EuroDisney: From Dream to Nightmare
EuroDisney: From Dream to Nightmare
TheDisney group entered the European market with the objective ofreplicating its success in America. However, they failed to considerthe wide differences between the two markets (Packman, & Casmir,2000). The difference in market informed a lot of challenges whichled to a lack of profitability in some years. The culture had failedto capture cultural and other contexts that are unique to theEuropean market. However, over time, the challenges were addressed,and the company is certainly on the path to recovery andprofitability.
Disney`sDecision to Build a Theme Park in Europe
Thendecision by Disney to build a theme park in Europe was mainlyinformed by the high level of success that the company hadexperienced in Tokyo, Japan. There was a consensus that the themeparks had the potential to capture an international appeal in most ofthe regions around the world. It, therefore, felt that Europe wasready to embrace the concept.
Thedecision was also influenced by the high number of tourist thatvisited Europe each year (Alexander,1992). There are a lot oftourists visiting Europe annually, and the company had to topcapitalizes on the numbers to widen its revenue base. It wasestimated that 50 million tourists visited Paris annually spendingmore than $20bilion. That was a huge market that would tempt anyserious investor.
Thelocation that was chosen in Paris was accessible by most of theEuropean people. The company had to look for a strategic, locationthat would also be accessible by tourists who visit any of theEuropean countries annually (Muir & Casmir, 1999).
Therewere no theme parks in Europe, yet the continent had a largepopulation at the time. The Disney management was determined to takeadvantage of those numbers to expand its business. With an estimatedpopulation of 728 million people at the time, the number was hugeenough and could provide enough market for the company`s products andservices (Hartley,2006).
Fromthe research that the company had conducted, there was demand forDisney parks in Europe. People were just ready to embrace the idea.The readiness for the idea was, therefore, a significant motivationfor the company (Cangemi, Lopez & Lubin School ofBusiness,1994). Availability of a ready and willing market wasencouraging to the management of the enterprise.
Theinvestment would provide about 30,000 employment opportunities, andthe company felt that that was attractive enough to the Europeanmarket. The vast changes would make the idea appealing top Europeanin general and French in particular.
Thetheme park would be centrally located. The location in Paris was justfour hours by road from England.
WhyDisney Chose To Combination of Equity Ownership, a Licensing Contractand a Management Contract
Disneydecided to enter the European market through a mix of equity owner,licensing contract and manage contract as a strategy to penetrate theEuropean market. The company felt that the approach would appeal tothe population and, therefore, determine its market (Perrard,1992).The company decided to retain the management so that it could injectits traditional style of management with an aim to borrow variousaspects of management from the mother company (Alexander,1992).
Thecompany would also retain the operational control. They felt theimportance of allowing European investors to acquire majority sharesso that the population was able to identify fully with the companyand its operations. The idea would also provide the European banks toavail most of the financing.
WaysDisney Adapted To a French and European Context
Onethe ways that Disney adapted itself to French and European context isby tailoring its products, services, and approach to making alignwith European culture which is quite different from the Americanculture. All the goods and services had to evoke a European appeal.The activities had to be organized in such a way they considered theculture of the European community in that the Europeans are not verypatient (Klesch & Company Limited,1994).. Therefore,accessibility to the park had to be contextualized, and generallytransportation to the park had to be availed.
Ithad to adapt to the eating habits of the French people. For example,the idea of having fast foods at odd hours was just not appealing tothem (Lainsbury, 2000). That could have been the case in America, butit just could not work in France. The fact that wine is closelyconnected to the French culture necessitated the company to introducethe product in Disney Park in Paris.
Thecompany also had to adapt the cold winter season to create strategiesto attract people to the park. Most parks are deserted at such times,and the company had to come with appealing products and services toentice the clients during the cold season. However, Euro Disney wasnot effective in the ways it adapted itself to the European market(Hartley, 2003). Disney should have adapted more especially toEuropean culture which is entirely different from the American one.Importing the American model into the European market was one of themajor mistakes that Euro Disney did in the entry of the Europeanmarket. It should have based its evaluations solely on the terrain ofEuropean businesses.
Actionsto be taken to improve the financial viability and how interests inEuro Disney can best are protected and furthered.
Toimprove the economic viability of Euro Disney and realize itspotential for shareholder return, the marketing should focus on thediversity that exists in Europe regarding culture. The USA success ofthe concept should not be applied in Europe (Spencer, & LubinSchool of Business. 1995). The company should embark on advertisingand campaigns that are entirely different from the American model.The advertisement should be aimed at the adults and not to thechildren as was the case in the past. That is based on the fact thatthe adults have the final say on visiting the park.
Thecompany should consider the fact that theme parks are not wellestablished in Europe, and hence, marketing must focus on convincingthe people that Euro Disney would meet the expectations of thepopulation (Cangemi, Lopez & Lubin School of Business, 1994). Thepricing model of the company should reflect the stage of developmentof the parks and should not guide merely by the success in theAmerican market. The management should not be influenced by thereputation for success in the European market but rather focus on theunique contexts of the European market. Planning and administrationshould solely be guided by the demands of the European market.
Thereduction of cost of products and services at the Euro Disney shouldalso be reduced to make them more affordable so that more customersare attracted to the park to increase the volume of revenues(Perrard, 1992). That is informed by the high unemployment rates thatexist, not just in euro by around the world. Lowering of the costswould widen the customer base and increase the profitability of EuroDisney.
Disneyinterests can only be protected by creating unique models for theEuropean market. A comprehensive review of the approach should beencouraged so that only products and services that are suitable forthe European market are introduced. The European weather would alsobe an important consideration in the advancing of interests of EuroDisney (Fink, 2000). Products and services should be tailored so thatclients are attracted to the park even during the harsh winter seasonto keep the park in operation throughout the year. The ownershipissue could also be changed so that it adopts the American modelwhere the entire branch is 100% locally owned to eliminate themanagement issues that has plagued the park for long.
EuroDisney was a fantastic idea that necessitated by the need to exploitthe vast European market. The choice of Paris was even betterconsidering the reputation of the city as a huge tourist destination.However, failure by the Disney group to come up with a model thatpurely addressed the needs of the Europeans posed several challengesat the initial stages of implementation (Fink, 2000). The group hashowever been able to adjust the operations and management to capturethe unique cultural needs of the European population. Products andservices have also been well selected to address the diversity of theEuropean culture. There is every reason for the shareholders to beoptimistic as the Euro Disney strategizes itself to create a uniqueEuropean model.
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