WALT DISNEY WORLD, ORLANDO, FLORIDA: AN OPERATIONS

STRATEGY CASE
Walt Disney World, Orlando, provides a good example of how operations strategy and
marketing strategy can combine for overall success. In 1955, Walt Disney opened
Disneyland in Anaheim, California. The park was extremely successful, not only at
serving the people of Southern California, but also as a national tourist attraction. All
around Disneyland hotels, motels, restaurants and souvenir stands opened. Although
Disneyland earned a good profit from ticket sales and concessions, a large part of the
tourists spending for hotels, meals, and souvenirs went to these other companies. Walt
Disney learned from this when he decided to open another theme park, Walt Disney
World.
Disney began planning Walt Disney World (WDW) in the mid-1960’s and it
opened in Florida in 1971. WDW was to be a substantially enhanced version of
Disneyland that would retain the successful features of Disneyland but provide a
complete family vacation in which children and adults could be entertained and educated
in a safe, clean environment. This product definition was an order of magnitude larger
than that of Disneyland: the Magic Kingdom theme park would be the initial focus to
attract customers, but it would be only a small piece of the overall product and
operations. Walt Disney was intent on making sure that Walt Disney, Inc., rather than
others provided and benefited from all of the auxiliary activities of the theme park.
Marketing Strategy
The marketing strategy for WDW was simple. It would be a total family vacation
experience, with activities that adults and children could enjoy both together and
separately. The primary order-winning dimensions were to be product uniqueness, variety,
and quality, but not price. There would be a wide variety of activities such as the Magic
Kingdom, golf, boating, and water sports. There would also be educational activities such
as EPCOT (the Experimental Prototype Community of Tomorrow) and wildlife preserves.
This variety would allow visitors to customize their vacations. An important part of the
experience was that visitors could totally eliminate the normal problems of family
vacations (other than the cost) by staying on the WDW grounds at a Disney hotel. Visitors
could go from the Orlando airport to WDW and never leave Walt Disney World until they
left for home. To make the product complete, every aspect of the visitors’experiences
would be pleasant, quality assurance was paramount.
Operations Strategy
The product that WDW is selling is its facilities and their operation. The magnitude and
complexity of the system made strategic planning essential and Walt Disney, Inc., has
done it well
Facility Location
The crucial component of the strategy for WDW was selecting a location. Several factors
were important.
1. A large site was necessary so that WDW could grow and contain all the support
activities and facilities needed.
2. WDW had to be in a warm climate where it could be used year round.
3. It should not compete with Disneyland.
 4. Walt Disney, Inc., had to have compelete legal independence in terms of development
so that it would not continually have to seek zoning or construction approvals.
5. The park had to be in an area experiencing population growth and had to be attractive
to both U.S. and international visitors.
These factors combined to make the central part of Florida ideal. Disney was able to
purchase a large undeveloped area near Orlando and obtain almost complete legal
independence in terms of development. By being on the East Coast, the location did not
compete with Disneyland. It was also in one of the fastest-growing areas of the country and
was readily accessible to foreign tourists from Central and South America and Europe. Its
proximity to baseball training camps, established beach resorts and the Cape Canaveral Space
Center enhanced its desirability for visitors who wanted to combine their visits to these
attractions with a day or two at WDW.
Capacity
Walt Disney, Inc., bought a much larger site than it thought it would ever use to give it
maximim development flexibility. It has followed a plan of steady capacity expansion over
time, ignoring short-term fluctuations in tourism. It has been willing to turn away customers
during peak periods rather than accelerate expansion in the short term. There are many
different components of capacity within WDW complex. Disney has added major attractions
approximately every 10 years, after the opening of the Magic Kingdom in 1971. EPCOT was
opened in 1982, The Disney-MGM Studios was opened in 1990, and the new Disney’s Wild
Animal Kingdom is scheduled to open in 1998. Within each of these major attractions, one or
two new rides or exhibits are added or enhanced each year. Hotel capacity has been added at a
steady rate in line with long-term demand and in a way that broadens the customer base. Hotel
facilities range from high-priced luxury facilities to lower-price cabins and camping areas.
Some hotels are designed for families with children and others for adults. Although Disney
has added capacity at a steady pace, it has lagged the additions so as not to incur high
facilities costs until the demand could support it; consequently, Disney hotels have occupancy
rates above 90 % much of the year.
Facility Design and Layout
The WDW complex and the attractions and facilities within it are spatially designed to
provide visitor convenience while encouraging visitors to spend money, Distinct activities are
separated so that adults can isolate themselves from children if they wish, Yet all the facilities
are linked together by monorail, boats, buses or walking paths so that people can travel
between facilities quickly. In the family hotels, electronic game rooms are on the main floor,
with fast-food restaurants nearby, so that children can be easily entertained with minimum
parental supervision (as long as the kids have a fist full of money). In the Magic Kingdom,
EPCOT and MGM Studios, restaurants are well distributed so that any desire for food or
drink is quickly satisfied. Golf courses, wild-life areas (Discovery Island) and lakes perform
triple duty as sources of entartainment, sight and sound buffers between activities and
aesthetic scenery for guests.
Process and Technology
Disney has always been a company that desired self-reliance. As such, it has established and
maintained a strong technological competence in those areas considered essential to its
operations: product development, equipment design and maintenance, and industrial
engineering. Walt Disney Imagineering designs and supervises the development and
construction of all rides and exhibits. This intimate involvement provides the technical
foundation for it to maintain them well and to make improvements over time. The industrial
engineering capability of Walt Disney Inc., is as good as that of any service company in the
world. The largest operational problems facing amusement park operators are moving people
through the system efficiently and minimizing aggravation from waiting in line. Disney is a
leader in designing and managing waiting lines, as well as maximizing the number of people
using rides and exhibits without creating a feeling of being hurried.
Personnel and Quality
Most companies claim that their greatest resource is their personnel; unfortunately not all of
them act on their claim. At Disney, personnel are the heart of operations. All the attractions in
the world will not make for a pleasant vacation experience if they are operated poorly and the
personnel are discourteous and unfriendly. WDW needs a wide variety of people for its
operations, from engineers and artists to nurses, cooks, ride operators and performers. The
guiding theme of its personnel strategy is to hire the most talented people possible, train them
well, and indoctrinate them, with the understanding that each of them is WDW. Employees
not only must be competent in their jobs, they must be friendly and helpful. WDW does not
compete heavily on price; those who visit WDW are usually willing to pay a substantial
premium for quality, and it can only be delivered by competent, trained and friendly
personnel
One dimension of quality that Disney stresses at all of its attractions is safe, clean
surroundings. People are working constantly to make sure there is no litter on the ground and
that bathrooms are clean. Unruly behavior is not tolerated at all; employees are in instant
contact with security workers who ensure that no disturbances occur.
Information
Coordinating all the different aspects of WDW is a complicated undertaking. An integral part
of the overall strategy is an information network that keeps all the players informed. For
example, within the major attractions, most employees have access to radios or phones so that
problems (machine breakdown, excessive lines requiring more workers, a sick visitor) can be
reported immediately and assistance provided. Hotels and restaurants are electronically
connected so that guests can make reservations for meals or nightclub shows and arrange for
airline tickets and child care. Providing helpful information to customers is a distinctive and
effective aspect of WDW’s information strategy. At the Magic Kingdom, most rides have
signs that indicate the expected waiting time to get on the ride so that parents can plan their
activities, and a special TV channel provides information about WDW attractions on hotel
guests’ television sets.
Each of these strategic features- location, capacity, layout, technology, personnel, and
information- enhances the quality of the product and promote sales. Strength in one
dimension enhances the strength in other dimensions, just as a deficiency in one area could
weaken another.
 SOUTHWEST AIRLINES
Southwest Airlines has been a consistent moneymaker while other U.S. airlines have lost billions.
How?
Southwest Airlines Company has done this by fulfilling a need for low-cost and short-hop
flights. It offers low-cost, point-to-point service between midsize cities and secondary airports in large
cities. Its operations strategy has included 1) use of secondary airports and terminals, 2) first-come,
first-served seating, 3) few fare options, 4) smaller crews flying more hours, 5) snacks-only or no meal
flights and 6) no downtown ticket offices.
Southwest avoids large airports and for the most part does not fly long distances. Southwest’s
frequent departures and low fares attract price-sensitive customers who otherwise would travel by bus
or car, as well as convenience-oriented travelers who would choose a full-service airline on other
routes.
Most managers describe strategic positioning in terms of their customers: “Southwest Airlines
serves price-and convenience-sensitive traveler”. But the essence of strategy is in business activities-
choosing to perform activities differently than rivals.
A full-service airline is configured to get passengers from almost any point A to any point B.
To reach many destinations and serve passengers with connecting flights, full-service airlines employ
a system centered on major airports. To attract passengers who desire more comfort, they offer first-
class or business-class service. To accommodate passengers who must change planes, they coordinate
schedules and check and transfer baggage. And because some passengers will be traveling for many
hours, full-service airlines serve meals.
Southwest in contrast, tailors all its activities to delivering low-cost, convenient service on its
particular type of route. Through fast turnarounds at the gate of only 15 minutes, it is able to keep
planes flying longer hours than rivals and provide frequent departures with fewer aircraft.
Since its flights are limited to short routes (about an hour), all flights are direct. That means
Southwest does not have to offer meals, assigned seats (first-come, first-served seating), baggage
transfers. It also does not offer premium classes of service (such as first-class or business-class) and
downtown ticket offices. Customers contact the airline directly to book flights. Automated ticketing at
the gate encourages customers to bypass travel agents, allowing Southwest to avoid their
commissions. There are no assigned seats and no printed boarding passes for flights. Passengers show
their ID at the gate, are checked off the reservation list, and are issued plastic boarding passes that the
airline can use again and again.
It has very effectively matched capacity to demand and effectively utilized this capacity. It has
done this by designing a route structure that matches the capacity of Boeing 737, the only plane in its
fleet. It achieves more air miles than other airlines by faster turnarounds- its planes are on the ground
less, ie. smaller crews are flying more hours. It uses a standardized fleet of Boeing 737 to facilitate
crew changes, to streamline training, record-keeping, maintenance and inventory costs.
On another dimension the airline carefully selects the employees and uses a profit-sharing
plan.
One driver of low-cost strategy is a facility that is effectively utilized. Southwest and others
with low-cost strategies understand this and utilize resources effectively.
 Southwest has staked out a unique and valuable strategic position based on a tailored set of
activities.

QUALITY AT THE RITZ-CARLTON HOTEL COMPANY

Ritz-Carlton. The name alone evokes images of luxury and quality. As the first hotel company
to win the Malcolm Baldrige National Quality Award, the Ritz treats quality as if it is the
heartbeat of the company. This means a daily commitment to meeting customer expectations
and making sure that each hotel is free of any deficiency.
In the hotel industry, quality can be hard to quantify. Guests do not purchase a product
when they stay at the Ritz: They buy an experience. Thus, creating the right combination of
elements to make the experience stand out is the challenge and goal of every employee, from
maintenance to management.
Before applying for the Baldrige Award, company management undertook a rigorous
self-examination of its operations in an attempt to measure and quantify quality. Nineteen
processes were studied, including room service delivery, guest reservation and registration,
message delivery, and breakfast service. This period of self-study included statistical
measurement of process work flows and cycle times for areas ranging from room service
delivery times and reservations to valet parking and housekeeping efficiency. The results were
used to develop performance benchmarks against which future activity could be measured.
With specific, quantifiable targets in place, Ritz-Carlton managers and employees now
focus on continuous improvement. The goal is 100 % customer satisfaction: If a guest’s
experience does not meet expectations, the Ritz-Carlton risks losing that guest to competition.
One way the company has put more meaning behind its quality efforts is to organize
its employees into “self-directed” work teams. Employee teams determine work scheduling,
what work needs to be done, and what to do about quality problems in their own areas. In
order that they can see the relationship of their specific area to the overall goals, employees
are also given the opportunity to take additional training in hotel operation. Ritz-Carlton
believes that a more educated and informed employee is in a better position to make decisions
in the best interest of the organization.