sm case 2_sec b_group 11_samsung amusment park

8/9/2019 SM Case 2_Sec B_Group 11_Samsung Amusment Park

http://slidepdf.com/reader/full/sm-case-2sec-bgroup-11samsung-amusment-park 1/19

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'



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



)-.') 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

• P e o p l e p a i d m o n e y t o b e t e r r i ! e d

) a t e 4 8 6 6 s • S e # e r a l t h e m e p a r k s i n C o n e y I s l a n d 9 1 e $ * o r k :

• 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



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



?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



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



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



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



.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



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



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



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



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



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



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



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



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



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



T/'1K*-2

sm case 2_sec b_group 11_samsung amusment park

Documents