Bargaining Power of Supplier

Bargaining Power of Supplier

4.4 Bargaining Power of Supplier

“Suppliers are those who supply the organization with what it needs to produce the

product or service. As well as fuel, raw materials and equipment, this can include

labor and sources of finance. Suppliers can exert bargaining power on participants in

an industry by raising prices or reducing the quality of purchased goods and services.

Powerful suppliers can thereby squeeze profitability out of an industry unable to

recover cost increases in its own prices” (Michael, 1980).

In the case of Disney Park and Resorts we think the Bargaining Power of

Supplier is Medium for the following reasons:

● Limited suppliers

Not many companies are in the industry of producing, building and maintaining

amusement rides. The few major of them are Bollinger & Mabillard, Intamin,

Vekoma, Arrow, Premier Rides, The Gravity Group, and S & S Power. Their

products could be found in most of the theme parks throughout the world. Thus,



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those companies have large flexibility to bargain with Disney.

● Switching costs

The unique products and service is not only unique but also popular among

Disney’s customers. For the industry of producing toys or character related

products, they had lower bargaining power. Disney has the pattern right on it,

so it can ask any company to produce merchandise. However, in amusement

rides industry, Disney can only buy specific rides from limited company. If

Disney wants to change the supplier, the switching cost would be high.

● Supplier sustainability

The company size may be an advantage to Disney. Suppliers do not control the

bargaining power strongly because Disney they would want to keep their

business. Suppliers know that Disney is a stable company that could provide

business for many years to come.

4.5 Bargaining Power of Buyers

In the parking and entertainment industry, there are four big bosses that are

Disney, Six Flags, Seawood and Universal. While Disney is the leader in this

Oligopoly service industry, buyers’ bargaining power is much lower.

The buyers group is non concentrated: Disney park and resort has three competitors

in their amusement park operate. For the 7 billions population in the world, they have

no many choices for this kind of entertainment and the fact that, Disney Park and

resort still stand steadily at first rate.



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The buyer group demand is higher suppliers


Figure 5. Disneyland in Anaheim

During special events, it’s common to see thousands of people on Main Street, U.S.A.

at Disneyland in Anaheim. Here, they celebrate the park’s 60th anniversary with a

24-hour party that began at 6 a.m.

There are fun facts about Disneyland:

● 0-25 minutes: 0-25 minutes is the average waiting time in line in low attendance

day in Disneyland. But this is rarely happened, and you might have to wait for an

hour + often.

● Forecast rain: It might be larger attendance days before rain forecasted days.

● Busy days: Week days are the least busy days. Saturdays are busier than Sundays.

Long Weekends can be 3 times busier.

● Discount ticket: Disney rarely offers discounts on single ticket. Because Walt

Disney focuses on middle class, its prices are reasonable. The price changes are

based on season which is high when the market is good and reduced during low

season. For Knott’s and Six Flags, their tickets are lower than Walt Disney (in

range of $40-50 ). However, Six Flag has discounts frequently (bringing Coke



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cans to get 50% off), and Knott’s ticket price promotion can be found at

supermarkets. Unlike some of its competitors, Disney not often give discounts on

single ticket purchases. They said that when the lower price, the quality is also


● Raising pass price and parking price: Some people speculated that Walt Disney

ticket price raising is needed way to reduce that large crowds during weekends

and hot season the recent ticket increases are a much-needed way to reduce the

large crowds that occurs at Disneyland during some weekends and high-demand


Parking prices at the Disneyland Resort also raised. New prices for annual

passholders increases from $169 to $199. Theme park parking raised $1, to $18.

Downtown Disney now only offer two hours of free parking, the hourly parking price

now is doubled from $6.

Figure 6. Queue time for major attractions and visitors

This graph is for US Disney Resorts, which include Disneyland, Disney

California Adventure & Walt Disney World, Florida (WDW includes: Magic Kingdom,

EPCOT, Disney Hollywood Studios & Animal Kingdom) and is very generalised. The



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Tokyo Disneyland, Disneyland Paris and Disneyland Hong Kong theme park

attendance patterns will differ due to holidays that don’t match with the USA.

The products is differentiated: Disney park and resort has their own

spaciality and so are competitors. The feeling and experience is not the same for every

kind of theme park so may be visitor will consider before making decision.

Many switching costs on the part of the buyer: althought there is different

among substitues but switching cost is not very high, because for the entertainment

service, different experience is necessary.


The amusement park industry is a mature and profitable market in western

countries. Most of Disney’s established competitors are in North America. The

company also faces competition in China where they recently opened a new park in

Shanghai. The threat of substitutes to amusement parks is relatively high however

Disney has a strong brand and offers a unique experience making the visit of a park

still attractive. Disney parks are relatively free of potential entrants as opening a park

requires a huge capital. The bargaining power of suppliers is medium because there

are only a handful of attraction makers and switching may cost a lot of money; once

Disney makes a company build an attraction they have to stick with them several

years for the maintenance. The visitors have very low bargaining power as the entry

ticket prices are fixed and cannot be negotiated. Finally, Disney Park and Resorts has

many strengths, its future success will be determined by its ability to innovate and

keep offering a unique experience to its visitors.




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Chapter 5 Strategic Group Analysis

In this strategic group analysis, first we discussed and found some popular theme

or sensation parks and resorts in the world, which is Disney, Six Flag, Lego land,

Universal, Puy du fou, Europa Park, Tivoli, Wanda city and HK Marine Park. And we

chose the two variable is Numbers of Location and Sensation or/and Theme Park.

Table 2. Numbers of Location and Sensation or/and Theme Park

Numbers of location Sensation/Both/Theme

Disney 6 Both

Six Flag 13 Sensation

Lego land 8 Both-theme

Universal 4 Both

Puy du fou 1 Theme

Europa Park 1 Sensation

Tivoli 1 Both-Theme

Wanda city 2 Sensation

HK Marine Park 1 Theme




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