Samsung and theme park in Korea Essay Example for Free

Samsung and depicted object pose in Korea EssayTitle of the case Samsung and root park industry in Korea 1) Is the Global base pose industry an interesting industry to be in? a) Rivalry among existing competitors Is the industry growing rapidly? Yes,because of the increasingly fierce arguing and the maturity of the market. parsimoniousness Do the 4 biggest players view together more than than 80% of market sh be? Yes, because 4 biggest players which atomic number 18 The Walt Disney Comp whatever,Time Warners Six Flags Corporation, Paramount, Anheuser Busch and Cedar Fair have together more than 80% of market share. vicissitude of competitors ar competitors all of approximately the same size?No,because it depends on the land size and different regions ar the competitors diversified quite a specialized? Yes. root word park by and large have a global theme to propose. Diversity of competitors were getting more intense. Product note Are there important increase differences and shop identities betwixt the competitors? Yes,there was a variety of parks and attractions, each with a different approach to fellateing crowds and present them a good succession. That are Cultural and Education positions Outdoor recreation Park Theme Parks were generally family-oriented entertainment Byzantinees that were built somewhat a themeWater Theme Parks.That doer theme is equal to brand. Are products complex and do they require a detailed understanding on the part of guests? No, the rides and attraction are not require teaching. Would clients incur portentous costs in fracture to a competitor? No,ticket prices for consumers is very cheap. Excess capacity and exit barriers Is the industry with no intermittent oer capacity? No. Important over capacity of extra staff during spring and summer Is it tricky to get out this commerce because there are specialized skills and facilities or long term withdraw commitments? Yes, it is. Economies of shie ld and the ratio of fixed to variable costs.Are there economies of scale in this industry? Yes, the economies of scale and scope were significant in the industry. Increasingly, Parks got larger and long-dated to generate more operating revenue enhancement. Also, companies had multiple parks to take advantage of the learning curve effects in the management of theme parks and the increased economies of scope. Most of the operating expenses for theme parks ( al well-nigh 75 per cent) were for personnel. Are the fixed costs of the business a relatively low portion of total costs? No, because land developing costs around 50% of investments and advertising campaigns around 10%.b) panic of new entrants Capital requirements Is a lot of cr admitwork ingested to enter the industry? Yes, because the theme park business required a large-scale sign investment, typically ranging from $50 million to $3 billion. Is equipment high-ticket(prenominal) to acquire / to serve? Yes, because land development costs, Amusement machinery costs, Working capital and Amusement equipment are all expensive to acquire. Economies of scale Do large firms have a cost or performance advantage in the industry? Yes, they have. M some(prenominal) parks sporadically added new attractions or renovated existing ones to draw repeat customers.The parks typically reinvested much of their revenue for intricacy or upgrading purposes. Absolute cost advantages ( graduation mover advantage) Does experience help to continuously degrade costs? Yes, because large firm such as Walt Disney Company, its financial profile was generally used to mensurate the ease up on investment within the industry. The revenues for the theme parks segment of the Walt Disney Company were at US$2. 042 billion in 1988 and grew to US$3. 4 billion in 1993. Operating income was pegged at US$565 million in 1988 and US$747 million in 1993.With this clarification,large firms has enough experience to help to continuously lower c osts,most of revenue to be reinvest for expansion purposes. Does a fledgling have any problems in obtaining the necessary skilled people, materials or suppliers? Yes, they have. In some countries, where land was scarce, governments limited the area of the land that the developers could take up for theme parks. Park administration was dependent on the government for utilities such as world-beater, gas and water. A typical effect required for arranging government approval for a theme park could be as soaring as two to five classs,depending on the country.Product differentiation Are there any trademarked product differences in the industry? Yes,because the theme park industry had three classes of inputs the building and construction function that provided landscaping and architectural support the hardware providers that supplied merriment machinery and the software providers that supplied management know-how. Are there any established brand identities? Yes, because the park man ager should work with tour operators and government tourist promotion boards to draw the tourist crowds to their parks. Theme parks spent about 10 per cent of their annual revenues for advertising.Radio, newspaper, yellow rascal (telephone book) advertisements, family and group discounts, and direct mail were the most commonplace promotional methods. Do customers incur any significant costs in switching suppliers? No, because the customers dont care about the price. Access to channels of distribution Does a newcomer to the industry face tryingy in accessing distribution channels? Yes, because theme parks spent about 10 per cent of their annual revenues for advertising. Radio, newspaper, yellow page (telephone book) advertisements, family and group discounts, and direct mail were the most common promotional methods.Governmental and legal barriers Are there any license, indemnification of qualification which are difficult to obtain? Yes, because the licence and insurance of qualif ication are all difficult to obtain, because government regulations were quite unmitigated because of the extensive land use and security. Licensing requirements and methods of ascertaining operational expertise to ensure visitors safety varied from country to country. avenging Can a newcomer attend strong retaliation on entering the market? Yes, because the insurance premiums were extremely high in some parts of the world.Given the likelihood of accidents in the cheer parks and the possibility of serious injury, 100 per cent insurance coverage was a must in the industry. c) Threat of substitutes Has the customer no real substitutes? No, there are Various substitutes for customers former(a) modes of entertainment Propensity/ willingingness of buyers to substitutes Is the customer unlikely to substitute? No, customers can easily substitute, because they want to try something new, something different, cheaper, safer, better or more convenient. leave alone the customer incur cost s in switching to a substitute?Yes, because they meet more complex needs. Free admission parks and beaches, tenting trips, or even video-movies at home were competing options for leisure time. It path if customers have enough leisure time while the price is lower than theme park or have the same type of entertainment, they were probably change their mind. Price/performance characteristics of substitutes Have substitutes performance limitations which do not completely offset their lowest price or is the performance advantage of substitutes not justify by their higher price?Yes, It was the availability of leisure time and a high discretionary income that control the commercial recreation industry. Like video-movies at home, customers cost little even though they cant go out for fun. Is it difficult to perceive performance differences mingled with industry products and substitutes? No, because Theme Parks industry do not fit well with High tech image of Samsung. d) Bargaining pow er of buyers Buyersprice sensitiveness 1) Importance of the item as a isotropy of their total cost Are customers not exceedingly sensitive to price?Yes, because in a good economy, customers do not have a vast deal of bargaining power within the theme park industry. Although the entertainment facilities as a proportion of their total cost, customers just focus on the rides themselves,it shows that buyersprice sensitivity are not highly. 2) Level of differentiation Is the product unique to some degree or has accepted branding? Yes, like special simulators for amusement purposes using proprietary technology were creation developed by technology-intensive companies. Does the customer face any significant costs in switching suppliers? No, because the customers are not affected by suppliers.3) Level of competition between buyers Are customers businesses/activities/finance remunerative? Yes, because to handle the admissions revenue a centralized ticket system was generally preferred . An all-inclusive admission price entitled customers to as many rides and shows as they desired. This approach led to longer stays at parks resulting in increased food and beverage sales. 4) Importance of the sold product to the quality of the buyers product/service Yes, successful park managers used extensive merchandise research to understand their customers and also spent a lot of effort in promoting the park.To reach the several(a) groups, parks emphasized increased beautification and the range of entertainment and food services offered. Relative bargaining power 1) Size and concentration of buyers relative to suppliers Is there a large egress of buyers relative to the number of firms in the business? Yes, there are local families,childrens groups,the evening market,corporate groups and tourists. Is there a large number of customers, each with relatively small purchases? Yes, each customer just buy one ticket. 2)Buyers information Does the buyer need a lot of important infor mation to properly buy?No, they dont need any information to buy a ticket. 3) Ability to enter the other party business through upright integration Is there anything which prevents the customer from taking suppliers function in-house? No, there isnt anything to prevent the customer from taking suppliers function in-house. e) Bargaining power of suppliers Sensitivity to suppliers price 1) Importance of the item as a proportion of total cost Have cost of purchases no significant influence on general costs? No, significant for landscaping, machineries (hardware) and know-how (software).The amusement equipment required for the park was expensive, most of it going from $1 million to $50 million. The software charged huge licensing fees which were over 10 per cent of the revenues. 2) Level of differentiation Are inputs (materials, labor, supplies, services) standard, rather than unique and differentiated? Yes, because these inputs provided by the supplier that the value constitute a larg er proportion in the total cost of the product of the buyers, that is to say bargaining power of suppliers will increases greatly. Is it possible to switch between suppliers quickly and cheaply?No, the amusement machinery industry had grown over the years. Because most of the large drives which has a unhurt market position, they have many buyers so that not controlled by the market competition of firms. 3) Level of competition between suppliers Are suppliers businesses meshable? Yes, because admission fees constituted over 60 per cent of the total revenues of a theme park, while the rest came primarily from food, beverage, and merchandise sales. 4) Importance of inputs to the quality of product/service Yes, because customers expect high level of quality along all areas of the theme park.Users also expect adventures and experiences in an mushy environment at a calculable risk. Relative bargaining power 1) Size and concentration of suppliers Are there many potential suppliers? No, like special simulators for amusement purposes using proprietary technology were being developed by technology-intensive companies such as Sega Japan and Simex Canada. Is there no major dominant supplier(s) ? Yes, the amusement machinery industry had grown over the years. Most of the large drives, such as the Hurricane or the Giant Wheel, were construct in Japan, Europe or the United States.2)Information Is it easy to compare suppliers offer? Yes, because there were fewer than 10 suppliers who were capable of developing quality machinery, such as DOGO of Japan, HUSS of Germany, and ARROW of the United States. 3) Ability to enter the other party business through vertical integration Would it be easy to enter the business of suppliers? No,because most of these suppliers worked globally, and the machinery were custom designed and made to order to fit the particular market and environment conditions. Summary overall industry rating.Favorable Moderate Unfavorable Intensity of opposit ion among competitors v Threat of entry v Threat of substitutes v Bargaining power of buyers v Bargaining power of suppliers v 2) More specifically, will the idea of theme parks work in Korea ? Yes, because there is an increase of Theme Parks convey in Korea that is creating a booming in leisure domains, leading to a potential very profitable if running in this business. The theme park industry was still in its early stages in Korea, and had a history of less than two decades.However, indications were that the industry was growing globally, with more players entering. Rivalry between established competitors the Korean market is becoming mature with 33% of worldwide Theme Parks are based in Asia. In Korea, around the Seoul area , there were six themes parks. The most notable player in these region are Lotte World , Seoul Land and Yongin Farmland. Each of these firms offers theme parks with varying experiences, everlastingly trying to debut the newest and best experiences in order to stay ahead of one another.A great example of this can be seen by looking at these three major theme parks. New attraction and technology can agreeable customers. Lotte World has a series of their own entertainment, Seoul Land is more of a entertainment place for short visit,Farmland planned to revamp its theme park with addition of the water park, a global fair and the expansion of the existing zoo. all year new attractions, restaurants, entertainment, and hotel offerings are announced in order to influence people to attend the various parks.This rivalry also affects the profits of these theme parks as they typically see a good return on their investment year over year. Other forms of competition comes from free admission parks, beaches, camping trips. These are either free or cheaper than paying for a trip to the theme park. Threat of entry The little terror of new entrants of theme park in Korea is particularly high. Theme parks around the world need a large scale initial i nvestment from $50 million to $3 billion. Land development cost ,amusement machinery cost and working capital are the main component of the capital investment.Another causation is land use, Seoul where land is scare. The land requires for building or expanding a theme park unremarkably involved considerable large land plot. The government often gives firms long periods of approval. Theme parks always have a large economic of scale in order to attract much more customers because of the rides and services which need satisfy customers demand. Threat of substitute Farmland plan to develop a vivify town in Yongin with luxury hotels, golf courses and resort accommodations catering to customers with families and spend longer time in Farmland.The challenge for Farmland is finding ways to entice customers to spend their vacations with them as opposed to trips to the beach, admission parks, camping trips or staying at home and watch video-movies. Bargaining power of buyers In a good econom y and during the holiday seasons, the buyer bargaining power is low where there are many patrons to the theme park. Since the Koreans do not have many vacation leave and Korea is a temperate country , the only time for Koreans to go out with their family will be during the mid summer to mid autumn period.These will be the peak period for most of the theme parks and it is term the high seasonality. When the high seasonality period is over, the customers bargaining power will be high and the theme parks must uprise their promotional activities or special events to attract customers to visit the theme park. Bargaining power of suppliers the suppliers to the theme park industry have a lot of bargaining power. DOGO of Japan, HUSS of Germany and ARROW of the United States are just a few of the major companies who create the attractions found in most of the theme parks throughout the world.Every year,the IAAPA hosts a convention where the newest technology is put on display for the consum ers (theme parks). In an effort to keep customers unbalanced year after year, theme parks have the opportunity at this convention to see the newest technologies first hand and decide what to bring to their theme parks in the future. This can negatively affect the profit level of theme parks, however, as they bid against one another as they vie for the best technology, drive up the prices and reputation of the suppliers. 3) Should Samsung invest in the proposed Master Plan ($300 million investment)? Yes, but should be more because theme park developers chose land sites in a central area which was relatively expensive in Korea and several important criteria are missing in this plan to be complete and realistic. For example, the fact that Farmland is going to build new attraction and extend some others to make them more attractive is a point that required the whole advertising campaign to be reconsidered entirely, and also more impacting by focusing on all those novelties. This is an important operation that will raise a budget fit to more than 10% of the revenue in the group, plus other unexpected extra costs.