors in the external environment that contributed to Disney's

success, failure and adjustments in foreign theme parks operations?
Answer:
Success:

Brand Popularity
They focus on the region where there is high market potential

Failure:

Not being able to analyze extensively the economic conditions of the

regions;
Not taking into consideration difference/diversity of cultures, climate, and
political stability of their target regions.

4. Should Disney set up a park in Shanghai? If so, what types of operating

adjustments would it make there?
Answer:
Without taking in consideration that the construction is currently on going, we
believe that still, Shanghai is a great location for another theme park.

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China might have a negative track record of amusement parks, but China is still
China. A tiger economy with a current state-based focus on promoting tourism
and entertainment, Shanghai will surely attract huge number of tourists.
China's demand for theme parks has been fueled by several factors, including
China's growing middle class, which has money to spend but few options for
leisure activity. A recent move by the Chinese central government to relax
building permits for theme parks has also spurred development.
By 2020, China will outnumber the U.S. in parkgoers. Parks operated by the
Shenzhen tourism company OCT Parks China already attract more than 26
million visitors a year, behind only Walt Disney Attractions, Merlin Entertainment
Group, and Universal Parks and Resorts in total attendance, according to the
AECOM study.
Therefore, in order to sustain the lead in the theme park industry, Disney, thru its
best effort, must try adapt/incorporate more Chinese culture and/or characters to
make the best out of Shanghai.

VI. LEARNINGS
Mere statistics cannot project future profits. As for Disneyland Paris, they
projected that the location, the number of tourists visiting Paris (compared to
other parts of Europe) and local government's support would predict the
success of the Disney brand in France. The management was not able to
carefully study the culture of the people in that country. They were not able
to consider how the population valued their culture which then led to its
failure.

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