EuroDisney(final2)

CASE PAPER #1 (THE NOT-SO-WONDERFUL WORLD OF EURODISNEY) Globma, 21 May 2011 Group 2  Quincey Huang Jojo Javier  January Mamauag Agnes Villarivera

I.

Background1

EuroDisney EuroDisney SCA formally formally launched its theme park to Europeans

in

Apr April

1992

near near river river Marn Marne, e, 20 mile miles s East of Paris ris. It was the biggest

and

most

lavish

theme park that Walt Disney (Dis (Disne ney) y) had had buil builtt bigg bigger er than any of its Disney parks around the world.   The location was chosen over over 200 200 pote potent ntia iall site sites s in Europe from Portugal through Spain, France, Italy and Greece. Spain was the strongest contender for the park location but its inadequate acreage of land around Barcelona paved way for Paris to be the chosen location, add to that the generous incentives and impressive regional demographics presented by the French government. Disney Management expected Europeans to receive the theme park park in the same same behavi behavior or that that their their Japane Japanese se counte counterpa rparts rts for Disneyland-Tokyo did for Mickey Mouse and other famous Disney characters but the projected operating of S100 million during the first year of operation became a loss of $900 million by summer of 1994. 1

Case 2-1 p.614, Cateora & Gram, International Marketing (13 th Edition)

Page 1 of 22

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CASE PAPER #1 (THE NOT-SO-WONDERFUL WORLD OF EURODISNEY) Globma, 21 May 2011 Group 2  Quincey Huang Jojo Javier  January Mamauag Agnes Villarivera

EuroDisney failed to attract the expected number of European visitors especially French visitors because the theme park was seen as Amer Americ ican an impe imperi rial alis ism m where where Ameri America can n fairy fairy-t -tale ale chara charact cters ers compet competed ed and lost lost over over loveab loveable le French French cartoon cartoon charac character ters s like like Astérix, the helmeted, pint- sized Gallic warrior who has a theme park beside EuroDisney.

II. Problem/s a. EuroDisney has lost $900 million from 1992-1994;

b. Europeans Europeans failed failed to “go “go goofy” goofy” over Mickey Mickey Mouse Mouse unlike their their  Japanese counterparts; c. French cartoon cartoon themed themed parks parks compete compete with EuroDi EuroDisney; sney; d. Construction

cos costs

ballooned

from

$2.37

billion

to

an

additi additiona onall $340 $340 millio million n as a result result of themetheme-par park k add-on add-ons s which failed to attract visitors( e.g. expensive facilities like trams were built to ferry visitors inside the theme park when most visitors prefer walking); e. A “barnstormin “barnstorming, g, kick-the-do kick-the-door-do or-down wn attitude” attitude” of US decision decision makers makers aliena alienated ted many many EuroDi EuroDisne sney y and Disney Disney manage managers rs from from their their counte counterpa rparts rts in govern governmen ment, t, banks, banks, ad agenci agencies es and other concerned organizations. f. Disn Disney ey plan planne ners rs fail failed ed to fore forese see e exte extern rnal al thre threat ats s such such as

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CASE PAPER #1 (THE NOT-SO-WONDERFUL WORLD OF EURODISNEY) Globma, 21 May 2011 Group 2  Quincey Huang Jojo Javier  January Mamauag Agnes Villarivera

g. Disney planners also failed to study the European culture and

beha behavi vior or (e.g. e.g. wine wine drin drinki king ng amon among g Fren French ch with with meal meals, s, preference for redder than red nail polish among women); h. EuroDisney was on the verge of bankruptcy in 2005.

III.Discussion Questions

1. What factors factors contribute contributed d to Euro-Disne Euro-Disney’s y’s poor performance performance during its first year of operation?

a. Visi Visito tors rs to the the park park were reluc relucta tant nt to spen spend d $280 $280.0 .00 0 a day day to enjo enjoy y the the park park attr attrac acti tion ons. s. Its Its hote hotell room rooms s were were much much more more expensive than top hotels in Paris. b. Airfar rfare es

were

cheaper to

Disneyworld

in

Orlando

Flo Florida

compared to Paris. The weather was also much better in sunny Florida. c. French French visitors visitors stayed stayed away because because of the histori historical cal animosi animosity ty between the French and Americans.

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CASE PAPER #1 (THE NOT-SO-WONDERFUL WORLD OF EURODISNEY) Globma, 21 May 2011 Group 2  Quincey Huang Jojo Javier  January Mamauag Agnes Villarivera

e. Ther There e were were high high inte intere rest st rate rates s and and the the deva devalu luat atio ion n of seve severa rall currencies against the franc. f. They They compe compete ted d agai agains nstt the the Worl World d Fair Fair in Sevi Sevill lle e and and the 1992 1992 Barcelona Olympics. g. They banned banned alcohol alcohol in a wine loving loving culture culture.. h. Disney Disney executi executives ves also also did not invite invite investo investors rs to a share in the project. They wanted to design and build themselves with a view to selling at a profit. They were influenced by their experience in   Tokyo Disneyland when they licensed its name and image to another company who raked in all profits and left the parent company with a meager share. i. They downsized downsized breakfast breakfast service service because because they were erroneousl erroneously y informed that Europeans don’t eat breakfast. 2,500 customers showed up in 350 seat hotels.  j.  j. Euro Europe pean ans s spent spent only only 1 or 2 days days to visit visit the park park compa compare red d to their American counterpart who spent at least 3 days. k. They also failed to consider the vacation ion customs of the Euro Europe pean ans. s. Euro Europe pean ans s enjo enjoye yed d mont month h long long vaca vacati tion ons s whil while e Americans preferred short but several vacations in a year. l. Disney Disney stres stressed sed the the size and and sheer sheer magnitu magnitude de of the the park rathe ratherr than than the the ente entert rtai ain nment ment value alue it offe offere red d in its its marke arketi tin ng campai campaigns gns.. This This report reportedl edly y “ruine “ruined d the magic” magic” Disney Disney parks parks were known for.

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CASE PAPER #1 (THE NOT-SO-WONDERFUL WORLD OF EURODISNEY) Globma, 21 May 2011 Group 2  Quincey Huang Jojo Javier  January Mamauag Agnes Villarivera

fores fo reseea eeable ble and contro controlla llable ble by either either Euro Euro Disney Disney of the the  parent company, Disney?

Most of the mentioned factors were mostly foreseeable and controllable. It was a matter of looking more deeply into the cultural aspects of the business. They should have hired a mix of European executives that knew the culture. If they were involved from the initial conception and had a large hand in managing the park, it could have mitigated the risk factors that caused their harrowing experiences. They only realized in the end that “ Guests need to be welc welcom omed ed on the the basi basis s of thei theirr own own cult cultur ure e and and trav travel el habi habits ts.”  .” 

Disn Disney ey fail failed ed to adap adaptt to the the envi enviro ronm nmen enta tall diff differ eren ence ces s of one one market to another. Adaptation is a conscious effort to anticipate the influences influences of both foreign and domestic domestic uncontrollable uncontrollable factors on a marketing mix and then to adjust the marketing mix and minimize the effects of cultural diversity.

3. What

role

does

ethnocentrism

play

in

the

story

of 

EuroDisney’s launch?

Ethnocent Ethnocentrism rism is the tendency to believe that one's ethnic or cultural group is centrally important, and that all other groups are measured in relation to one's own. The ethnocentric individual will  judge other groups relative to his or her own particular ethnic group or culture, especially with concern to language, language, behavior, customs, and religion. religion. This is a particular problem for American managers

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CASE PAPER #1 (THE NOT-SO-WONDERFUL WORLD OF EURODISNEY) Globma, 21 May 2011 Group 2  Quincey Huang Jojo Javier  January Mamauag Agnes Villarivera

As a form former er Disn Disney ey exec execut utiv ive e cited “Disney Chairman Michael Eisner and President Franck Wells had never made

a

single

misstep,

never

a

mistake, never a failure. There was a tendency to believe that everything they touched would be perfect.”  The roots of Disney’s problem in EuroDisney may be traced to their tremendous success in Tokyo Disneyland. The park was a success from the first day and has been visited by millions of Japanese who wanted to capture as they perce rceives as the ultimate U.S. entertainment experience. France is undoubtedly the first response that comes to mind when when asked asked which which countr country y in Europe Europe is the most most anti-A anti-Amer merica ican. n. Even before the days of De Gaulle and Chirac, it seems that France has has alwa always ys been been at the the fore forefro front nt of anti anti-Am -Amer eric ican an anim animos osit ity. y. However, polling data in the early 2000s reveal that France is not drasti drastical cally ly more more anti-A anti-Amer merican ican than than other other Europe European an countr countries ies – even less so on a variety of dimensions.

  4. How How do you you asse assess ss the the cros cross-c s-cul ultu tura rall mark market etin ing g skil skills ls of  Disney?

In the early stage of EuroDisney, POOR would be the most approp appropria riate te assess assessmen mentt for the crosscross-cul cultur tural al market marketing ing skills skills of  Disn Disney ey.. The The Disn Disney ey mana manage geme ment nt team team had had fail failed ed to cond conduc uctt a

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CASE PAPER #1 (THE NOT-SO-WONDERFUL WORLD OF EURODISNEY) Globma, 21 May 2011 Group 2  Quincey Huang Jojo Javier  January Mamauag Agnes Villarivera

park management and initial financing of the park. Disney has always prided itself on quality of service that its visitors will experience but it fell short of being sensitive to the cultural differences between Americans and French people such as: •

Eating habits of Europeans. Unlike Americans who were

used to snacking many times in a day, French people have a more more fixed fixed schedu schedule le wherein wherein leisur leisurely ely lunch lunch starts starts at 12:30 in the afternoon res resulting in long queues in restaurants due to the inadequate seating and staffing to accommodate the influx if diners. 2 French people are also knows knows to enjoy their meals with wine while Disney banned alcohol consumption inside the premises. •

Personal Grooming. French women liked to wear redder

nail polish in the United States so the Disney rules on nail polish for women employees was relaxed a little but the grooming for the park’s male employees facial hair to have a clean-shaven, neat and tidy look was maintained. •

Walking versus Riding. Expensive trams were built along

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CASE PAPER #1 (THE NOT-SO-WONDERFUL WORLD OF EURODISNEY) Globma, 21 May 2011 Group 2  Quincey Huang Jojo Javier  January Mamauag Agnes Villarivera

changes in their marketing strategy to adjust to the needs of the location: •

Blend

of

European

influence

in

Disney  

entertainment.  The new-movie themed park in Paris

designed to be a tribute to moviemaking “blends Disney Ente Entert rtai ainm nmen entt and and attr attrac acti tion on with with the the hist histor ory y and and culture of European film”. •

Reva Re vamp mp of Disn Disney ey Char Charac acte ters rs and and Prop Props. s.  The

characters in the new theme park speaks 6 different langua language ges s and utiliz utilizes es backd backdrop rops s inspir inspired ed by French French towns. •

Food

Variety.

When

visito visitors rs compla complaine ined d of the lack of choices for sausages in

Euro EuroDi Dis sney, ney,

the

park ark

revamped its menu to cater to the multip multiple le indige indigenou nous s tastes of various European cultures.

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CASE PAPER #1 (THE NOT-SO-WONDERFUL WORLD OF EURODISNEY) Globma, 21 May 2011 Group 2  Quincey Huang Jojo Javier  January Mamauag Agnes Villarivera

States was Tokyo Disneyland in Japan. Between 1990 and 1992, 14 million people had visited Tokyo Disneyland, three-fourths of who returned to visit. An ordinary family of four would also send $600 a night to stay in a Disney hotel.   This international and instant success for a theme park had rendered management to be very optimistic of their expectation in success in France. In the company history of EuroDisney SCA found at http://www.fundinguniverse.com/company-histories/Euro-DisneySCA-Company-History.html,, the article mentioned that Walt Disney SCA-Company-History.html company intends to capitalize on the experi experienc enced ed gained gained from its internat internation ional al exposure exposure

in

 Tokyo and saw that Europe was the next logical choice due to its long established acceptance of Disney products and films, the latter having wider audience in Europe than in America. Its population of  320 million with airplane distances of less than 3 hours also made the option very lucrative. Disney also intended to correct the business opportunities it lost lost by fail failin ing g to fore forese see e pote potent ntia iall mone moneyy-ma make kers rs.. In Orla Orland ndo, o, Flor Florid ida, a, the the deve develo lopm pmen entt of hote hotels ls and and othe otherr them theme e park parks s and and

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CASE PAPER #1 (THE NOT-SO-WONDERFUL WORLD OF EURODISNEY) Globma, 21 May 2011 Group 2  Quincey Huang Jojo Javier  January Mamauag Agnes Villarivera

investment.

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

  Yes Yes..

The The them theme e park park would would have encou encount ntere ered d the the same same

prob proble lems ms if a loca locati tion on in Spai Spain n had had been been selec selecte ted. d.

Spai Spain n is

geographically seated next to France. As such, both are inclined to have similarities in many respects, in terms of origins and culture, climate, experiences in economy, economy, and history. Being common common with France France in these these aspect aspects s should should pose pose simila similarr proble problems ms had EuroEuroDisney Disney broken ground ground in Spain. Spain. Below Below are some traits traits inherent inherent to both France and Spain:

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CASE PAPER #1 (THE NOT-SO-WONDERFUL WORLD OF EURODISNEY) Globma, 21 May 2011 Group 2  Quincey Huang Jojo Javier  January Mamauag Agnes Villarivera

More importantly, history will show that Spain’s relation with the United States of America is not quite welcoming. Both oth Fran France ce and Spai Spain n shar share e comm common on

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CASE PAPER #1 (THE NOT-SO-WONDERFUL WORLD OF EURODISNEY) Globma, 21 May 2011 Group 2  Quincey Huang Jojo Javier  January Mamauag Agnes Villarivera

After

the war, ar, Spain ain’s relati ationship with the U.S. was

predominantly for the country’s economy and national defense. defense. The increased commercial trade operations in Spain as a result of trade agreements with the U.S., has improved Spain’s domestic economy. “The “The 1953 1953 Pact Pact of Madrid Madrid betwee between n Spain Spain and the United United State States s provided for mutual defense as well as for United States military aid, and it brough broughtt to an end Spain' Spain's s post-w post-war ar isolat isolation ion.. It did not however,

end

anti-Americanism

( http://countrystudies.us/spain/89.htm http://countrystudies.us/spain/89.htm )

in

Spain .”

  This anti-Americ anti-Americanism anism

attitude attitude has dragged dragged on to the the early 1990’s. 1990’s. It was during during these these times that the Partido Socialista Obrero Español (Spanish Socialists

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CASE PAPER #1 (THE NOT-SO-WONDERFUL WORLD OF EURODISNEY) Globma, 21 May 2011 Group 2  Quincey Huang Jojo Javier  January Mamauag Agnes Villarivera

Given all these similarities between the cultures of France and Spain, the recession in Europe during the early 1990’s, and taking extr extra a cons consid ider erat atio ion n the the cold cold rela relati tion onsh ship ip betw betwee een n Spai Spain n and and America that dates back to the 19 th century, we believe that Spain’s welcom welcoming ing commit committee tee for a suppos supposedl edly y Euro-D Euro-Disn isney ey Spain Spain is no more hospitable than France. It is also interesting to know how Europeans view Americans (in %):

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CASE PAPER #1 (THE NOT-SO-WONDERFUL WORLD OF EURODISNEY) Globma, 21 May 2011 Group 2  Quincey Huang Jojo Javier  January Mamauag Agnes Villarivera

7. In ligh lightt of the the near near-b -ban ankr krup uptc tcy y in 2005 2005,, eval evalua uate te the the  proposed plans to strengthen Disney’s appeal to the French market.

  The case cited several action plans by Disney for the year 2005, as follows: a. Make Euro Disney a cheaper vacation destination .

Following the European recession in the early 2000’s, most of the European Union (EU) members, including France, suffered from high unemployment rates in 2005 and onwards:

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CASE PAPER #1 (THE NOT-SO-WONDERFUL WORLD OF EURODISNEY) Globma, 21 May 2011 Group 2  Quincey Huang Jojo Javier  January Mamauag Agnes Villarivera

“wholesale” “wholesale” more more expensive expensive tour. tour. The plan to lobby lobby for the use use of the Charles de Gaulle airport for low-cost airlines would bring the park closer to a larger number of Europeans.

b. Introduce a new Disney character tailored for the European

audience. The The debu debutt of the the Pump Pumpki kin n Ma Man n in Disneyland Paris is a simple but very  effe effect ctiv ive e way way of capt captur urin ing g Fren French ch enthusiasm to enter the park, mainly  because he is French He is a

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CASE PAPER #1 (THE NOT-SO-WONDERFUL WORLD OF EURODISNEY) Globma, 21 May 2011 Group 2  Quincey Huang Jojo Javier  January Mamauag Agnes Villarivera

Europ European eans. s. As stated stated in the case, case, the problem problem is the “lack “lack of  attrac attractio tions” ns” to justify justify the entranc entrance e fee. fee.

Not the lack of rides. rides.

Perhaps an option may be the remodelling of certain rides that are not attractive and are not contributing enough to net income. For example the Armageddon—Special effects:

Since it was too

American, it flopped. flopped. Disney may transform transform that part part of the Walt Disney Studio into a French attraction such as “The City of Lost Children”, based on the 1995 fantasy/adventure French movie “La Cité des Enfants Perdus” about a mad scientist who steals childr children’ en’s s dreams. dreams.

This This would would definite definitely ly be a hit to Europe’ Europe’s s

chil childr dren en and and the the roll roller er coas coaste terr chas chase e coul could d be made made hear heartt poun poundi ding ng for adults adults as well well..

The The Pump Pumpki kin n Man Man coul could d be the

perfect host for this city. We beli believ eve e that that impr improv ovin ing g exis existi ting ng attr attrac acti tion ons s to suit suit to the the

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CASE PAPER #1 (THE NOT-SO-WONDERFUL WORLD OF EURODISNEY) Globma, 21 May 2011 Group 2  Quincey Huang Jojo Javier  January Mamauag Agnes Villarivera

be challenging but the results would be rewarding in terms of  bett better er serv servic ice e to the the visi visito tors rs,, live liveli lier er perf perfor orma manc nces es,, more more enth enthus usia iast stic ic host hosts, s, and and bein being g able able to deli delive verr a trul truly y magi magica call experience.

8. Now that Disney has opened Hong Kong Disney and begun work on the Shanghai location, where and when should it go

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CASE PAPER #1 (THE NOT-SO-WONDERFUL WORLD OF EURODISNEY) Globma, 21 May 2011 Group 2  Quincey Huang Jojo Javier  January Mamauag Agnes Villarivera

However, for the long term such as in 5 years ars, it is recommended that Disneyland select from three possible locations: Sydney Sydney (Austr (Australi alia), a), Seoul Seoul (Korean (Korean), ), and and even even Dubai Dubai (The (The United United Arab Emirates).

Seoul : Location: In the the nort northw hwes estt is foun found d the the capital and

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CASE PAPER #1 (THE NOT-SO-WONDERFUL WORLD OF EURODISNEY) Globma, 21 May 2011 Group 2  Quincey Huang Jojo Javier  January Mamauag Agnes Villarivera

Culture: Opening and multi-culture. Tourism: In the year ending March

2008, Sydney received 2.7 million international visitors. Transportation: Bus, LRT and Sydney Airport is Sydney's main airport.

Dubai:

It is located south of the Persi Persian an Gulf  Gulf on on the Arabian Peninsula and and has has the the larg larges estt popu popula lati tion on with with the the

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CASE PAPER #1 (THE NOT-SO-WONDERFUL WORLD OF EURODISNEY) Globma, 21 May 2011 Group 2  Quincey Huang Jojo Javier  January Mamauag Agnes Villarivera

world location (capacity to attract tourists). Seoul in Korea has a very small land area compared to the other two locations and in Asia alone, there are already 3 Disney parks: Disney Tokyo, Disney Hongkong and Disney Shanghai. If Disney will settle in Korea, it will no longer have any competitive advantage. Sydney located in Australia is multi-cultural and attracts a large number number of tourists tourists there is no Disney park in Oceania. Oceania. Locating Disney in Sydney may be at a disadvantage because Sydney is a famous tourist city

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CASE PAPER #1 (THE NOT-SO-WONDERFUL WORLD OF EURODISNEY) Globma, 21 May 2011 Group 2  Quincey Huang Jojo Javier  January Mamauag Agnes Villarivera

9. Given your choice of locale X for the newest Disneyland, what what are the operat operation ional al implic implicati ationa onall implica implicatio tions ns of the history of EuroDisney and Disney Hong Kong for the new  park?

Before Before undert undertakin aking g anothe anotherr large large ventur venture e such such as Disney Disney--

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CASE PAPER #1 (THE NOT-SO-WONDERFUL WORLD OF EURODISNEY) Globma, 21 May 2011 Group 2  Quincey Huang Jojo Javier  January Mamauag Agnes Villarivera

consider such occasions and cater Halal foods its Muslim visitors. Environment and Location : In EuroDisney, the choice was