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Oriental Land Co., Ltd. -Tokyo Disney Resort

Casadesus-Masanell, Ramon; Kanno, Akiko

Product #:720460
Supplier:Harvard Business School
Discipline:Strategy
Setting:Asia;Japan;United States, 2018
Details:Case (PDF) • 38 pages • 2020-04-23 (Rev: 2020-06-03)

Subjects:

BrandingBusiness growthBusiness historyContractsCorporate strategyEmployee retentionGrowth strategyOrganizational culturePartnershipsPricing strategyStrategyBrand managementBusiness and societyBusiness law and ethicsTalent managementBusiness managementBusiness structuresSales and marketingBusiness expansionStrategy

Industries:

Food and beverage sector

Geography:

AsiaJapanUnited StatesNorth America
Your Price:$11.64

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This case describes the history of Oriental Land Co. Ltd.'s (OLC's) Tokyo Disney Resort (TDR), its operations, the extent of vertical integration, and the challenges it faced in 2018 as OLC's chairman and CEO, Toshio Kagami, contemplated how best to deal with congestion in the park. As of 2018, Tokyo Disneyland and Tokyo DisneySea, the two parks that comprised TDR, were the only Disney parks not owned and operated by Disney. Instead, OLC paid royalties to Disney based on the parks' revenue (in yen). The parks were immensely popular, but OLC had begun to see lower customer satisfaction ratings in recent years as high attendance led to long wait times. Although it continuously added new attractions to TDR, the company now faced a dilemma regarding how to expand further, given the limited land available around the parks. Kagami also considered whether to focus on OLC's other businesses, such as hotels, and even its nascent agriculture business, which it used to grow food served in the two parks.

Learning Objectives

This case illustrates how a well-designed contractual relationship with competent and motivated partners can result in levels of value creation similar to what can be attained through vertical integration. Specifically, through a contractual relationship, Oriental Land Co., Ltd.-an independent firm-operated the Tokyo Disney Resort in a way that upheld the Disney brand, providing an experience comparable to that of Disney's company-operated resorts in the US. In addition to the theme park business, the case describes OLC's attempt and subsequent failure to operate the Disney Stores business in Japan. This sets up a nice contrast: why did contracts do a good job governing a highly experiential and complex business such as theme park operations, but fail to do so appropriately for the simpler business of operating a chain of retail stores? Finally, the case asks students to put themselves in the shoes of OLC's management and consider how OLC might achieve future growth in light of the limited physical space available to it, given that its business model was built on continuously adding new attractions to maintain high customer WTP.
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Case Study: Oriental Land Co., Ltd. -Tokyo Disney Resort (English version) | Ivey Publishing