SM Case 2_Sec B_Group 11_Samsung Amusment Park
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Transcript of SM Case 2_Sec B_Group 11_Samsung Amusment Park
8/9/2019 SM Case 2_Sec B_Group 11_Samsung Amusment Park
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Samsung and
The Theme ParkIndustry in Korea
Group 11 Sec BPartha P. Chowdhury- PGP/17/099
Parvathy Rajan- PGP/17/100
Pooja Punjabi PGP/17/10!
Sande"h # PGP/17/109
Sonia $an%&ani PGP/17/11'
8/9/2019 SM Case 2_Sec B_Group 11_Samsung Amusment Park
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Samsung
Conglomerate• Multinational conglomerate companyheadquartered at Seoul, South Korea
• Four core business groups :lectronics,machinery, chemicals and !nance " insurance
• Sub groups : trading acti#ities, hotels, ne$spaper,state o% the art medical and research institutes,cultural and $el%are %oundations
• &ong 'ng (e#elopment Co )td de#eloper o% *ongin
Farmland came under this subgroup• Samsung group $ould be the ma+or in#estor in
re#amping the *ongin Farmland
8/9/2019 SM Case 2_Sec B_Group 11_Samsung Amusment Park
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)-.') T/M P'0K I1(2ST0* 3 TIM)I1
a r l y 4 5 6 6 s • 0 u s s i a n s 7 o p e r a t e d a s l e d r i d e
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• 4 8 8 ; 3 F i r s t r o l l e r c o a s t e r , i n d o o r a m u s e m e n t p a r k S e a l i o n P a r k
4 < 6 6 s • T h e m e p a r k s e m e r g e d a s a m a + o r s o u r c e o % % a m i l y e n t e r t a i n m e n t • 4 < = 6 s 3 C o m p e t i t i o n % r o m m o # i e h o u s e s , e c o n o m i c d e p r e s s i o n • 4 < > > 3 ( i s n e y l a n d o p e n e d i n C a l i % o r n i a , r a i s i n g p r o ! l e a n d p r o ! t a b i l i t y
o % t h e i n d u s t r y t o a n e $ l e # e l
8/9/2019 SM Case 2_Sec B_Group 11_Samsung Amusment Park
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T*PS -F P'0KS '1('TT0'CTI-1S
Cultural and education parks• Formal greens, gardens and %ountains• Incorporated historical and educational e?hibits
-utdoor amusement parks• Small parks that ser#ed a metropolitan cro$d• Featured traditional thrill rides, carni#al mid$ays etc but no theme
Theme parks• Family oriented, theme3based
• )arger, greater #ariety o% rides and attractions
@ater theme parks
Centred around $ater acti#ities, large parks %eaturing $a#e pools, ri#er stridesetc
8/9/2019 SM Case 2_Sec B_Group 11_Samsung Amusment Park
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?isting Market
1. (orth #)erican $ar*et
• Three ma+or @alt (isney Theme Parks
• Time @arnerAs Si? Flags Corporation had Se#en Parks9Second )argest
• Paramount9@onderland, 'nheuser .usch and Cedar Fair among othercompetitors
•
/ea#y in#estment in upgradation!. +urope
• 'lton To$ers, 56 year old park reshaped to 'musement Park
• .lackpool Pleasure .each in ngland
• Three theme parks in France including uro (isney, Parc 'steri?, andSmur%s Park
•
Si? Flag Corporation and 'nheuser .usch ha#e also entered theuropean market
,. #"ia
• Tokyo (isneyland, -cean Park in /ong Kong9largest $ater park, &aya'ncol (reamland, .ei+ing 'musement Park $ere ma+or theme parks inasia
8/9/2019 SM Case 2_Sec B_Group 11_Samsung Amusment Park
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The Korean Market in the <6As and
Speci!c Problems
• Tremendous economic gro$th during 86As and<6Asdespite political diBculties
• 2rbaniation rate o% D;E; percent
• ?pected gro$th rate o% %or second hal% o% <6As around
8 to < percent• Temperate climate
@inters : (ecember to March 3 temperature belo$ 36degrees in some places and sno$%all at some places
Summers : &une to early September E /ea#y sho$ers in
&une and &uly• Gacation season : Mid &uly to Mid 'ugust
• Festi#als : Many in -ctober
• Success%ul international e#ents
• Steady tourism gro$th $ith tra#el packages beingpopular
8/9/2019 SM Case 2_Sec B_Group 11_Samsung Amusment Park
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Strategic and -perationalIssues
perationa& ""ue"• Transportation
• )ocated 56 km south o% Seoul
• Took t$o hours due to traBc
+am
•
Short term problem• Parking space
• Currently ample parking space
but insuBcient in peak season
• 1eed to increase in caseFarmland e?pands
•
-rganiational Inertia• )ot o% persuasion to mo#e the
oBce %rom Seoul to *ongin
• n#ironmental Issues
• )and le#elling
• Flooding o% area
Strate%ic ""ue"• Korean people do not ha#e
much time %or leisure• Pricing Issues3 HPay one
price or per rideJ•
Change in recruitmentpattern 7 %rom academicallygood people to more ser#iceoriented candidates, also tobring di#ersity
• Is in#estment in a sector
$hich does not go $ith high3tech image o% Samsung agood choiceJ
• Is changing its mission andname %or catering to ane?panded segment #iableJ
8/9/2019 SM Case 2_Sec B_Group 11_Samsung Amusment Park
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PorterAs > %orces 'nalysis:.argaining Po$er o% .uyers The targeted segment %or *ongin Farmland $ere
the )ocal Families, ChildrenAs groups and TouristsE
.uyers had required in%ormation
's the buyers reser#ed quite a substantial part o%
the day %or their rela?ation and re%reshmentpurpose they did not mind paying %or the same
'ttracti#e e?ible oLers in the %orm o% pay as yougoA, pay one price or passportA and membership
options1ot much competition bet$een the competitorsas there is not much #ariation in the pricing
• -$ing to the abo#e conditions $e can see thatthe buyers had limited bargaining po$er
8/9/2019 SM Case 2_Sec B_Group 11_Samsung Amusment Park
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.argaining Po$er o% Suppliers
= main supplies : )and, machinery9hard$are and so%t$are
• )and
N strict go#ernment regulations o#er e?tensi#e use o% landand insurance
• Machinery
N #ery %e$ suppliers capable o% de#eloping qualitymachinery
9 customised, market based, en#ironmental condition based
N large no o% suppliers o% smaller machines
• So%t$are : park management e?pertise not easily a#ailable
This gi#es a lot o% po$er to suppliers to bargainE There%ore thesupplier po$er is #ery high
8/9/2019 SM Case 2_Sec B_Group 11_Samsung Amusment Park
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Threat o% Substitutes• hat are the "ub"titute"J
- Close substitute : Girtual reality theme park
- -ther substitutes : Modes o% entertainment such as mo#ie houses, %reeadmission parks and beaches, camping trips, #ideo mo#ies at home etcE
• i&&in%ne"" o buyer" to "ub"titute J
- To try something ne$, diLerent, cheaper , sa%er , better or morecon#enient
- Time 7 Tra#el time plus time spent at these parks e?ceeds time requiredto be in#ested in other entertainment modes Since buyers pay here they$ould also ha#e the mentality to stay %or longer hours to get theirmoneyAs $orth and time may be a lu?ury %or many 9 >E> days $ork
- S$itching costs 7 1o s$itching costs
• Price / Peror)ance characteri"tic" o "ub"titute"- In this case there being no close substitutes apart %rom Girtual theme
parks , there $ould not be any price cutting or price $ars or directper%ormance impact %rom other substitutes since they are not direct innatureE
8/9/2019 SM Case 2_Sec B_Group 11_Samsung Amusment Park
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Threat -% ntry
• conomies o% scale
• )arger !rms en+oy larger operating re#enues
• Product diLerentiation
• stablished brand identi!cation 9egE Samsung
• Customer ser#ice, customer loyalty 9egE throughmemberships
• Proprietary product diLerences 9egE unique rides
• Capital requirements
• /igh initial in#estment requirement 3 typically O>6
million3O=billion 9egE land acquisition, landde#e=lopment, transportation net$ork construction i%location is inaccessible etc
• /igh operational costs 7 personnel salaries,maintenance costs etc
8/9/2019 SM Case 2_Sec B_Group 11_Samsung Amusment Park
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Threat -% ntry 9ContdE
• Cost disad#antages independent o% sie
• Companies ha#e multiple parks to take ad#antage o%learning cur#e eLects, increased economies o% scope
• ?perience cur#e eLects 7 learning cur#e eLects,
economies o% scale• 'ccess to distribution channels
• 'ccess to channels like TG, yello$ pages, radio etc
• o#ernment policy
• Methods o% ensuring #isitorsA sa%ety 9high insurance
costs
• )icense requirements and time required to getappro#als
• 0esource scarcity 9limited land and dependence ongo#t %or resources 9po$er, gas etc
8/9/2019 SM Case 2_Sec B_Group 11_Samsung Amusment Park
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0i#alry amongestablished competitors• - Concentration
• The biggest players like @alt (isney capture most o% the market
• The scale o% each theme park diLered on their land a#ailable
• Competitors are rather di#ersi!ed like come ha#e $ater parks, some ha#egardens and historic parks
• - Product di2erentiation
• .rand recognition and image mattered 9/ighest Market share o% disney
• The price paid by customers to #isit diLerent parks is same and customersegments do not diLer much
• - +3ce"" capacity and e3it barrier"
• ?tra capacity and staL generally required during peak seasons
• /ard to get out the business because specialied skills " %acilities or long
term contract commitments $ere there plus high cost o% e?it• - Co"t condition
• conomies o% scale $ere signi!cantE )earning cur#e eLect $as there %or all
• Gery high initial in#estmentE )and de#elopment costs around >6 o%in#estments and machinery $as around 63=6
So, the 0i#alry $as high as market $as captured by ma+or players though
there $as not much diLerence in productE .rand Image and location playeda big role in gaining customersE
8/9/2019 SM Case 2_Sec B_Group 11_Samsung Amusment Park
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Market Share o% SouthKorean Theme Parks
4<<6 4<<4 4<< 4<<=
6
4666
666
=666
;666
>666
5666
*ongin Farmland
)otte @orld
Seoul )and
(ream )and
ChildrenQs rand
Park
Seoul rand Park
8/9/2019 SM Case 2_Sec B_Group 11_Samsung Amusment Park
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Market Share o% SouthKorean Theme Parks• @e can see %rom the graph that customer attendance at Farmland has
been continuously increasing o#er years $hich can be attributed totheir established brand image and ne$ additions to the theme park9=>
• /o$e#er the other competitors market share has been almost constant
• In comparison to ne?t top players9in terms o% gro$th, the diLerence in
customer attendance as a percentage o% FarmlandAs attendance is :• Farmland and dreamland 7 D;
• Farmland and Seoul grand park 7 5>
So %armland had considerably higher attendance and highest market share inKorean
*ongin Farmland)otte @orld
Seoul )and
(ream )and
ChildrenQs randPark
Seoul rand Park
8/9/2019 SM Case 2_Sec B_Group 11_Samsung Amusment Park
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Is the Korean market conduci#eto Farmland J
4actor #na&y"i"
Popularity 44th in the top >6 amusementRtheme park list 9 Table 4
Tourism Korea has a steady tourism gro$th rateE > percent o%FarmlandAs #isitors are o#erseas tourists 9 Table =
Seasonality
/olds true %or any amusement Rtheme park in anycountry
conomy Tremendous economic gro$thE ?pected gro$th rate o%83<
Political
Stability
Political diBcultiesE Though this has not hampered
economic gro$th " gro$th o% large business groups
1P Increase %rom 2S O;46 to 2S OD>4= E @ould increasethe amount spent on leisure acti#ities
t t
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s t e orean mar etconduci#e to Farmland J
9contd• The Korean market seems to be conduci#e to FarmlandAse?pansion plansE /o$e#er the political situation $ill ha#eto be closely monitored %rom time to time as thein#estment required to e?pand is highE Since tra#el
packages are popular Farmland can try to increase its
#isitors through oLering lucrati#e packages through suchtra#el agencies
• o#ernment planning to build sub$ay to *ongin in %uture
7 sol#e the traBc congestion problem
• Tremendous economic gro$th in Korea in the currentdecade 7 increase in the customer base
• Farmland has highest gro$th rate in Korea
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0ecommendations
• e reco))end 56er to %o ahead with the e3pan"ion p&an
• Payback period comes out to be 48 years $hich is lesser thanindustry a#erage o% 6 years %or in#estments o% such scale 9e?celattached though $e ha#e assumed that the customer base $illgro$ at current rateE .ut $e hope it $ill increase as Farmland ispro#iding ne$ %eatures thereby %urther reducing the paybackperiod
• Proper compensation %or people $ho are being displaced due toe?pansion plans
• Promotions and 'd#ertisements are required to attract morecustomers, both domestic and %oreign
•
-perational issues should be taken care o% during e?pansion andalso eBciency o% the system can be impro#ed by going Hpay3oneprice system
• The upcoming sub$ay $ill take care o% traBc problem
• 0ecruitment policy as per the plan o% taking ser#ice orientedpeople should be implemented
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T/'1K*-2