Administración de Negocios Internacionales
1. How would you describe the business model of Kidzania in
2
Administración de Negocios Internacionales
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
3
Administración de Negocios Internacionales
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
4
Administración de Negocios Internacionales
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
5
Administración de Negocios Internacionales
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
6
Figure1
Administración de Negocios Internacionales
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
7
Administración de Negocios Internacionales
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
8
Administración de Negocios Internacionales
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
9
Administración de Negocios Internacionales
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
10
Figure
Administración de Negocios Internacionales
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.
11
Administración de Negocios Internacionales
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
12
Administración de Negocios Internacionales
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
13
Administración de Negocios Internacionales
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
14
Administración de Negocios Internacionales
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:
15