Eurodisney A Case

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EURODISNEY "A" CASE

· Question #1

What did Disney do wrong in its planning for Euro Disney?

ANSWER

When the idea of Euro-Disney was conceived in the mid 180s, US and Europe were undergoing different economic, political and social changes. Some of theses changes were radically opposite, and others, although facing in the same direction, were slowly implemented in Europe. For example, the opening of financial markets in Western Europe was being slowly accepted by most investors and consumers.

Disney failed to be sensitive not only to cultural differences and the choosing of France as the location for Euro Disney where the anti-American sentiment is keener than the rest of Europe, but it also failed to observe and adapt to this un-rested region and the market changes around it. On the contrary, in order to be seen as the ultimate "Marketing Wizards" Disney tried to build and adapt Euro-Disney around the concept of the American parks with just few cultural implementations, tailored again, around self-developed concepts of the European culture (i.e. the scarce parking spaces for buses and RVs). Instead, Disney should have built a whole new park extremely sensitive to European culture, especially the French, with implementations of the American characters around the European themes and customs.

Disney failed to take into account the input of different French people from government authorities and construction advisers to marketing and financial planners. From its original location in France to its final site in the Westside of Paris, Disney did not listen to the experts in Europe and rather decided to build an empire around Euro-Disney which was being perceived as a threat to the French pride. Another failure in planning from Disney was in the labor and management issues. It simply failed to get the right advisers and implement a bilateral strategy with the French government in this regard.

· Question #

What recommendations would you make to Disney to deal with the problems for Euro-Disney?

ANSWER

Disney should focus its efforts in building a true European theme-park instead than on the endless business avenues of office parks, hotels and other real estate developments. In order to adapt better to the European culture, Disney should build a couple of theme parks around Disney with more European themes and local characters, and perhaps rename the complex of all parks to something like "Euro-Parks" featuring Euro-Disney, etc. In this way, a more local branding campaign can be launched for those Europeans with an anti-American sentiment.

Another key aspect for Euro-Disney is to develop stronger ties with local governmental authorities, particularly those having to do with labor issues. Seasonal work permits should be negotiated or perhaps the possibility of shorter weeks or through external job agencies (government or private). Management at all levels should be well mixed, preferably with French and British people, the latter being more in line with American management style but with a better understanding of Europe's business practices, and the former having a good image not only with the French government but also with the general public for "good will" purposes.

Financially speaking Disney should concentrate its efforts in building Euro-Disney park and others around it and sell its current participation in the other real estate ventures like hotels and business parks; instead, it could license the use of its name on those premises and act as the operating company alone raising its ownership (if possible) to 51% or more. In the future, Disney should consider the acquisition of other small parks around Europe and slowly introduce their characters in Euro-Disney and other Disney parks.

· Question #

What lessons can we learn from Disney's problems with Euro-Disney?

ANSWER

There are many lessons to be learned from the Euro-Disney case. It does not matter if your brand name is Coca-Cola, McDonald's or Disney there are always adjustments to be made when entering a foreign market, especially if the start-up investment takes billions of dollars like the case of Euro-Disney. Disney took for granted its experience in Japan and decided to build from that model with just minor cultural changes around the giant American Mickey Mouse. No two foreign models are equal, the experience in Japan where people crave and long for American goods and fashion, will never work in Europe where the anti-American sentiment makes people resist US products and people. Disney should have built Euro-Disney in a mixture of European cultures and folklores with the typical Disney characters, adopting local characters in the medium run.

Another key aspect, often overlooked by American corporations abroad is the relationship with government and the leverage obtained through such relationship. In this case, many labor issues could have been negotiated in advance with the French government which could have saved Euro-Disney US$ millions during off-peak season. Since foreign ownership in many countries is restricted in certain industries, it is always wise to make the government one of your best allies in your business venture or even a preferred partner. Many US ventures abroad try to keep government involvement to the minimum following the American style, but at the end this can result very costly and when you need an exit from bankruptcy, government may be your only way out.

When entering a new market abroad, best location, income per capita, population or many other demographic factors may not be the ultimate sign for choosing a country. In many instances your best host-country may be that one where secondary marketing conditions are sometimes overlooked but at the end become more relevant, for example National pride, resistance/craving for American products, little government bureaucracy and involvement, local and foreign competition, access to credit and restrictions on capital repatriation. These factors if considered in advance by Disney may have led them to a different choosing of location for Euro-Disney like Germany, Spain or even the UK.

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