euro disney
TRANSCRIPT
Euro Disney: From Dream to Nightmare
Matt CastingsMelissa Harward
Margo PossehlEric RomanoBrian Starks
Taylor Wallace
Euro DisneylandOn April 12, 1992, Disney officially opened Euro
Disney,a $4 billion USD, 4,300 acre resort located just
east of Paris, France.
Despite over seven years of planning and countless hoursof research, Euro Disney quickly developed into one of the most costly mistakes in the company’s history.
After their great success in Tokyo, Disney was very optimistic about its next park, Euro Disney.
Disney believed they could establish a competitive advantage in the European theme park industry using their vast resources and capabilities to create an economy of scale.
To achieve this competitive advantage Disney made a large initial investment and essentially overbuilt their park to accommodate the visitors they expected.
The Walt Disney Company
Mission“The mission of The Walt Disney
Company is to be one of the World’s leading producers and
providers of entertainment and information. Using our
portfolio of brands to differentiate our content, services and consumer
products, we seek to develop the most creative, innovative and profitable entertainment
experiences and related products in the world.”
Dilemma: Lack of ResearchPoor info: Researchers depended on unreliable indicators
such as Tokyo Disneyland’s success and an annual European visitor count for Disneyland and Walt Disney World
Poor assumptions: Disney’s perception of European standards led them to spend large amounts of money on high quality products and facilities.
Poor strategy: The park lacked a unified vision. "European folklore with a Kansas twist"
Poor timing: The park was built during one of Western Europe’s worst economic downturns since World War II.
Cultural ChernobylFrench felt threatened by the invasion
of American culture and languageAdaptation of Cinderella’s and Snow
White’s attractionsUnique attractions to the park
Discoveryland Visionarium
High-quality food and entertainmentAlcohol policy
Domestic approach to employee recruitment and training replicated at Euro Disney
Staffing requirements, hiring policies and "The Euro Disney Look" challenged by French labor unions as "an attack on individual freedom"
Park History
DisneylandCalifornia, 1955Opened with one park, one hotel. Expanded in early 1990s
Walt Disney World ResortFlorida, 1971Opened with one park, 2 golf courses, 3 hotels and a campground. Expanded over time to encompass 4 theme parks, 2 water parks
and 23 hotelsTokyo Disneyland
Japan, 1983… approached Disney to open park on their own…
“Walt Disney pioneered the theme park concept. His goal was to create a unique entertainment experience that combined fantasy and history, adventure, and learning in which the guest would be a participant, as well as a spectator.”
PESTELEnvironmental
Market potential: 109 million people in a 480 km radius
French location had cloudy weather much of the year
Indirect competition in forms of traditional festivals or more culturally-rich attractions
Few direct competitors posed a threat to Euro Disney. 5 other theme parks in
France sprang up to compete but all 5 quickly failed.
LegalPressured to hire 70% of
its workforce from local French population
Differences in French employee rights and expectations of performance.
SocialCombination dubbed a
“Cultural Chernobyl.” Disney adapted many
stories for Europe More Western theme
attractions Video screens to
entertain guests waiting in line.
Increased quality of food and restaurants attempting to appeal to European tastes
Porter’s 5 ForcesThreats of Substitutes• Considerably high. The company
recognized that a wide range of family vacation and entertainment experiences compete for household disposable income.
• Being in Europe, they are competing with cities that offer a richness and variety of cultural and historical experiences far different than Euro Disney for family vacations.
Threat of New Entrants• New entrants seem to be having as hard a time getting started as Disney. • Within two years of Disney’s announcement to build Euro Disney, three
French there parks opened in an attempt to preempt Disney’s entry into the market. By the summer of 1989, two more theme parks opened their gates.
SWOT AnalysisStrengths• Brand recognition of
“Disney.”• Greater financial ability
then many companies in foreign territories.
Weaknesses • The Disney “culture”
does not fit with the culture of all foreign countries.
• High risk, high investment involvement
Opportunities• Room for expansion and
development in untapped countries.
• Opportunity to integrate other cultures into the atmosphere of the park.
• Customizing employee standards to reflect those of the different cultures.
Threats• Other historical locations and
vacation destinations• High Costs• Bad Weather
Key Success FactorsDisney Brand
Famous characters, stories, settings, etc would immediately attract attention without as much advertising
Known for customer and employee focus and outstanding service
CapitalVast financial resources allowed rapid development on a
large scale.Experience
4th theme park in Disney’s history after Disney Land, Disney World, and Tokyo Disney.
Top management had previous knowledge of things to expect
Disney had improved its technologies used in theme parks to further improve the quality of the customer’s visit
Industry Critical Factors-BrandingDisney theme parks benefit from the talent and expertise of the Walt
Disney “family” of businesses.Disney has the advantage of having a good reputation and consumer
recognition all around the world.The themes for attractions and the characters that are featured in
them often have their origins in cartoons and movies produced by Disney’s studios.
The huge parks allow Disney to broaden the scope of its theme park activities to create themed hotels, offer golf courses and other sports, convention facilities, night clubs, a range of retail stores, and even residential housing.
Europe had always been a strong market for Disney movies, and there was a high demand for toys, books, and comics that featured Disney characters.
European consumers generated about one-quarter of revenues from Disney licensed Disney characters.
How’s it doing?Euro Disney opened in 1992 with 7 hotels, changed its
name to Disneyland Paris in 1994, turned its first profit July 1995.
2 theme parks (second park opened in 2002), 7 resort hotels, 6 associated hotels, golf course, railway station
Wrote off French company’s debt in 2005
As of 2007, Disneyland Paris is $2 billion in debt.
Tokyo Disney is working around power restrictions to reopen in April. Only a parking lot was affected by the quake.
Group Discussion
Less importantBargaining Power of SuppliersRealistically there is little bargaining power of suppliers
because of the entire Disney conglomerate of companies. Disney theme parks benefit from the talent and expertise of the Walt Disney “family” of businesses. Parks are designed by the engineers and architects of a wholly owned subsidiary – WED Enterprises.
Bargaining Power of CustomersAgain, there really is not much bargaining power from the
customers side. They don’t have many alternatives to the “giant” theme park of Euro Disney. Luckily Euro Disney will have a wide array of customers that will be able to attend the park from anywhere in Europe.
PESTEL Cont’d•Political• Lightning rod for political protests against U.S.• French labor unions called Disney’s hiring process “an
attack on individual freedom.”
•Economic• Europe was experiencing one of its worst economic
downturns • Actual attendance, average spending per customer and hotel
occupancy was well below projections for the first year.• According to GAAP, pre-tax loss totaled over $0.5 billion
•Technological• Disney’s experience with engineering rides and
attractions made construction and planning easier.• Revamping aspects for more European appeal increased
development costs considerably.