Kidzania Case

Administración de Negocios Internacionales

Kidzania Case

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1. How would you describe the business model of Kidzania in

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Mexico?

2. What are the competitive advantages of Kidzania in

Mexico?

Porters

ForceLevel of Threat Details

Impact on

Profits

New

EntrantsLow

+Expensive to enter theindustry

+Experience needed+Low barriers to entry

Increase

Rivalry Medium+No direct competitors+Some indirect such as:Papalote Museo del Niño

and Granja de lasAméricas

Still

Increase

Supplier

PowerHigh

+Material forconstruction

+Sponsors are includedhere and they are a keyfor the success of the

company

Decrease

Buyer Power Medium

+Consumers aren’t pricesensitive

+Only company in Mexicowith the same service

+Substitutes areavailable

Still

Increase

Substitutes High+People could chose togo to cinema, amusement

parks, concerts,museums, zoos and malls

Decrease

As we can see in the Five Forces Analysis chart the rate of

profit of the industry that in this case is the edutainment

one, it is considered as a high profitable even the consumers

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can find a lot of substitutes but no one will offer them the

same experience as in this industry.

Following it is important to analyze the Key Factors

of Success of the industry to know how is KidZania

developing.

Concept of education through entertainment.

Innovation and creativity in the services.

The industry is not old at all at least 15 years.

Sponsors play an important role.

There is not a lot of direct competition.

It encourages parents to make use of the industry as new

way to educate their sons.

Locations of the indoor entertainment centers are

crucial part of its success.

It is require experience and knowledge on the

edutainment arena.

It can be offered familiar services.

This analysis let us notice how the industry is developing

and what they are doing for satisfy the desires of consumers

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and how they manage to survive in front of competition, that

in this case we can find a few competitors.

Moreover it is also necessary to make a VRIO analysis of

the company in order to know deeply the competitive advantage

taking into account the basic resources and capabilities.

VValuable

RRare

IDifficultto Imitate

OOrganizatio

nallyembedded

Resources

Sponsorship It bringssuccess to the

company

Not at all It isdifficult toget all thesponsorships

It influencesthe internalmanagement

Location inthe mostimportantmalls

It adds valueto have indoorfacilities

Not at all Yes, becauseit requires abig facilitie

Reflects thesuccess of the

companygettingclients.

InternationalExperience

Have access tonew markets

It is not rarethe

franchisingmodel

Not at all Totally

Capabiliti

es

See beyond itstarget market

(kids)

It alsofocuses on

adults market

Yes, afterbeing just as

a kidsattraction

Not at all Totally

Innovation andcreativity

Essential partof its coreactivities

The concept iscreative,

difficult toget the

experience

Totally Totally

Differentiation of the

Innovativeactivities

Yes A lot ofknowledge is

Totally

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service required

As a result with this brief analysis it can be concluded that

KidZania has a good internal analysis because it has good

competitive advantages as was mentioned above; the most

important ones is that this firm has a first move

advantage in the concept that it offers in Mexico that let it

grow even internationally. In addition the activities that

the consumers enjoy can be apply by not just kids and also

adults. Moreover they are constantly innovating in the

concept and with the play-roles that they offer. Totally this

concept is difficult to imitate because a lot of experience

is required. Another competitive advantage that they have is

the capability of getting sponsors, which is the main factor

of success for the company.

As we can see

in the Figure 1, it

is showed that 57.9%

of the focus of

Indoor Entertainment

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Figure1


Centers and Theme Parks is occupied by the edutainment

industry where KidZania is categorized.

3. How would you describe the internationalization of

Kidzania?

As it was mentioned during the case material, KidZania showed

an amazing growth within Mexico and obviously a big

acceptance from the population, especially the kids. The

founders of this firm made use of innovation in the concept

and business model, identified as unique. According to

Papageorgiou (2013) companies go international after they

started locally and grew from the foundation, and also this

author mentioned that the companies will get into a market

and gaining all the benefits of being first, well known as a

first-mover advantage, which KidZania applied in Mexico and

the concept also could apply overseas.

For its expansion the company established a

strategy where its main objective was to penetrate the

biggest cities in Asia, Latin America, Europe and USA but

this will be apply in stages in order to have access in their

main target that was USA. The first stage was to focus on

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their Mexican business by keeping the same owners. The second

one was to focus outside Mexico establishing a franchise

model with partners that wanted their concept. The third and

last stage is to enter into USA market, this strategy hasn´t

been accomplished, later on I will explain the main reasons.

By 2010, they performed stages 1 and 2.

After their success in Mexico, they decided to

turn the business into a franchise, getting the attention of

its first partner from Japan, with this Asian market KidZania

started its internationalization, where according to KidZania

(2014) they seek candidates, on a country-by-country basis,

the licenses are granted to a single, exclusive licensee for

each country. The Mexican company specifies that candidates

should have total interest in foster education and success of

children; these prospects must be locally based in each

country. According with the information above, by

franchising, the company could have control of the concept

that characterizes KidZania and also they offer training

services and diverse support to its licensees. By using this

mode of entry to foreign markets, it has been applied a

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multi-domestic strategy, which according to Diaconu (2012)

this strategy is ideal for a relative independent

subsidiaries (in this case, franchises), each of them

focusing on a well-determined market. This approach fits when

there are important differences between the markets. In the

case of KidZania while they establish a franchise model

transferring the company’s culture and know-how, each of the

franchises could make some adaptations in relation to the

countries’ culture.

4. What should be the mode of entry into the United States?

As it was mentioned recently above, the main objective of

Kidzania was to penetrate USA market as its third stage, once

they acquired enough knowledge of the industry and that the

business become mature. This objective has being delayed

because the founders don’t want to establish a franchising

entry to the north American market, instead they want to own

whole or big part of the company over there. In article wrote

by Tejeda (2014) it is mentioned that the Director of

Kidzania in Mexico, Barbieri, said that the United States

represents the higher percentage in market terms of the

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entertainment industry, 50% of the total it is generated

there. With this it is imply that entering to USA signifies a

big challenge for the Mexican company. Moreover in an article

Coy (2013) made a research and it is mentioned that

in relation of indoor

entertainment centers

theme parks and

amusement parks, 40%

is located in USA, as

it is showed in the Figure 2.

As a result it is almost impossible to enter

this market as being a whole owner enterprise, due to the

unknown market, in relation of the previous information the

ideal mode of entry would be an International Joint Venture

where according to Lande (2014) by using this entry mode the

parties can share management experience and expertise,

industry knowledge and some capabilities in technology. In

the case of KidZania has the knowledge and experience to

develop this edutainment business model and they will need to

look for this Joint Venture partner(s) to contribute in the

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Figure


access to a new market, it is also relevant to mention that

they will acquire a big quantity of control of the company,

well this issue is negotiable.

5. Analyze through external sources the example of Wannado

City Florida. What does your analysis suggest for the

strategy of KidZania in the United States?

Just for a complementary information Wannado City was the

same idea as KidZania brought it by the same creator, Luis

Javier Laresgoiti with the exception that he decided to

continue his concept by first going to USA with the name of

Wannado City opening its gates in August 2004, the creator

didn’t consider the advices of waiting until the business

idea were mature to enter to this giant and diverse market in

the USA. At the beginning of its entry, this company became

one of the major touristic attractions in South Florida; but

after six years, the firm announced its closing date due to

the financial problems that they were facing. Here comes the

question of what brought the failure to Wannado City? And how

KidZania could learn about it for its near access to the

North American arena.

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According to Bandell (2010) the location of

Wannado City wasn’t the ideal for it, specially because it

was located in Florida where Orlando represent the best

attraction for entertainment so there wasn’t a lot of effort

from the public of traveling to Sunrise, Florida just for

this theme park instead of going to Disneyland. With this we

can imply that for the entry of KidZania they should try to

find a good location without stronger competition that can

affect its profits.

Moreover another important factor the brought the

failure of the firm is that its business concept just focused

on kids excluding the adults; in this case KidZania has a

broad services that fit on a familiar basis but maybe they

should retake the possibility in diversification in that

market including more activities for teenagers because they

already had activities for adults.

In addition, in the article wrote by Bandell

(2010) the ticket price of this kind of amusement park was

higher than the zoo and children’s museums of South Florida,

and also they charge a quantity for adults where they didn’t

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have an special activity the only one was to watch the kids

through windows. With this we can suggest that KidZania

should apply a good price strategy in order to don’t

experience bad situations and also to penetrate the market

with its first move advantage that obvious was first Wannado

City but now they can be the leader on the edutainment

industry in the USA, and also as was mentioned before they

need to keep the activities for the adults and include

services that will fit to an American family.

Another important issue that Wannado City did

to enter to USA market was to form part of Corporación

Interamericana de Entretenimiento, S.A. de C.V. (CIE) which

according to CIE Press (2004) is the leading out of home

entertainment company in the Spanish and Portuguese speaking

markets in Latin America and Spain, the businesses that they

manage are mainly amusement parks, live concerts and other.

As we can see CIE just have experience in the industry but

just in Latin America and Spain and no experience at all in

USA so this wasn’t a good idea to enter to this broad and

important market. In this case KidZania should find the way

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to entry to the North American market by doing a partnership

with a local company who has the knowledge, distribution

channel and connections there.

References:

Bandell, B. (17 de November de 2010). South Florida Business

Journal. Recuperado el 07 de November de 2014, de

South Florida Business Journal:

http://www.bizjournals.com/southflorida/blog/2010

/11/where-wannado-city-went-wrong.html?page=all

CIE. (12 de August de 2004). CIE Inaugurates Wannado City

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http://www.bizjournals.com/southflorida/blog/2010/11/where-wannado-city-went-wrong.html?page=all

http://www.bizjournals.com/southflorida/blog/2010/11/where-wannado-city-went-wrong.html?page=all


Theme Park. Mexico City, Mexico.

Coy, J. (1 de June de 2013). Major Theme Parks are going

Indoors. World's Top 30 Indoor Entertainment Centers: Part

1 . Phoenix, USA.

Diaconu, L. (2012). Business Strategies of the Multinational

Corporations. Romania.

KidZania. (2014). KidZania. Recuperado el 7 de

November de 2014, de KidZania:

http://www.kidzania.com/franchising-overview.php

Lande, B. (21 de January de 2014). Law360. Recuperado el 7 de

November de 2014, de Law360:

http://www.law360.com/articles/502733/the-key-

benefits-of-forming-a-joint-venture

Papageorgiu, K. (27 de June de 2013). techhub. Recuperado el

07 de November de 2014, de techhub:

http://www.techhub.com/blog/5-reasons-why-

companies-go-international

Tejeda, C. (5 de February de 2014). El Economista. Recuperado el

7 de November de 2014, de El eEonomista:

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http://eleconomista.com.mx/industrias/2014/02/05/

kidzania-pie-mercado-estados-unidos

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Kidzania Case

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