Research Topics: Ocean Park Papers

Core Competence including Value Chains

Ocean Park: Business Analysis 1.         Introduction             Tourism is among the most important business sector in Hong Kong. With its multitude of shopping malls, theme parks and tourist sites, the tourism sector is indeed considered by the local government as a major economic contributor; for this reason, efforts have been continuously done in order to enhance its main tourist spots. Ocean Park, a main theme park in the country, is one of the most sought-after sites of both locals and foreign visitors. The theme park is found in between Aberdeen and Repulse Bay, and is currently recognized as one of the largest leisure sites in Southeast Asia as well as the one of largest marine parks in the world. Aside from these, the park also offers various rides, sceneries, activities and quality services that park-goers would enjoy. Despite being a popular theme park, the business is also encountering a few challenges that must be addressed strategically. In this business analysis, the environment and strategies of the company will be analyzed through the use of different analytical tools.   2.         Environmental Analysis (SWOT) <ul style="margin-top: 0in; margin-bottom: 0in" type="disc"> <li class="MsoNormal" style="text-align: justify; line-height: 200%"> Strengths</li> </ul> Being a major player in Hong Kong’s theme park industry, Ocean Park has a number of essential strengths that make it a highly competitive company. One of which is the brand name portrayed by the company; through this brand identity, visitors, including those abroad, recognize what Ocean Park has to offer. Through its global image, the company acquires access to foreign markets. The diversity of its clientele is then another essential strength of the business. Having diverse customers made Ocean Park a globally-known brand. Moreover, this supports the company’s profitability. The theme park has been established in 1977; with years of successful operation, the company has grown accustomed to various business challenges. Its years of experience had then served as one of its strengths as this enables it to predict and understand the needs of its customers. Through this strength, the company was able to employ various strategies and introduce quality services that meet the customers’ standards. One of these strategies was product/service diversification. Ocean Park not only offers entertainment but education as well; specifically, the park also promotes marine knowledge and awareness through mini-lectures and seminars. Aside from diversity, the environmental commitment involved in its strategies is also another strength that helps in attracting more customers.   <ul style="margin-top: 0in; margin-bottom: 0in" type="disc"> <li class="MsoNormal" style="text-align: justify; line-height: 200%"> Weaknesses</li> </ul> One of the major weakness of the company is it lack of effective and strategic business management. This weakness has been apparent as the rise of strong competitors, such as Hong Kong Disneyland, had greatly affected the company. Despite its strong financial performance, the company has gone through considerable profit losses since the opening of the new theme park.   <ul style="margin-top: 0in; margin-bottom: 0in" type="disc"> <li class="MsoNormal" style="text-align: justify; line-height: 200%"> Opportunities</li> </ul> The tourism sector of Hong Kong has been down in 1997 mainly due to the SARS outbreak. However, the latter part of 1998 had shown signs of tourism revival and has continued up to the present. This progress has been emphasized by the growing occupancy rates in local hotels, the increasing number of mainland Chinese visitors as well as the rising activeness of the Hong Kong Tourism Authority which has effectively organized various overseas tourism campaigns. The tourist sector has also been revived through the increased number of business travelers entering the country; moreover, leisure travel has also recovered through the increased availability of inexpensive tour packages. These outcomes then stress the continuing growth of the country’s tourist sector. Companies, such as Ocean Park, then have the opportunity to invest on major developments and strategies that would optimize the influx of foreign visitors. Ocean Park also has the opportunity to use its ability to acquire pertinent consumer data, which allows it to develop products/services that are based on consumer needs and preferences. By developing product development plans with its skilled staff, the company can make the most of the opportunity to produce salable and original products.   <ul style="margin-top: 0in; margin-bottom: 0in" type="disc"> <li class="MsoNormal" style="text-align: justify; line-height: 200%"> Threats</li> </ul> The tourist sector in Hong Kong is a highly competitive industry. This is mainly due to the number of theme parks available in the country. As most of these competing parks offer similar services and products, the competition level becomes even stricter. In the case of Ocean Park, its main competitor is the newly-established Hong Kong Disneyland. Considering that the Disney brand presents a strong impact to customers worldwide, the operations of Ocean Park is then greatly threatened by this company. Ocean Park should then develop strategies that could overcome this essential threat.   3.         EVR Congurance <ul style="margin-top: 0in; margin-bottom: 0in" type="disc"> <li class="MsoNormal" style="text-align: justify; line-height: 200%"> Environment </li> </ul> Political             The Hong Kong government is very much supportive of the country’s tourist sector; most theme parks in Hong Kong in fact have some form of affiliation to the government. Ocean Park for instance, is owned by the HK SAR administration; the new Hong Kong Disneyland is a business venture between Walt Disney and the HK government. These examples then indicate the significant role of the political sector in the operations of these businesses. Aside from taking part of the management of these amusement parks, the local government also realizes the contribution of the sector to the economy; thus, it has been active in identifying various possibilities that would facilitate the establishment of more new theme parks in Hong Kong.   Economical             After the SARS issue, the economic situation of Hong Kong has recovered and has now grown stable and strong. With the progressing performance of the country’s economy, the tourist sector likely expects the influx of more and more foreign visitors brought about by the rise of business and tourist travelers. As the tourism sector is considered as one of the most essential economic contributors of Hong Kong, companies operating within the industry, including theme park operators, would obtain support from the local government. This environmental factor then implies that theme parks will be supported by both political support as well as current economic stability.   Socio-Cultural             Hong Kong has been recognized as one of the major tourist hubs in the world. With the presence of several nationalities in the country, it can be said that the country’s socio-cultural aspect is rich and diverse. With socio-cultural diversity, theme park operators can then expect the influx of foreign visitors who are also interest or accustomed to leisure and recreational activities. The presence of foreigners in the country also increases the awareness of the locals to new and different forms of amusement park entertainment. This then allow theme park operators to attract both local and foreign park-goers.   Technological             The presence of high end technology in Hong Kong allowed the establishment of more theme parks in the country as well as the introduction of new rides and related theme park activities. The presence of technology also supported the marketing efforts of the business operators, enabling them to promote their services locally and globally. In addition, as majority of the locals and foreigners visiting the country are exposed to advance technology, park-goers in general are interested to try innovative activities and services offered by theme parks. The openness of the market to technology then helps theme park operators in attracting more visitors.   <ul style="margin-top: 0in; margin-bottom: 0in" type="disc"> <li class="MsoNormal" style="text-align: justify; line-height: 200%"> Value</li> </ul> Ocean Park is operating within a highly competitive industry, where strong rivals are also offering similar services and employing similar strategies. This then threatens the profitability of the company. Nonetheless, Ocean Park has access to various opportunities including the continuous growth of the tourism sector as well as its access to essential business resources such as workforce, technology and target markets.   <ul style="margin-top: 0in; margin-bottom: 0in" type="disc"> <li class="MsoNormal" style="text-align: justify; line-height: 200%"> Resources</li> </ul> As a major theme park in Hong Kong, Ocean Park is able to serve its diverse clientele through strong brand identity. Through technology, the company is able to promote its services locally and abroad. Its years of successful operations also allowed it to acquire highly competent and skilled staff; its workforce then helps the company to maintain effective operations and develop new strategies that would meet changing customer trends. Despite these strengths, the company would have to consider its downsides so as to continuously progress and develop. Specifically, it would to train its staff to become better strategic players and planners. This would help in overcoming major competitors and buffering the effects of competition.   4.         5 P’s             In this section, the strategies of the Ocean Park management will be assessed through the 5 P’s of strategy ( 1998). <ul style="margin-top: 0in; margin-bottom: 0in" type="disc"> <li class="MsoNormal" style="text-align: justify; line-height: 200%"> Plan</li> </ul> Ocean Park develops its business as a plan as they are developed with intended purposes. One example is the strategic plan of Ocean Park to make an investment HK .5 billion for business expansion. The main objective of this strategy is to ensure that Ocean Park would sustain its competitiveness in the market. From this example, it is clear that making strategies as a plan involves the development of purposeful business activities. On this part however, the main flaw of the company is its immediacy of its strategic actions. While it has developed the strategies purposefully, time is also essential in order to prevent the negative impacts of certain business issues and challenges.   <ul style="margin-top: 0in; margin-bottom: 0in" type="disc"> <li class="MsoNormal" style="text-align: justify; line-height: 200%"> Ploy</li> </ul> The business strategies of Ocean Park are all directed to specific objectives; in this case, the company lacks strategies that can serve as a ploy, or those that could outwit competitors. By ploys, the strategic moves of the company will be less predictable; hence, other companies will not be able to anticipate the effect or copy the strategy. Nonetheless, the company uses its competitive advantages and resources such as its workforce and leaders in order to outdo the competition.   <ul style="margin-top: 0in; margin-bottom: 0in" type="disc"> <li class="MsoNormal" style="text-align: justify; line-height: 200%"> Patterns of Behavior</li> </ul> From the business and people strategies developed and implemented by the Ocean Park management, it can be deciphered that the strategic pattern of its business activities are influenced by quality performance and customer-orientation.   <ul style="margin-top: 0in; margin-bottom: 0in" type="disc"> <li class="MsoNormal" style="text-align: justify; line-height: 200%"> Position</li> </ul> The position of the company within the tourism and theme park industry is high; this evaluation is after the consideration of the investment the company makes in order to sustain its competitiveness. As its market position falls along with other major theme parks in the local and international level, the strategies of the company are then developed in accordance to its current position. By doing so, the company is able to achieve its expected business outcome or developments.   <ul style="margin-top: 0in; margin-bottom: 0in" type="disc"> <li class="MsoNormal" style="text-align: justify; line-height: 200%"> Perspective</li> </ul> The perspective aspect of Ocean Park’s strategies is influenced by the pattern factor. Specifically, the strategies of the company are all directed to quality and satisfaction. This perspective of the company is then established among the staff by means of the value the company gives them. By motivating and enhancing its staff, Ocean Park employees are then able to employ the same treatment to the customers. This strategy helps the company to build a people-oriented working environment; this in turn enables Ocean Park to be committed to the people they serve.   5.         Capabilities <ul style="margin-top: 0in; margin-bottom: 0in" type="disc"> <li class="MsoNormal" style="text-align: justify; line-height: 200%"> Unique Resources</li> </ul> (1997) noted that the company’s unique resources or competitive advantages are one of the winning essentials of business operations. In Ocean Park, these include the tangible and intangible resources. One of the company’s tangible resources is its people, which include its managers and leaders.  Through efficient and skilled staff, the company is able to deliver the best to the customers as well as promote the park effectively worldwide. The programs and strategies developed by the company to shape its staff according to the standards of Ocean Park are also important tangible resources. The values of the company serve as the main intangible resource of Ocean Park. In particular, the company openly values its relation with both its internal and external customers. By valuing its staff, the company is able to obtain highly contributory and productive staff members. The value given to the staff is then passed on to how they deliver their services. By building a people-oriented company, Ocean Park is able to acquire both loyal employees and customers.   <ul style="margin-top: 0in; margin-bottom: 0in" type="disc"> <li class="MsoNormal" style="text-align: justify; line-height: 200%"> Internal Competencies (Value Chain)</li> </ul> The value chain analysis is done for assessing the resources and capabilities of a company, primarily how this company generates its competitive advantage. This summarizes the chain of activities that takes place in the company, starting from product development to its distribution to the consumers (1980). Through this tool, the company is able to evaluate its operational performance ( 2002). Below is the value chain model for Ocean Park (Fig. 1):           Figure 1: Value Chain Model for CCM             Product Development. In this stage, Ocean Park focuses its resources to support the development of its entertainment activities and services for the clients or park-goers. At this point of the value chain, the company is determining which service will suit or attract the interest of the customers and how these planned services will be marketed.              Product Evaluation. Certain expenses are required in this value chain link, primarily due to electrical facilities, performance assessment and preparation of production materials. Here, the main aim of the company is to ensure the quality and security of the products or services that they intend to offer to the public. Through this value chain link, the company is able to produce the best for its target markets.             Marketing. A significant expenditure is acquired in this value chain link. In Ocean Park’s case, the production of the park catalog as well as the maintenance and updating of the company website are the main marketing factors. Printed and broadcasted advertisements are also done at this point so as to market the theme park to the rest of the world. Distribution. This value chain link represents how the company deliver the products and services it has advertised. Thus, for this the main component is the people or staff who will deliver the park’s services. To ensure that park-goers enjoy their stay to Ocean Park, the company management employ the most efficient staff as well as subject its hired employees to sufficient training. Retailing. This aspect covers the means of the park in order to acquire more patrons of their amusement rides and entertainment activities. For this, the company collaborates with travel agencies and offers possible Hong Kong tour packages that would include a trip to Ocean Park.   <ul style="margin-top: 0in; margin-bottom: 0in" type="disc"> <li class="MsoNormal" style="text-align: justify; line-height: 200%"> External Competencies (Porter’s Five Forces)</li> </ul> To understand the external competencies of Ocean Park,  (1985) five forces model was used: Rivalry The level of rivalry within Ocean Park’s environment is high. This is mainly due to the presence of several competing companies of similar sizes. Moreover, rivalry level increases because of product and service differentiation inadequacy. The competitors of Ocean Park, such as Hong Kong Disneyland, are also very aggressive in making fresh moves so as to increase sales and market share. Aside from this, these companies are also targeting similar market segments, making the level of rivalry even higher.   Entrants For Ocean Park, the entrant factor can be considered as low due to a number of reasons. One of which is the fact that operating such business demands a considerable capital. A great deal of capital will not only be necessary for putting up the business itself but also in acquiring the best professionals and technology for product development as well as marketing. Moreover, time is necessary for the company in order for it to flourish; Ocean Park started in 1977 and spent years of operation before it became a major company. Aside from capital and time, entering the same business and competing with Ocean Park can be difficult due to customer loyalty and strong brand preference factors.   Buyers This aspect of Porter’s five forces pertains to the power of the buyers over the manufacturer or the company. In the case of Ocean Park, the buyer power is high. This assessment is based on the nature of buyer power sources surrounding the company. For instance, the buyer power for Ocean Park increases as buyer concentration is high. This power is brought about by the presence of product/service substitutes; as buyers have several choices for recreation, customers have greater control on which park to go to. This then suggests that in order for Ocean Park to gather as much customers, customer-oriented strategies must be employed.   Suppliers             Considering that Ocean Park is a major company, other suppliers will be very willing to supply entertainment goods and supplies to a large company. However, the company should also note that healthy relation with suppliers is as important as those with its customers. So as not to affect the quality and security of its products and services, it is imperative that the company refrain from changing one supplier to the next.   Substitutes             As mentioned, the tourism and theme park industry is very competitive; Ocean Park is operating in a business environment where several major companies are producing and offering similar products or services. In addition, the target markets of these companies are similar as well. The consumers then have several product options to choose from, making the level of substitutes high for Ocean Park.   6.         Competencies             (2007) have stated that strategies are essential to business success; in order for these strategies to work, companies should make the most of their available resources. In Ocean Park’s case, the company has a number of strengths and resources that were strategically utilized. For instance, as the company has the financial resources to support business expansion, the company they see it fit to use this to achieve even greater product and service diversity. This will help in achieving more customers and achieve higher levels of customer satisfaction. The company also invests on training its staff, which is also one of its major competencies. Through training, motivation and empowerment, the company is able to build employees who can contribute to Ocean Park’s continuous success.             7.         Conclusion             Through the business analysis tools used in the discussion, it became clear that Ocean Park has been able to succeed in Hong Kong’s theme park industry through its distinct strengths and resources. By means of using these competitive advantages, which include people, brand identity, corporate culture, business plans and financial resources, the company is able to surpass most business challenges. From the analysis, one of the company’s strong points is its ability to optimize its competitive advantages. However, with the rise of strong competitors, the company has encountered significant losses both in market and sales. It is then essential that the company develops appropriate and timely strategies that would counter the effects of strong competition. It is also necessary for the company to develop and implement business strategies whose outcomes are less predictable; in this way, it will be easy for the company to outdo other competing companies. In conclusion, strategies are made not only for the purpose of developing current operations, but most importantly, they must be created to surpass unpredictable business trials.   Credit:ivythesis.typepad.com

Core Competence including Value Chains

Ocean Park: Business Analysis 1. Introduction Tourism is among the most important business sector in Hong Kong. Wit...

Ocean Park

Introduction             Obviously, the tourism industry plays an important role in the world, no matter environmentally or on the economy. It is believed that the tourism planning within the industry is extremely significant. In Hong Kong, tourism has been a very important aspect in their economy. For this paper, one of Hong Kong’s main tourist attractions, the Ocean Park will be examined with regards to its core competencies and competitive advantage.             Since its opening in January 1977 as a non-profit organization, the home-grown Ocean Park has developed itself into an attraction connecting people with the nature by attracting more than 76 million tourists by the end of last year. Ocean Park has also been named one of the “10 Most Popular Amusement Parks in the World” by Forbes.com (2006). The company sees this recognition as a source of pride for their staff and the people of Hong Kong. The park will continue to offer new and exciting attractions as well as events and programs to bring people closer to nature. It was also chosen by Hong Kong citizens as the most favorite scenic spot in Hong Kong last year.   Resource Audit             Owned by a nonprofit organization, Ocean Park hasn’t always been so popular. Just before 2000 it was an aging, poorly maintained attraction, and business was so poor that it was on the verge of being closed down. A facelift complete with new management and upgraded food outlets injected new life into the park a few years ago. Ocean Park now has a new jellyfish house and five annual events – including a Halloween bash that proved a huge success – on top of its popular pandas, giant aquarium, and cable car ride (2006). Additionally, Ocean Park has the ability to finance its chosen strategy which requires the park a significant investment in new attractions, services, and products; distribution channels; production capacity; and working capital. In terms of physical resources, design of space is another keep up the good work attribute. Given that the location of the park, the layout of rides, activities and other facilities is a challenging task. Apparently the visitors here are satisfied with the current arrangement. Because space design is an important factor in the creation of image, further improvements in layout (especially when adding other activities and rides) must be designed with two objectives in mind. One is the maximization of organizational effectiveness and efficiency in serving the needs of the visitors. And the other is making sure that the changes further strengthen the ocean theme and ambiance of the park. It is important to remember that, in service environments, the ambient cues interact with the social cues to influence consumers’ level of pleasure and arousal (2006). In their interactions with the park, the sense of human touch to the visitors is conveyed by the personnel who are the predominant actors. In the eyes of the visitors, the contact personnel are an important dimension of a service organization’s image as they are the first points of contact in the service encounter. Since first impressions are lasting impressions, the contact personnel, who are part of the total servicescape, have a key role in the formation and management of an image. The contact personnel maintain this major role until the completion of the service delivery process (i.e. by the time the visitors leave the park). Fortunately, for Ocean Park, their human resource is competent enough to handle the visitors. Employee courtesy, helpfulness, understandability, language skills and appearance are some characteristics of the human resource staff of Ocean Park.             Disney land, being its biggest competition, it cannot be helped to compare the two theme parks. As the aura in Disney is laced with magic, the ambience in Ocean Park is quite different. Reputed to be eight times bigger than Disneyland, the layout of the park is airier, which provides guests with more room to explore. The park is divided into the lowlands and the headlands. The Lowlands is the tamer part of the park as it houses viewing features such as the Goldfish Pagoda, the Amazing Birds Theater Show, The Hong Kong Jockey Club Giant Panda Habitat, Dinosaurs Now and Then, and the Dolphin University, where dolphins are trained to perform (2006).             Intangible resources of Ocean Park includes goodwill or what customers are prepared to pay to the park, reputation – Ocean Park having a track record pulling in more than 4.03 million visitors so far for the year 2006. That’s the best visitor count the park has seen since opening in 1977, and Forbes magazine recently named the park one of the world’s 10 most popular amusement parks ( 2006).   Core Competencies             Core competencies of Ocean Park include the following: <ul style="margin-top: 0in; margin-bottom: 0in" type="disc"> <li class="MsoNormal" style="line-height: 200%"> Strategic location. Tourists from the rest of the world visit Hong Kong, being one of the top ten destinations in Asia with more than 11 million visitors per year.</li> <li class="MsoNormal" style="text-align: justify; line-height: 200%"> Strategic marketing positioning. It has been in existence for more than 20 years and many tourists and locals are familiar with the entertainment that the park offers. Additionally, the park offers attractions that are appealing to different ages.</li> </ul>   Strategic Competitiveness In the last 5 years, many parks failed particularly due to bureaucracy issues, location in rural areas, and lack of a developed middle-class in the vicinity of the park. Disney Park being its main competitor differentiates itself by focusing on fairy tales and magic. However, both can complement each other in drawing tourists to Hong Kong. Ocean Park also is in partnership with the Hong Kong local government. This guarantees uninterrupted financial and governmental support to the construction of various projects and the park’s initial years of operation. This also assures that government will help fend off community criticism on Ocean Park and its projects.   The Value Chain Model The Value-Chain was conceptualized and popularized by  in 1985 through his book, a best-seller, Competitive Advantage: Creating and Sustaining Superior Performance. The primary activities includes the following, inbound logistics, production, outbound logistics, sales and marketing, and maintenance. Support activities include administrative infrastructure management, human resources management, research and development team and procurement (2003). According to  (1985) a company’s value chain is embedded in a larger stream of activities that he termed the value system. Suppliers have value chains that create and deliver the purchased inputs used in a company’s chain. Suppliers not only deliver a product but also can influence a company’s performance in many other ways. In addition, many products pass through the value chains of channels (channels value) on their way to the consumer. Channels perform additional activities that affect the consumer, as well as influence the company’s own activities (2003). Simply, the value chain is a model that describes a series of value-adding activities connecting a company’s supply side (raw materials, inbound logistics, and production processes) with its demand side (outbound logistics, marketing, and sales). By analyzing the stages of a value chain, managers have been able to redesign their internal and external processes to improve efficiency and effectiveness (1996), which could be applied to Ocean Park. Value chain is a model that helps to analyze specific activities a theme park can do to create value and competitive advantage in the marketplace. Since it was originally written for business strategy we will simplify it according to theme parks to make things easier. The essence of the value chain model is every organization benefiting from or contributing to other organizations is a link in a value chain. From this simplistic notion of value chain, every theme park can be described by three basic functions service-in, service-out and value-add.                       Porter’s Generic Value Chain Obtaining a competitive advantage entails Ocean Park’s application of a business strategy that results to the achievement of a value that exceeds the cost of manufacturing its attractions and services. Thus, there is value in creating activities that Ocean Park should consider to achieve competitive advantage. Any visitor to a theme park, except those like jungle safaris that involve live animals, must abandon the private auto and experience the environment as a pedestrian. This status stands in sharp contrast to the everyday life of being a commuter in an auto- and train-dependent world. The contrast with suburban life is especially graphic. In suburbia the car is a necessity and walking is discouraged by the layout of housing subdivisions that rarely, if ever, offer pedestrian paths. Because most visitors to Ocean Park come from the areas outside the central city and even outside the country, their experience of communion with the crowd is a rare occasion. Suburbanites also find a classic urban experience of this kind at malls. Lately, as crime levels have risen in the city and lifestyle changes, such as cocooning, characterize the routines of urban residents, they too seem to enjoy the unfettered, crime-free pedestrian environment of the theme park, if not the mall as well.             Experiencing Ocean Park also transforms family relations. At home the father rules and the mother manages. Adults define the agenda of daily life. Children exist within a social world of parent expectations. At the park things are different, and even reversed. The kids most often define the routine of the park visit. They direct their parents to the attractions they would most like to see (1997). Finally, the park experience involves an extraordinary encounter with architecture. Here the built environment itself, as with other themed milieus, is a form of entertainment. Each structure provides its own fantasy. The park itself is architecture that entertains.   PEST Analysis In order to analyze the environmental aspects of Ocean Park, PEST analysis will be used.  PEST Stands for Political, Economic, Sociocultural and Technological factors that influence overall performance in the market place.   Political Sector A company will not be able to gain success, good reputation and trust if it will not consider legal and political sector as part of their strategy. Thus, Ocean Park has been able to follow the principles of business ethics. The company considers legality in all their actions. The management and staff of Ocean Park make sure that all their services adhere to the standards and wills satisfy their customers regardless of nationality and age. Politically, the company had been able to follow all the standards set by the Hong Kong government and other international organization, most especially with regards to laws governing animals which are present in the park.   Economic Sector Economically, it can be said that for more than 20 years, Ocean Park had enjoyed being at the top of its competitors. The economic status of Ocean Park is highly remarkable that it always give its consumers the best and quality attractions and services. Even with the entrance of the Disneyland Park, Ocean Park was still able to get an advantage. Ocean Park’s continued presence has been able to have a stable economic capacity to sustain and maintain its competitive position in the market place.   Sociocultural Sector Culture is an important factor in understanding an industry, because for any organization to operate effectively it must for some extent have a general set of believe and assumptions on how culture will influence the productivity and the success or failure of any company. Culture environment is one of the important principles that influence the organization. (1991) identifies that there are four dimensions that differentiate cultures at a national level (power distance, individualism-collectivism, masculinity-femininity, uncertainty avoidance), which help to understand that people arrive to organizations with their own national culture. In Ocean Park, the management sees to it that they value the opinion of their employees no matter what is their nationality. Since, Ocean Park is accessible to any nationality and age; it cannot be denied that they need employees from different cultures to be in the company to help in the decision making.  It is also indicated that the international managers has been able to create a positive relationship in the local managers. Moreover, the management of the company has seen to it that they would be fair in treating all their employees. In addition, as mentioned earlier, the company sees to it that their social commitment is being achieved by satisfying the consumers with their quality products and services in aviation and special material industries.   Technological Sector The complexities of achieving success through increased efficiency, effectiveness and competitiveness, combined with innovative applications of modern technology, has heightened the awareness of both Technology and business managers towards more strategically oriented approaches for planning and management of any industry (1993). Ocean Park has been able to use technological advancement for creating new and innovative attractions and services needed by its visitors. Part of this is their utilization of modern technology in producing new attractions and services that will meet the demands of their target market. They also use the purpose of information technology by creating their own website to let prospective visitors have an easy access of knowing the park and the attractions and services that the company has made for them.   Five Forces According to  (1980), some industries tend to become more profitable and competitive than the others. Henceforth, an existing industry such as Hong Kong’s Ocean Park should always remember that their industry will only survive by utilizing a strategy that would enhance the competitiveness of the business. In Porter’s model it is assumed that there are five forces that particularly affect an industry. The model is useful if a manager who strives to get the better off rivals. The framework provides excellent understanding of the industry context in which the business operates. Power of Suppliers. An industry requires raw materials to produce their goods and services which lead to buyer-supplier relationships within the industry. Ocean Park requires to various suppliers which can supply them with the goods and services that they need. These suppliers could be those from the food industry, human resources, animal accessories, and others which are present in the provision of services and attractions at Ocean Park. Power of Buyers. This refers to the impact which customers or the visitors have on the industry. There are reasons why the power of consumers or buyers in Ocean Park is high. One major reason is that there are many theme parks in the place and thus visitors can chose which park they will go. Thus, buyers are not forced to follow the prices dictated by the theme parks along with other rules in the market such as availability of the services and attractions to be offered to them.  New Entrants/Barriers to Entry. The possibility of new theme parks entering the industry influences the pace of the competition. Thus, the key is to evaluate the methods of entry and exit for a new player to the industry. Although any theme park should be able to enter and exit the sector, each industry presents different levels of difficulty influenced by economics. These unique characteristics of the each industry are referred to as barriers to entry which may come from different aspects of the business ranging from supplies to technology. They seek to reduce the rate of entry of new entrants which leads to maintenance of a level of profits for the existing players. Substitutes. These are the products which are available from other industries which can meet an identical or similar need for the consumers or visitors. Existing substitutes could come in the form of movie houses, restaurants, or any other place which the visitors can go instead of going to Ocean Park. Industry competitors. The known competitor of Ocean Park is basically Disneyland. Ocean Park has held the monopoly of Hong Kong theme park for the longest time and though it still continues to enjoy its status as the market leader, competition has emerged because of the emergence of new theme parks like Disneyland.   SWOT Analysis             To formulate an effective strategy, senior management must take into account the distinctive competencies of the organizations, and they must scan the environment. They must determine what competitors are doing, or planning to do, and take that into account. They must critically examine other factors that could have either positive or negative effects. This is sometimes referred to as the SWOT approach and in the succeeding paragraphs will be applied to the situation in Ocean Park, Hong Kong.             The park, which sprawls across both sides of a mountain in southern Hong Kong, was overhauled a few years ago in preparation for Disney’s arrival. Ocean Park knows its strengths – a hybrid of thrills and animals, fun and education – and sells them well. In contrast to Disney, Disney is all about fantasy, cartoons, and castles. Ocean Park is real. It has real animals, real fish. Some have also decided that Hong Kong Disneyland may not be worth its steep entry fee – .90 to – compared to Ocean Park, which costs .80. Ocean Park is also more centrally located than Disneyland, which is built on the lush Lantau Island 30 minutes away from downtown Hong Kong ( 2006).             The Ocean Park, which is a long time expert to entertain its mainland customers is also putting more efforts in providing convenient transportation than language training. It arranges a shuttle bus directly from Huanggang checkpoint to the Ocean Park to save transportation procedure and expenses of mainland visitors. The Ocean Park hopes the shuttle bus may bring in more visitors from the region of Pearl River Delta (2006). Other strengths of the theme park are discussed below, including the other aspects of the SWOT analysis.   Strengths: Ø  There are enough financial resources that are allocated for the operation of the park Ø  The government is prepared to provide support for half of the funding of Ocean Park’s redevelopment cost Ø  Appealing to the all age groups Ø  Has already been around for more than 20 years   Weaknesses: Ø  The theme park has to come up with more diverse attractions to lure visitors Ø  High prices may push potential visitors to competitors with affordable prices   Opportunities: Ø  Provide packages to increase visitors Ø  Growing market trend Ø  New competitors continually enter the market   Threats: Ø  The threat of not appealing to target market at all therefore generating a loss as opposed to profit Ø  Entry of new theme parks Ø  Vulnerability of the tourism cycle   Probable problems Themed environments are not always embraced by consumers. Despite their growing popularity as a marketing solution, they can be problematical to customers. Ocean Park also faces these problems including the following discussed in the succeeding paragraphs. Because Ocean Park is relatively bigger than Disney, guests should be prepared to hike for longer periods of time, a factor which the designer of the park has seriously considered (2006). Visitors who easily get tired or are not used to long walks may opt not to visit the park at all. Ocean Park must therefore come up with strategies designed to encourage these kinds of visitors even with the tiresome hikes. Several intervals like food kiosks and viewing areas should therefore be situated in the middle of the hiking trails on the way to the bigger rides in Ocean Park. A lack of market knowledge from the Ocean Park management could prove costly, especially if unable to anticipate the problems of seasonality and occupancy caused by the Hong Kong location. Most crucially perhaps, a failure to appreciate Hong Kong’s composition of a series of individual national markets exhibiting different consumption patterns could also prove bad for Ocean Park. The vast differences between the forecast and actual visitor origin profile for the park underline this problem.                       Credit:ivythesis.typepad.com

Ocean Park

Introduction Obviously, the tourism industry plays an important role in the world, no matter environmentally or on the econo...

A Strategic Analysis of Ocean Park of Hong Kong

TABLE OF CONTENTS           Page A. Executive Summary 4       B. Introduction 4       C. Strategic Position           - Market Segmentation & Life Cycle of Ocean Park 5-6   - Strategic Capabilities & Resources 6-7   - Expectation & Purpose 7-8       D. Strategic Choices 8         - Corporate Level 9-10   - Business Level 10-12       E. Strategy In Action           - Structure 13   - Process 14   - Relationship 15-16       F. Conclusion 17         Appendices 1 – 7 18-28         References 29-30           A. EXECUTIVE SUMMARY   This paper attempts to analyze the business environment that Ocean Park (OP) operates and employs the FIT approach to discover the environmental forces that drive changes in this theme park.  It has to build on the existing resources through the design lenses to formulate strategies at both the corporate and business levels.  It already possesses the strategic capabilities of having a convenient location, high service standard and good quality staff. The main change is to adopt the strategy of product diversification, i.e. to develop the spa and resort facilities.  We also recommend it to penetrate the current market by strengthening its supremacy in leading wildlife and marine education tour to complement the service rendered to its the family clientele. It is important for the park to focus in PLOY, by maneuvering the existing resources to maximize the business results.  We also review the configuration employed by OP which adopts the multidivisional structure to align the process and relationship together.  All in all, the Park should then position itself as the complementary experience to that of the soon-to-be opened Disneyland rather than engaging in a direct competition.     B. INTRODUCTION   OP, the first theme park in Hong Kong, was established in 1977 as a non-profitable public organization, 100 percent wholly owned by the Hong Kong SAR government. With its long history and unique image, it becomes one of the icons in Hong Kong. It is also the possession of Hong Kong people and part of the community heritage. Its mission is to firstly provide local and overseas visitors with experiences that combine entertainment and education, secondly, to assist in the understanding and practice of wild life conservation.   Given the dynamic of global business environment, fierce competition and many other influences, OP has encountered a few years of deficit. To improve its financial performance, OP continuously expands and improves the entertainment facilities and service standards, seeks and introduces new educational programs and opportunities to promote lifelong learning, strives to deliver the highest standard of quality service and customer care. With the opening of Hong Kong Disneyland this year and to sustain its competitive advantage, OP must re-develop its strategy to cope with the challenges in the external and internal environment.   C.    STRATEGIC POSITION   To understand the business environment that OP is operating, we will examine it by means of the PESTEL Framework, Porter’s Five Forces and the SWOT analysis (Appendix 1).   Market Segmentation and Life Cycle of OP   In view of the current market segmentation of OP (Appendix 2), the main market segment is overseas visitors of which Mainland visitors are the main target. Looking into the life cycle of OP, it is estimated the local visitors has reached the declining stage while the Mainland visitors is at the growth stage. The performance of each strategic business unit would be analyzed by the BCG matrix(Appendix 3). The theme-event, like the Halloween Blash is in the “STAR” box which was proven to increase the admission rate. The rides, collection of marine and animals are in the “CASH COW” that maintains their business in OP.   Looking into business of theme-events and rides, the potential for growth is in doubt. To reinforce the park’s role in the Hong Kong community and outperform their competitors, OP has to re-position itself, look for new local market, such as, the young married with and without children and develop new products, like resort and spa and wedding facilities.   Strategic Capabilities and Resources   Management and Human Resources OP has a strong management team with 27 years of experience in managing theme park. The board is rejuvenated under the leadership of the new Chief Executive whose strength, diversity and commitment have been invaluable to OP. They had made a remarkable turnaround in 2003-2004 with the support of the experienced and well-trained human resources. Their standards of service and product knowledge are credits to the Hong Kong’s image. They had received the Hong Kong Award of Services in 2000 by Hong Kong Tourist Association. OP employees work stoically through the difficult SARS months, and shared significantly in the restructuring costs. They not only manage the difficult period, but also play an invaluable and creative role in ensuring the success of the recovery plan, such as, theme-events.   Marine Collection and Animal Care In the theme park industry, OP matches the world’s best in terms of the range of marine collection, quality and breadth of animal care that arises out of their commitment to education and conservation of the natural world and marine environment.   Location The location of OP is supreme which has a stimulating setting, visual containment and interesting outlook. Also, it is easy to access and well served by road.   Good Value Chain OP has developed a strong good relationship with the Chinese Travel Agency and Hong Kong Tourist Association. In 2003-2004, OP sales staff plays 15 separate sales visits to more than 240 Chinese travel agents in 30 Mainland cities, while the executive team met Mainland media in Guangzhou, Shenzhen, Beijing and Shanghai. All these contribute to good reputation and appeal of OP across the Mainland (2004).   Improving Financial Performance OP has an improving financial performance with visitors up by 25 percent at 3.7 millions, revenues up 25% at HK6 million and a surplus of HK million for the year, reversing the deficit of HK million in 2002-2003 and marking OP’s second most profitable year on record. The reasons are due to not only the emergence of visitors from Mainland, account over half of all the park’s visitors, but also, the carefully-focused development of special events and intensive and carefully-targeted promotional activity. These have brought visitors to the Park more often and encouraged them to stay longer every time they come (Annual Report 2004).   Expectation and Purpose   Corporate Governance OP has strong local roots and a wide range of home grown strengths nurtured over the 27 years of operation. Their core commitment to education and conservation remains solid. They also have a strong Corporate Social Responsibility. 100,000 senior citizens visited the park free of charge in 2003-04. They provide fee of charge of kindergarten tours and heavily subsidize on-site educational tour programs.   In summary, the strengths and weaknesses of OP are as follows:   The strengths of OP are its unique image and reputation to Hong Kong community and the tourists. It is situated in a supreme location with high accessibility. Besides, OP benefits most from its intellectual capital, excellent value chain and organization knowledge. The drive of management and the sponsorship of government lead to great potential for further development.   However, OP also has a number of weaknesses. The operating cost is high and the growth of local market is still declining. It takes a long period of time to develop new ride or other facilities. The product feature is not innovative enough to enhance the attractiveness as a major tourist destination to the local market.   Strategic Lenses As Design   In order to formulate a clear strategic direction, the top management uses the Design Lenses to view the strategy development. They look at the forces and constraints imposed on OP through a rational, analytical, structured and directive process so as to optimize the limitations or constraints ( 2005).   To sum up the above analysis, the inbound tourism in Hong Kong is booming. With government support on tourism, economy upturn, change of life style, demand of spa and beauty facilities, flexible wedding arrangement, as well as strong capabilities, there are great opportunities for OP to develop. As a result, it has to accelerate its innovation, and reposition itself, capture the new markets and develop the new products to sustain its competitive advantage.       D.    STRATEGIC CHOICES   After numerous analysis made on OP’s external and internal factors, it is clear that OP needs an innovative plan to reposition itself on the market to maintain its attractiveness and differentiate itself among competitors.  To begin with our strategic formulation, we will adopt the staircase model (2005) to assist us in linking our different levels of strategies: Corporate and Business, in a systematic way.     Corporate Level   To map the blue print of our total strategy, we need to set and identify new vision and mission for OP.  Being a “must-see” destination is the new vision for OP.  How to translate and implement this vision is through its new mission: create an image for OP where people can celebrate and share the important moments of their life.   In order to realize this vision and mission, we need to draw out an action plan.  Under the current circumstances, we believe a FIT strategy approach is more appropriate since it is the most effective in a known and stable environment where success is built on existing competences.    As the study shows, OP has gone through several phases of changes with similar result.  Base on Porter’s theory, OP can design its strategy by using a differentiation (2003) method to substantiate its new features in the market.   OP is unique of its own (1) having a spectacular view and close to the nature, (2) prestige location in the south side of the HK Island, (3) isolated from major city activities yet easy accessible, (4) famous in its expertise on nurturing animal, marine and wildlife, (5) a place where entertainment and education are coherent and (6) ”ranked among the top 25 theme parks with regard to attendance in the world” (People’s Daily Online).   To align with our FIT strategy approach, we will maximize its existing capabilities to diversify its product/service focus (Appendix 4) to a new frontier.  We believe our new strategy will add value to our customer “over the long run by consistently meeting their needs better than the competitor does” (5/19/05).     Based on our findings, we recommend OP to develop a new business unit of Spa & Resort concept hotel to make full use of its resources with the nature and to capture the latest living trend of HK.  Since OP is lack of expertise in the hospitality industry, we suggest them to bring in strategic alliance (2005) where the name can speak for itself.  “Banyan Tree” is our first choice to select as a strategic partner since it has extensive experience in managing various Spa & Resort hotel worldwide.   To name a few, they have existence in various Asian countries such as Singapore, Malaysia, Indonesia, Thailand and China (Banyan Tree).  With this reference, we believe this partnership can bring benefits to both parties where expertise and resources is shared to nurture the best outcome.   In the meantime, we are counting on this new business unit to bring in revenue and new opportunities to OP’s current product mix.  With the potential of this Spa & Resort unit, we categorize it as a STAR in a BCG matrix (Appendix 5), we expect this business unit will stay and enjoy its growth for a long period of time.  Our confidence comes from the study of the 3 critical success factors, being (1) acceptability, (2) suitability and (3) feasibility of this concept project. (Appendix 6)     Business Level   At this level, strategies are formulated in a more operational manner.  To maintain its competitive edge, we need to constantly ask ourselves the questions: Who are our target segment? Where do we want to go?  How to achieve the expected result?   We will use the ‘PLOY’ features in strategic formulation to lead us towards our goal (Appendix 7).   To answer the question of “Who are our target segment”, we tend to expand our clientele to those segments that have high disposable income, educated and treasure the quality of life as well as to get close and preserve the nature. “Where do we want to go” is relatively easy to understand by making OP as the must- see attraction for people to share their important moments together.  As for the question of “How to achieve the expected result”, we will organize and conduct various programs to cater for different customer segments.  Categorization of the customers is as below:   Family   Provide a relaxed environment for adult while a safe environment to children.  Parents can encourage their children to join various educational tours that offered by OP on wildlife and marine animals. This frees parents to have their private moment.   Children   Cater for family segment, educational tours to the marine and wildlife sections of the park can divert their attention from their parents to other areas.  In turn, it provides a more delicate type of babysitting service.  With years of experience, OP has earned the trust from general public to be a safe and educational place for children where they can find an ongoing excitement.   Young Couple   Since the Government has relaxed on the rules and regulations in organizing wedding ceremony, this Spa & Resort Hotel can offer special arrangement for wedding, such as wedding banquet and special theme wedding ceremony for the newly weds.  Under the management of Banyan Tree where it is famous for its “blend of romance, rejuvenation & exotic sensuality”, the hotel can offer special honeymoon package to encourage the newly weds to spend their sweet moments in the resort.    Corporate   Nowadays, many corporations are in favor of organizing off-site conferences and seminars.  We can offer similar facilities and package to cater for the needs of this target segment at an affordable rate.  These corporate customers are expected to generate new income on a more regular and stable fashion.   Furthermore, we can introduce the idea of club membership or loyalty programs to those repeat customers.  Special package to the management of the corporate clients is a very power and useful tool to establish a client base.   Outdoor Sports Activities   This new business unit is situated in a beautiful water front where it is near to the nature, the Spa & Resort Hotel can organize a variety of outdoor activities for in-house customers, such as water sports, sports, beach activities, hiking, cycling etc… to promote and portrait a healthy environment to build a positive image.         E.  STRATEGY IN ACTION   The New Configuration of OP   Employees who are the most important resource of an organization play the key roles in the implementation of the strategy.  The interactions and relationships among people can lead to the success or failure of the strategy.  After the right strategy is formulated, the next step is to configure OP so that the structures, processes and relationships are aligned and coherent to the new strategy.         a.    Structure   With the implementation of the new strategy, the structure of OP should be changed to multidivisional structure, which consists of separate divisions on the basis of products and services (2005).  Each division responds to the specifications of its product or market strategy with its own functional department.  For instance, the strategic alliance with Banyan Tree will require a new division set up to focus mainly on the market of resort and the new services provided.  This allows each division to develop a specific competence on a particular customer group.  The divisional structure is also flexible for OP to add, dissolve or combine divisions in response to the changes in circumstances.  The head office of OP is able to control its divisions by setting performance standards and targets.  The divisional managers are accountable for their own divisional strategies.  As divisions are so specialized and self-sufficient, it is crucial to establish cross-communication and co-operations among divisions to enhance collaboration and knowledge sharing within OP.  For instance, the Resort Division can work closely with the OP Academy division to explore new education tours or events for the kids of the resort customer.  The central service such as finance, human resources, and legal should be well trained to understand the specific needs of each division so as to provide the necessary support.    One way to make change more effective is through fair, open and honest communication ( 1987).  Before setting up the new structure in OP, it is recommended to ensure the managers and the employees are clear about the purpose of the new structure.  Training should be offered to each level in OP so that managers and employees have the competence to meet with the new requirements of the new structure (2000).  Clear roles and responsibility can shape the behaviour of employees and can achieve the expected outcomes.  Flexibility among division should be encouraged to allow divisional managers to explore and follow new opportunities as market needs change (Whittington 2005).  New and complex collaborations among divisions may need particular skills so proper trainings are required to ensure successful collaborations (1999).   b.    Process   The formal and informal organizational processes are the key drivers that make the organizational structure works.  The processes are the controls: inputs or outputs, direct and indirect on the organization’s operations and can help and hinder the translation of strategy into action.  For OP, it is suggested to adopt the combination of processes in planning and performance targeting. The former is the archetypal administrative control focusing on the organization’s input, which can monitor the implementation of strategy. The latter is the performance processes, which focus on the outputs of an organization such as service standards, revenues and products.  By adopting these two processes, it is intended to strike the balance between the control mechanism over output and input.   i.      Planning Processes   Such is focused on the standardization of work processes, which are essential for OP who is committed to provide world-class service to its visitors.  By introducing the e-commerce operations, OP can enhance its global presence.  Visitors from overseas can reserve the resort room and admission tickets through the Internet.  This allows OP to plan ahead for the peak seasons and to design promotion packages during low seasons to maximize the allocation of its resources.  Also, the bottom-up planning from business units is a vital process (2005).  Divisions could have their own planning within the corporate guideline.  As they are the most directly involved in the operation, they have better understanding of what resources and budgets are required for the coming fiscal year.  Through careful planning, the Head Office of OP can have a much clearer picture about the operations of the divisions and can adopt proper control as circumstances change.       ii.     Performance targeting processes   These are introduced to ensure alignment of the performance targets.  Head Office of OP sets performance target to control the divisions while allowing divisions sufficient autonomy to manage their divisions ( 1979).  The performance targets can help OP to evaluate its outputs of it service quality and profits facilitated by a clear set of role and responsibilities.      c.    Relationship           i. Internal relationship   According to , the multidivisional structure focuses on the structural relationship between the headquarters and the divisions, between the strategic apex and the top of the middle line (Mintzberg 1979).  In order to make the structure, process and relationships coherent to each other, strategic control, which concerns with shaping the behaviour in business units and with shaping the context within the divisions will be the main strategy style of OP under the new structure (2005).  Under this style, divisions will have their business plans formulated within the corporate guidelines, which are set by the Head Office.  The divisional managers have to understand the corporate logic and should have the competence to think strategically.     ii.     External Relationship   As strategic alliance with Banyan Tree will be constructed, the success of the strategy is relied on the cohesiveness and compatibility of this “marriage”. It is important for OP to balance between the best sources of specialist knowledge and the competence to integrate the specialist knowledge to create a best-value service to customers (2005).  Such connection offers OP and Banyan Tree an option of opening new doors and unforeseen opportunities by collaboration rather than mere exchange (2002).  Commitment and trust are the two key ingredients of forming the alliance, which is similar to the marriage of man and woman.  The expectations of two parties must be aligned to achieve the different interests of two parties.    With the diversified business of OP, the one-stop shops, one of the network relationships will be the other focus of OP.  The one-stop shop network offers customers to have a coherent and joined-up service, which is the ultimate goal of OP’s new strategy.  Under this network, OP offers a complete package of services: resort, spa, riders and educational experiences- exciting, relaxation, wild adventure to its visitors.     F.  CONCLUSION   OP has reacted to the diversified environment by capitalizing on its strength while exploring product / services that would appeal to the new market segment, e,g. spa & resort visitors and promotion of wedding reception and honeymoon packages.  By adopting these changes in the business and corporate level and supported by the right configuration as outlined above, we are confident that it will continue to be one of the top theme parks in the world and be able to do well in face of the opening of the Disneyland.       Appendix 1   Macro-Environmental Forces – PESTEL Framework Political   In the past few years, both Hong Kong and China are living in a politically stable environment. With the launch and progressive extension of the Individual Visit Scheme, there was 4.3 million Mainland visitor arrivals to Hong Kong under this scheme in 2004, accounting for over one-third of overall visitor arrivals which renders an important invigorating force to Hong Kong inbound tourism. In addition, Hong Kong government will continue to expand tourism in the Southern District and link Aberdeen with OP. In 2005, the government has launched a new policy on marriage registration. Marriage ceremony is no longer limited to take place in the Marriage Registry. The marrying couple can choose different locations for marriage ceremony with advance application for officiating minister. All these give opportunities for OP the opportunities of other business development.    Economic   In 2004, Hong Kong economy entered into a full-fledged upturn which was broad-based, marked by thriving exports and offshore trade, vibrant inbound tourism, strong pick-up in consumer spending and visible bounce-back in investment. The gross domestic product (GDP) grew by a remarkable 8.1% in real terms, distinctly faster than 3.2% growth in 2003. In 2005, the GDP is expected to attain growth of 4.5%-5.5% in real terms. The adjusted unemployment rate fell from a high of 8.6% in the second quarter of 2003 to a near three-year low of 6.5% in the fourth quarter 2004. Hong Kong consumer spending maintained notable growth throughout the year since they are optimistic of the economic outlook and improving labour market conditions. The growth of Private Consumer Expenditure as a whole is 6.7% in 2004. The prospect for the Hong Kong economy is bright which reinforce its existing strengths and identify a new era for development.   Sociocultural   In 2004, the birth rate was quite low in Hong Kong. There were 47,900 newborn babies compared to 51300 in 1999. It is because Hong Kong people prefer to have late marriage and fewer children. Also, the population is aging and there are more female than male. The ratio is 51.8% to 48.2%. More working women in the business world create a potential market for business opportunities. Nowadays, Hong Kong people are better educated. Their life-style is changing. They seek for a balance of work and life and willing to spend more resources and time on recreation, entertainment and the development of their children   Environmental   With increasing awareness and concerns on environmental protection, the Hong Kong Government continues to streamline their effort in controlling the pollution and protecting the natural resources by public education and organizing different activities and programs, such as, Rechargeable Batteries Recycling program. Besides, they make an effort to improve the street landscape by putting more green plants in order to give a pleasant pedestrian environment. This coupled with the growing trend of eco-tourism provide opportunities for tourist industry.               Competition in the Theme Park Industry – Five Forces Framework (Michael Porter)   The Threat of Entry   The barrier to entry in the theme park industry is very high due to high capital cost. The total fixed asset is around HK6 million for initial capital requirement. For instance, Abyss Turbo Drop costs around HKM. Besides, potential site for development of theme park is very limited due to scarce supply of land.   The Threat of Substitute   In 2005, the main threat of substitution will be Hong Kong Disneyland, a new international theme park that expected to become another major tourist destination in Asia. Apart from this, there are other forms of substitution. From the education side, Hong Kong people can switch to go to Cultural Centre, Mai Po Wetland, Hong Kong Zoological and Botanical Garden. For entertainment purpose, they can visit the Karaoke, Cinema, Game Centre, or have a day trip to China.   The Power of Buyers   The buying power of consumer is high since they have many choices as mentioned above. The switching cost is relatively low. Also, Hong Kong people like new experience and their loyalty to the product is generally low.   Competitive Rivalry   The global competition is great in the industry. There are 342 parks with 500,000 visitors or more per year all over the world in 2002. OP ranked at the top 25 in the world. With the opening of HK Disneyland in 2005 as well as other existing small-scale parks in Hong Kong, such as, Lai Chi Kok Park, Snoopy’s world, Teddy Bear Kingdom, Winter Carnival at Hunghom/Hong Kong, Spring/Summer Carnival at Tamar Site, these competitive rivals possess the challenges to OP.   Opportunities and Threats   The above environmental and competition influences provide OP the following opportunities and threat:   Opportunities for New Product and New Market   With more and more working women as well as the need of better quality of life, the demand for Spa and Beauty is increasing. There is a market for resort developments. Whilst a spa would be a main element within the resort, it would have to have other attractions to be viable, such as child caring service and eco education tour for children.   Owing to the fact of increasing importance of Chinese Medicine, the Spa offering traditional Chinese Medicine, and medical/clinical based spas (comparable to Swiss’s health and beauty treatments) are likely to be attractive to tourists not only in local market, but also overseas market through the year.   Spa resorts have continued to develop through South East Asia, such as, Thailand, Indonesia and Malaysia. The market is increasingly competitive. However the brand name of OP would attract visitors and bring certainty to the products offered.   Due to the flexibility of holding marriage ceremony, OP can develop new business, like, wedding and honeymoon facilities and arrangement to make use of its unique image and supreme location.   Threat   The opening of Disneyland poses a strong threat to OP in addition to the other substitutes. Also the war for talent and aging workforce can bring negative impact on its operation. To survive in a more favourable environment and sustain its role in Hong Kong community, there is strong need to rejuvenate its reputation by capturing the new market and develop new products which can strengthen the strategic position of OP and cope with the challenges externally.   Appendix 2   Market Segmentation of OP   Appendix 3       BCG Matrix                         STAR QUESTION MARK       　   　     　       　   　     　     High 　 Theme Event 　     　       　 　     　   Market Growth Rate   　   　     　     　   　     　     　 　 　 　 　 　     　   　     　       　 Rides 　     　       　   　     　     Low 　 Animal & Ocean 　     　       　 　     　       　   　     　       　   　     　       CASH COW DOG                           High     Low                               Relative Market Share                             Appendix 4     Ansoff’s Product/Market Expansion Grid                                           Current Product                               New Product                 Current Market                     New Market           Viewing the current products and services of OP, there is not much room for OP to increase its market share with its existing facilities.   Therefore, an alternative for growth is to enter into a new market with a new product/service to differentiate itself from competitors.  As a result, the new plan falls under the diversification strategy of Ansoff’s Corporate Strategy where the major characteristic of this strategy is to expand its market share by stimulate the market with new product (1) with existing capabilities, (2) new capabilities and (3) beyond current expectations (2005).   By inviting Banyan Tree, the famous brand name for Spa & Resort, OP is entering into a whole new hospitality industry to fully utilize its resources related to nature. Appendix 5   BCG Matrix for the new Spa and Resort Hotel                                                               Relative Market share                                                         Market Growth          Rate                This Spa & Resort business unit of OP is expecting to capture new market share from the new market segment.  Since the life style of the local people is changing, people are more aware and conscious of the quality of life.  Accompanied with the increase of consumption power and limited spa and resort hotel available locally, we expect this concept will draw much attention among the local and overseas visitors.   In addition, alliance with Banyan Tree and the attractive and convenient location of the resort will give an alternative to those who are seeking for a “one-stop-shop” of holiday retreat for family.    Furthermore, expansion in corporate client for conference will add additional value for this business unit.   Appendix 6   Acceptability   The life style and mentality of the local people is changing.  As observed, (1) spa & resort services are in substantial demand, (2) people are more health conscious with enhanced awareness on relaxation and quality of life, (3) limit competition on local level, (4) convenient location, (5) increase in consumption power and (6) the awareness of environmental friendliness.  Banyan Tree can offer the solutions to all the identified issues ().    Suitability   The infrastructure of the hardware and software (people and other contingency issues) of OP can assist this new business unit to capture new potential local market while collaborating and aligning with the concept of the theme park.     Feasibility   By conducting the feasibility study, we identify that OP has the resources to carry out the proposed strategy. In light of (1) strong and sound stakeholders, (2) reputable strategic alliance to guarantee on high service and quality of product and management, (3) limit competition in local market (one head on rivalry – The  Gold Cost Hotel in Tuen Mun), (4) the noticeable demand on the service. Appendix 7   Concept of Strategy Formulation   Consistency                                                                                                  meaning                                           Winning                                                                                                         focusing         Because changing in environment, the new economy industries, the configuration of strategy contents, has changed significantly from traditional industries.  Instead of emphasizing on plan and position, it now changes to focus more on ploy and perspective (2005).    In the case of OP, in order to stay competitive and increase its sustainability, it decides to adopt a FIT strategy approach when formulating its strategy plan.   By understanding the environment, it can then maximize its resources to design different programs to ultimately win against its competitors.     </div> Credit:ivythesis.typepad.com

A Strategic Analysis of Ocean Park of Hong Kong

TABLE OF CONTENTS Page A. Executive Summary 4 B. Introduction ...