Tokyo Disney Land
For the exclusive use of H. Thomas, 2015.
HKU568
MITSURU MISAWA
TOKYO DISNEYLAND AND THE DISNEYSEA PARK:
CORPORATE GOVERNANCE AND DIFFERENCES IN
CAPITAL BUDGETING CONCEPTS AND METHODS
BETWEEN AMERICAN AND JAPANESE COMPANIES
In the spring of 1997, it had been 14 years since Tokyo Disneyland opened its doors for business. Company executives at Japanese Oriental Land Corp. (OL), known to many as the company that brought Disneyland to Japan [see Exhibit 1] were enjoying the success of their well-established company, and began looking at new business endeavours that would allow for further growth and enhance OL’s earning capability.
While there was an undoubted need for growth and expansion, the timing and approach of any new endeavour would be critical. Management knew that most of OL’s customers were repeat visitors. However, while customers were expected to return two or three times, it was not clear if they would come back for a fourth visit. There was concern that customers would eventually get bored with the existing attractions and facilities, resulting in a severe shortage of customers. The company forecasted that the number of visitors in 1998 would be 4% lower than the year before.
Some years before, OL had received an inquiry from their licenser, the Walt Disney Company
(WD), to consider the idea of constructing a new entertainment park, the DisneySea Park
Project. The conditions of this new joint project would be similar to the conditions of the original—OL would pay WD a licensing fee for the continuous use of the name “Disney”, and in return, WD would provide OL with valuable technical advice and management support for the new project.
Prof. Mitsuru Misawa prepared this case for class discussion. Dr. Misawa is a professor of finance and director of the Center for
Japanese Global Investment and Finance at the University of Hawaii at Manoa. This case is not intended to show effective or ineffective handling of decision or business processes. This case is
HKU568
MITSURU MISAWA
TOKYO DISNEYLAND AND THE DISNEYSEA PARK:
CORPORATE GOVERNANCE AND DIFFERENCES IN
CAPITAL BUDGETING CONCEPTS AND METHODS
BETWEEN AMERICAN AND JAPANESE COMPANIES
In the spring of 1997, it had been 14 years since Tokyo Disneyland opened its doors for business. Company executives at Japanese Oriental Land Corp. (OL), known to many as the company that brought Disneyland to Japan [see Exhibit 1] were enjoying the success of their well-established company, and began looking at new business endeavours that would allow for further growth and enhance OL’s earning capability.
While there was an undoubted need for growth and expansion, the timing and approach of any new endeavour would be critical. Management knew that most of OL’s customers were repeat visitors. However, while customers were expected to return two or three times, it was not clear if they would come back for a fourth visit. There was concern that customers would eventually get bored with the existing attractions and facilities, resulting in a severe shortage of customers. The company forecasted that the number of visitors in 1998 would be 4% lower than the year before.
Some years before, OL had received an inquiry from their licenser, the Walt Disney Company
(WD), to consider the idea of constructing a new entertainment park, the DisneySea Park
Project. The conditions of this new joint project would be similar to the conditions of the original—OL would pay WD a licensing fee for the continuous use of the name “Disney”, and in return, WD would provide OL with valuable technical advice and management support for the new project.
Prof. Mitsuru Misawa prepared this case for class discussion. Dr. Misawa is a professor of finance and director of the Center for
Japanese Global Investment and Finance at the University of Hawaii at Manoa. This case is not intended to show effective or ineffective handling of decision or business processes. This case is