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Factors That Contributed To Euro Disneys Poor Performance Tourism Essay

Euro Disney and other Disney are subsidiaries to Walt Disney Company. This is a case study based on Euro Disney to critically analyse and answer question of the Not So Wonderful World of EuroDisney- Things are Better Now at Paris Disneyland. EuroDisney first year of operation was faced with several factors in which hindered their financial growth and success in the first year of operation.

The case study will analyse and answer several questions relating to the Not so Wonderful world of EuroDisney. The questions are broken down in to five which are: 1) Why was Euro Disney performing poorly during its first year of operation? Recommend and propose strategies and suggestions to improve the situation? 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? Evaluate the cross-cultural marketing skills of Disney! 3) Do you think the new theme park would have encountered the same problems if a location in Spain had been selected? 4) If you were the business development manager, what would be the major consideration you would go through before selecting a location for the next Disneyworld? 5) From your discussion select a location you think will be the next Disneyland site.

By the end of the analysis, a clear understanding it to be derive on what lead to the not so wonderful world of EuroDisney, and shading light on mistakes made by the parent company.

Table of Contents

CHAPTER 1

INTRODUCTION

The Walt Disney Company is the parent company of Euro Disney and other Disney company in various countries making it a network of international family entertainment network in all house hold around the world with four business diversification which are media networks, parks and resorts, studio entertainment and consumer products. Disneyland, Disney world and all places Disney have been known as the happiest place on earth, the goal of Walt Disney is opening Disneyland was not to just be a theme park, but to be a theme park that the entire family could enjoy. Although the Walt Disney Company was founded in 1938, it was not until 1952 that the theme park, Disneyland, was opened to the public. When Walt Disney opened an amusement park in the middle of Southern California orange groves in 1955, he changed the way that Americans, and the world, viewed such entertainment. Once the domain of carnival hucksters, amusement parks underwent a significant makeover at the hands of the head of the Disney Studios

Walter Elias Disney is a pioneer, innovator and possessor of one of the most fertile imaginations in the world. He was an American film producer, director, screenwriter, voice actor, animator, entrepreneur, entertainer, international icon and philanthropist. Disney is famous for his influence in the field of entertainment during the twentieth century. As the co-founder (with his brother Roy O. Disney) of Walt Disney Productions, Disney became one of the best-known motion picture producers in the world. The corporation he co-founded, now known as The Walt Disney Company, today has annual revenues of approximately U.S. $35 billion. Disney is particularly noted for being a film producer and a popular showman, as well as an innovator in animation and theme park design. He and his staff created a number of the world's most famous fictional characters including Mickey Mouse, a character for which Disney himself was the original voice. He received fifty-nine Academy Award nominations and won twenty-six Oscars, including a record four in one year, giving him more awards and nominations than any other individual. He also won seven Emmy Awards. He is the namesake for Disneyland and Walt Disney World Resort theme parks in the United States, Japan, France, and China.

In April 1992, The Walt Disney Company and Affiliated Companies opened a new park for European visitors. It was located by the river Marne some 20 miles east of Paris and was designed to be the biggest and most lavish theme park that Walt Disney Company had built as compared to other sister companies (Cateora, & Graham, p.615). Nevertheless, the development of big theme park in Paris instead arise Euro Disney’s start up problems because the management has done some mistakes on project plan. They could not arrange a proper plan. Since the management not able to purposely consider certain outcomes, there was a something wrong in planning Euro Disney. The Disney management also did not have ample assumption about the European market as well as they did for their parent mark.

CHAPTER 2

2.0 CASE STUDY

The not-So-Wonderful World of Euro Disney – Things Are Better Now at Paris Disneyland.

2.1 The questions of case study have to be answered:

Question 1

Why was Euro Disney performing poorly during its first year of operation? Recommend and propose strategies and suggestions to improve the situation?

Question 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?

Question 3

Evaluate the cross-cultural marketing skills of Disney!

Question 4

Do you think the new theme park would have encountered the same problems if a location in Spain had been selected? Discuss!

Question 5

If you were the business development manager, what would be the major consideration you would go through before selecting a location for the next Disneyworld? From your discussion select a location you think will be the next Disneyland site.

CHAPTER 3

3.0 ANSWERS TO CASE STUDY

3.1 Question 1

Factors that contributed to Euro Disney’s poor performance during its first year of operation.

Euro Disney’s factors of poor performance marketing mistakes were present throughout the whole inception of Euro Disney. Euro Disney were faced with several affecting factors which contributed to the failure or poor performance of the company, the factors came along with location, price, and lack of research in exchange rate, as well as the style of the theme park all played roles in the lack of success experienced by Euro Disney. The factors that played into the unsuccessful first year could have been foreseen and somewhat easily by Euro Disney or the parent company, the same goes for their being able to control them. Hostility among the French had risen even as the plans were being set as it was stated earlier, that they did not want American imperialism invading their country and culture. Cateora & Graham, p.614 reports, “Paris theatre director Mnouchhkin” descried Euro Disney as a “cultural Chernobyl.” In fall 1989, during a visit to Paris, French columnist pelted Michael Eisner with eggs. The joke going around at the time was, “for Euro Disney to adapt properly to France, all seven of snow white’s dwarfs should be named Grumpy ...”

Location

Many factors contributed to Euro Disney' poor performance during the first year of operation and many of these factors could have been alleviated if the proper factors would have been looked at previously. The first problem was the demographics and subsidies, and because the French government made Disney an offer it could not refuse, they located Euro Disney 20miles outside of Paris, a location that was thought to be very convenient. It played a negative role in the success in the success for Disney. How many people go to Paris to get glimpses of American theme parks? Most of the tourist going to Paris would spend time travelling the city and its wonders. About 17 million lives less than two hour drive from Paris and another 310 million can fly there at the same tie or less. The French government offered the company more than $1billion in various incentives; all in the expectation that project would create 30,000 French jobs. “The land came at rock bottom prices, cheap loans were made available, and a dedicated high speed TGV and suburban railway link was also offered by the French. France gave Disney an offer they could not refuse, overlooking the over value franc, bad weather, French people not being known for their hospitality and occasional anti-American demonstration by angry farmers because French agricultural subsidies had been cut, Paris was still chosen to be home of Euro Disney. The climate in Paris was also unsuitable and off-season attendance was way below expectation. Many landmarks events were competition to Euro Disney’s opening year, such event was the one held in Spain. “Spain held the world fair in Seville and Barcelona was home to the 1992 Olympics which took tourists to area other than Paris.” All in all, 1992 was not looking good for Euro Disney in terms of success.

Foreign uncontrollable and Exchange rate.

In Paris in regards to economic forces, legal forces, competition, and culture can be held accountable for Euro Disney misfortune. In opening in the summer of 1992, Europe was entering into recession and this caused income from catering, merchandise, including souvenirs and foods, hotels to be way below that was expected. High interest rates also caused many currencies to devaluate against Franc leading to more financial difficulties for Euro Disney. In negotiation with France, lawyers were used excessively. The rigid legal approach was offensive to the French, who, like most Europeans consider depending on lawyers to reach a conclusion to be last resort. Despite the foreign market uncontrollable hindering the park from the beginning, when Euro Disney opened in the summer of 1992 many marketing and operational errors factored into the parks unsuccessful opening.

Advertisement made by Euro Disney

Another controllable factor was the advert made by Euro Disney, which factored the poor the poor performing by the Euro Disney in Paris. Euro Disney advertising had emphasised Disney image as an alluring bit of American rather than an explaining to potential customers what they can actually do for the park. France (2004) reports, “every surface that could possibly have an advert placed on it clothing, buses, taxis, myriad walls and billboards, even the snow you sky on now hawks something.” According to Wikipedia encyclopaedia, ´Advertising is the promotion of goods and services, companies and ideas, usually performed by an identified sponsor. Company are bombarding us with thousand of advert with only one intention, to persuade us to buy their product. Euro Disney’s image marketing did not explain to Europeans that the theme park was or what attractions it had to offer the European consumer. The company advertising focused on the size of the park and the glamour behind it that this poor marketing strategy hurt over all business. No one in France cared that Euro Disney had cost over $4 billion and that its 4,800 acres include five separate recreation areas, six hotels with room for 5,200 people in all, an entertainment centre, a 27 hole golf course and a wooded campground. The marketing strategy in America was used in France and it backfired when the French visitors stayed away from the park. Yes advertising bombards us everywhere, but it is not without control and regulation by the government, businesses, and citizens. This opens one of the major issues in advertising, “the question of law and ethics.” The sensitivity perceived by the French in relation to the advert was that, it did not tell them what the citizens will benefit from the EuroDisney, and also the French were not happy with how the Americans use their own advertising style.

Poor Management operation

The management of Euro Disney had difficulties due to cultural and lack of understanding of the French culture. Operational errors that easily could have been avoided accounted for more troubles than were expected in the Euro Disney. In regards to employees, alcohol, admission and hotel prices, and breakfast in the hotel, staffing problems, and regulations regarding pets, many problems cause the Euro Disney misfortune in the first year. The employees dressed code enforced on employees prohibited facial hair and limited the use of makeup and jewellery. The lack of understanding by the parent country in regards to the dress culture of the French affected customer patronage. The French did not think dress standards like that existed outside the west military academy. Also the ban on alcohol caused astonishment in a country where glass of wine is normally given for launch and it is necessary as a fork for eating. However banning the alcohol in this theme park could have ever been a consideration is unbelievable and since it was a major issue, this policy of not serving alcohol in the park was also a hindering factor at Euro Disney. Another factor that leads to poor operation was the price system. Prices involve around Euro Disney were also the cause of it not performing well and not generating profit. “consultant who studied the park say that its high admission price 30 percent more that Disney Orlando makes visitors keen to take as many rides as possible, so they spend less time shopping for Mickey Mouse ears and such”. Prices at the Disney hotel were high compared to other hotels in Paris, the hotels in Paris ranges from $180 to $380 in the Paris metropolis.

Staffing problem

One of the major factors in the customer relationship in the international marketing, even at the domestic market is the customer- staff relationship. At Euro Disney, there were staffing approach problems too. The company had tried using the same team work model it did use either in America or Japan, which did not work in France. Within the first nine weeks of Euro Disney’s operation, roughly 1,000 employees, 10 percent of the employee left. People were leaving because they felt they were not being understood and they were not being treated in an appropriate manner that was satisfactory to them. The company actually taught that Monday would be a les busy day, while Friday a hectic busy time, but the reverse was the case, Monday turned out to be very busy at the Euro Disney.

Unforeseen issues

Factors that really could not be seen by managers included the approach to European recession, the Golf war in 1991, and increased interest rates. External factors that affected business were also the devaluation of the Franc currency in the international market, which lead to competitors to draw the attention of customers to the various sites. These competitors were the world’s fare in Seville and the 199 Olympics, which was held in Barcelona. (Cateora, & Graham, p.615)

Ethnocentrism

The managers of Disney and Euro Disney used their way of doing business, their cultural belief and ethics, and what they know and are used to in order to try and get another country to do the same. Cateora & Graham describes in more detail, “A brainstorming, kick the door down attitude seemed to reign amongst the U.S. decision makers.” The authors referred to one former manager’s comment, “We were arrogant, it was like, we were building the Taj Mahal and people will come on our terms.” Ethnocentrism is usually referred to as “tunnel vision. This view says that one certain ethnic group beliefs about morals is the right one and better than any group. The French saw the American managers as bullies, arrogant, and workaholics. A search for the topic, “Business culture Vs French” (n.d) refers to Laura Hampton, French ministry of Education as she explains the views that the French have about American business and culture:

“The French have a love or hate relationship with the U.S. We are deeply admired for many things (entertainment industry, our political system, our optimism as a people) but they are also very critical of the role the U.S has played in globalisation which they see threatening their own identity, culture, and language... (Regarding management practices) the French are less direct about theory expectation and you have to pay closer attention to the subtle cues given to you.,

Disregarding the French culture of being the world’s biggest consumers of wine, the management of Disney still hung on their “we know best” conviction. Male employees had to keep well groomed as the American managers wanted in this way. Their insensitivity to the French culture led to a very bad start even though they did relent in some areas such as allowing females employees to wear brightly coloured nails polish and allowing kennels for the quest pets. The French would never dream of leaving their pets when going on vacation. (Cateora & Graham, p 615)

CONCLUSION: the major factor that contributed to their poor performance, during their first year of operation can be narrowed down to marketing surveysm, which lead to ethnocentrism and self reference criterion.

3.1.2 RECOMMENDATION, PROPOSE STRATEGY AND SUGGESTION TO IMPROVE THE SITUATION AT EURO DISNEY.

There are several means in which the controllable factors could be avoided in other to present Euro Disney the success it needed at the first year of business. This means are suggest and proposed as follows:

The deliverance of advertising to the customers, not on the physical composition of just the area alone, but on the resources and service that a customer will get from patronising the resort. Advertising should be careful controlled. Society needs to make sure that people are not taken in by misleading advertisement. There is a set of principles that all advertisers must follow (Roman & Mss, 2003, p.200):

Tell the truth, show the truth- the product should look exactly the same way as the consumers will purchase it

Make the general impression truthful- “Advertising is judged not by what it says, but what consumer’s thinks it says”. (p.201)

Ban “weasels” and dangling companions- All sentences must be clear.

Substantiate product claims- must provide evidenced that the claim is true.

Back testimonials with research.

It is crucial that cross cultural communication, cooperative decision-making and collaborative problem solving be implemented in multinational corporation management like Disney. It is important that the management of a multinational corporation work together to overcome boundaries and differences and to be able to communicate, and collaborate in order to effectively work together, communicate, make decision, and solve problems as a single entity as globalisation does simple that. This brings the world together. The EuroDisney could use the help of the Disney in Turkey in other to be able to handle the cultural difference in French. By understanding the French culture, EuroDisney will be able to bring polices that will be accepted by the French customers. The French cherish their culture that it is important for EuroDisney to able to adapt the culture and avoid cultural self criterion, rather try to understand the culture of the French.

Make use of their number one asset which is human resource in order to apply the best approaches and method and focus on both macro and micro economics of the global business. The management from the head quarters branch(in this case, management from the United State) cannot do this alone but will achieve success if he learns from those in the various parts of the world and learns from those who are experts in the various locations and cultures in which they live and work. They will next, approaches communication, sales, customers services, find solutions, developing innovative tactics, and so on. The best way in managing a diverse sales team is to incorporate the sales management from each area and empowering them and learning from them, this system will help the Euro Disney to overcome the cultural differences and policies that are not suitable for the French workers.

Generally as management, it is important to have a general knowledge of domestic activities and policies, and to understand the various cultures and operations of the sales force outside of the United States. This can only be accomplish by using human resource from which are familiar with the culture of French, company, and cultures, how business is handled in different parts of the world, varying company policies and operations (although the company is an entity, policies and routines vary slightly, if not extremely, in order to accommodate the differences), language and cultural differences, various sales methods, training, customer service, account management, follow up procedures, key account management, and so on. Can only be handled by working with the various sales teams and using their expertise.

CONCLUSION: The above mentioned proposed recommendation will tackle the poor performance at Euro Disney. The first recommendation should be the market research and survey, which will tackle the staffing problem, cultural issues and drafting and delivering of effective promotion,

3.2 Question 2

3.2.1 The factors that could have been foreseeable and controlled by Euro Disney or the parent company.

Taking a look at the above mentioned factors that lead to the poor performance of Euro Disney in their first year of operation, some of the factors were possibly foreseeable, while some were not foreseeable and uncontrollable. A company reputation and size of Disney is allowed no room for mistakes. The stakes involved are billions of dollars. Complementary businesses like that of the hotel industry are reliant upon the success on the success of this team park in Paris. Generous funds received from the government and private institutions would have to be made well of. Disney should be able to foreseen the unforeseen.

When Euro Disney was established the consideration taking into account is the geographical area and culture as well. However Disney established the Euro Disney based on the nature or American thinking, they expected the Europeans to act as Americans and thrive over newly designed theme park. They forgot that they were producing a massive theme park bigger than any other theme park in Europe for the American mentality. They could have calculated the exchange rate, and did not calculate the European culture. They could have foreseen the problems mentioned in the above poor performance factors listed.

Factors such as those mentioned above are not categorized as the unforeseen; rather they are being classified as the expected factors, which Euro Disney or the parent company Disney should have detected. Economics, politics, culture complemented and associated with in depth analysis of the 4P’s follow the basic principles of marketing. Disney should have foreseen the changing economic scene in France with the forthcoming European recession in 1991. The relationship with the French government should have been handled with greater care and delicacy, because of the size of the investment involved and ultimately, the number of jobs dependant on the success of the Euro Disney. Looking at culture, the parent company can force itself on another people, looking at the cultural profile of the French, which in this case was the European continent. Disney promoted its product, the theme park similar to that of Tokyo Disneyland in Japan believing Europeans wanted their piece of Americana. In international marketing, the needs and wants of the consumer are being indentified, the package presented by Disney to their customer meet neither their needs nor wants. Disney true success lies in adapting to the surrounding culture of the French and Europe as a whole, being marketing oriented in finding success in customer satisfaction. Disney failed in both aspects. Culture is wide and change occurs when resistance slowly yields to acceptance, so the basis of resistance becomes unimportant or forgotten, which means that on the part of the European community, we are certain to see compromise, but over a period of time. Disney too has to reconcile with the environment it has settled in. we read in the case that Disney does ultimately mend it ways. Making room for continuous change is the best way to go about its business.

CONCLUSION: most of the factors that lead to the poor performance of EuroDisney in their first year of operation were foreseeable which are the staffing problem, advert problem, and cultural differences and so on, where some factors were not, such as the economic recession at that time in Europe.

3.3 Question 3

The cross-cultural marketing skills of Disney

The problem was that in the beginning, cross cultural marketing skills were not used and employed. Taking for example, Disney executives were told that French did not take breakfast in the morning, which lead to downsize but surprisingly, the French do eat breakfast.

Cross cultural marketing would have let the managers know that the Europeans were more energetic and covered more of the Euro Disney theme park and rides than those in the western hemisphere. Therefore, instead of the normally three days stay at the Disney American theme park, the stays were normally shortened to two days stay. The European vacation customs were not being examined so the theme park did not see profits and success as hoped. Americans take short breaks but they take the more often. However, Europeans take one month for holiday. The American managers thought that the Europeans would change their one month tradition and adopt the Americans shorter yet more frequent time off but did not happen. The French schedule remains the same and they would close the office and factory during the entire month of August, which was contrary to what the American do. These factors should have been considered. Cross cultural marketing would have been extremely useful but the parent company executives were being quite ethnocentric and it cost a great price. (ibid, p.615) needed to say, their cultural marketing skills were unsatisfactory, in fact, nonexistent. Had they had any skills of this sort, the beginning would have been a success and not such a failure at the start.

Therefore, we can say that the skills of Euro Disney cross cultural marketing skill was poor, they did not have skills of cross cultural marketing skills which is the main key in dealings in international trade like Euro Disney. They put an American theme park in the middle of Europe with American mentality, American food, and this did not heed to the cultural values of the Europeans. However, the new CEO in 1993, the park understood their problem and made the changes. They then started their new marketing plan, which included skills of cross cultural values, understanding. They started to include French and European favourites like Zoro and Mary Poppins. They advertising campaign include famous European characters with the magic kingdom. Within a year, they took off deals boosted.

CONCLUSION: after the recognition of the problem facing Euro Disney which was the cross cultural marketing skill, which was bad. After some time park understood the pending problem and provided a solution, which was the use of French in their advertising campaign and so on.

3.4 Question 4

3.4.1 New theme park in Spain

Spain is a country that accept and receive foreign cultures compared to France, the southerners receive foreign culture with greater warmth compared to the central and east Europeans, in which if Euro Disney would have launched in Spain, Disney would have met less criticism. But we should bear in mind that, Euro Disney is actually built to serve the entire Europe as a whole not just Spain. Therefore, criticism will likely come from other part of Europe, even if Spain receives Americans with warmth.

Cultural profile is formed as the bases of international marketing relationship, how a product is being marketed in the international market, in a foreign country is based on the cultural variable present in the country. In other for Disney success in marketing the theme park internationally, it will force them never over emphasise the importance of understanding the culture of a foreign culture. A theme park in any part in Europe generally, Spain not excluded will face a varying percentage of regal restraints, political risk, culture conflict, and economic disruption as well.

Therefore, if Disney places a theme park in Spain, it is believed that the cultural difference will lay a huge role in its success, as suggested earlier. Disney would have to adapt to the customers culture and the culture of Spain generally, and incorporate them into the development, implementation, and operation of a new theme park. The workaholic habits of the Americans is opposite of not just Spain’s focus of life and family first, but generally Europe as a continent. In the United States, people focus more on themselves and individuality is the focus not group (Hofstede cultural dimension).

CONCLUSION: international marketing is the function associated with culture, what one is able to do in marketing to a particular foreign product is shaped by the cultural variables of the country. A theme park is Spain as in another part of Europe would face a varying proportion of, legal restraints, political risk, culture conflict, and economic disruption.

3.5 Question 5

3.5.1 The major considerations for the next Disneyworld

The consideration for the next Disneyworld should be in Dubai. Dubai should be considers as the next Disneyworld location priority. Dubai (UAE) is the major commercial business hub of the Arab world. Business horizons expand from the west coast of the United States to the eastern Philippine archipelago. Business communities around Europe have created a stronghold here as a gateway to most of Northern Africa, the Middle East and to a limited extent the Asian Subcontinent. Dubai seems to be a good strategic location for the Next Disney world to be established. Dubai is seen as the portal not only to the minority communities from Europe, Asia and America’s but specifically to the Muslim world of over one billion. Then underlying opportunities are immense. The parent company Disney is already a recognise figure in households of the respective location UAE. The relaxed social and cultural atmosphere Dubai possesses over Muslim states should not pose a threat to the continuity of business at Disney in Dubai, which will be called Disney Arabia.

Dubai reports a GDP (gross domestic product) per head of US$15,000 to $18,000, one of the highest figures in Asia. The trade balance remains a surplus with over US$500 million. The infrastructure boasts access to telecommunication facilities and transport by land, air and water as state of the art. The diverse ethnic communities level communication barriers between the Arabs and expatriates. All in all, Dubai posses the qualities and the right backdrop to promote the new “Disney Arabia” to a wider scope of people, both the conservative and the more liberal, foreign and local. Thus, lunching the new Disney subsidiary is obviously not an overnight or one day project, meticulous planning will be needed in defining the eight P’s as pertinent to the Arab world.

CONCLUSION: it is important to learn from the mistakes that were made when EuroDisnay was started. Having offices and managers from the country will be detrimental. Incorporating Dubai culture and examining the tourist activities, practices and trends will be crucial to the making of breaking of a Disney in Dubai.

CHAPTER 4

4.0 CONCLUSION

Euro Disney faces poor performance during their first year of operation, which makes it important to learn from mistakes that were made when Euro Disney was started. Having offices and managers from the country will be detrimental. Incorporating the culture and examining the tourist activities, practices, and trends will be crucial to making or breaking of a Disney new project and existing one as well. The Disney Paris in recent years from 2005 began to see changes in sells from what was generated back then as Euro Disney, and this was due to the fact that, the new management came about looking into previous managerial procedures and operation, in which assisted them in understanding were the mistakes were made at the initial stage of the operation in the first year, for its poor performance.

Cultural literacy is required to do successfully business in any country and making decisions based on assumption should be avoided at all cost. The use of effective virtual communication and working is designed to help one to communicate effectively as steelworkers, remote project team members and geographically dispersed employees. Therefore, communication is seen as an important key in international marketing. Most multinational companies, when embarking on international marketing fail to consider the cross cultural marketing techniques which are important for the MNC.

BIBLIOGRAPHY

Book:

Cateora, P., & Graham, J., 2007. International Marketing 13th edition. McGraw-Hill America

Cateora, R.P. Gilly, M.C. & Graham, J.L., 2009. International marketing 14th ed. McGraw-Hill Irwin, New York, America

Deresky, H., 2002. International Management: Managing Across Borders and Cultures 4th ed. Prentice Hall, America

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America Heritage Dictionary of English language, 4th ed., 2000. Available at: Houghton Mifflin Company. htpp://education.yahoo.com/reference/dictionary/enrty/ethnocentrism [Accessed on 20 February 2010]

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