Report of Euro Disney
... to speak English might not be a good idea. Visitors from other European countries might not be able to understand both English and French. Finally, French have more holidays than Americas of a year, thus the spending pattern might not be the same. In Japanese case, after a slow start, the theme park was enthusiastically accepted by the Japanese. In 1987 over one million school children, who normally would have been taken to the shrines of Japan, were brought to the park. Internal influence On Japanese market • Franchise Agreement The agreement with the Disney Company was simple. Disney took no ownership interest and would design the park and supply expertise in return for a royalty of 10% of the gate and 5% of concessions. Disney would also make sure that the Tokyo park was a close duplicate of the two American parks. Oriental Land wanted toe genuine article – Disney Americana. • Disney’s concerns It was obvious that the Disney management was concerned about constructing a theme park, using Disney characters and Disney trademarks, in an Asian country and in a cold environment. They were uncertain as to how well the Disney images, so popular with American audiences for generations, would be accepted by a foreign culture. With regard to the cultural challenge, Disney was able to prepare the Japanese market with a flood of cartoons, TV shows, movies, and cartoon characters. By the time the park was complete, Disney images were well known and growing in popularity in all segments of the Japanese population. The image of Mickey Mouse had become so popular that even Emperor Hirohito wore one on his wristwatch. The location of the park was another matter. Walt Disney had expressed strong doubt as to ever building a theme park in a northern climate. • Physical adjustments Although similar to the two American parks in most important features, Tokyo Disneyland does make heavy use of bilingual signs. In addition, the park includes a number of Japanese food entrees on the menu (along with hamburgers, French fries, and hot dogs, of course). Because of climatic differences, Tokyo being much father north than Orlando, the park designers enclosed waiting areas to protect visitors from the elements. In addition, a number of the rides have covers over them to protect riders. These changes permitted the park to effectively operate twelve months out of the year. • Cultural Adjustments In addition to the architectural changes to Tokyo Disneyland, there were also cultural and ethnic changes. “Melvin, Buff and Max, the antlered commentators at the Country Bear Jamboree, speak in the grave basso profundos of Kurosawa samurais” rather than the country twang found in the American parks. Alice in Wonderland was given Asian features. Frontierland was changed into Westernland (the Japanese don’t like frontiers). Finally, the centre of the entire park, Main street, was renamed the World Bazaar. These differences are relatively minor, however. The spirit and essence of the park are strictly Disney. • Impact on Company’s strategy The success of Tokyo Disneyland had one important effect on the Disney Company’s plans for expansion. Just as the success of Disneyworld had convinced Walt Disney to build a second park in Florida, the success of Tokyo Disneyland convinced Disney management to build a second park – a European park. Since there were certain similarities between the climates and the regions, management felt that if the Disney theme park idea worked in Japan, then surely it would work in Europe. On European market • Over optimism of Disney Management In relation to a serious of previous successful experiences, Disneyland management seemed very over optimistic about the Euro project. They were more worried that the park might not be big enough to handle the crowds: “My biggest fear is that we will be too successful.” “I don’ think it can miss. They are masters of marketing. When the place opens it will be perfect. And they know how to make people smile – even the French.” However, the truth turned out that not everyone in France was happy about the project. No matter how supportive the French government was, it was likely to say that the willingness to accept the project among French people was not completely convincing. • Deficiency of Disney Management The management team made many mistakes in its operations. For example, with the lack of the researches on cultural differences, they did not give enough training and motivation to French employees in efficient and customer orientation. • Arrogant mindset of Disney Management The Disney management was an arrogant mindset. The need for major streamlining of inventories and operations after the opening suggested the team was arrogant. Maybe the successful story of Tokyo Disneyland led them overestimate the coming numbers of visitors for Euro Disney. They believed customers would come in the control of their hands. • Miscalculations The Disney made crucial calculation mistakes. For example, they made mistakes in pricing hotel rooms and merchandising products. The biggest mistake they made was that they borrowed too much money from the banks, so the company ended with heavy debt. Because the revenue could not cover the interest payment, the breakeven point was much higher than expected. Unlike the location of the two American parks, the Paris region was considered a temperate climate with cold winters. For the most part, many of Disney’s concerns were neutralised by the success of the Tokyo park, but there remained some anxiety as to whether the park would generate sufficient crowds during the winter months. Since the Japanese park faced the same problem, Disney designers made similar adjustments in the Euro park design (extensive sheltered areas and numerous fireplaces). Management was now fairly certain the French would support the park in November, December, and January. • Euro Disney’s Personnel Robert Fitzpatrick, an American with fluency in French (his French wife), was selected as the president of Euro Disney. His appointment was seen as a means of demonstrating Disney’s commitment to French culture. Unluckily, however, he was unable to establish the rapport needed and was replaced in 1993 by a French native. 2. Discuss the significance to the company of cultural analysis with regard to the European customer market. The main reason for Euro Disney to fail in its opening period was the lack of understanding of culture. Nowadays, most multinational companies adapt transnational business strategy. It means they use global business strategy with local adaptation to win the foreign market they are targeting. In other words, to be able to understand what the needs and wants from the consumers abroad is extremely vital for MNCs, such as, Walt Disney. First of all, it is necessary to identify what culture is. One of the best definitions of culture was offered by Stacey (1996): The culture of any group of people is that set of beliefs, customs, practices and ways of thinking that they have come to share with each other through being and working together. It is a set of assumptions people simply accept without question as they interact with each other. At the visible level the culture of a group of people takes the form of ritual behaviour, symbols, myths, stories, sounds and artefacts. Secondly, the importance of culture is another primary subject. Stonehouse, Campbell, Hamill and Purdie (2004) commented that culture is important to transnational organisations in several respects including consumer behaviour and management. Here are the researches they made: • Consumer behaviour Culture is an important influence on consumer behaviour, consumption patterns, preferences and expenditure patterns. In the case of Euro Disney, European visitors were far more frugal than their American counterparts. Perhaps it resulted from the economic recession in Europe at that time, but it did not mean that cultural difference could be neglected. For example, like many others, a French family toured Euro Disney on a 3-day visit, and they kept a “no spend” attitude. Disney had initially priced the park and hotels to meet revenue targets and had assumed demand was there at any price. The pricing strategy soon became a failure in that guests were not staying as long or spending as much on the fairly high-priced food and merchandise. The company also assumed that European visitors would not be greatly different from those visitors, foreign and domestic, of U.S. Disney parks. Yet, at least in the first few years of operation, visitors were much more price conscious. This suggested that those within a 2- to 4- hour drive of Euro Disney were considerably different from the ones who travelled overseas, at least in spending ability and willingness. • Transnational organisations and their management The dimensions of culture identified by Hofstede and Trompennars will affect the approach to management adopted within a transnational organisation. Management in transnational will inevitably have to take account of cultural differences like the importance attached to time, the need for formality in work relationships, the importance of ability versus seniority and so on. Culture will also have an important effect on the attitudes to work of employees, aspects of motivation, loyalty to the business, personal initiative and collective responsibility. To take the case as an example, Disney had problems in motivating and training its French employees in efficiency and customer orientation. It could be caused by both an intractable French mindset and a deficiency of Disney management. Regardless these possible reasons, Disney management should have researched all cultural differences more thoroughly after all. • Culture and success Culture will be an important determinant of how effectively the organisation operates and has important implications for employee motivation. The linkages between culture and successful strategy can be the following: 1) Successful organisations tend to have cultures that emphasise excellence, quality and good customer service. 2) Culture should not be seen as static – it must change as environmental conditions change. 3) Culture is closely linked to the vision and mission of the organisation. With little experience of European culture, Euro Disney was not able to meet hotel occupancy and expenditures per visitor projections. There were far below expectations and were placing a strain on the theme park’s finances. This poor showing also drew Disney’s California-based senior management directly into the crisis in late 1993. The management team highly expected another huge success after the one built in Tokyo. Unfortunately, however, European market is different from Japanese market. Europeans are proud of their culture and having difficulty in shifting their own to another – American culture, the totally opposite one. On contrast, Japanese tend to accept the American fit more easily. It was not a wise idea for Euro Disney to follow what Tokyo Disneyland did in terms of environmental change. In general, the pace of culture change cannot always be controlled by managers. Due to the lack of knowledge of European market, Disney management did not achieve their goals. They wanted to: 1. Meet the goal of 11 million visitors at the end of one operational year. 2. Generate a profit from the theme park and the hotels by the end of the third operational quarter and continue to expand profits in each succeeding quarters. 3. Develop the financial foundation with the theme park and its supporting hotels so as to continue with the second phase (an American-like office park complex and another theme park – MGM/Disney) and the third phase (a housing project and a second theme park). 4. Have all of the elements of the project reinforce each other; thereby making the sum of the parts greater than the individual parts themselves and subsequently increasing tourist activity. 3. How might a strong marketing approach be made to key European customer groups e.g. consumers, travel agents, tour guides and bus drivers? A correct and strong marketing approach can be the important factor for a company to win the market share. The adoption of global marketing strategies involving co-ordination and integration of the needs of European customers should be considered. Therefore Euro Disney needed to a...