Ocean Park was opened in 1977 as the only theme park in Hong Kong by then Governor of Hong Kong. It is owned by Hong Kong government and a non-profit organization that aims to provide a meaningful experience to the people in real nature. Since its inception, market was monopolistic in nature with Ocean Park being the only theme park. Without competition, Ocean Park was operating without direction and focus. When Disneyland was decided to be launched in Hong Kong in 1999, Ocean Park started strategizing in its own way and came out as a surprise winner.
The question arises how all of a sudden a mediocre and an inactive theme park came out so strongly that its strategies are now well regarded in the world. What were the steps that it took to turn the threat into an opportunity?
Porter’s five forces is a tool to analyze the competitive intensity and attractiveness of the market. It not only place checks on industry rivalry but also on the other competitive forces such as customers, suppliers, entrants and substitute products. In light of Porter’s five forces framework, Ocean Park’s strategies can be properly analyzed.
- Rivalry among Existing Competitors: After the opening of Ocean Park in 1977 and till the announcement of opening of Disneyland in 1999, there was no competition. The opening of Disneyland created stiff competition in Hong Kong and decreased the market share of Ocean Park. However, this competition was beneficial for Ocean Park because it improved its offerings by investing $700 million to buy a roller coaster, a subzero Ice Palace and an underwater restaurant along with more animal species and more number of rides. Competition improved the offerings of Ocean Park and strategically Ocean Park competed in different domain by the unique offering of real nature. It was no easy selection for consumers on whether to choose Ocean Park over Disneyland or vice versa.
- Threat of New Entrant: The increase in number of theme parks mostly in East Asia has come up as a threat. Theme parks by Disney such as in Shanghai have affected the number of visitors to the Ocean Park. A huge amount of investment is also a considerable factor for the new entrant; hence the threat is considerably low in this market.
- Threat of the Substitutes: The business of theme parks is the environment business. So, anything from the entertainment industry is a threat to Ocean Park. Ngong Ping 350 and The Peak Experience etc. are providing similar services and experiences.
- Bargaining Power of Buyers: The bargaining power refers to the ability of the customers to negotiate the prices from the seller. The Ocean Park provides unique experience by combining thrill rides with nature through its unique collection of insects, fishes, birds and other animals. These experiences are available only in Ocean Park; hence due to the nature of uniqueness customers have a low bargaining power.
- Bargaining Power of Suppliers: Ocean Park has increased its customer base over the years and is place in one of the top spots by Themed Entertainment Association and Economics Research Associates. Hence, its success enables it with the strong negotiation power with its suppliers especially the restaurants inside the theme park namely the Bayview Restaurant, Terrace Café, Headland Rides, Panda Café and the Middle Kingdom Restaurant. Hence, the bargaining power of suppliers is low.
The Porter’s five forces analyzed the strength of the position of Ocean Park in the current scenario and the future threats it may encounter. However, the resource-based view is a tool which can be used to determine the resources available within the organization. As per Wernerfelt B, 1984, the competitive advantage of a firm lies in the bundle of resources available with the firm. Also, strategic capability defines the level of performance required by the organization to be successful. "Strategic Capability is the ability to perform at the level required for success. It is underpinned by the resources and competences of the organization." (G. Johnson, K.Scholes , R. Whittington, 2008). The capabilities for Ocean Park are analyzed in the competitive environment and the macro-environment.
Core competence: A core competency can be in various forms which include an expertise in a particular field, processes in organization and the relationship with customers and suppliers (Hamel, G. & Prahalad, C.K., 1990). Core competence of Ocean Park was the closeness to the real nature; however the Disneyworld was focused on virtual reality. Ocean Park utilized its knowledge of the culture of East Asia to strategize its offerings. For example, during Halloween Disneyland focused its west approach to celebrate it; however Ocean Park focused on traditional Hong Kong strategy which was well received by the customer.
Unique Resources: Unique resources are the factors that create competitive advantage and are difficult to replicate by competitors(G. Johnson, K.Scholes , R. Whittington, 2008). The main focus became nature and animals, a rare combination in urban Hong Kong. The theatre showed dolphin and sea lions shows and presence of Atoll Reef, Shark Aquarium, Bird Aviary and Pacific Pier provided unique experience to the visitors. Other valuable assets included rare marine mammals and panda of the mainland China, which are well received by the animal lovers. These resources are found only in Ocean Park and hence provide a competitive edge over other theme parks. In addition, Ocean Park was opened in 1977 and has already built space in the mind of people. The education, conservation and natural environment are some intangible resources of the Park which helped it branding over the years.The knowledge of culture of Hong Kong and the preference of visitors helped Ocean Park to plan marketing strategies which were indeed successful.
CAGE Analysis can help in understanding the impact of distance from Hong Kong to United States on the establishment of Disneyland. It will help us to identify the difficulties Walt Disney Company had faced in establishment of Disneyland in Hong Kong and the favorable which Ocean Park had.CAGE stands for the cultural, administrative, geographic, and economic distance framework.
Cultural Differences: While incorporating international strategy, cultural differences are to be analyzed for appropriate results. Disneyland found it difficult to understand the culture of Hong Kong and was criticized for the offering of shark fin soups in hotels. Shark fin soups are discouraged in China and Hong Kong. They were also not able to estimate the visitors during the peak times. These weaknesses of Disneyland were beneficial for Ocean Park as it was local and understood the expectations of people in better way. Ocean Park activities are majorly focused on cultural heritage which not only attracted local people but also from neighboring nations of Asia.
Administrative Distance: Recently, the Chinese and Hong Kong government launched self-tour-guided program which allows a certain number of people from Honk Kong and China to move freely in other country. This has increased the number of visitors to both Ocean Park and Disneyland. Ocean Park is governed by Hong Kong government, hence has restrictions to take derisions. However, it has benefitted as being part of government.
Geographic Distance: Disneyland at Hong Kong was the third theme park of Disney outside United States after France and Tokyo. It strategized to take advantage of the large economies of Asia i.e. China and Hong Kong as well. However, Hong Kong location came to advantage of both Disneyland and Ocean Park because intentional tourists from China and East Asia visited both of the parks.
Economic Distance: Hong Kong has high spending power and high per capita income. Hence, it was logical enough to open amusement parks in Hong Kong.
Disney was faced with multiple barriers in international trade. It is an American company with American values, it had to adapt to the social, economic and cultural differences in host countries. Legal Differences such as laws and regulations were an obstacle to its global growth. Disney has involved a local partner to its big projects so that local partner can incorporate the local laws, understanding of the business and it became easy to adapt itself in a foreign market. The cases of Hong Kong and Shanghai are living proof of the return of an international strategy where an organization such as Walt Disney is seeking value-adding help from local partners. Disney has learnt that highly unique resources and capabilities require some form of adaptation in foreign markets. Disney has partnered with firms such that it is able to effectively and efficiently handover those assets and competences with the required amount of adaptation. Disneyland entered in Hong Kong in partnership with Hong Kong government. The major benefit of Joint Venture is relationship with the local government is developing and Asia being a complicated market, it benefits to have government on its side. The knowledge of traditions and customs by local partner has helped Disney.
Overall the competitive entry of Disneyland came to be beneficial to Ocean Park and the threat was converted to the opportunity for Ocean Park. Ocean Park justified that competition helps in improvement. The attitude of Ocean Park changed after the announcement of entry of Disneyland. They, they decided to strategically focus on its strengths rather directly compete the Disneyland. The major strengths of the Ocean Park include closeness to nature with various species of animals making the urban people close to the reality. They invested $700 million in order to improve the facilities and increase the number of rides. The price was also made 30% less than that of Disneyland. Marketing efforts of Ocean Park paid off because of its better understanding of culture of Hong Kong and they offered annual passes and seasonal discounts to attract visitors. They had introduced themes based on local culture, nature, and seasonal holidays and focused on East culture. With time, Hong Kong became a hub for tourism and the international visitors who visited Disneyland naturally visited Ocean Park. The entry of Disneyland came as a boon for Ocean Park.
References:
Cheang, F. (2016, August 12) OceanParkfightsonwithits'uniqueness'. Retrieved from
Hofstede, G. “The Cultural Relativity of the Quality of Life Concept.” Academy of Management Review, Vol. 9 (1984)
ITIM International, Retrieved from
Johnson, G, Scholes, K & Whittington, R 2008, Exploring corporate strategy : text & cases, 8th edn, Pearson Education, Harlow.
Kapil (2011, December 10) The CAGE Framework – Distance Matters in Globalization!!! Retrieved from
Prahalad, C & Hamel, G .(1990). THE CORE COMPETENCE OF THE CORPORATION. Harvard Business Review, 68 (3), 79-91.
The Walt Disney Company.(n.d.).Strategies for reaching global markets. Retrieved from
Vivian (2011, December 12) Why Hong Kong Disney did so bad?Retrieved from
Vower, D. (n.d.). Strategies for Reaching Global Markets: Licensing.Retrieved from
Wernerfelt, B. (1984). A resource‐based view of the firm. Strategic Management Journal, 5(2)