Research Korner: Ocean Park Hong Kong

Ocean Park Hong Kong

Ocean park, situated on the southern side of Hong Kong island is one of the world’s acclaimed educational theme parks covering more than 870, 000 square meters of land. Operated by the Ocean Park Corporation, a statutory board, it is a not-for-profit organization providing elements of entertainment, education and conversation at an affordable price (source: www.oceanpark.com.hk).             Over four million people visit the Ocean Park each year. Residents of Hong Kong as well as tourists from all over the world enjoy the facilities and services provided at the Ocean Park. With 29 years history, Ocean Park has established itself as one of the major tourist attractions in Hong Kong and Asia. Aside from entertainment through thrill rides and a wide variety of shows, the Park prides itself on its education and conservation programmes. About 40,000 school children in Hong Kong visit the Park each year and learn about animals. In 2000, the Park’s research activities on marine mammals and artificial insemination (AI) produced the world first successful pregnancy of bottlenose dolphins through this process (AI). In May 2001, two healthy dolphin calves were born at Ocean Park as a result of these earlier successful AI conceptions (source: www.oceanpark.com.hk).             Ocean Park comprises two sections, the Headland and Lowland, connected by a 1.5km long cable car system which offers spectacular, panoramic views of the southern side of Hong Kong and the South China Sea. At Headland, the Park boasts of its many thrill rides including the Dragon, Eagle, Crazy Galleon, Ferris Wheel, Ocean Park Tower, Flying Swing, Raging River, Space Wheel, Mine Train, and Abyss Turbo Drop, a heart throbbing thrill ride that delivers a free fall experience from a height of 62 meters (source: www.oceanpark.com.hk).             Complementing the rides is the Ocean Theatre where dolphins and sea lions entertain visitors and educate on the habitat of these marine mammals each day through their lively performances. Providing more enjoyment and education are the world-class Atoll Reef Aquarium, Shark Aquarium, Pacific Pier and the newly opened  Sea Jelly Spectacular. At the Park’s Tai Shue Wan site, there is the entrance to a bird aviary and a 2258 meters outdoor escalator leading to the Headland (source: www.oceanpark.com.hk).             At the low land, visitors can meet with the delightful “An An” and “Jia Jia”, a pair of giant pandas bestowed on Hong Kong by the Central Government of China at the Hong Kong Jockey Club Giant Panda Habitat. Adjacent to the Faint Panda Habitat is the Goldfish Pagoda featuring more than 100 goldfish of 42 species. Other attractions include Amazing Amazon, Butterfly House, Dinosaur Now & Then, Whiskers’ Wild Ride and Kit’s World. Besides Kid’s World is Dolphin University where visitors are able to have a closer encounter with dolphins and learn more about these fabulous marine mammals (source: www.oceanpark.com.hk).             Enjoy 2 newly-opened delights at Ocean Park The Bayview Restaurant and The Terrace Café, both offering an international menu as well as an unbeatable view of the South China Sea. Visitors can indulge in the oceanic ambience at The Bayview Restaurant featuring an aquatic backdrop with sea jellies; or enjoy alfresco dining at the relaxing Terrance Café with its breathtaking sea view (source: www.oceanpark.com.hk).   Quality Management             Quality management is a method for ensuring that all the activities necessary to design, develop and implement a product or service are effective and efficient with respect to the system and its performance (source: www.wikipedia.org). Quality is gaining in importance in all areas of modern life. In tourism too, guests require ‘products’ where they are sure of getting top quality, value-for-money services.   Importance of Quality Management             Quality management can help Ocean Park to plan its efforts. Quality management will help Ocean park achieve superior performance through continuous quality improvement. Quality management will help the organization to achieve improvements in areas such as employee relations, quality, costs, market share, profitability, and customer satisfaction. Quality management can help Ocean park to create and sustain a competitive advantage and satisfy the requirements and expectations of the external environment. Prioritized and focused quality initiatives that are focused on areas or processes that add value to the customer, who sees and appreciates this value and is willing to pay for it will help Ocean park to gain an edge over its competitors’ products and services. Quality management will give Ocean Park ability to change continually and learn to innovate in relation to the changing marketplace. Quality management will give the organization the ability to drive, respond and anticipate the continually changing forces, requirements and expectations of both the external and internal environment (Antony & Preece, 2002).   Quality Systems Appropriate to Ocean Park Hong Kong Customer Satisfaction and Impact on Society             Customer satisfaction considers the response of customers to the goods and services provided. The impact on society examines many of the issues such as environmental impact, impact on quality of life, preservation of resources, and internal measures of resource utilization efficiency. How well the organization represents itself to its community is considered. Quality is about how well goods and services meet customer expectations. Quality is defined by customers. A high quality product or service is one that satisfies customer needs. A poor quality product or service is one that does not meet customer's needs and expectations. As the customer's needs and expectations can only be defined by the customer, then quality is also defined by the customer. A high quality product need not be a high priced one, but it will give better value for money than competing products(Wenmouth, 1994).   Role of Quality Management: Normative Decisions             The changing nature of the world of organizations and the increasing concern with ethical issues such as morality, environmentalism, and so on demand a new approach to quality management. Normative management decisions are concerned with these aspects, helping to define the nature of the organization itself, that is, the values, expectations and beliefs espoused by its members. The norms so derived should ensure that the organization makes a good ethical fit with all its stakeholders and with society in general. When the characteristics of the products or services do not meet the expectations of consumers, or the behaviour of the organization is considered unacceptable, the customers will seek products or services elsewhere. Normative decisions determine what questions and decisions are acceptable to the organization at the strategic level. They therefore pre-control strategic decision-making. Strategic decisions create potential new value for the organization - how profits will be made tomorrow. This in turn pre-controls the potential decisions at the administrative and operational levels - today’s profits. At this point, and notwithstanding the potential for marketing activity to influence consumer behaviour, the organization largely loses control to the market. If the normative decisions are incorrect, the consumers will not buy. In many organizations, the normative decisions are expressed through devices such as mission statements or publicized ‘visions’ which attempt to express the values for which the organization stands (Beckford, 2002).             Ocean Park as one of the world’s largest educational theme parks, aims to provide guests with excellent experiences in a theme park environment that connects people with nature. Normative decisions will help Ocean Park to maintain a good ethical fit with all its stakeholders and with society in general, by providing its visitors with entertainment and education while inspiring long learning and conservation involvement. Ocean Park’s mission to its guests, society, and environment is to deliver the highest standards of safety, animal care, products and guest service. What differentiate Ocean Park within the market is the organization’s mission to connect people with nature, through conservation, entertainment and education. The organization firmly believes that ‘edutainment’ experience enables the visitors to get close to and understand how animals behave in the wild, is what makes Ocean Park so special. As a bridge to the natural world, the Park awakens a respect for the beauty of animal and marine life and in so doing develops an awareness of the importance of conservation.   Quality Management Objectives Strengthening the Products and Services             Strengthening the products and services to bring life to the organization’s mission of ‘edutainment’ will be one of the quality management objectives of Ocean Park. New capital investments and attractions will be introduced to attract the customers and promote learning and conservation. Using new interactive technologies, the attractions will offer different theme park experience. As Ocean park brings the marine-world to life for its guests, new signature outlets will also be unveiled to cater to the guests’ needs and encourage growth in per capita spending within the Park. Substantial resources will also be allocated to strengthen retail within the Park. Different in-park displays and merchandise as well as photo opportunities will also support the organization’s missions and goals. Conservation through Education             The organization will continue to promote The Ocean Park Conservation Foundation Hong Kong, a non-profit organization that advocates and facilitates the conservation of Asian wildlife and habitats through research and education. The organization also plans to continue supporting important scientific research projects to conserve marine mammal and animal life. The organization is planning to form partnerships with different foundations and organizations in order to increase the people’s awareness about the environment and animal life.  Collective local loyalty translates into a unique Park experience for everyone who visits, and this is what separates Ocean Park from its competitors. Building critical mass entertainment opportunities is essential to enhance the appeal to the community, as a premium tourism destination. Differentiation in market product and presentation will provide the appropriate environment for coexistence and success of the varied destination options, with Ocean park standing out as a premier marine-based theme park experience. Juran Trilogy – Quality Management Processes             One of the most imminent of quality ‘gurus’, Dr. Joseph Juran has proposed an overview of quality management that identifies the three basic elements required for a balanced quality program. The overview has become as the Juran Trilogy. Juran asserts that quality planning, quality improvement, and quality control must all be addressed otherwise the quality program will lack balance (Wenmouth, 1994). The Juran Trilogy can be thought of as strategic framework for the implementation of quality management. While a great deal of Juran’s writing discusses the details of specific tools and steps to improve quality in the firm, the Juran Trilogy is the strategic reasoning that explains why all these tools and steps are necessary. The three stages of quality management, taken as a whole, form the basis for the entire quality management effort. Quality Planning             Quality planning is the first stage of the Juran trilogy and is essentially concerned with designing products and processes that align with customer needs. Quality planning is comprised of the following steps: 1. Determine who the customers are              Where the customers are numerous, customers should be segmented using the Pareto principle. This allows the organization to place more of the planning emphasis on the most important customers. 2. Discover the customers’ needs             The organization must always bear in mind that customers may have needs that they do not voice explicitly. 3. Develop products whose features align with the customers’ needs             The organization must use different tools in order to translate customers’ needs into product specifications. 4. Develop processes that are capable of producing these products along with their accompanying features. 5. Hand these pans off to operations             Often this entails an abrupt transition of responsibilities as the quality planning team moves on to the next planning project. Quality Control             After the planning team hands its plans off to operations and production begins, the firm should simultaneously take steps to ensure that its operations maintains the level of quality that was planned. This is the purpose of quality control, According to Juran, quality control is comprised of three steps: 1. Evaluate actual operating performance             It is important that the organization know what to measure. Statistical tools are very useful for evaluating operating performance. 2. Compare actual performance to operating goals In addition to merely comparing, the organization should also use statistical tools to interpret the meaning of any differences between performance and goals.   3. Take action in response to differences             Because the organization’s operating goals should be based on its processes’ capabilities, the organization should find that any differences between performance and goals are merely sporadic and attributable to unique, identifiable process breakdowns. Quality Improvement             Quality improvement is the third and final stage in the Juran Trilogy. Improving goes beyond control in that it allows the firm’s operations to reach levels of quality heretofore unattainable. The quality improvement process does this by removing the chronic quality problems that were built into the products and processes in the planning process. Additionally, the organizational learning that occurs during quality improvement efforts should be taken into account and utilized, where applicable, in future quality planning. According to Juran, quality improvement includes the following steps: 1. Establish the infrastructure needed to facilitate continuous quality improvement             This step should include the formation of a standing Quality Council whose responsibility is to ensure that quality improvement efforts receive sufficient attention, effort, and resources. 2. Identify specific improvement projects             The Quality Council should consult employees, customers, and cost-of-poor-quality data in identifying potential projects. Subsequent projects should be selected on the basis of expected financial return on investment, the urgency of the problem, the amount of the potential improvement and so forth. 3. For each project, establish a team that is clearly charged with the responsibility of bringing a successful resolution to the project. Quantitative Techniques and Tools for Continuous Quality Improvement 1. Statistical Methods             Statistical methods can be used by Ocean Park for measuring and evaluating performance and performance improvement on a sampling basis. Statistics can be used by Ocean Park to support decision-making. Accurate, well-founded and reliable statistics can tell the Ocean Park management much about what is happening within the processes of the organization. 2. Benchmarking             Benchmarking is a process of comparison between the performance characteristics of separate, often competing, organizations intended to enable each participant to improve its own performance in the marketplace. Benchmarking will help Ocean Park in obtaining a clearer understanding, particularly of customers, will lead to reduced complaints, a sharper focus on customer needs and higher levels of customer satisfaction. 3. Process Chart             A process chart will be valuable in providing an overall picture of a connected set of actions by recording, in sequence, each of the operations and activities within Ocean Park. The process charts are developed by identifying particular operations and linking them together along with inspections, audits and delays.   Factors to Consider 1. Customers             In introducing quality management, Ocean Park must establish the proposed market and identify target customers. The design and development process, be it product or services, should be driven by the needs of the customer (Antony & Preece, 2002). 2. The customer view of Quality             Customers’ perceptions of quality are more complex than is often supposed. Basic Quality relates to items where customers will assume that appropriate performance levels will be met as a matter of course. If the product meets all of these requirements, no significant positive satisfaction will be generated. However, of it fails fully to satisfy one of these criteria high levels of dissatisfaction may result. Example of basic quality is staff politeness. Spoken Performance issues will take the form ‘I would like the product/service to achieve this level of performance’. If the performance meets or exceeds this level, the customer will be satisfied on that issue. If it does not then the customer will be dissatisfied. Spoken performance would include things like waiting time at a bank. Excitement Quality refers to given customers something they did not know they wanted. Clearly, customers cannot be dissatisfied because the organization did not give them something they did not know they wanted, but providing such features may generate extraordinary customer satisfaction.             Barriers to the introduction of Quality Management Management Perspectives             Management perspectives refer not simply to the attitude to quality, but to the whole management ethos of the organization as it impacts on quality. In order for an appropriate attitude to be developed to quality, it must be recognized as an issue - that is, the lack of quality in a product or service must be acknowledged. Frequently, companies adopt an ostrich-like attitude to quality, finding it easier to blame poor performance on a host of other reasons. For example, when a previously successful sales performance declines, a common reaction is to focus on market changes, the sales team or activity by competitors rather than on the product or service itself. Issues such as pricing and margins are often raised, perhaps leading to a focus on manufacturing performance in terms of productivity. Rarely is quality of product or service considered as a potentially primary issue at the outset. It is essential that quality be treated as a potential part of the problem and be considered as a possible cause of decline. Even where a company is performing well, a positive attitude to quality needs to be developed and maintained. A product which is considered ‘good enough’ probably isn’t so in today’s competitive markets. There is no room for such complacency (Beckford, 2002).

Ocean Park Hong Kong

Ocean park, situated on the southern side of Hong Kong island is one of the world’s acclaimed educational theme parks covering more than 8...

A Strategic Analysis of Ocean Park of Hong Kong

Distance Learning   MSc Hospitality Management   Strategic Management                                 Prepared by :              A Strategic Analysis of Ocean Park of Hong Kong   (FIT) the purpose is to discover the environmental forces and the resources that need being developed to address them in order for the Park to perform better than its competitors.     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 HK$536 million and a surplus of HK$96 million for the year, reversing the deficit of HK$4 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 HK$706 million for initial capital requirement. For instance, Abyss Turbo Drop costs around HK$17M. 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.

A Strategic Analysis of Ocean Park of Hong Kong

Distance Learning MSc Hospitality Management Strategic Management ...