Euro Disney

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.