Samsung and the Theme Park Industry in Korea

SAMSUNG AND THE THEME PARK INDUSTRY IN KOREA

Yongin Farmland was a 3700 acres amusement complex in Yongin Valley, South Korea. Yongin Farmland (Farmland), opened in 1976, was the first amusement park in Korea. It was managed by Joong-Ang Development Company, one of the wholly owned subsidiaries of Samsung. In October, 1994, Her Tae-Hak, President of Samsung’s Joong-Ang Development Company envisioned a $300 million expansion plan for Yongin Farmland. This proposal was to be analysed keeping in mind the industry dynamics of the theme park industry in Korea and around the world.

PESTLE Analysis of Theme Park industry in Korea –

Political –

Park administration was dependent on the government for utilities such as power, gas and water. A typical period required for arranging government approval for a theme park could be as high as two to five years, depending on the country. Since Yongin was a part of the larger Samsung Group which enjoyed significant support from the Korean government, the political scenario was conducive for business growth.

Economic –

Korea, with its population of 44 million people, had seen tremendous economic growth over the 1980s and 1990s. Over 10 million Koreans lived in Seoul, and along with the other five metropolitan cities, the urbanization rate was at 74.4 per cent. Korean economic growth has often been dubbed as an “economic miracle.” The per capita GNP had risen from US$4,210 in 1989 to US$7,513 in 1993. The growth rate for the second half of the 1990s was expected to be eight to nine per cent. Increasing disposable income of Korean citizens provided ample opportunities for industries like theme park.

Social –

In Korea, people worked for five and a half days a week. They had only 4 to 5 days of vacation every year. On holidays, people preferred staying at home to finish their chores. This was not a good trend for the theme park industry. Moreover, Koreans were serious people and found it difficult to smile at strangers. This made it difficult for theme parks to find suitable human resources that would deliver Disney like experience.

Technological –

Technology was crucial for theme park industry. Most of the large equipments were manufactured in Europe, USA or Japan with smaller equipments being manufactured domestically. The park management expertise commonly referred to as the “software” in the industry was not easily available. Leading theme park companies, such as Walt Disney Company, charged huge licensing fees which were over 10 per cent of the revenues. Also, they were very selective in choosing joint ventures in other countries. Yongin could not get into a JV with Walt Disney, because Disney was not interested in the Korean market.

Legal –

Government regulations were quite strict because of the extensive land use, and the potential for serious accidents. Licensing requirements and methods of ascertaining operational expertise to ensure visitors’ safety varied from country to country. High insurance premiums for accident cover was also a major cost for theme parks worldwide but it did not have much impact in Asian countries.

Environment –

Villagers near the Yongin Farmland opposed expansion on the grounds that cutting down trees would cause flooding of their farms. Korean weather was a temperate climate since it was in the transitional zone between continental climate and subtropical maritime climate. The winter time stretched from December to mid-March when intense, cold dry spells alternated with spells of milder weather. Temperatures dropped to -20 degrees Celsius in some places. Heavy snow was expected in the mountains. Summer, stretching from June to early September, was hot and humid with temperatures rising to 35 degrees Celsius with heavy showers in June and July. Mid-July to mid-August was the peak of Korean vacation season.