Finance Analysis of Disneys Decision to Build a Theme Park in Europe - Case Study Example

first Euro Disney Assess Disney’s decision to build a theme park in Europe. How can such a decision be evaluated and was it a wise one? The case study on Euro Disney shows Disney’s decision to build a theme park in Europe based on its market research to be highly possible and also challenging considering the incredible number of issues in terms of location, labor, environment, and regulations are concerned; however, its popularity as understood from the number of European visitors in America seemed to defy this stance. Its entry into new market, after successful entry in Japan, seems to be the right thing to do in order to grow its business. Europe is the nearest and best market that Disney could enter compared to any other region of the world. Friendly political conditions provided a boost to its entry. However, environmental and social conditions in its chosen location were hostile, which were detected only at later stages. 2. What is Euro Disney’s target market, and what are the implications for the development and organization of the park? Euro Disney’s target market in general was the younger generation and children though it provided entertainment for people of all age groups. As assessed by Arthur D. Little (ADL) based on the location, population and largest penetration rates, Marne-la-Vallee, near Paris in France certainly seems far from perfect location that is accessible to larger European nationals. However, based on the European visitors in America, this was probably the most suitable one from a positioning strategy perspective. This location is close to countries like Germany, Portugal, UK and Switzerland, all of which are also high in attracting maximum numbers of tourists from different parts of the world. Vacationing habits of the Europeans seemed to add greater benefit to Euro Disney compared to its American business. Added to this, the French Government’s support adds great value to Euro Disney’s profitability in the long run. It was the French government’s mistake of not establishing harmonious alliances with the local farmers that later create issues for Euro Disney. Euro Disney entered the European region during a time when they were facing recession, which could have affected their spending habits. At that time, European political environment was much stable to provide a peaceful business environment to Disney, which is a crucial element for cross-border business establishment. 3. What issues should a company like Disney think through before extending a successful concept across cultural boundaries? An important cultural perspective that Euro Disney thought of is its design that included European flavour and interests, though it affected its own Americanism that some of its visitors detested. Euro Disney was quick to understand the Europeans’ concerns for long waiting lines and provided them with other entertainment activities for visitors standing in line, which was well appreciated. Despite considering the differences in food habits and providing diverse food options, visitors continued to show their dissatisfaction about food. In fact, Euro Disney also considered the Europeans’ yearning for alcohol and provided separate areas for serving alcohol, much against their policies in American and Japanese centers. Cross-cultural businesses have their own set of challenges. Firstly, customer expectations and preferences are usually influenced by the cultural beliefs and value systems. Secondly, human resources come with different cultural backgrounds that might have diverse motivating factors. Thirdly, national cultures have a strong influence on organizational cultures and hence policies and practices have to be aligned to national culture; policies and practices followed at head-quarters from a different country most often do not get accepted in foreign cultures and organizations. Most importantly, Euro Disney was unsuccessful in providing customer service that was of the Disney standards; this is because of cultural influence and attitude towards customer service in the European region which is very different from that of the American notions of customer service. No amount of training and orientation could imbibe such service attitudes in the European staff members. Disney’s culture requires patient, obedient and disciplined staff, like in Tokyo, to handle large numbers of visitors, which not the case with European nationals that are less patient and demanding. 4. Assess the implementation of Euro Disney’s service delivery system. What could the company have done differently? The main issue highlighted at Euro Disney was its confusing culture, whether it was American or European, or French. While Euro Disney tried to blend European flavour with American style, it failed to impress the guests because most of the guests were non-French and probably non-European. With their European flavour in entertainment sector, Euro Disney should have trained its European-origin employees to provide American customer service. The European characters were only to show some Europeanism to the protestors that felt American cultural dominance had begun in European region. In fact, it should be noted that it would be impossible to answer conventional beliefs, but can impress the guests through best service and behavior that would be appreciated by all. The cast members were probably not embracing American service delivery standards due to their cultural values. Another perspective to improve service delivery is complete adaptation to the European service patterns, communication, employment standards including compensation, working patterns etc. Disney’s adherence to its American type of operating or originality affected its business in Europe, unlike in Japan that embraced its Americanism with great success. 5. Should Euro Disney proceed with the next step of development? Euro Disney should proceed with the next step of development considering its potential to make a deeper impact in this market. It is important to note that Euro Disney is not a total disaster, and hence has ample potential for improvement. However, before proceeding with development, it is important to address some of the current issues. For instance, they have to reduce the waiting lines by introducing more rides. They have to modify their employment policies and practices according to the French expectations and regulations. They need to improve guest service with robust cultural awareness and training for cast members and other staff. Minimizing management by foreign managers and increasing local managers will reduce challenges in the HR. They should also reduce prices to match with local markets. To improve profitability, Euro Disney has to improve marketing and promotional activities of all its offerings instead on focusing on specific popular services. Employee retention has to be given special attention, which would be possible only with greater involvement and interaction between management and staff; this would again require better understanding of employees’ nature, preferences, and beliefs, which would be possible through local leadership teams. Works Cited Euro Disney: The First 100 Days, Harvard Business School, 1993. Read More