The Walt Disney Company Hongkong Case Study

Global Business Strategy 1

GBMP 518 - G1

Professor: Alain Londes

November 5th, 2012.

Table of Contents

The Walt Disney Company 2

a. Background 2

b. Products and Services 3

Hong Kong 3

a. The Amusement Park Industry in Hong Kong 6

b. Hong Kong Disneyland 6

Analysis 8

The Walt Disney Company's SWOT 8

a. Strengths: 8

b. Weaknesses: 9

c. Opportunities: 10

d. Threats: 10

Hong Kong's PEST 11

a. Political: 11

b. Economic: 12

c. Social: 12

d. Technological: 12

Questions 13

Conclusion 20

References 22

The Walt Disney Company

The Walt Disney Company, headquartered in Burbank, California, is the world's largest theme park operator. The company, together with its subsidiaries, provide a sizeable portfolio of offerings classified into five segments: media networks, parks and resorts, studio entertainment, consumer products and interactive media (The Walt Disney Company, 2012). According to Datamonitor (2012), the corporation recorded revenues of $40,893 million that generated a net profit of $4,807 million for the fiscal year ended in October 2011, which represents an increase of 21.3% over 2010. Its brand is a global phenomenon associated with fun and family by people of all ages throughout the world.

a. Background

Walt and Roy Disney founded the Disney Brothers Cartoon Studio on October 16th, 1923, which soon after was renamed as the Walt Disney Studios. With the creation of Mickey Mouse in 1928, the icon that has represented Disney ever since, and the launch of its first animated film Snow White and the Seven Dwarfs in 1937, the company reached worldwide fame and ushered in an era that would revolutionize the entertainment industry (The Walt Disney Company, n.d.).

Building on the success achieved in the film and television industry, Walt Disney decided to turn that magic world into a real experience. Therefore, The Walt Disney Company ventured into the theme park business with the opening of Disneyland on July 17th, 1955, in Anaheim, California (The Walt Disney Company, n.d.). Since then, the corporation has experienced a remarkable growth within the theme parks sector. On October 1st, 1971, Disney's biggest project, Walt Disney World, was launched in Orlando, Florida. On April 15th, 1983, Tokyo Disneyland opened its doors, being the first project of international expansion. Later on, Disney entered the European market with Euro Disney in Paris, France, on April 12th, 1992; and continued its expansion on Asia opening Hong Kong Disneyland Resort on September 12th, 2005 (The Walt Disney Company, n.d.). Finally, on April 8th, 2011, the company announced the future development of Shanghai Disney Resort with its opening targeted for the end of 2015 (The Walt Disney Company, 2012).

b. Products and Services

The Walt Disney Company has a strong presence within the parks and resorts business. It operates in three continents and encompasses 11 theme parks that include theme hotels; vacation club properties; shopping, dining, entertainment and sports complexes; convention centers; campgrounds; golf courses; water parks; and other recreational facilities designed to attract visitors for extended stays.

The company's parks and resorts segment consists of the Walt Disney World Resort in Florida, the Disneyland Resort in California, Aulani Resort & Spa in Hawaii; the Disney Vacation Club, the Disney Cruise Line, Adventures by Disney and eight ESPN Zone restaurants. Internationally, the company manages and has ownership interests in Disneyland Paris, in Hong Kong Disneyland Resort, and in Shanghai Disney Resort  currently under construction. Additionally, the corporation licenses the operations of Tokyo Disney Resort in Japan (The Walt Disney Company, 2012).

Hong Kong

Hong Kong has been an international hub for investment for a long time. Occupied by the British Empire in 1841, it returned to the Chinese government administration in 1997 through a treaty signed in 1984 between the two governments that set up a Special Administrative Region in which a socialist economic system would not be enforced under the Chinese administration (CIA WORLD FACT BOOK, 2012). As we can see in Figure 1, its strategic location in the heart of Southeast Asia and along China's seashore makes it a valuable trade route.

Figure 1: Hong Kong Location obtained from The World Fact Book, CIA.

After World War II, Hong Kong experienced a rapid growth mainly due to a high influx of Chinese immigrants fleeing the civil war. Due to the high development achieved by a free trade and low taxation policies, Hong Kong became a highly competitive investment destination (CIA WORLD FACT BOOK, 2012). The fact that Hong Kong is an island and the competitiveness achieved under the British Empire made Hong Kong reach the Stage III in population development. In other words, it possesses a high economic growth and its entire population is concentrated in urban areas (World Bank, 2012).

Hong Kong has one of the most flourishing economies. Figures 2 shows its GDP per capita.

Figure 2: Hong Kong GDP per Capita obtained from the World Bank.

With a stable population (Figure 3) due to the space factor, Hong Kong today is one of the most powerful cities in the world and a key point of entrance into the growing Chinese market.

Figure 3: Hong Kong Population obtained from Census and Statistics Department SAR of Hong Kong.

If we take into account the facility to arrive in and move around Asia via Hong Kong (Figure 4), the latter's friendly investment environment and its proximity to a growing market