Disney: Losing Magic in the Middle Kingdom SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Global Business
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Disney: Losing Magic in the Middle Kingdom
Hong Kong Disneyland has been struggling with lower-than-expected attendance rates for almost three years since its opening. Factors such as small size, inconvenient location, lack of unique features, insufficient appeal to adults and missing Chinese elements have been cited as possible causes. The Walt Disney Company and its joint-venture partner, the Hong Kong government, are negotiating about injecting extra capital to expand the park in order to attract more visitors. For a successful turnaround, the management has to figure out what went wrong in the first place. This case explores the possible reasons for the park's lackluster performance. It also covers the park's positioning and product offerings, the remedial actions taken by the company, an analysis of the market dynamics for both local and overseas visitors, and the competition faced by the park. The launch strategies and performance of Tokyo Disneyland and Disneyland Park in Paris are included in the case for comparison. This case was used in the 2nd McKinsey/HSBC Business Case Competition.
Swot Analysis of "Disney: Losing Magic in the Middle Kingdom" written by Ali Farhoomand, Penelope Chan includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Disneyland Park facing as an external strategic factors. Some of the topics covered in Disney: Losing Magic in the Middle Kingdom case study are - Strategic Management Strategies, Marketing, Sales and Global Business.
Some of the macro environment factors that can be used to understand the Disney: Losing Magic in the Middle Kingdom casestudy better are - – increasing energy prices, there is increasing trade war between United States & China, geopolitical disruptions, supply chains are disrupted by pandemic , challanges to central banks by blockchain based private currencies, central banks are concerned over increasing inflation, increasing commodity prices,
banking and financial system is disrupted by Bitcoin and other crypto currencies, cloud computing is disrupting traditional business models, etc
Introduction to SWOT Analysis of Disney: Losing Magic in the Middle Kingdom
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Disney: Losing Magic in the Middle Kingdom case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Disneyland Park, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Disneyland Park operates in.
According to Harvard Business Review, 75% of the managers use SWOT analysis for various purposes such as – evaluating current scenario, strategic planning, new venture feasibility, personal growth goals, new market entry, Go To market strategies, portfolio management and strategic trade-off assessment, organizational restructuring, etc.
SWOT Objectives / Importance of SWOT Analysis and SWOT Matrix
SWOT analysis of Disney: Losing Magic in the Middle Kingdom can be done for the following purposes –
1. Strategic planning using facts provided in Disney: Losing Magic in the Middle Kingdom case study
2. Improving business portfolio management of Disneyland Park
3. Assessing feasibility of the new initiative in Global Business field.
4. Making a Global Business topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Disneyland Park
Strengths Disney: Losing Magic in the Middle Kingdom | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Disneyland Park in Disney: Losing Magic in the Middle Kingdom Harvard Business Review case study are -
Ability to recruit top talent
– Disneyland Park is one of the leading recruiters in the industry. Managers in the Disney: Losing Magic in the Middle Kingdom are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Highly skilled collaborators
– Disneyland Park has highly efficient outsourcing and offshoring strategy. It has resulted in greater operational flexibility and bringing down the costs in highly price sensitive segment. Secondly the value chain collaborators of the firm in Disney: Losing Magic in the Middle Kingdom HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Effective Research and Development (R&D)
– Disneyland Park has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in, as mentioned in case study Disney: Losing Magic in the Middle Kingdom - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Operational resilience
– The operational resilience strategy in the Disney: Losing Magic in the Middle Kingdom Harvard Business Review case study comprises – understanding the underlying the factors in the industry, building diversified operations across different geographies so that disruption in one part of the world doesn’t impact the overall performance of the firm, and integrating the various business operations and processes through its digital transformation drive.
Sustainable margins compare to other players in Global Business industry
– Disney: Losing Magic in the Middle Kingdom firm has clearly differentiated products in the market place. This has enabled Disneyland Park to fetch slight price premium compare to the competitors in the Global Business industry. The sustainable margins have also helped Disneyland Park to invest into research and development (R&D) and innovation.
High switching costs
– The high switching costs that Disneyland Park has built up over years in its products and services combo offer has resulted in high retention of customers, lower marketing costs, and greater ability of the firm to focus on its customers.
Organizational Resilience of Disneyland Park
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Disneyland Park does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Learning organization
- Disneyland Park is a learning organization. It has inculcated three key characters of learning organization in its processes and operations – exploration, creativity, and expansiveness. The work place at Disneyland Park is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Disney: Losing Magic in the Middle Kingdom Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Low bargaining power of suppliers
– Suppliers of Disneyland Park in the sector have low bargaining power. Disney: Losing Magic in the Middle Kingdom has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Disneyland Park to manage not only supply disruptions but also source products at highly competitive prices.
Diverse revenue streams
– Disneyland Park is present in almost all the verticals within the industry. This has provided firm in Disney: Losing Magic in the Middle Kingdom case study a diverse revenue stream that has helped it to survive disruptions such as global pandemic in Covid-19, financial disruption of 2008, and supply chain disruption of 2021.
High brand equity
– Disneyland Park has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Disneyland Park to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Cross disciplinary teams
– Horizontal connected teams at the Disneyland Park are driving operational speed, building greater agility, and keeping the organization nimble to compete with new competitors. It helps are organization to ideate new ideas, and execute them swiftly in the marketplace.
Weaknesses Disney: Losing Magic in the Middle Kingdom | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Disney: Losing Magic in the Middle Kingdom are -
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Disney: Losing Magic in the Middle Kingdom, in the dynamic environment Disneyland Park has struggled to respond to the nimble upstart competition. Disneyland Park has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Products dominated business model
– Even though Disneyland Park has some of the most successful products in the industry, this business model has made each new product launch extremely critical for continuous financial growth of the organization. firm in the HBR case study - Disney: Losing Magic in the Middle Kingdom should strive to include more intangible value offerings along with its core products and services.
Aligning sales with marketing
– It come across in the case study Disney: Losing Magic in the Middle Kingdom that the firm needs to have more collaboration between its sales team and marketing team. Sales professionals in the industry have deep experience in developing customer relationships. Marketing department in the case Disney: Losing Magic in the Middle Kingdom can leverage the sales team experience to cultivate customer relationships as Disneyland Park is planning to shift buying processes online.
No frontier risks strategy
– After analyzing the HBR case study Disney: Losing Magic in the Middle Kingdom, it seems that company is thinking about the frontier risks that can impact Global Business strategy. But it has very little resources allocation to manage the risks emerging from events such as natural disasters, climate change, melting of permafrost, tacking the rise of artificial intelligence, opportunities and threats emerging from commercialization of space etc.
Lack of clear differentiation of Disneyland Park products
– To increase the profitability and margins on the products, Disneyland Park needs to provide more differentiated products than what it is currently offering in the marketplace.
High dependence on existing supply chain
– The disruption in the global supply chains because of the Covid-19 pandemic and blockage of the Suez Canal illustrated the fragile nature of Disneyland Park supply chain. Even after few cautionary changes mentioned in the HBR case study - Disney: Losing Magic in the Middle Kingdom, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Disneyland Park vulnerable to further global disruptions in South East Asia.
Workers concerns about automation
– As automation is fast increasing in the segment, Disneyland Park needs to come up with a strategy to reduce the workers concern regarding automation. Without a clear strategy, it could lead to disruption and uncertainty within the organization.
High bargaining power of channel partners
– Because of the regulatory requirements, Ali Farhoomand, Penelope Chan suggests that, Disneyland Park is facing high bargaining power of the channel partners. So far it has not able to streamline the operations to reduce the bargaining power of the value chain partners in the industry.
Need for greater diversity
– Disneyland Park has taken concrete steps on diversity, equity, and inclusion. But the efforts so far has resulted in limited success. It needs to expand the recruitment and selection process to hire more people from the minorities and underprivileged background.
Slow to strategic competitive environment developments
– As Disney: Losing Magic in the Middle Kingdom HBR case study mentions - Disneyland Park takes time to assess the upcoming competitions. This has led to missing out on atleast 2-3 big opportunities in the industry in last five years.
Increasing silos among functional specialists
– The organizational structure of Disneyland Park is dominated by functional specialists. It is not different from other players in the Global Business segment. Disneyland Park needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Disneyland Park to focus more on services rather than just following the product oriented approach.
Opportunities Disney: Losing Magic in the Middle Kingdom | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities highlighted in the Harvard Business Review case study Disney: Losing Magic in the Middle Kingdom are -
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Global Business industry, but it has also influenced the consumer preferences. Disneyland Park can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Better consumer reach
– The expansion of the 5G network will help Disneyland Park to increase its market reach. Disneyland Park will be able to reach out to new customers. Secondly 5G will also provide technology framework to build new tools and products that can help more immersive consumer experience and faster consumer journey.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Disneyland Park can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Low interest rates
– Even though inflation is raising its head in most developed economies, Disneyland Park can still utilize the low interest rates to borrow money for capital investment. Secondly it can also use the increase of government spending in infrastructure projects to get new business.
Loyalty marketing
– Disneyland Park has focused on building a highly responsive customer relationship management platform. This platform is built on in-house data and driven by analytics and artificial intelligence. The customer analytics can help the organization to fine tune its loyalty marketing efforts, increase the wallet share of the organization, reduce wastage on mainstream advertising spending, build better pricing strategies using personalization, etc.
Identify volunteer opportunities
– Covid-19 has impacted working population in two ways – it has led to people soul searching about their professional choices, resulting in mass resignation. Secondly it has encouraged people to do things that they are passionate about. This has opened opportunities for businesses to build volunteer oriented socially driven projects. Disneyland Park can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Learning at scale
– Online learning technologies has now opened space for Disneyland Park to conduct training and development for its employees across the world. This will result in not only reducing the cost of training but also help employees in different part of the world to integrate with the headquarter work culture, ethos, and standards.
Leveraging digital technologies
– Disneyland Park can leverage digital technologies such as artificial intelligence and machine learning to automate the production process, customer analytics to get better insights into consumer behavior, realtime digital dashboards to get better sales tracking, logistics and transportation, product tracking, etc.
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Global Business industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Disneyland Park can take advantage of these changes in consumer behavior to build a far more efficient business model. For example consumer regular ordering of products can reduce both last mile delivery costs and market penetration costs. Disneyland Park can further use this consumer data to build better customer loyalty, provide better products and service collection, and improve the value proposition in inflationary times.
Buying journey improvements
– Disneyland Park can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Disney: Losing Magic in the Middle Kingdom suggest that firm can provide automated chats to help consumers solve their own problems, provide online suggestions to get maximum out of the products and services, and help consumers to build a community where they can interact with each other to develop new features and uses.
Reconfiguring business model
– The expansion of digital payment system, the bringing down of international transactions costs using Bitcoin and other blockchain based currencies, etc can help Disneyland Park to reconfigure its entire business model. For example it can used blockchain based technologies to reduce piracy of its products in the big markets such as China. Secondly it can use the popularity of e-commerce in various developing markets to build a Direct to Customer business model rather than the current Channel Heavy distribution network.
Use of Bitcoin and other crypto currencies for transactions
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for Disneyland Park in the consumer business. Now Disneyland Park can target international markets with far fewer capital restrictions requirements than the existing system.
Building a culture of innovation
– managers at Disneyland Park can make experimentation a productive activity and build a culture of innovation using approaches such as – mining transaction data, A/B testing of websites and selling platforms, engaging potential customers over various needs, and building on small ideas in the Global Business segment.
Threats Disney: Losing Magic in the Middle Kingdom External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Disney: Losing Magic in the Middle Kingdom are -
Stagnating economy with rate increase
– Disneyland Park can face lack of demand in the market place because of Fed actions to reduce inflation. This can lead to sluggish growth in the economy, lower demands, lower investments, higher borrowing costs, and consolidation in the field.
Easy access to finance
– Easy access to finance in Global Business field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Disneyland Park can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Shortening product life cycle
– it is one of the major threat that Disneyland Park is facing in Global Business sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Disneyland Park in the Global Business industry. The Global Business industry is already at various protected from local competition in China, with the rise of trade war the protection levels may go up. This presents a clear threat of current business model in Chinese market.
Increasing wage structure of Disneyland Park
– Post Covid-19 there is a sharp increase in the wages especially in the jobs that require interaction with people. The increasing wages can put downward pressure on the margins of Disneyland Park.
Technology disruption because of hacks, piracy etc
– The colonial pipeline illustrated, how vulnerable modern organization are to international hackers, miscreants, and disruptors. The cyber security interruption, data leaks, etc can seriously jeopardize the future growth of the organization.
Aging population
– As the populations of most advanced economies are aging, it will lead to high social security costs, higher savings among population, and lower demand for goods and services in the economy. The household savings in US, France, UK, Germany, and Japan are growing faster than predicted because of uncertainty caused by pandemic.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Disneyland Park with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Technology acceleration in Forth Industrial Revolution
– Disneyland Park has witnessed rapid integration of technology during Covid-19 in the Global Business industry. As one of the leading players in the industry, Disneyland Park needs to keep up with the evolution of technology in the Global Business sector. According to Mckinsey study top managers believe that the adoption of technology in operations, communications is 20-25 times faster than what they planned in the beginning of 2019.
Consumer confidence and its impact on Disneyland Park demand
– There is a high probability of declining consumer confidence, given – high inflammation rate, rise of gig economy, lower job stability, increasing cost of living, higher interest rates, and aging demography. All the factors contribute to people saving higher rate of their income, resulting in lower consumer demand in the industry and other sectors.
New competition
– After the dotcom bust of 2001, financial crisis of 2008-09, the business formation in US economy had declined. But in 2020 alone, there are more than 1.5 million new business applications in United States. This can lead to greater competition for Disneyland Park in the Global Business sector and impact the bottomline of the organization.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Disney: Losing Magic in the Middle Kingdom, Disneyland Park may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Global Business .
Instability in the European markets
– European Union markets are facing three big challenges post Covid – expanded balance sheets, Brexit related business disruption, and aggressive Russia looking to distract the existing security mechanism. Disneyland Park will face different problems in different parts of Europe. For example it will face inflationary pressures in UK, France, and Germany, balance sheet expansion and demand challenges in Southern European countries, and geopolitical instability in the Eastern Europe.
Weighted SWOT Analysis of Disney: Losing Magic in the Middle Kingdom Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers in the HBR case study Disney: Losing Magic in the Middle Kingdom needs to zero down on the relative importance of each factor mentioned in the Strengths, Weakness, Opportunities, and Threats quadrants.
We can provide the relative importance to each factor by assigning relative weights. Weighted SWOT analysis process is a three stage process –
First stage for doing weighted SWOT analysis of the case study Disney: Losing Magic in the Middle Kingdom is to rank the strengths and weaknesses of the organization. This will help you to assess the most important strengths and weaknesses of the firm and which one of the strengths and weaknesses mentioned in the initial lists are marginal and can be left out.
Second stage for conducting weighted SWOT analysis of the Harvard case study Disney: Losing Magic in the Middle Kingdom is to give probabilities to the external strategic factors thus better understanding the opportunities and threats arising out of macro environment changes and developments.
Third stage of constructing weighted SWOT analysis of Disney: Losing Magic in the Middle Kingdom is to provide strategic recommendations includes – joining likelihood of external strategic factors such as opportunities and threats to the internal strategic factors – strengths and weaknesses. You should start with external factors as they will provide the direction of the overall industry. Secondly by joining probabilities with internal strategic factors can help the company not only strategic fit but also the most probably strategic trade-off that Disneyland Park needs to make to build a sustainable competitive advantage.
