...Resort Paris: Mickey Goes to Europe Case Study Prenae George January 21, 2012 MGT Organizational Theory Walt Disney opened in 1983, Disney US theme parks and had great success. Tokyo Disneyland soon became the most profitable Disneyland in the world. Because of the enormous success of Tokyo, and because Paris was the most visited tourist area in Europe The Walt Disney Company decided to open Euro Disneyland near Paris. Amidst intense criticism form Europe’s cultural elite, Euro Disney opened the Disneyland part and hotels to the public on April 12, 1992. The Walt Disney Company has such great success in the past with their other theme parks in Florida, Japan, and California; this was a recipe for greatness. Regrettably, Euro Disney story did not follow the Florida, Japan, and California drafts for success. After opening Euro Disney they were faced with much opposition such as financial difficulties. These oppositions forced the company to reassess their formula for success. Disney must produce techniques that will densely fit the needs of the European market in order for the Euro Disney to survive. Because Management practices are influenced by cultural valued, global management learning must recognize that successful practices in one culture may work less well in others (Erez, P. and Christopher, E.) Although Disney has been very successful in other countries they appear to have a lot to learn about management and organization practices...
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...The Not-So-Wonderful World of EuroDisney—Things Are Better Now at Paris Disneyland Bonjour, Mickey! In April 1992, EuroDisney SCA opened its doors to European visitors. Located by the river Marne some 20 miles east of Paris, it was designed to be the biggest and most lavish theme park that Walt Disney Company (Disney) had built to date—Bigger than Disneyland in Anaheim, California; Disneyworld in Orlando, Florida; and Tokyo Disneyland in Japan. In 1989, EuroDisney was expected to be a surefire moneymaker for its parent, Disney, led by Chairman Michael Eisner and President Frank Wells. Since then, sadly, Wells was killed in an air accident in spring of 1994, and EuroDisney lost nearly $1 billion during the 1992-1993 fiscal year. Much to Disney management’s surprise, Europeans failed to “go goofy” over Mickey, unlike their Japanese counterparts. Between 1990 and early 1992, some 14 million people had visited Tokyo Disneyland, with three-quarters being repeat visitors. A family of four staying overnight at a nearby hotel would easily spend $600 on a visit to the park. In contrast, at Euro Disney, families were reluctant to spend the $280 a day needed to enjoy the attractions of the park, including les hamburgers and les milkshakes. Staying overnight was out of the question for many because hotel rooms were so high priced. For example, prices ranged from $110 to $380 a night at the Newport Bay Club, the largest of EuroDisney’s six new hotels and one of the biggest...
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...Introduction: Euro Disneyland is a foreign venture of very successful American company known as Walt Disney Company which was established in 1923.The organization has been very successful over the years operating in USA, California and Florida and also expanded its business in Japan and Europe. Their operation in Europe widely known as Euro Disneyland was not successful for various reasons which include planning , cultural differences etc. Evaluating some of the areas that went wrong in case of Euro Disney: Walt Disney, a highly successful organization of US, comes up with a theme park, Euro Disney located outside of Paris, France. The Walt Disney Company was one of the American organizations which expand its business to the foreign soil. Doing a very successful and profitable business throughout US, California and Florida, the company established its first foreign venture Tokyo Disneyland, another winning and profitable business of Walt Disney. Being successful from Tokyo Disneyland, the company decided to further expand abroad and enhance its foreign presence, Euro Disney comes forward. But in case of Euro Disney, the company made some wrong steps in decision making which in turn experienced numerous complications from its inception. Below some areas are discussed critically that went wrong in case of Euro Disney. Location or area and environment selection were wrong in first place. Though French suggested to building the Euro Disneyland into the East Paris despite the...
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...Introduction The Walt Disney Company was originally founded in 1923; a company committed to providing quality and wholesome entertainment experiences to people of all ages. The company is known for the following four segments, which consist of Studio Entertainment, Parks and Resorts, Consumer Products and Media Networks. The Walt Disney Company consists of five (5) Disneyland and Disney Park Resorts, in total. Two are located in the United States, one in Europe and two in Asia Pacific. The original Disneyland Resort was built in 1955, in Anaheim, California; followed by Disney World Resort, Lake Buena Vista, Florida in 1971. After the success of these two large theme parks in the United States, Disney decided to expand internationally. First Tokyo Disney Resort built in 1983, secondly, Disneyland Resort Paris (EuroDisney) which opened its doors in 1992, and thirdly, Hong Kong Disneyland, opening its doors in 2005. Case Study Questions 1. The factors that contributed to EuroDisney, now called Disneyland Resort Paris, poor performance during its first year of operation was the lack of knowledge of their target market, cultural differences between the USA and Europe, and the failure to take into account that “Paris is Europe’s most-popular city destination among tourist of all nationalities”. Disney did a bad job at understanding Europeans and their lifestyles. Unfortunately, for Disney the French were neither happy nor receptive to having what they called “America Cultural...
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...Controllable facts -price -product -promotion -channels of distribution Since the cost of Disney World Florida was cheaper, customers preferred to fly to the US. This meant that prices in Paris could also be controlled. There were several other mistakes made by the management, for instance, alcohol was banned although consuming wine with meals was a French tradition. The reason for banning alcohol in the park could be justified but it was not acceptable by the French due to their tradition 3) The Disney belief was that what it sells in the U.S and Japan would sell just as well in Europe. So when Disney opened Euro Disney in Paris the park was a symbol of American culture. However, the culture was so different from America or Japan. Believing all Europeans enjoyed the same sausage or Europeans vacationed in the same way that Americans did was easily corrected by cultural awareness that would not have cost much but they were too ethnocentric to even know the questions to ask. 4) In the early stage, Disney had poor cross-cultural skills. Disney management team failed to recognize the importance of cultural adaptation in Euro Disney as they misinterpreted the culture and behaviour of European customers. After Euro Disney suffering for the huge losses, they realized the problems and made appropriate changes in their marketing strategy to cater the needs of Europeans customers. 5) Disney management team were not certain of the success of the first international venture because...
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...French national issues was a major factor. Michael Eisner was indeed powerful and seemingly arrogant which also contributed to the problems. The business plan assumed that the people from all over Europe would flock to EuroDisney. This plan wasn’t good because it failed to recognize how diverse those consumers would be. Although Europe is united as the European Union, the cultures have always been extremely distinct and independent. To what degree do you consider that these factors were a) foreseeable b) controllable by either EuroDisney or the parent company Disney? A closer look into the history and a better understanding of the characters of Europe and the European market place would have enabled the Disney executives to foresee many of the problems. Most of the problems could have been controllable and others were inevitable. It was clear that the choice to open in France was going to cause some commotion. If Disney had researched French history this would have been understood. For the American executive to insist on English being the only spoken language at the park was completely wrong. There are strong facts showing the French culture monitors words which are absorbed from other languages. The way Americans do business is completely different to the French way, so pushing the American way was disrespectful. The French take their liberty and...
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...flexibility (step 2) for Euro Disney Key accounting policies • Euro Disney Associés has opted for financial lease. The firm leases the Disneyland Park from Euro Disneyland S.N.C. EDL Hotels S.C.A., which is owned for 99,99% by Euro Disney Associés, leases the hotels from a specialpurpose financing company. • The special-purpose financing companies are fully consolidated in Euro Disney’s financial statements. The substance of the relationship between the group and these financing companies is such that they are effectively controlled by the group. Areas of accounting flexibility • The personnel is transferable between the park and the hotels and vice versa. This way, the company copes with the fact that 90% of the employees have a permanent contract. • Euro Disney can defer the payments of interest, royalties and management fees that it has to pay to The Walt Disney company, when the actual performance is less than the contractually agreed benchmark. • The debt covenants limit the amount of new debt capital that Euro Disney can attract to $50 million. 2. What incentives may influence managing reporting strategy (step 3)? • The CEO of the Gérant, Philippe Gas, could obtain a discretionary annual bonus based on the individual performance relative to the objectives of the company. Moreover, he also obtains discretionary grants of the company’s stock options, The Walt Disney Company’s stock options and The Walt Disney Company’s restricted...
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...permission. To request permission to reproduce materials, contact Catherine Lombard, administrative officer, IUMI, HEC, BFSH1, CH-1015 Lausanne-Dorigny, Switzerland; phone 00 41 21 692 3310 ; fax 00 41 21 692 3495; e-mail admin.mim@hec.unil.ch. © IUMI/HEC, 2003 Version: (A) 2003-09-10 Disney www.disney.com is the biggest entertainment company in the world with a market value of US$38 billion, and one of the oldest, continuously operating since 1923. Today it is comprised of filmed entertainment businesses, major media networks, publishing, theme parks, resorts, a cruise-line, real estate, and consumer products. Disney‟s first international park opened in Tokyo, Japan in 1983. Tokyo Disneyland opened with a flourish and continued to do well until the softening of Japan‟s economy in the 1990‟s, from which it has yet to recover. In an effort to boost attendance, the older male-oriented Tokyo DisneySea Park opened in 2001.1 Disney is currently building Hong Kong Disneyland (www.info.gov.hk/disneyland), which is scheduled to open in 2005 – about the time that Universal Studios will open China‟s first world-standard 1 theme park in Shanghai.2 There has been criticism of value-for-money at Disney parks, which total ten worldwide,...
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...Case Discussion Questions 1. ------------------------------------------------- What assumptions did Disney make about the tastes and preferences of French consumers? Which of these assumptions were correct? Which were not? ------------------------------------------------- 2. ------------------------------------------------- How might Disney have had a more favorable initial experience in France? What steps might it have taken to reduce the mistakes associated with the launch of Euro-Disney? ------------------------------------------------- 3. ------------------------------------------------- In retrospect, was France the best choice for the location of Euro-Disney? Disney has made certain assumption about the European taste and preference particularly of French consumers which turn out to be flawed because they did not evaluate effectively the cultural differences and preferences of French consumers. Firstly, Disney followed the traditional policies by forbidding liquor in their theme park, which is astonishingly very commonplace in French culture where wine is complementary with lunches and meals. Secondly, from Disney’s perspective Monday would be a light day and Friday would be a heavy day proved to be reversed. Thirdly, Disney assumed that most of the French did not take breakfast so they downsized the restaurants but customers for breakfast turned out to be in greater numbers than expected. There were 350 serving seats for 2500 people. Moreover...
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...Case Analysis: Euro Disney There are many environmental issues that affect businesses when entering a foreign market, the main environmental factors that will be discussed is as follows: technological, economic, social, political, and demographic. Each factor will impact the business different and cause various degrees of impacts on the company and its decision to enter a foreign market. Euro Disney, a foreign division of Walt Disney Company; is located France and opened in 1992 to service the people of France. Researchers had discovered that like the many people in the United States, foreigners also were attracted to the whole them park idea. When Disney decided to launch Euro Disney, many issues were bough up and many environmental issues were faced; in this paper these issues will be briefly discussed. First off the cultural differences that existed between the US and France had to be discussed and worked out, for example the weather in France was an issue when determining rather the park would be a success or not along with the staff who would ultimately become family to the Disney Corporation. Fist off the economic factors, which are usually income, expenses, and resources; that Disney faced when deciding to build Euro Disney were easily noticed and overcame. Issues such as attraction and income it generated played a huge part in the economic factors, in the beginning Euro Disney estimated that during the first year it would attract 11 million visitors achieving...
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...Euro Disney SCA formally launched its theme park to Europeans in April 1992 near river Marne, 20 miles East of Paris. It was the biggest and most lavish theme park that Walt Disney had built bigger than any of its Disney parks around the world. The location was chosen over 200 potential sites in Europe from Portugal through Spain, France, Italy and Greece. Disney Management expected Europeans to receive the theme park in the same behavior that their Japanese counterparts for Disneyland-Tokyo did for Mickey Mouse and other famous Disney characters but, in 1992, amount of visitors reached only 9.2 million and spent 12% less on purchases than the estimated $33 per head, and the projected attracting 11 million visitors and operating of S100 million during the first year of operation became a loss of $900 million by summer of 1994 since opening. Development Crisis looms and rescue was put on October 1994. The park's name was officially changed from Euro Disney to "Disneyland Paris", in order to more closely link the park with the romantic city of Paris, and to disassociate itself with the poor reputation that has become linked with the phrase "Euro Disney". The tide turnaround in 1996, Disneyland Paris became the most visited tourist attraction in France with 11.7 million (increase 9% from the previous year), being one of Europe's leading tourist destinations. Later entering Hong Kong, although, Disney was determined not to make the same cultural and management mistakes in China that...
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...Utilizing Hofstede's research in culture discusses one area in which the Disney corporate culture did not fit with the French national culture? Do the US and France rate similarly in this dimension? 2) Which of the four strategic dispositions did Disney seem to use in the case? What is simplification and was Disney guilty of utilizing this process. Describe one specific example to justify your answer. Disney corporate culture did not fit with the French national culture in many aspects. Using the Hofstede’s research I will discuss the individualism in USA and France. Individualism is the “tendency of people to look after themselves and their immediate family only”. The acceptance of the strict dress code by thousands of employees even when it is criticized by labor organizations is an example for the difference in individualism level. The hiring process was heavily criticized by applicants, the press, and even the French unions. The controversy revolved around Disney’s grooming requirements. Disney enforced a strict dress code, a ban on facial hair and colored stockings, standards for neat hair and fingernails, and even a policy of “appropriate undergarments.” Applicants and labor leaders felt that requirements were excessive and much stricter than other employers. It was against the French law, which prohibits employers from restricting individual and collective liberties. The efforts to force Disney loosen the standards were unsuccessful. Another example for the difference...
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...visitors stayed away due to view EuroDisney as “American imperialism—plastics at its worst” * Advertising by EuroDisney aggravate local French sentiment by emphasizing glitz and size instead of the attractions * The Gulf War in 1991: * Put a heavy break on vacation for the rest of the year * High interest rates and devaluation against the franc * Competition due to “The World’s Fair” in Seville and the 1992 Olympics in Barcelona * Ban on alcohol goes against French culture * Disney executives believed in cultural inconsistencies such as: Europeans didn’t eat breakfast which is not true * Disney didn’t stress the entertainment value of visit to the theme park in their promotions which “ruined the magic” * Europeans only spent 1-2 days at the park which contrasted the American experience which lasted at least 2 days * Europeans had different vacation tendencies; they preferred a month of vacation to a year b.) Hong Kong Disney: * Only acquired 5 million visitors out of its targeted 5.6 million * Many visitors complained the park was too small and had little to excite...
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...Euro Disney: The First 100 Days Disney products, including films and television shows, had been sold in Western Europe for over 50 years. In 1988 European sales accounted for 25% of all Disney product licensing sales. This is one of the main points that need to be considered while evaluating the opportunity. Europeans were already familiar with Disney products and they appeared to be very receptive to it. Another major point that needs to be considered to evaluate the project is the population and how easily they can access Disney Park. European population exceeded that of the United States by 150 million in roughly one-half of the land mass. This meant that Disney would be accessible to more number of people who lived closer to it than in the United States. Also, Europe had a lot of holiday destinations such as Paris, Madrid and London. This means that a large number of people from outside Europe would be visiting these places and they could also be added to the number of potential people who would visit the park. European vacation practices also would play a major role in setting up a park there as they took upwards of five weeks of vacation a year, whereas most Americans took only two or three. The choosing of location in Paris, France was a wise decision as it was almost at the center of Europe. Seventeen million people lived within two hours; of the site by car, 109 million people lived within six hours of the site by car, and 310 million people could reach the complex...
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...EURO DISNEYLAND CASE ANALYSIS 6 Cultural differences between United States and France Power distance This dimension deals with the fact that all individuals in societies are not equal, and it expresses the attitude of the culture toward these power inequalities amongst us. Power distance is defined as the extent to which the less powerful members of institutions and organizations within a country expect and accept that power is distributed unequally. It has to do with the fact that a society’s inequality is endorsed by the followers as much as by the leaders. US The fairly low score on Power Distance in combination with the most individualistic culture in the world reflects itself in the following: * The American premise of “liberty and justice for all.” This is evidenced by an explicit emphasis on equal rights in all aspects of American society and government. * Within American organizations, hierarchy is established for convenience, superiors are accessible and managers rely on individual employees and teams for their expertise. * Both managers and employees expect to be consulted and information is shared frequently. At the same time, communication is informal, direct and participative to a degree. * The society is loosely-knit in which the expectation is that people look after themselves and their immediate families only and should not rely (too much) on authorities for support. * There is also...
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