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 household debt because of falling income levels, cloud computing is disrupting traditional business models, wage bills are increasing, there is increasing trade war between United States & China, increasing commodity prices, increasing transportation and logistics costs, increasing energy prices,
increasing government debt because of Covid-19 spendings, increasing inequality as vast percentage of new income is going to the top 1%, 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 -
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.
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.
Digital Transformation in Global Business segment
- digital transformation varies from industry to industry. For Disneyland Park digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Disneyland Park has successfully integrated the four key components of digital transformation – digital integration in processes, digital integration in marketing and customer relationship management, digital integration into the value chain, and using technology to explore new products and market opportunities.
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.
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.
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.
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.
Successful track record of launching new products
– Disneyland Park has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Disneyland Park has effective processes in place that helps in exploring new product needs, doing quick pilot testing, and then launching the products quickly using its extensive distribution network.
Superior customer experience
– The customer experience strategy of Disneyland Park in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
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.
Analytics focus
– Disneyland Park is putting a lot of focus on utilizing the power of analytics in business decision making. This has put it among the leading players in the industry. The technology infrastructure suggested by Ali Farhoomand, Penelope Chan can also help it to harness the power of analytics for – marketing optimization, demand forecasting, customer relationship management, inventory management, information sharing across the value chain etc.
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.
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 -
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Disney: Losing Magic in the Middle Kingdom, is just above the industry average. Disneyland Park needs to redesign the compensation structure and incentives to increase the revenue per employees. Some of the steps that it can take are – hiring more specialists on project basis, etc.
High operating costs
– Compare to the competitors, firm in the HBR case study Disney: Losing Magic in the Middle Kingdom has high operating costs in the. This can be harder to sustain given the new emerging competition from nimble players who are using technology to attract Disneyland Park 's lucrative customers.
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.
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.
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.
Skills based hiring
– The stress on hiring functional specialists at Disneyland Park has created an environment where the organization is dominated by functional specialists rather than management generalist. This has resulted into product oriented approach rather than marketing oriented approach or consumers oriented approach.
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.
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.
High cash cycle compare to competitors
Disneyland Park has a high cash cycle compare to other players in the industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.
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.
Interest costs
– Compare to the competition, Disneyland Park has borrowed money from the capital market at higher rates. It needs to restructure the interest payment and costs so that it can compete better and improve profitability.
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 -
Creating value in data economy
– The success of analytics program of Disneyland Park has opened avenues for new revenue streams for the organization in the industry. This can help Disneyland Park to build a more holistic ecosystem as suggested in the Disney: Losing Magic in the Middle Kingdom case study. Disneyland Park can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
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.
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.
Developing new processes and practices
– Disneyland Park can develop new processes and procedures in Global Business industry using technology such as automation using artificial intelligence, real time transportation and products tracking, 3D modeling for concept development and new products pilot testing etc.
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.
Manufacturing automation
– Disneyland Park can use the latest technology developments to improve its manufacturing and designing process in Global Business segment. It can use CAD and 3D printing to build a quick prototype and pilot testing products. It can leverage automation using machine learning and artificial intelligence to do faster production at lowers costs, and it can leverage the growth in satellite and tracking technologies to improve inventory management, transportation, and shipping.
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.
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.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Disneyland Park can build a diversified supply chain model across various countries in - South East Asia, India, and other parts of the world. This reconfiguration of global supply chain can help, as suggested in case study, Disney: Losing Magic in the Middle Kingdom, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
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.
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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Disneyland Park to expand its talent hiring zone. According to McKinsey Global Institute, 20% of the high end workforce in fields such as finance, information technology, can continously work from remote local post Covid-19. This presents a really great opportunity for Disneyland Park to hire the very best people irrespective of their geographical location.
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.
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 -
High dependence on third party suppliers
– Disneyland Park high dependence on third party suppliers can disrupt its processes and delivery mechanism. For example -the current troubles of car makers because of chip shortage is because the chip companies started producing chips for electronic companies rather than car manufacturers.
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.
High level of anxiety and lack of motivation
– the Great Resignation in United States is the sign of broader dissatisfaction among the workforce in United States. Disneyland Park needs to understand the core reasons impacting the Global Business industry. This will help it in building a better workplace.
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.
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 .
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Disneyland Park can face downward pressure on margins from increasing competition from international players. The international players have stable revenue in their home market and can use those resources to penetrate prominent markets illustrated in HBR case study Disney: Losing Magic in the Middle Kingdom .
Environmental challenges
– Disneyland Park needs to have a robust strategy against the disruptions arising from climate change and energy requirements. EU has identified it as key priority area and spending 30% of its 880 billion Euros European post Covid-19 recovery funds on green technology. Disneyland Park can take advantage of this fund but it will also bring new competitors in the Global Business industry.
Backlash against dominant players
– US Congress and other legislative arms of the government are getting tough on big business especially technology companies. The digital arm of Disneyland Park business can come under increasing regulations regarding data privacy, data security, etc.
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.
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.
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.
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.
Regulatory challenges
– Disneyland Park needs to prepare for regulatory challenges as consumer protection groups and other pressure groups are vigorously advocating for more regulations on big business - to reduce inequality, to create a level playing field, to product data privacy and consumer privacy, to reduce the influence of big money on democratic institutions, etc. This can lead to significant changes in the Global Business industry regulations.
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.