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Instruction for End Semester

( To be distributed TWODAYS IN ADVANCE of the END SEMESTER) 1. Only Hard copy of the slides and books allowed 2. NO Laptops are allowed
Case : 1 A Study in Corporate Foreign Expansion: Euro Disney On April 15, 1983, the Walt Disney Company opened in Tokyo, Japan, their first theme park outside the United States. This theme park, Tokyo Disneyland became an instant hit. In fact, since the Walt Disney Company executives believed they learned so much about operating a theme park in another country, and since Tokyo Disneyland was an instant success, they began immediately to search for a site for a fourth park. To find a site for their fourth theme park, the Walt Disney Company looked to Europe where Disney films historically have done better than in the United States. Because of this film success, the Western European audience already was familiar with Disney entertainment and merchandise the possibilities were narrowed down to Costa del Sol in Spain and Paris in France. France with its larger population and a spectacular transportation network became the choice site for their fourth theme park. Marne-la-Valle is located in an ideal geographic location since it is 20 miles (32 kilometers) due east of the center of Paris and is halfway between the two international airports of Orly and RoissyCharles-de-Gaulle. The French railway regional express network connects Marne-la-Valle with the Paris metro system, and major highways are nearby. In fact, of more than 350 million Western Europeans, 17 million can reach the Euro Disneyland resort within two hours by car and 310 million can fly creating a "...denser market than the United States". The Walt Disney Company promised new jobs and contracts for local suppliers which resulted in red carpet treatment from France. More specifically, Euro Disneyland planned on hiring 12,000 new Cast Members (employees). About 6,000 would work in Euro Disneyland's Magic Kingdom, 5,200 in hotels on the property, and the remainder in recreation and support facilities. The area was suffering high unemployment at the time and the Walt Disney Company executives believed the economic benefits to the region would be great since they

would employee so many local citizens and since tourism generates revenue without requiring such costly social services as schools and hospitals. On April, 12, 1992, despite a few protests, the Walt Disney Company's fourth theme park, Euro Disneyland opened its doors to the public with essentially the same attractions as in the other Disney theme parks in California, Florida, and Japan. Euro Disneyland's target of 11 million guests in the first year was met, but revenues did not roll in as had been planned. In fact, Euro Disneyland reported a $905 million loss for the fiscal year that ended in September 30, 1993 and by December 31, 1993, Euro Disneyland had amassed cumulative loss of 6.04 billion French francs or 1.03 billion US dollars. Euro Disneyland's first chairman, Robert Fitzpatrick, an American, won kudos for setting up the park, yet he stumbled over day-to-day operations. Fitzpatrick spoke French, knew Europe well and his wife was French. But he seemed to be "...caught in the middle and quickly came to be regarded with suspicion by some on both sides". Numerous times he attempted to warn Disney executives that France should not be approached as if it were Florida, but his warnings were ignored. He was replaced in 1993 by Frenchman Philippe Bourguignon. The allAmerican enterprise suddenly had raced to put on a European face. Although there was a change in the head of Euro Disneyland there are problems which it faced with the old management and still faces problems with the new management. Among these problems are included their optimistic assumptions, staffing and training, cultural issues, interest rates, marketing, communication, and convention business. The Walt Disney Company, overly ambitious in their venture, made several strategic and financial miscalculations. The Walt Disney Company wanted to build a state of the art, as near to perfect as possible, theme park. In order to meet this goal the company frequently attempted to build and rebuild, with no regard for the "bottom-line" construction cost. Michael Eisner, the Chief Executive Officer of the Walt Disney Company, ordered several last-minute construction changes, known as budget-breakers, which further increased Euro Disneyland's debt. For example, one cold day before Euro Disneyland opened Eisner warmed himself by a Paris hotel lobby fireplace and ordered more than a dozen wood-burning fireplaces for Euro Disneyland despite the added construction cost and upkeep. Another example of an Eisner budget-breaker was his decision to remove two steel staircases from Euro Disneyland's Discoveryland. He wanted them removed because they blocked a view of the Star Tours ride. It was estimated the cost to remove the staircases was approximately $300,000. Euro Disneyland executives and advisors failed to see the signs of the approaching European recession. "Between the glamour and the pressure of opening and the intensity of the project itself, we (the executives) didn't realize a major recession was coming". Operational Errors: There were numerous errors made regarding the overall operation of Euro Disneyland. For example, from its American experience the Walt Disney Company

thought Monday would be the light day for guests and Friday a heavy one, and allocated staff accordingly. In reality the reverse was the case. In fact to this day, the company still struggles to find the right level of staffing at a theme park where "...the number of visitors per day in the high season can be 10 times the number in the low season". Furthermore, to add to the operation problem is the difference in employee acceptance of conditions of employment. In Orlando Cast Members are accustomed to and have learned to accept being sent home if they are not needed. However, in Paris, French Cast Members feel extremely irritated by and have a very difficult time accepting the inflexible scheduling. Another example of operational assumptions at Euro Disneyland involved the bus drivers. The Walt Disney Company built the French bus parking spaces much too small. Bus drivers were unhappy as they had a very difficult time fitting their busses into their designated spots. In addition, the Walt Disney Company provided only 50 restroom facilities for bus drivers and on peak days there would be 2,000 drivers. A final example of the operational errors made by Euro Disneyland involved the computer stations at the hotels. Euro Disneyland executives assumed guests would stay at the park for several days. This in fact did not happen. Many guests arrived early in the morning, spent the day at the park, checked into the hotel late that night, and then checked out early the next morning before heading back to the park. Since there were so many guests checking-in and checking-out, additional computer stations had to be installed at the hotels in order to decrease the amount of time the guests stood in line. Labour Cost: Before the opening of Euro Disneyland executives had estimated labour cost would be 13% of their revenues. This was another area where the executives were wrong in their assumptions. In 1992 the true figure was 24% and in 1993 it increased to a whopping 40%. These labour cost percentages increased Euro Disneyland's debt. Staffing and Training: Before Euro Disneyland opened the Walt Disney Company built offices in Marne-la-Valle in order to recruit their Cast Members. In just 12 months 12,000 Cast Members had to be recruited, hired, trained, and housed. This is a challenge for any company, "...but it is more complex for Disney, whose employees (Cast Members) become more like members of a theater troupe". Euro Disneyland recruited through job fairs, a popular European recruiting technique. In two days, 1,000 applied. However, since the Walt Disney Company's requirements for employment are so high, for every 10 candidates interviewed only one was hired. To complicate the hiring process, there were language requirements since the official languages of Euro Disneyland are French and English. Preferences were given to trilingual applicants because it was hoped that the park would draw guests from all over Europe. Once the candidates were hired Euro Disneyland's challenge was to train the Europeans, half of them French, to be Disney Cast Members. "Every employee goes through human resource training, then additional training in requirements of specific jobs" (Bakos, 1991, p. 102). The

success to Disney parks' repeat guest visits is the employee-customer rapport. Thus, the largest challenge Euro Disneyland encountered was implanting a "have a nice day" mentality and teaching 12,000 European employees to smile the "Disney smile" all day. Throughout training and employment ALL Cast Members learn they must adhere to the company's strict 13 page manual of dress codes, known to Cast Members as the "Disney Look." The Europeans did not understand this "Disney Look". The "Disney Look" is a rigid code of Cast Member appearance that imposes a well-scrubbed, all-American look. It details the size of earrings to the size of finger nails to the no tolerance rule regarding facial hair and dyed hair. It is difficult for the Europeans to adhere to an "American look" since they are not American and they believe this requirement has stripped them of their "individualism". Furthermore, the French "...were hardly specialists in service". In December 1994 Euro Disneyland was taken to French court contesting the Walt Disney Company's strict dress code. The Europeans believed the dress code violated French labor law. As a result Euro Disneyland restructured their French dress code. However, the French believed that the Walt Disney Company just instituted a new policy not as a result of being taken to court but in an attempt to patch up the rocky labor relations at the theme park. Cultural Issues: Although European public acceptance of the theme park itself has not been a problem for Euro Disneyland there has been a different type of cultural clash. Most Europeans believe there is cultural imperialism. Europeans have not taken to the "...brash, frequently insensitive and often overbearing style of Mickey's American corporate parent". Disney executives' contentious attitudes exacerbated the difficulties it encountered by alienating people with whom it needed to work. "Its answer to doubts or suggestions invariably was: Do as we say, because we know best". Much has happened with Euro Disneyland since its opening. Although there have been successes at Euro Disneyland the high debt incurred along the way has caused the financial problems to become the number one priority. To end numerous labour disputes over longhours and poor pay, Euro Disneyland has "...shifted away from imported American working practices and towards a more French approach" (Sasseen, 1993, p. 27). This new approach set a maximum working week and annualized hourly work schedules. In addition, it reclassified jobs using the French method which allowed French citizens the ability to recognize their standard French job classifications. As a result, Euro Disneyland won greater acceptance and willingness to be flexible from its work force. Conclusion The Walt Disney Company's venture of Euro Disneyland is an excellent source of study, training, and learning for human resource professionals involved in possible foreign expansion. Although Euro Disneyland is located in Europe, the lessons learned and experiences gained can apply to any country on the globe. The astute human resource professional can learn from this process and apply these newly acquired skills in similar situations anywhere in the world.

A move by any company to any foreign market should not be made without an extensive, indepth study based on exhaustive research into every applicable aspect of the economy, laws, culture, climate, interests, customs, life-style habits, geography, work habits, just to name a few.

Case II

Issue of Performance Appraisal

Employees from countries such as the United States, United Kingdom, France and the Netherlands more readily accept personal responsibility for results than would employees from counties such as Venezuela, China, Russia, Kuwait, Egypt, Saudi Arabia and India, who are more likely to believe outcomes aer due to forces at least partially outside of their control. Reconciling differing perspectives requires recognition that both internal and external factors impacted results and that both must be considered in appraisal. Evaluating individuals based on what they accomplish, rather than who they are, will be more acceptable in cultures that are achievement-oriented than in cultures that are ascription-oriented. Employees from countries such as the United States, Australia, Canada, United Kingdom and the Netherlands are more likely to accept evaluation based on what people have accomplished than are employees from countries such as Egypt, Japan, China, Russia, Mexico and France, who are more likely to believe the status/qualifications of the individual should be a consideration in evaluating performance. Reconciling differing perspectives requires recognition that performance must be defined in terms that reflect all types of contribution. A well-connected person who is the key to disseminating needed knowledge through his or her network may be recognized for that contribution, while the person who succeeded individually as a result of applying that knowledge different types of contributions can help resolve this dilemma. Employees from universalistic cultures will believe that the same policies, methods, processes and standards should apply to appraising all employees, as opposed to those from particularistic cultures. Employees from countries such as Canada, United States, Sweden, United Kingdom, Australia, the Netherlands and Germany are more likely to believe in one set of rules that apply to everyone under all circumstances than employees form Venezuela, Russia, China India, Japan and France, who accept that the identity of the person and the circumstances should be considered. Reconciling different views requires that those who adapt policies factor processes to make the best of unanticipated circumstances should be credited for their initiative and good judgment even in a control-based culture, while those who ignore policies and factor friends to the detriment of the organization should be admonished, even in a particularistic culture. Employees from countries with low power distance cultures will expect to participate in setting performance standards and debating ratings with the supervisor more than those from high power distance cultures. Employees from the Netherlands, United Kingdom, Australia, Canada and the United States tend to be more active in the process and challenge the supervisor when there is disagreement on performance level, while this

would be less likely among employees form countries such as Mexico, Venezuela, France and China.