Specificity of the national business culture and management system in the country of doing business often act as a kind of constraints to further expand the scope of international activities. And the need to take into account cultural factors is more urgent than the contrasting culture of the partner countries.
The fact is that when business is not an international and works in mono-environment, a national cultural component does not play a decisive role in the business.Â But, according to many specialists (Roll, 2002; Hofstede, 2000), everything changes during the transition to an international business model, implemented in different cultural settings, whose effectiveness is increasingly dependent on national cultural component. Â Knowledge of the management system and the specifics of the national business culture, typical models of organizational behavior with local community creates a special competence of the firm and carries a set of fundamentally new benefits.
Globalization has deepened ethnic and cultural differentiation of society, making the barriers and constraints to international business.Â To resolve problems in business due to "cultural factor", was created a cross-cultural management, offering a technology of knowledge transfer between actors from different cultural traditions of doing business (within the same organization, or a few cooperating firms).Â
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We will try to understand the mechanisms of influence of culture on business and understand how to draw all the power of cultural tradition, and differences for the benefit on the example of Disney company and "Euro Disneyland".
History of Euro Disneyland
After the death of Walt Disney "The Walt Disney Company" has lost its creative scope, however, management was attempting to revive and re-create the magic of Disney and its former glory.Â Company's management was confident that the name of the company, its cultural traditions and heritage is the main achievement. The heads of Disney company believed that the company must simultaneously develop its traditional areas and develop new ones.
The new activity was the export of theme parks. Success of Disneyland in Anaheim, California, and Park "Walt Disney World Resort" in Florida contributed to the fact that in 1972 there were plans to build a similar entertainment complex in Europe.Â Tokyo Disneyland was opened in Japan in 1983 under the leadership of E. Cardon Walker, and immediately became a popular destination for holidays and a catalyst for the emergence of similar parks in other countries. In the late 1984, the branch manager of the amusement park "Disney" Dick Nunis and Jim Cora presented a list of about 1,200 possible locations of the complex in Europe and only 4 positions were chosen - two in France and two in Spain.Â Both countries have seen the potential economic benefits of such a theme park and competed by offering favorable financial conditions of the company "Disney." (Trigg 1993)
"Disneyland Resort Paris" was opened on April 12, 1992, and consists of two theme parks, entertainment zones and seven hotels owned by Disney company.Â This is the second theme park created by the company outside the United States (after "Tokyo Disney Resort"), and the first one which it owns and operates.Â
The company "Euro Disney" planned to take daily about 55 000 of people and serve approximately 14,000 visitors to the "European Disneyland" per hour.Â For this purpose in the park was built 29 restaurants (11 of restaurants were opened in Park and 5 - in the complex "Festival Disney"), while recipes of all dishes were adapted to European tastes. Menu and prices were established in accordance with American principles, in addition acted rule of "Disney": not to sell alcoholic beverages in the park.Â
Â The company "Euro Disney" has had some features of businesses, which were introduced by European authorities. For example unlike American parks of Disney, "Euro Disney" was trying to hire permanent staff, not seasonal or part-time workers.Â In Paris, London, Amsterdam and Frankfurt were established centers for recruitment, which reflected the diversity of European visitors to Disneyland.Â However, between the French government and the company "Disney" there was an agreement that "every effort will be to enter the French labor market."Â The company Disney was looking for friendly staff with communication skills, who speak two European languages (French or any other).Â The company "Euro Disney" has even created its own university of Disney (Disney University) to train and educate its employees.
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These and other reasons have caused problems in the park - it turned out that the opening of business in another country and another culture has unexpected difficulties.
Contradictions and problems of the park
The perspective of building the park "Disney" in France has become the subject of debates and controversy.Â Critics of the project, among whom were prominent French figures, stated against the construction of the park, which they regarded as a manifestation of cultural imperialism of the Company "Euro Disney", as well as a catalyst for the spread of unhealthy American consumerism in France.Â
Others considered "Euro Disney" as a symbol of America in France.Â That is why on June 28, 1992 a group of French farmers blocked the "Euro Disney" in protest against the agricultural policy of the United States.
In addition, there were contradictions with U.S. managers of "Euro Disney" who required that all negotiations were conducted in English. Also the look of employees had to be consistent with the corporate dress code of "Disney" that specifies the rights and restrictions on the use of cosmetics, hair style, tattoos, jewelryÂ and other accessories.Â But the French trade unions have protested against the imposition of dress code.(The New York Times 1991)
Â In addition, the company Disney was criticized for insensitivity to French culture, individualism and privacy, since the restriction of individual and collective freedoms were contrary to French law, if they were not needed to work and do not exceed the desired limit.Â The company Disney argued that the law forbidding set of the standard appearance of employees threatened the image and success of the park.
The company has faced problems with financing, attendance and staff.Â In May 1992, the "Hollywood Reporter" reported that about 25% of workers in the company of "Euro Disney" (approximately 3,000 men and women) resigned because of intolerable working conditions.Â The second problem was the fact that attendance of the park, hotels and revenues were lower than planned.Â
And although the company claimed that the business of "EuroDisneyland" was successful, it was obvious that there were serious problems - in April 1992 it was under the wave of negative articles and opinions in press.Â According to the French political figures, Disney characters could win the hearts of many French people, if they decided to adopt English as a second official language of the theme park.
Also climate in Europe is not as favorable as in the U.S., and the company received income only in the summer months.Â In 1992 it was a cold summer, the French economy moved into recession, the workday was shortened, and also decreased the costs that people spent on weekends.Â By the end of the first summer season, it became clear that "Euro Disneyland" near Paris would not be able to exist only by income from the summer season.
The company Disney has realized that it needed to make immediate actions.Â To raise the level of attendance in the "low season", the company reduced the prices in hotels in the winter, provided additional discounts on tickets from April to October. Also the company began a large advertising campaign: co-operation with the largest tourist company American Express, advertisements in regional and national newspapers, radio and on television.
The company was forced to rely on its brand and marketing opportunities.Â Disney has managed to convince some clients and partners that would develop "Euro Disneyland", claiming the glory of "Disney" in Europe, and its popularity would grow. Partly for this reason in 1995 "Euro Disney Resort" was renamed in "Disneyland Paris".Â After that in July of that year the company won its first quarterly profit.
Differences of Europeans and Americans that Disney company faced were connected with different habits, customs, and traditions, and problems in of language barrier. Because when companies enter international markets, it is necessary to take into account peculiarities of individual national cultures, which should be studied together with the corporate culture.
Disney company deliberately intended to introduce its culture and thereby exacerbated the problems affecting the national interests of the French culture.Â The strength of Disney's corporate culture has led to conflict and losses due to differences with the local culture and interests.
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Answers to the questions
What are some of the main cultural differences between the United States and France?
Differences of Europeans and Americans are mostly in different habits, customs, and traditions, and problems of language barrier. That is why when companies enter international markets, it is necessary to take into account peculiarities of individual national cultures, which should be studied together with the corporate culture.
In what way has Trompenaars' research on organisational culture helped explain cultural differences between the United States and France?
The most important idea of Trompenaars, that was useful in explaining the cultural problems, is that "Cultures are more than language, dress, and food customs". Cultural influence and identity is very important, and when it is misunderstood, it may bring a lot of problems. It is important that cultural identity of people is a factor of conflict, so the right cultural approaches help to minimize conflicts in organizations. (Trompenaars 1997)
In managing its Euro Disneyland operations, explain three mistakes that the company made?
The main cultural differences between two countries, that faced Disney company were connected with:
human resources and staff problems, that Disney company tried to bring and to establish its own rules for French workers: the style of clothes and makeup, hairstyle and even behavior.Â Such an imposition of American behavior and customs were negatively perceived by French workers, and led to massive layoffs'
Language differences: the adoption of English language as the basic in the Euro Disneyland also caused dissatisfaction of many workers, and there were contradictions with U.S. managers of "Euro Disney" who required that all negotiations were conducted in English.
The case of Disneyland company shows that when penetrating the European market, the company relied on its reputation in the world, the reputation and success.Â Error company was that it was not taken into account the specificities of the European climate and economic situation in Europe, finding themselves in an unfamiliar foreign market.Â This directly affected the number of visits to the park, as the year of opening of the park coincided with a period of economic recession. (Trigg 1993)
Based on its experience, discuss the three lessons the company should have learned about how to deal with diversity?
Since national culture can be regarded as one of the factors affecting the organization, it is important that the culture was realized and used by the management of the organization as a resource to all the values of the company, and also transformed into knowledge.
Cross-cultural technology that was widely referred to in articles (Luthans D. 2008; Roll), are a fundamental competence of the company, facilitating creation of knowledge, values, experiences from different cultural sources inside and outside the organization and transform them into behavior, goods or services.
In conclusion, we must point out the phenomena that occur in the interaction of cultures.Â When companies are going to make business in different countries, the experts must think over and calculate all the consequences: financial, administrative, marketing.Â However, the cause of many failures lies in a cross-cultural differences. And the more diverse the cultural field of international business, rich mosaic of cultures, the more acute are cross-cultural differences, communication barriers are higher, so the more critical are requirements for cross-cultural competence of the international management.
In the context of globalization, the natural mixing of cultures, languages, styles of doing business, in an environment where geographic boundaries are valid only on the map, knowledge of cross-cultural management is important, relevant and applicable for companies of any size and type of activities.Â If we look closely to even one example of successful application of cross-cultural technologies by Disney company, we can gather a lot of useful information.