Case Analysis # 1 Euro Disney- Disney Land Paris 1. What factors lead to Euro Disney's poor performance during its first year of operation? Euro Disney had a disastrous first year in Paris, France. There were many reasons that contributed to the horrible start. I am going to discuss six reasons why I think Euro Disney had such a hard time adjusting in Europe. 1. It was cheaper for European families to travel to Disney World in Orlando, FL.
Not only was the trip to Orlando going to be cheaper, but it was almost guaranteed that the weather was going to be spectacular. People go on vacation to have a good time, but more importantly to enjoy the weather. People in Europe and around the world are not going to vacation at a spot where the weather is going to be unpredictable. France get cold in the winter, therefore going to Disney World in Orlando would be more logical. It will be cheaper and the weather is going to be decent for whenever you choose to go.
2. The French culture did not like the American Fairy-tale characters. The French had their own fairy-tale characters; one even has a park located near Euro Disney. Starting up a company internationally is an extremely hard task.
Researching the culture of the country in which the company is going to be located is extremely important. When the plans to bring Euro Disney to Paris were finalized, they should have begun extensive research on the culture and history of France. By not doing that Disney may have insulted the French, but more so they hurt their chances of making money. 3. The whole Disney idea was not sitting well with the French people.
For example, during a trip to France in 1989 Michael Eisner was hit with eggs by a French columnist. When a culture shows somebody this much disrespect, take it as a hint and get out. The French people were extremely upset at the thought of having an American tourist attraction arrive onto their land. When Japan got Disneyland they welcomed it with open arms. Each culture and country is different as it pertains to other cultures. Japan's successful adaptation to an American tourist attraction all but guaranteed its success in Europe.
4. Disney's had a reputation of maintaining a quality park for its customers to enjoy. The French people got upset when Disney began to market Euro Disney by referring to its size and glitz, instead of by the variety of attractions and rides that were available. By making Euro Disney so extravagant, they ended up alienating many potential customers.
When it was all said and done, the people of Europe, but more specifically France, did not show up in the first year of business. Those potential customers may have chosen to go to another tourist attraction or they may have ended up in Orlando at Disney World for a fraction of the cost. 5. Europe was headed into a recession. There were signs of it during the late 1980's, but nobody on the Disney planning team paid any attention to it. When a country is headed into a recession that means the economy is not doing that well and people are not spending their money as many would hope.
European's avoided spending their money foolishly, but in essence it affected Euro Disney. During a recession people are going to save money, but the executives in the United States obviously did not take that into consideration when choosing France as the spot for the next Disney Park. 6. Competition was extremely high the year Euro Disney opened its doors. The World's fair was in Seville and the 1992 Barcelona Olympics were occurring all in the same year Euro Disney opened. These two competitors took away quite a bit of potential business to Euro Disney.
In 1992 Europe was a tourist's heaven; it had everything the people could want. Disney executives were so anxious to open Euro Disney that it cost them about $900 million dollars in the first year. If the opening could have been delayed for another year, they may have had more visitors and not have lost the ungodly amount of money that they did. 2. To what degree do you consider that these factors were (a) foreseeable and (b) controllable by either Euro Disney or the parent company, Disney? The cost of a vacation to Euro Disney Paris compared to Disney World in Orlando Florida was astonishing. I see this factor being foreseeable for this reason.
Before a company goes abroad they must complete an extensive research project on the history, culture, and economics of the specific region in which they are going to operate. The people in charge of the economics of Europe obviously did not calculate the amount of money a family was going to need in order to visit Euro Disney. It is mind boggling that this mistake was not intercepted before the launch. This factor was also controllable for Euro Disney and the explanation following will explain how. This crucial mistake may have cost them millions of dollars in revenue and millions of visitors from all over the world.
Instead of attracting people to the new start-up attraction, the people opted to travel to the United States and visit Disney World for a fraction of the price. They should have priced Euro Disney similar to Disney World in Florida, and the problem may have been alleviated somewhat. The prices should have been thought out more carefully and compared to other amusement parks in Europe. If that was done from the beginning, then Euro Disney may have been a success in its first year.
The problem that arose in which the French culture did not like American fairy-tale characters was foreseeable and controllable. The executives at Disney should have done some research on what characters the French liked and disliked. If they would have done that then maybe the park would never have been put up in Paris. I think this issue was controllable in this one particular way. Out of all the places that Disney had to choose from, they chose Paris, France; they did not even like the Disney characters.
If the proper work was done, Euro Disney may have been in some other location that likes the Disney characters and appreciated this amazing park. The biggest problem to arise was that the French people opposed the Disney idea from the beginning. This factor should have been foreseeable, but more importantly controllable. The reason as to why it should have been foreseeable was the fact market research was done on this particular area in Europe. When reviewing the information gathered from market research the executives should have noticed that the French opposed the Disney theme park. If the country in which Disney is planning to do business opposed them, then a new strategy should have been devised and a new country should have been selected.
This factor was 100% controllable by both Disney and Euro Disney. When the people of France opposed the theme park, the executives of both companies should have immediately begun searching for a new Euro Disney home. Another sign should have been when Michael Eisner went to France he got eggs tossed at him. That is a sign that a company is unwelcome. They should have found a home that would appreciate the Disney Park and come out to see it. The Euro Disney people upset the French yet again, but this time it was in the marketing campaign.
Euro Disney was advertised by its size and how beautiful it was; instead of advertising the rides an attractions it offered. This event should have been foreseeable, but the executives thought no matter what the people of France and all of Europe were still going to come and visit. It seems to me that the Euro Disney executives went into battle with no real plan. The Disney and Euro Disney executives did not foresee the marketing strategy to be a problem, but as they began operating the people never showed up. They thought in a narrow minded perspective and it cost them a lot of money in the first year of business. The factor of marketing was controllable, but they first had to figure out the problem.
With the way they thought it was not a big surprise they lost $900 million the first year. It all comes back to researching the area before you settle down and do business. They should have studied how the French and Europeans marketed products and tried to incorporate their tactics into their own. Try to figure out why they market products the way they do, and try to immolate the culture you are in as much as possible.
It is only going to increase your chances of success. During the late 1980's reports had it that Europe was head for a recession. Euro Disney was once again thinking in a narrow minded perspective. An event of this magnitude should have been foreseen right away. All it would have taken was some research on the European economy and the executives at Disney and Euro Disney would have found out that Paris was not stable enough to hold a theme park the likes of Disney.
Why a theme park would be placed in a continent that is headed toward a recession is beyond me, but in my opinion the executives thought ethnocentrically. They saw how the U. S economy was doing and based their decision that way. If proper research was done I am positive that Disney would have built a park in a more stable area of the world.
This factor was controllable by both the Disney and Euro Disney executives. A different geographic location could have been chosen if they took a close look at Europe and where it was headed. The economy plays an important role all business. Businesses are going to do business where the economies are stable and the location is perfect.
Disney took a tremendous risk by settling in Europe, but lucky for them it has worked out. Competition was intense during the first year of business for Euro Disney. This is another event that should have been foreseen and avoided. How the Euro Disney executives did not foresee the intense competition it faced is beyond me. The World's Fair was held in Seville and the Barcelona Olympics were held in the same year as Euro Disney opened. The heavy competition aspect was controllable.
Delaying the opening of the park for another year would have eased Euro Disney's pain somewhat. Many people in Europe and around the world attended those other events instead of going to Euro Disney. The mind set of the people probably was The World's Fair and The Olympics are only around for a limited time. In the end, people chose the competition over Euro Disney. Euro Disney was hurt by the heavy competition and it was reflected in the loss of about $900 million. 3.
What role does ethnocentrism play in the story of Euro Disney's launch? Ethnocentrism is defined as the notion that one's culture or company knows best how to do things. Clearly ethnocentrism played a prominent role in the creation and location of Euro Disney. It began with the French stating that they dislike the Disney characters. The American executives in charge of this project refused to see that the Disney characters were not loved everywhere. They assumed that the French would like them because American's like them. When doing international business never assume anything, find out for yourself and then move on with your plan.
The next step escalated to the French not being warm to the Disney idea. Once again the American executives at both Disney and Euro Disney did not take into account that the French did not want Disney on their land. The American's used an ethnocentric view in determining that France was going to house Euro Disney. They did not care what the French thought about it and how it was going to affect their lives, but instead they saw it the American way and built it anyway. I think it was put in France for selfish and greedy reasons. The final factor that determined the American executives used ethnocentric views was when the European economy was headed into a recession.
The American executives assumed that because the American economy was stable, every economy was stable. That is such a horrible way to conduct business. Know the territory that the company is entering and be sure that it is safe and business will flourish as a result. Without proper knowledge of the country, disastrous things could occur. American's get a bad reputation in the ways they conduct business, and this is a prime example of how they attained it. 4.
How do you assess the cross-cultural marketing skills of Disney? Euro Disney dropped the ball as it pertained to the marketing aspect of business, they failed to acknowledge minuscule items that would have made the French people more excited to visit the park. Their first mistake that made was the ban of alcohol inside the park. The executives of Euro Disney and Disney should have done some cultural research and found that the French people like to have wine with their meals. By banning alcohol in the park, the executives alienated many people and it cost them business and more importantly revenue.
This blunder should have never occurred because doing business internationally is major project. If success is to be achieved in international business then everything has to be done correctly in order for the company to be triumphant. Ethnocentrism played a major role in the banning of alcohol performed by Euro Disney in its first year of operation. It was assumed since alcohol is banned in the U. S.
parks then it must be banned in all others too, but little did they know alcohol is an important part of some cultures. The next marketing blunder came as it pertained to European vacations. Once again ethnocentric views were used in marketing Euro Disney. The Euro Disney executives planned on the Europeans taking short, but more frequent vacations; the European tradition includes a one month family vacation. It is quite obvious that Euro Disney was going to be run as if it were in the United States. The American culture was brought over the Europe and the Europeans recognized that and stayed away from the tourist attraction.
Simple mistakes like this could end up costing the business. All the mistakes made by Euro Disney were caused by ethnocentric views. The Executives thought that every culture was just like America's, but they found out the hard way and lost lots of money and potential visitors. The last marketing issue that got Euro Disney in trouble was how the park was promoted toward visitors. The emphasis was placed on the size and beauty of the park instead of the entertainment value. The American people like to focus on size and beauty, but not every culture is like ours.
Other cultures focus on more important issues like entertainment, so when Euro Disney focused its advertising on size and beauty people of Europe and all around the world were turned off. The bottom-line in marketing internationally is that having an ethnocentric view upon other cultures is going to better the chance of failure. The mistakes made by Euro Disney should have been prevented. If they were avoided then loss of money may not have been as substantial as it was. 5. a) Why did success in Tokyo predispose Disney management to be too optimistic in their expectations of success in France? Discuss The success of Disney in Tokyo happened for a reason; the people of Japan loved the Disney characters.
The culture was so intrigued that they took school trips to see Mickey Mouse. In my opinion Disney Tokyo was a fluke. The Disney Executives were praying that it would work and when it did they looked like geniuses. The people in charge of Disney assumed that Euro Disney was going to be a success from the beginning, but they failed to realize an important rule of marketing.
The rule being that if something works one place it is not guaranteed to work in another. They saw the success of Disney Tokyo and expected the same results. It looks to as if they did no research on France and the cultural patterns and habits of people in Europe. Doing ignorant things like that proves that they were only headed to Europe to make money; they could care less about the people and what they believe in.
I believe that they thought the Europeans but more specifically the French would adapt to the American ways and forget their own. I am starting to realize why people around the world do not like American's that much; it is because we do not care about anything unless it involves us. The failure of Euro Disney in the first year had a lot to do with the turnaround and the profitability of the company. The company is now a revenue machine; in essence they learned from their mistakes and turned it into a profit.
b) Do you think the new theme park would have encountered the same problems if a location in Spain had been selected? Discuss Yes, the same would have occurred if Spain was chosen. The reason behind my thinking is that the Disney executives failed to research the French culture, so why would they have done research on the Spanish culture? The mistakes made in France would have been made anywhere. The American's think every culture is just like theirs, but they found out the hard way that they are extremely different. The Disney executives would have gone into Spain and disrespected the people and their culture. People would not have visited and revenue would be unbearable. If the marketing mistakes were not made in France then they certainly would have been made in Spain.
Spain may have had the better all around situation of Euro Disney, but the same mistakes would have been made as they were in France. I firmly believe that proper research is necessary for a company to move operations overseas and be successful. The ethnocentric view of American's is not going to help when trying to start a new company up, but if people buy the product or service offered than ethnocentrism should not be an issue. For the most part cultures catch on to ethnocentrism and push it away.
6. Now that Disney has succeeded in turning around Disneyland Paris and has begun to work on the new Hong Kong and Shanghai locations, where and when should it go next? Pick three locations and select one you think will be the best location of the nest Disneyland. Discuss. I chose England as the country in which Disney should build its next theme park, for a few reasons. The British culture is different than America's but not by much.
The weather in Britain is moderate and similar to the United States. Another reason as to why I chose England is because the languages are the same, so communicating while trying to conduct business will not be difficult. Communication is the key to business, without proper means of communication it becomes extremely difficult to conduct business. The English people would love to have a little piece of America in their country, so why not give them the largest theme park, Disneyland. Of course proper research is going to be conducted to determine how and where the park is going to be constructed.
Cultural background checks are going to be extensive, and the park is going to cater to the English culture and way of life. Another reason I chose England was because of the rich history that it has. Without England America would not be around. Tourists that travel to England would get a treat in Disneyland. With England's history why not add an enormous tourist attraction. The country would benefit from a great deal from Disneyland, more tourists will visit and more revenue will be made.
The entire country would benefit from the arrival of Disneyland, but more importantly the people will benefit. Disney characters are so popular, so why not expose them to people who are not fortunate enough. With Britain's similar culture it would be a perfect fit.