Samsung and the theme park industry in Korea
Question: Is the global theme park industry an interesting industry to be in?
To answer to this question we will use Porter’s five Forces model and explain this one:
Porter’s five Forces model:
Competitors/ field of theme park
Before tocomplete this one, we will develop each Force:
Rivalry between established competitors: The sector of theme grew strongly during the 90s as show the growth of China’s theme park industry between 1990 and 1993. (Revenues increased over 2 000%). But nowadays this sector reaches the maturity stage of the cycle life.
In each country we have few competitors so we can say that the competition isconcentrate. But in the world this industry isn’t concentrate. The 4 biggest players haven’t together more than 80% of market share. Furthermore competitor haven’t the same size and haven’t a specialized offer. Indeed we find the same type of amusement machinery, the same fast food and beverage on each theme park.
Approximately theme park have the same price and provide the same services, the onlydifference is the “theme” of the park (example Astérix) and the type of the park (example aquatic). This service is really simple for customers who are only “spectator” (they don’t have to control the ride).
But each theme park has the same difficulties to control the seasonality and the economy of scale and the same exit barriers which are high, because you can’t easily sell a theme park and it’snot free to dismantle...
Threat substitutes: they constitute an important threat, because they are many and have many advantages with regard to theme park. Indeed most of substitutes are free or less expensive like cinema, camping trip, beaches, movie at home etc…
However other leisure activities are more easily accessible because theme parks are few and often consumer have to do many kilometersto reach theme parks what is a real weakness. (For example we have only 3 important theme parks in France).
Substitutes have other advantages, that’s they aren’t seasonal for many of them so they can attract theme park’s customers when weather is bad and contrary to amusement parks other leisure activities are approachable for everyone. (Indeed cardiac people can’t go to theme park).
But inother hand, theme park isn’t leisure as others because it’s unique. It’s the only one leisure where you can have strong sensations!
Threat of new entrants: the “new entrants” is the lowest strength of Porter’s five forces in this industry for many reasons.
Firstly, the investment in this industry is huge! Theme park business required an initial investment from $50 million to $3 billion.However theme park required over 50 acres minimum because they need to set up all amusement machinery, stores (memories), restaurant (fast food) etc... And they have to set up a big parking to welcome all consumers especially when the seasonal peak is achieved. Furthermore the park has to be accessible for all customers (what means near main highway and airport)
So is really important that newentrant know to control economy of scale to reduce their cost but they have to control also the seasonality of this field. Indeed seasonality had a real impact in this business because it has an influence on attendance of customers and the numbers of employees.
Secondly the government regulations are quite strict because of extensive land use, and the potential for serious accident. The regulationand the degree of safety vary according to every country. That’s why is really important for new entrants to have suppliers able to supplying secure amusement machines with high technologies. That’s another difficult questions because is hard to find a suppliers which can provide this service because there were fewer than 10 suppliers who were capable of developing quality machinery (DOGO,...