Operation Management Issues Facing Disney - Essay Example

? Operations Management – Hospitality & Tourism Introduction Disney land today is a word that is recognizable to each and every person interested in entertainment. Disney land is the entertainment phenomena of this age. Disney has five destinations all over the world stretched over three continents. Since its founding in 1923 Disney land has evoked a lot of sentiment from all areas in the world; both positive and negative stances. The organization has been quite extraordinary in the world as an industry (Caspari & Caspari 2004). This is mainly due to the extraordinary resilience of Disney during economic difficulties. During the last world recession towards the end of the last decade, Disney reported extraordinary profits for a company during such a tough economic time (chase & Tansik, 1983). In 1992 Disney opened up a new destination in Paris. This was after much analysis and lobbying behind the scenes on the location of the continental Europe branch. Two choices to be considered for the location were Spain and France (Cox, Blackstone & Schleier, 2003). After much analysis and consultation the Disney management decided to locate their new park in Paris France. Despite having unsuitable weather for a park such as a Disney, Paris had all the qualities of a promising market (Flynn, et. Al 1990). Paris was centrally placed in the European continent. This position made it easily accessible to many European citizens eager to experience Disney magic. However as it turned out the project almost watered down to oblivion from its opening and was still performing dismally as late as 2006 (Flynn, et. Al, 1995). Despite various administrative and structural changes in the company Paris Disney park is yet to pick up (Fuchsberg, 1992). This paper is going to look at operation management issues facing Disney, and ways in which through various theoretical explanations the operational problems can be dealt with. The Walt Disney Company founded in 1923 has been credited for its creativity, quality of services and customer oriented service, culminating to high levels of satisfaction in Disney’s clientele. It is this good legacy that prompted Disney to open up a new destination in Paris given the interest it evoked among Europeans (Goldrat, 1984; Gupta et al., 2000). Due to this, the company opened its Paris destination in 1992. Reports from different analysts and the media were highly optimistic that the breakthrough by Disney into the European market would be easy and fast. Policy of the existing Disney parks was projected to aid a lot in the venture (Goldratt, 1992; Goldratt, 1994). These factors and the overall goal of Disney of maximizing exposure and growth worldwide were projected to lead Disney through this period. Disney is also a unique family entertainment park since its services are enjoyable for people (Goldratt, 1997; Goldratt & Cox 1984). In Disney parks, different areas are themed around various areas which contain different attractions and rides which are not as scary as other rides in other parks making them acceptable to people of all ages (Goldratt et al 2000; Heizer & Render 2008). The first detrimental operational issue in Disney is the conformity of its basic setup, despite the huge regional difference in all its parks locations (Hackman & Wageman, 1995; Krajewski, 2007). All its parks from Florida to Tokyo are similar in their basic setup. The setup is basically based on American methods and style which may be alien to international customers. The company had opened a Tokyo Disneyland in 1982 which was a great success. The success was reinforced by huge appetite for American themes in Japan. As it would be seen in Europe, different markets portray different appetites for American inspired themes. Europeans were resentful and critical to the introduction of American culture on their continent (Meredith et al 1989). At the opening of Disney Euro the French government played a very big role. Porter’s-five-forces model tells of the external environment of a company. Being new entrants in the European market Disney would face problems such as high capital investment to deal with competition and common government policy. On government policy the French government was extraordinary by warmly welcoming Disneyland. The French government invested $1.2 billion in the company to assist with the raising of capital. The government also provided a large tax relief for goods sold in the park and also provided public transportation to the Disney facilities. This lessened the external forces exerted on the company by the new market. However, despite this investment in the company by the French government, there was a lot of criticism since the government had also stated it was willing to expropriate land from local farmers to give it up to the company for construction. There was also criticism that the park was an American culture imposition on others. European culture was much different from Disney’s American culture (Schroeder, 2008). Even before the park opened its gates to the public a serious problem was already brewing. Disney had to recruit and train around 14,000 permanent employees and 5000 temporary employees. Assembling such amounts of workers and training them is a difficult task. France, being a new market was a difficult territory for Disney to successfully and effectively stick to its recruitment plan. From the start of the recruitment process there were issues with the dressing requirements (slack et al, 2006; Goldratt, 1992). The company insisted on a neat dress code, appropriate undergarments and had set a standard for finger nails and hair. These requirements in contrast with French culture were unreasonable and utterly excessive. Accommodation for the workforce also proved to be a big problem. The rapid and abrupt influx of workers was unsustainable in the limited accommodation facilities around the park. These employee welfare problems would hamper the recruitment process and finally affect the opening of the park. In March 1992, the park opened for testing, whereby the main sponsors and their families were invited. The opening of the park was very chaotic with a staff unrest, strikes on the commuter trains to the park and there was also a terrorist related security problem when a bomb was detonated a night before the opening of the park. In the surrounding villages, villagers were also in protest against the noise emanating from the park. Operations of the new park were highly affected by the outlined problems. During the testing day only 10% of the expected guests made it to the park. Population of the first day showed that the French were not enthusiastic to the park. Only a small portion of the guests were French citizens ( Flynn et al 1990; Cox et al 2003) . As mentioned above, French workers of the new Euro Park were opposed to the requirements put forth by the company. In the first two months after opening of the park, around 1000 employees left Disney. Most of those who left their jobs cited long hours of work and a hectic pace of work within the company. Some workers also cited the chaos of the first few weeks after the opening of Euro Disney. Other workers also blamed the lack of understanding by the company that Europeans would make a different workforce not similar to a workforce comprising of Americans. Owing to the fact that a big proportion of the workforce was French, visitors who expected American standards service complained of services of low standards in the Euro Disney. In the first year of the company in Europe, attendance in the park fell short of the projected figures by a big margin. An economic recession in Europe resulted to a sharp drop of property prices and interest payments on the company’s start-up loans causing financial difficulties for the company. These economic problems and a weak dollar against the euro, made Disney enthusiasts to spend their holidays in Walt Disney world in Florida. To add salt to an already gross wound in Disney, a storm wrecked havoc in the park destroying many structures and monuments of famous Disney characters in the park. Another operational problem in Disney is a big workforce. This large workforce has to be effectively managed by corporate officers who are from time to time changed. Time to time change within the company’s ranks complicates smooth running of the company. A change of officers brings about large expenses and resistance to newly appointed officers from within the company. A company should be sensitive to the culture of people while venturing into a new market. In order for Disney to avoid losing its image and being accused of imposing American culture in Europe a new approach was needed in the euro Disney venture towards culture. In terms of the dress code Disney would at least have relaxed its requirements for its workers while insisting only on decency. Owing to the drinking culture of the Europeans, Disney would also have included some menus with alcohol. The American management style criticized in Europe for its strictness and rigidity would also require an overhaul for the euro Disney (Chase & Tansik 1983; Capsari & Capsari, 2004). It is also clear that Disney was venturing in a highly saturated market. Competition thus would be a threat to the company. Other amusement, other entertainment parks and attractions already existing in France and Europe gave Disney for sometime a run for their money. Instead of venturing to such a market using the usual Disney style largely criticized in Europe Disney should diversify its style (Fuchsberg, 1992; Goldratt, 1994). Disney should have maintained their unique management style but blended with a bit of European decency and relaxation. Europeans also adjust their activities from season to season. The company should have invented new alternating management technique to go hand in hand with the prevailing conditions. The almost authoritarian style of management used by Disney would be made efficient by blending it with other styles of management ( Gupta et al, 2004; Hackman & Wageman 1995). Disney brewed a problem for itself when it recruited a large workforce at once with no accommodation or an all inclusive framework for all its employees. Instead of the abrupt recruitment that was carried out, Disney could have used phases to recruit her employees. It would also be highly recommended for the company to recruit other employees after the opening of the park. This would ensure that instead of workers being introduced all at once to a new environment others would learn and blend into the company, as the company grew leap by leap (Krajewski et al, 2007; Heizer & Render, 2008). Timing of operations is also crucial in the smooth running of operations in a company or an institution. Timing is especially important when a company is venturing to a new market. Disney could have rescheduled their entrance in the euro market, since almost all factors were against the success of the company (Goldratt, 1992; Meredith et al 1989). Disney also seems to have not fully understood and acted according to the market’s consumer behavior. Instead of sticking to the traditional experiences, they would have invented or introduced new services specifically for the European market. The company should also have responded to pundits and the public opinion by improving their services not in a blueprint style but according to the demands of customers and the French society. This would improve Disney’s clientele base and customer relations with the company ( Cox et al, 2003; Flynn et al 1990). Conclusion Looking back at the main issue of interest with respect to this study, it can be conclusively asserted that Disney world is the best entertainment destination in the world. The operational problems facing the company as it has been seen above can be easily solved. As one of the fundamental steps in resovling the issues and problems that hinder its expansion and operationalization, the company should consider investing in emerging economies of the world. 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