Samsung and the Theme Park Essay
Samsung and the Theme Park
SAMSUNG AND THE THEME PARK INDUSTRY IN KOREA
Charles Dhanaraj and Young Soo Kim prepared this case under the supervision of Professor Paul Beamish solely to provide material for class discussion. The authors do not intend to illustrate either effective or ineffective handling of a managerial situation. The authors may have disguised certain names and other identifying information to protect confidentiality.
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Copyright © 1996, Ivey Management Services and Samsung HRDC
Version: (A) 2002-11-22
In October 1994, Her Tae-Hak, President of Samsung’s Joong-Ang Development Company was driving to his office, past the “Yongin Farmland” (Farmland), an amusement complex sprawling over 3,700 acres in the Yongin valley. Her was spearheading a major drive within the company to position the theme park as one of the world’s leading vacation resort towns. His master plan called for an investment of about US$300 million over the next five years, to be internally funded by the Samsung Group. Despite the booming Korean economy and the increasing demands for leisure attractions, the global competitive environment of the theme park industry raised several concerns. Should Samsung invest in such an aggressive expansion plan for Farmland? Was this an attractive industry for investment? Her was scheduled for a meeting with the Chairman of the Samsung Group for a formal presentation of the propo salat the end of the month.
THE GLOBAL THEME PARK INDUSTRY
The early 1990s saw the emergence of theme parks as a major source of family entertainment, not just in the United States but around the world. The earliest evidence of a business where people “paid money to be terrified” was in the early 1600s when several Russians operated a sled ride with a 70-foot vertical drop. In the late 1800s, several theme parks were set up in Coney Island (New York) in the United States. The first roller coaster was set up in 1884, followed by an indoor
amusement park, Sealion Park. In the 1930s, the amusement industry had to contend with alternative entertainment offered by the movie houses as well as setbacks due to economic depression. However, with the Disneyland Park opening in 1955 in California, the industry was revived and Walt Disney was credited with raising the profile, as well as the profitability, of the industry to a new height. There was a variety of parks and attractions, each with a different approach to drawing crowds and showing them a good time:
Cultural and Education Parks were a remnant of the old-fashioned type of European park. Such parks featured formal greens, gardens, and fountains. Generally they incorporated historical and educational exhibits. Outdoor Amusement Parks were small parks that served a metropolitan or regional market. These parks featured traditional thrill rides, carnival midways, and some entertainment. Most amusement parks did not have a theme to the architecture, rides, and entertainment.
Theme Parks were generally family-oriented entertainment complexes that were built around a theme. Theme parks were larger and had a greater variety of rides and attractions than amusement parks.
Water Theme Parks were a recent phenomenon, a special type of theme parks centered on water activities. Large water parks featured wave action pools, river rides, steep vertical drop slides, and a variety of twisting flume slides. Most of the theme parks were members of the International Association of Amusement Parks and Attractions, which tracked the attendance at various theme parks. In 1993, North American parks accounted for 48 per cent of the worldwide attendance, Asian parks 33 per cent, European parks 14 per cent, and Central and South American parks four per cent (see Table 1).
The Walt Disney Company was the largest park chain in the world with three major theme parks in the United States. Time Warner’s Six Flags Corporation was the second largest with seven parks spread out in the United States. Paramount, Anheuser Busch and Cedar Fair were some of the other conglomerates who owned theme parks. In mid-1993, Paramount bought Canada’s Wonderland theme park originally developed by Taft Broadcasting Company in 1981. Despite the mature nature of the industry in the United States, a number of theme parks were investing heavily in upgrading their facilities, and extending the theme parks’ services.
In 1980, Alton Towers, a 60-year old park in North Staffordshire (England), comprised primarily of historic gardens, repositioned itself as a theme park by adding a roller coaster and some other attractions. The park was extremely successful within a very short span of time. The success of Alton Towers led to a number of new theme parks in the late 1980s and the early 1990s, including Blackpool Pleasure Beach (England) that featured the world’s tallest roller coaster. In France alone, three major theme parks emerged in the early 1990s: Walt Disney’s $3 billion Euro Disney, the $150 million Parc Asterix located northeast of Paris, and the $110 million Big Bang Schtroumpf (Smurfs) theme park just north of Metz. Six Flags Corporation and Anheuser-Busch both recently opened new theme parks in Spain coinciding with the 1992 Barcelona Olympics. Asia
Tokyo Disneyland was opened in 1983 by Walt Disney as a joint venture with the Oriental Land Company (OLC). The success of Tokyo Disneyland set off a wave of theme park developments in Asia. OLC and Disney had agreed to open a second theme park, “Tokyo Disney Sea” in 2001. Ocean Park in Hong Kong, started in 1977, was the largest water park in Asia with an annual attendance of 3.2 million.
Jaya Ancol Dreamland, located in North Jakarta, Indonesia, was one of the largest recreation complexes in south east Asia. Dreamland had a theme park (Dunia Fantasi), a waterpark complex, an oceanarium, a golf course, a beach and several hotels. China was a major growth market. Beijing Amusement park, started in 1981, reported that between 1990 and 1993 revenues increased over 2,000 per cent and earnings before interest and taxes were up 200 per cent. Over the next five years, six regional theme parks were to be developed with a total investment of over $100 million.
The theme park business required a large-scale initial investment, typically ranging from $50 million to $3 billion. Depending on the real-estate markets, the cost of the land value itself could be very high. Theme parks required over 50 acres of land for a full scale development, with some of the theme parks utilizing 10,000 to 30,000 acres. Since accessibility of the park location was a key success factor in the industry, theme park developers chose land sites in a central area which was relatively expensive.
Alternatively, they could choose a remote area at a low cost and develop the transportation network. In either case, the land development costs constituted nearly 50 per cent of the overall investment. The amusement machinery constituted 20 to 30 per cent of the total investment, and the working capital requirements took up the remaining 20 to 30 per cent of the investment. The amusement equipment required for the park was also expensive, most of it
going from $1 million to $50 million. Businesses which had an in-house land development expertise or equipment technology had better control of these costs. Many parks periodically added new attractions or renovated existing ones to draw repeat customers. The parks typically reinvested much of their revenue for expansion or upgrading purposes. The economies of scale and scope were significant in the industry. Increasingly, parks got larger and larger to generate more operating revenues. 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 (about 75 per cent) were for personnel.
Admission fees1constituted over 60 per cent of the total revenues of a theme park, while the rest came primarily from food, beverage, and merchandise sales. 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. Another centralized admission method was to sell ride/show tickets in sets or coupon books (i.e., five coupons for $5, but 12 coupons for $10). Both approaches to centralized ticket sales minimized the number of employees handling money throughout the park resulting in improved efficiency and control.
Walt Disney Company’s financial profile was generally used to assess the return 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. The return on equity for the Walt Disney Company was pegged at 17 to 25 per cent. One of the analysts remarked on the theme parks segment of Walt Disney:
Theme parks are going to become increasingly stable and annuitylike, with the ability to generate $700 to $750 million in cash flow a year.
There were signs of declining profitability in the U.S. operations, since the market was maturing and the competition was getting more intense. Tokyo Disneyland, the Japanese operation, was growing and profitable. However, EuroDisney, the European theme park, was a disaster for the company with huge losses since operations began in 1992. The company was expecting a break-even in 1995.
Admission fees varied from $5 to $25 depending on the location and reputation of the park.
MARKETING AND SOCIAL ISSUES
The traditional appeal of theme/amusement parks was to preteens, teens, and young adults. Changing demographics were causing most parks to think in terms of a broader market, particularly families, corporate groups, and even senior citizens. There were five major market segments for theme parks:
Local Families — people within a day’s drive who visited mostly on weekends. Most parks focused exclusively on this segment, which generally constituted 60 to 75 per cent of the attendance.
Children’s Groups — schools, churches, recreation agencies, scouts, and other groups who traveled in buses on summer weekdays.
The Evening Market — teens and young adults who came for entertainment, concerts, and romancing at night.
Corporate Groups — included consignment sales and group parties. Tourists — a substantial market for large theme parks in destination areas such as Florida.
Customer satisfaction was a critical issue in theme parks management. Successful park managers used extensive marketing research to understand their customers and also spent a lot of effort in promoting the park. To reach the diverse groups, parks emphasized increased beautification and the range of entertainment and food services offered. Theme park managers were working 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 page (telephone book) advertisements, family and group discounts, and direct mail were the most common promotional methods. Among large theme parks, television advertising was an excellent visual medium to capture the excitement. Some parks expended a major portion of their advertising budget for television promotion.
An issue for the theme parks industry was the seasonal and intermittent nature of the business. Theme parks’ attendance peaked in the spring/summer and in the school holidays. Even in the holiday season, bad weather could adversely affect the attendance. The seasonal fluctuations put a lot of strain on the theme parks’ management. During the peak season, the requirement for employees shot up; quite often the management had to find employees beyond the domestic territory and provide housing for out-of-town employees.
The sudden surge in demand often choked the service systems such as transportation, building management, etc. It was the availability of leisure time and a high discretionary income that drove the commercial recreation industry. Economic downturns had a severe impact on industry revenues. Also, consumers could substitute a visit to theme parks with other modes of entertainment. Consumers substituted products/services in order to try something new, different, cheaper, safer, better, or more convenient.
admission parks and beaches, camping trips, or even video-movies at home were competing options for leisure time.
Government regulations were quite strict because of the extensive land use, and the potential for serious accidents. Licensing requirements and methods of ascertaining operational expertise to ensure visitors’ safety varied from country to country. 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 power, gas and water. A typical period required for arranging government approval for a theme park could be as high as two to five years, depending on the country.
A related issue was insurance premiums. Given the likelihood of accidents in the amusement parks and the possibility of serious injury, 100 per cent insurance coverage was a must in the industry. Although safety records in the industry were very good, the insurance premiums were extremely high in some parts of the world, particularly in the United States. However, the large premiums often drove the small players in the industry out of business. Countries in Asia did not have this handicap.
The theme park industry had three classes of inputs: the building and construction services that provided landscaping and architectural support; the hardware providers that supplied amusement machinery; and the software providers that supplied management know-how.
The amusement machinery industry had grown over the years. Most of the large drives, such as the Hurricane or the Giant Wheel, were manufactured in Japan, Europe or the United States. 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. Most of these suppliers worked globally, and the machinery were custom designed and made to order to fit the particular market and environment conditions. There were a large number of suppliers for the smaller machines, and quite often, they could be manufactured domestically. Special simulators for amusement purposes using proprietary technology were being developed by technology-intensive companies such as Sega Japan and Simex Canada.
The park management expertise commonly referred to as the “software” in the industry was not easily available. Leading theme park companies, such as Walt
Disney Company, charged huge licensing fees which were over 10 per cent of the revenues. Also, they were very selective in choosing joint ventures in other countries. Disney went through an extensive market analysis and partner profile analysis for over three years in Europe before finalizing the venue in France with the joint venture partner. Mr. Yu, director-in-charge of the Farmland project, commented:
We wanted to go for a joint venture with Walt Disney Corporation. But they somehow were not interested in Korea. So we had to go it alone. It takes a long time for theme park managers to develop service delivery of world class quality.
Although Walt Disney offered a number of educational programs to train other managers in the “Disney Management” style, the know-how seemed to be too sophisticated for the competitors to emulate.
Virtual reality (VR) was increasingly becoming a highly lucrative mass-market entertainment phenomenon. A new entry that was due to open in July 1994 was Joypolis, a $70 million interactive theme park owned by Sega Enterprises, with projected revenues of $37 million per annum. Sega had plans to open 50 such parks in Japan, and was negotiating with Universal Studios, California, for its first U.S. installation of a VR theme park.
Yongin Farmland (Farmland), opened in 1976, was the first amusement park in Korea. It was managed by Joong-Ang Development Company, one of the wholly owned subsidiaries of Samsung with a mission to provide a better quality of life through healthy open-air leisure activities. In addition to the Farmland management, Joong-Ang was responsible for the building maintenance at all Samsung’s offices, as well as maintaining two golf courses. Farmland was located about an hour south of Seoul, and was owned by the Korean conglomerate, the Samsung Group (see Exhibit 1). The 3,700-acre attraction began as an agricultural center to demonstrate how mountainous land could be used productively for growing food products. Mr. Lee of Joong-Ang said,
At that time, we had trouble raising enough food for our country. We created a model farm of how to work with an abandoned mountain by building a pig farm and planting fruit orchards. We changed the land use gradually through the years as we added entertainment elements.
The Wild Safari was opened in 1980, and the Rose Festival, an impressive rose garden filled with 6,000 rose bushes of 160 different varieties arranged according
to various themes, opened in 1985. To provide for winter entertainment, the Sled Slope was opened in 1988. A drastic departure from the traditional theme parks was taken when Yongin Farmland opened a Motor-Park in late 1993.
The motor park operations incurred a loss in the first year of operations (see Table 2 for the profit and loss statement).
In November 1993, Her took over as the President and Chief Executive Officer of the Joong-Ang Development Company. Prior to his assignment to Joong-Ang, Her was the CEO of Cheju Shilla, a luxury hotel on Cheju Island in Korea. Her was credited with developing a world-class sea resort at Cheju Shilla which surpassed in customer service established hotel chains such as Hotel Hilton. Since taking over the reins of the company, Her had focused on improving the customer satisfaction level at Farmland, and had also been developing the plans for Farmland’s expansion.
One of the major challenges was to see how the expansion plans for Farmland would match with the corporate strengths of the Samsung group. Her was aware that earlier attempts by previous management to expand Farmland had not met with the approval of the group’s Chairman. There were concerns in many quarters that the theme park industry did not fit well with the “high-tech” and the “global” image of the Samsung Group, and also that the profitability might be very low.
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. Nevertheless, some of the managers did not see profitable growth opportunity in the theme park industry. One of the managers in Joong-Ang said:
Theme parks may be a growing industry worldwide. That does not mean that it should be so in Korea. In Korea, we work five and a half days a week and we have annual vacation of only four to five days a year. Where do Korean people have time for theme parks? FARMLAND CUSTOMERS
Traditionally, Farmland focused on the local customers. Most of its customers came from surrounding areas within two hours’ drive (see Table 3). The economic growth in Korea had been a major driving force in industry growth (see Exhibit 2). Despite the early stage of growth in the Korean leisure industry, there were six theme parks in the Seoul area including Farmland.
Most notable among these were Lotte World and Seoul Land. Lotte World, started in 1989, prided itself on having the world’s largest indoor theme park with adjoining hotel, department store, shopping mall, folk village and sports centre. Commenting on Lotte’s strategy, one of the managers at Lotte World said:
We focus on a segment different from Farmland. Since we are
located downtown, we cater to a clientele who want to drop by for a shorter period. Typically, we get office people who want to relax after a hard day’s work or couples who would like to spend some time in a romantic environment.
Seoul Land, located near Seoul at Kyungkido, was also a key competitor to Farmland. With attendance at 3.37 million, Seoul Land ranked 23rd in the “Top 50 theme parks worldwide.” Mr. Woon, one of the managers at Seoul Land, remarked:
The park has a good reputation for quality special events and the people enjoy coming to the park because of its fresh air, beautiful scenery, and easy access.
Despite the competition from other parks, Farmland had the highest growth rate within the Korean industry (Table 4). The seasonal nature of the theme park industry affected all the competitors, not necessarily in the same pattern (Table 5).
Farmland was also going through a major change in its pricing structure. The pricing strategy in place (Table 6) was a combination of “pay-as-you-go” and “pay-one-price” system. Users had the option of paying the admission fees and buying separate tickets for rides (pay-as-you-go), that were available as coupons (Big 5 for five rides). Membership in the park was available for a price, which provided free admission for a year. The other option was to buy a “passport” (termed as “pay-one-price”) that provided admission as well as unlimited rides for one full day. The passport users were estimated at 17.4 per cent of the attendance in 1993, and the membership holders were estimated at 75 per cent. Farmland wanted to switch gradually to the pay-one-price scheme, which was the most common pricing scheme in the leading markets.
The prices across the major competitors were comparable. In 1993, average admissions and ride fee per person was 6,667 Won in Farmland, 7,279 Won in Lotte World, and 6,494 Won in Seoul Land. Theme parks also monitored the amount a visitor spent on food, beverages, and souvenirs. In 1993, average percapita expenditure on food and beverage in the three parks was 2,874 Won in Farmland, 2,017 Won in Lotte World and 1,804 Won in Seoul Land and merchandise sales per capita were 996, 1,319, and 722 Won, respectively.
While there was some indication that the Samsung Group would be willing to consider a proposal for expansion of the Farmland, Her had to contend with a number of operational issues at Farmland. Based on discussions with a number of managers and customers, Her had some idea of the various issues involved in the operation of Farmland.
One major issue was accessibility to the park. Yongin was 60 kilometres south of Seoul, and during peak hours, it took as long as two hours to drive from Seoul to Farmland due to traffic jams. One resident who lived very close to the Yongin area said:
Actually, it should take only 15 minutes to drive from my home to Farmland. But the traffic jam is so intense that if I go to Farmland, it may take almost an hour of crawling in the traffic. That’s one main reason why I have not visited it so far.
One of the managers in the marketing group commented on the critical nature of this problem:
In Korea, we work five and a half days a week. Most of the time on the working days the travel time is long. All the house chores have to be done only on the weekends. Given this fact, it is only to be expected that Korean customers would not be so keen to travel on a Sunday or on a holiday if the traffic is heavy.
However, many managers in Joong-Ang believed that the accessibility problem was only a temporary issue. Mr. Yu, Director of Personnel at Joong-Ang, commented:
Travel difficulties are part of our life in Korea, given the small land and the large number of people. The government has plans to bring the subway up to Yongin, in which case Farmland would have a subway terminal, which will provide a lot of convenience to our people.
This was echoed by one of the visitors to Farmland, who commented: I hate sitting inside my house all day. I have to get out somewhere. Seoul is too crowded and I would like to go to some place to breathe some clean air. Beaches are closed most of the season, and
if I want to go for some mountains or Pusan, it is too far away. So, I don’t mind driving down to Yongin to spend a relaxed day. I will skip the rush hour by leaving early from the park.
Another related issue was parking. Farmland had ample parking space for about 8,000 cars at one time around the four sides of the park. One of the managers who conducted an extensive analysis of the parking space said:
What we have now is more or less enough for the time being. We have enough space for about 8,000 cars and at four people per car we can accommodate about 32,000 people. If we assume the lot turning over at 1.7 times a day (at an average stay of six to eight hours), we can handle a peak attendance of 52,000. But the real problem is the seasonality. On peak days, we may get more visitors and quite often people may spend more time. If we are going to expand, this will be a major bottleneck.
Part of the expansion plan included augmenting the parking spaces and also providing a “Park and Ride” scheme for visitors so that they could travel comfortably from the various car parks to the entrance.
Expanding Farmland meant taking over more of the land mass available in the Yongin valley. A farmer living in the Yongin valley, who was vehemently opposed to the expansion ideas, said:
They (Samsung) just want to expand their business. But they don’t realize that one of the problems with cutting down the trees and leveling the ground will cause potential flooding in the surrounding region. This will damage all our crops. How will they compensate us?
It was also a challenge to introduce a dynamic environment within the Farmland organization. In order to succeed in the industry, Farmland had to go through a major reorientation in its organizational style. Farmland had initiated customer satisfaction surveys recently and it was brought to the attention of the management that the customer satisfaction levels were lagging behind the key competitor, Lotte World. As one of the marketing managers noted:
Repeat business is very important to our survival. If we don’t satisfy our customers, they won’t come back and we won’t have any business left. But, it is not in our Korean nature to smile at strangers. We are very serious people. So it becomes all the more difficult to get the type of service you can see at Disneyland. Mr. Yu, who had pioneered a number of changes within the organization, recalled one event which demonstrated the type of organizational inertia the management had to deal with:
Previously we had the head office at Seoul and we were managing the Farmland by ‘remote control.’ We were faxing information and directives up and down. But I somehow did not see that this would be the best way to work. I insisted that the head office had to be located where our products are and only after much persuasion could we move to this place.
Among other things, management was also considering a change in the recruitment process. Traditionally, Farmland had gone after the “academically best” graduates and students, which was the standard practice at Samsung. The management felt that they needed more service oriented people. The management wanted to recruit more female workers, the level of which at that time was below 25 per cent, but anticipated problems since most Korean women stopped working after marriage. Mr. Yu said:
I think times are changing. For that matter, even if we have a high turnover, it may be good for us since fresh blood always brings in fresh ideas and we would be able to preserve some dynamism in our organization.
THE MASTER PLAN
Based on a detailed survey (Table 8) and tentative analysis, the management had put together a master plan to invest about $300 million in revamping Farmland. There were also suggestions of changing the name to provide a better image of the company. A master plan, for a phased investment of about $300 million dollars over the next two years, was being developed. Everland, Green Country, and Nature Land were some of the names proposed for the new “mountain resort.” Included in the master plan were:
A waterpark to be built adjacent to the existing theme park, at an estimated cost of US$140 million, with a Caribbean theme.
A Global Fair, a fun-fair indicative of the major countries in the world, at an estimated cost of $85 million.
Expansion of existing zoo, and parks including a night time laser show and a fable fantasy garden at an estimated cost of $50 million.
The funding would come mainly from the parent, Samsung Group, and also through corporate sponsorship of the other companies within the Samsung Group. The master plan also indicated that if the first phase was successful, a second phase of developing a resort town in Yongin, with luxury hotels, golf courses, and resort accommodations would occur. (Exact budget for the second phase was not available at that stage.) A number of managers within the company who were closely involved in developing the master plan felt strongly that the theme park expansion was not only a priority but also would be a profitable venture. The General Manager of the planning group commented:
What we want to create is a destination resort town and a residential
community where people can come, relax and enjoy themselves in a low-stress environment. Samsung employs more than 180,000 people here in Korea. This will give them a place to come and be proud of. There will be plenty here for all members of the family as they grow.
We feel it is time to change from a farm-oriented name to a name which represents our new mission, which is to create a zeal for long-lasting life that is combined with the harmony of nature. If this plan is approved, we will become the prototype destination resort town in the entire world. We have visited them all, and when we’re finished, there won’t be any better!
Her wanted a comprehensive analysis of the theme park industry to ascertain the profitability of the industry. He wanted to present to the chairman of the Samsung Group a clear rationale why Samsung should invest in this industry.
The Richard Ivey School of Business gratefully acknowledges the generous support of The Richard and Jean Ivey Fund in the development of this case as part of the RICHARD AND JEAN IVEY FUND ASIAN CASE SERIES.
TOP 50 AMUSEMENT/THEME PARKS WORLDWIDE (1994)
Park & Location
Tokyo (Japan) DISNEYLAND
MAGIC KINGDOM of Walt Disney World, Florida, United States
DISNEYLAND, Anaheim, California, United States
JAYA ANCOL DREAMLAND, Jakarta, Indonesia
EPCOT at Walt Disney World, Florida, United States
EURO DISNEYLAND, Morne La Voltee, France
YOKOHAMA (Japan) HAKKEIJIMA SEA PARADISE, Japan
DISNEY-MGM STUDIOS, Walt Disney World, Florida, United States UNIVERSAL STUDIOS FLORIDA, Orlando, Florida, United States
BLACKPOOL (England) PLEASURE BEACH, England
YONGIN FARMLAND, Kyonggi-Do, South Korea
UNIVERSAL STUDIOS HOLLYWOOD, California, United States
SEA WORLD OF FLORIDA, Florida, United States
LOTTE WORLD, Seoul, South Korea
CHAPULTEPEC, Mexico City, Mexico
HUIS TEN BOSCH, Sosebo, Japan
TOSHIMAEN AMUSEMENT PARK, Tokyo, Japan
KNOTT’S BERRY FARM, Fuona Park, California, United States
SEA WORLD OF CALIFORNIA, San Diego, California, United States BUSCH GARDENS, Tampa, Florida, United States
CEDAR POINT, Sandusky, Ohio, United States
SIX FLAGS MAGIC MOUNTAIN, Valencia, Calif, United States
SEOUL LAND, Seoul, South Korea
PARAMOUNT’S KING’S ISLAND, Ohio, United States
OCEAN PARK, Hong Kong
SIX FLAGS GREAT ADVENTURE, Jackson, New Jersey, United States SANTA CRUZ BEACH BOARDWALK, California, United States
NAGASHIMA SPA LAND, Kuwona, Japan
TIVOLI GARDENS, Copenhagen, Denmark
SIX FLAGS OVER TEXAS, Arlington, Texas, United States
ALTON TOWERS, North Staffordshire, United Kingdom
SIX FLAGS GREAT AMERICA, Gumee, Illinois, United States
PARAMOUNT CANADA’S WONDERLAND, Maple, Canada
TAKARAZUKA (Japan) FAMILY LAND
SIX FLAGS OVER GEORGIA, Atlanta, United States
DE EFTELING, The Netherlands
PLAYCENTER, São Paulo, Brazil
DUNIA FUNTASI, Jakarta, Indonesia
PARAMOUNT’S GREAT AMERICA, California, United States
KNOTT’S CAMP SNOOPY, Bloomington, Minnesota, United States EUROPA PARK, Germany
KORAKUEN, Tokyo, Japan
PARAMOUNT’S KINGS DOMINION, Virginia, United States
SIX FLAGS ASTROWORLD, Houston, Texas, United States
PLAYCENTER, São Paulo, Brazil
BUSCH GARDENS THE OLD COUNTRY, Virginia, United States
DAKKEN, Klampenborg, Denmark
LISEBERG, Gothenburg, Sweden
TOEI UZUMASA EIGAMURA, Kyoto, Japan
BEIJING (China) AMUSEMENT PARK
Source: Amusement Business
Attendance (in millions)
PROFIT AND LOSS STATEMENT FOR YONGIN FARMLAND
(millions Korean Won)
Sales and Administration
Less Interest Expense
Profit/(Loss) after Interest
TARGET SEGMENTS — ATTENDANCE AND POPULATION DATA
Primary resident market
Secondary resident market
Tertiary resident market
Per cent of Total
the market type
in 2000 AD
The primary resident market is within one hour drive from Farmland, typically in a radius of up to 60 miles. The secondary market is within one to two hours, and the tertiary market is outside the two hour drive limit but within driving distance.
Percentage of total attendance is based on three repeat surveys of visitors to Farmland in early 1994. The estimated capture rate is based on statistical projections from the survey respondents. The analysis does not include overseas visitors, which constituted 25 per cent of the total attendance in 1993. Visitors were mostly from other Asian countries, such as Japan and Singapore.
COMPARATIVE ATTENDANCE IN SEOUL AREA AMUSEMENT PARKS
(Figures in thousands)
Children’s Grand Park
Seoul Grand Park
COMPARABLE MONTHLY ATTENDANCE: SEOUL AREA THEME PARKS (1993) (Figures in thousands)
YONGIN FARMLAND PRICING POLICY
(Figures in Korean Won)
Ski Sled Passport
Snow Sled Common
Major Rides (7)
Medium Rides (6)
Secondary Rides (5)
Tertiary Rides (5)
Kiddy Rides (3)
SAMSUNG GROUP FINANCIAL HIGHLIGHTS
(in billions Korean Won)
Return on equity
Exchange Rates: Korean Won/US$: 1992: 773
LEISURE PATTERNS OF SOUTH KOREAN CUSTOMERS (1994)
Question: Which is your most favoured spot for a one day holiday trip? Selected Choice
Resort/Spa Fishing Historic place Other
Sales and marketing
Question: Normally, when you go to theme parks, how many others accompany you? Selected choice
Question: How many hours do you spend in a theme park?
Question: How much do you spend at the park in one day excluding admission (in thousands of won)? Selected choice
Question: How do you normally come to the theme park?
Source: Korea Research Institute.
The late Chairman Lee Byung-Chul founded the Samsung Group in 1938. Though started as a trading firm to supply rice and agricultural commodities to neighboring countries, Samsung moved quickly into import substitution manufacturing activities such as sugar refining and textiles. In the 1960s Samsung moved into electronics by establishing Samsung Electronics that developed VCRs, integrated circuits for televisions and telephone exchanges, electron guns for cathode ray tubes (CRTs), and cameras. The 1980s marked a major expansion for Samsung with its evolution into high-tech industry, such as semi-conductors, telecommunications, computers, factory automation systems, and aerospace. Samsung had accomplished remarkable growth (see Table 7).
The 1994 revenues were expected to be about US$70 billion. Samsung, with 206,000 employees operating in 65 countries, had recently reorganized the group into four core business subgroups, Electronics, Machinery, Chemicals, and Finance & Insurance, and one subgroup of independent affiliates. While the core groups represented specific technological area, the independent affiliates subgroup represented a diverse mosaic that included the trading activities of the company, Korea’s highest-rated hotel, Korea’s leading newspaper publisher, state-of-the-art medical and research institutes, and cultural and welfare foundations. The Joong-Ang Development Co. Ltd., the developer of the Yongin Farmland came under this subgroup.
In 1987, Lee Kun-Hee, son of the late Lee Byung-Chul, was appointed the chairman of the Samsung group. Lee accelerated the pace of growth at Samsung by pursuing aggressively hightechnology areas and pushed the group to change from a quantity-oriented company to a qualityoriented company. Samsung’s goal was to become one of the world’s top ten corporations by the year 2000 by achieving annual sales of US$200 billion, and by producing products and services of the highest quality. Service quality and customer satisfaction become key phrases in all Samsung’s activities and all the companies in the group were taking active part in the “quality revolution” initiated by Lee.
KOREA IN THE 1990s
Korea, with its population of 44 million people, had seen tremendous economic growth over the 1980s and 1990s, despite the political difficulties. Over 10 million Koreans lived in Seoul, and along with the other five metropolitan cities, the urbanization rate was at 74.4 per cent. Korean economic growth has often been dubbed as an “economic miracle.” The per capita GNP had risen from US$4,210 in 1989 to US$7,513 in 1993. The growth rate for the second half of the 1990s was expected to be eight to nine per cent. The growth of the Korean economy was accompanied by an increasing prominence of large business groups, commonly known as “chaebol” — privately held industrial conglomerates involved in a wide range of businesses. Samsung, Hyundai, Sunkyong, Daewoo, Lucky-Goldstar, and Ssangyong were some of the better known chaebols.
Korean weather was a temperate climate since it was in the transitional zone between continental climate and subtropical maritime climate. The winter time stretched from December to midMarch when intense, cold dry spells alternated with spells of milder weather. Temperatures dropped to -20 degrees Celsius in some places. Heavy snow was expected in the mountains. Summer, stretching from June to early September, was hot and humid with temperatures rising to 35 degrees Celsius with heavy showers in June and July. Mid-July to mid-August was the peak of Korean vacation season. Many festivals came together in October. Despite the pressing political problems, the country was successful in attracting international events to the country — the most prominent being the Olympic games in Seoul in 1988. Tourist growth had been steady and approximately one third of the tourists in Seoul used a travel package from some travel agencies.