EURO DISNEY FROM DREAM TO

NIGHTMARE

GROUP 5 PRESENTATTION

Q1. Evaluate Disneys decision to build a theme

park in Europe.
The decision is still right due to these positive factors
The attractiveness of theme park market: Choice of Paris
- Paris is one of the most visited destination in Europe
- It is the centre of transportation and a linkage among different
destinations: easy traveling choices for tourists
- It has large population and there is a longer vocation time in
Europe countries, supporting the possibility of theme park
visiting

Q1. continue
Disneys competitive advantages
- Disneys financial resources
- Disneys worldwide famous and well known characters
- Disneys reputation and creditability regarding designing and
operating from existing theme parks (Tokyo, Florida)
- The demand of Disney characters-related products in Europe,
counted as of licensed products total revenue, supporting
the demand for localized theme park

Q1. continue
Superior support from French government
- Favourable tax and VAT rate
- Offer a below market interest rate
- Financed the key infrastructure of the park: extending TGV,
the Paris subway and make EURO Disney the ended station
- improve motorway
- Land sold to Disney at the modest cost

Q2. Explain why Disney chose to enter Europe through a

combination of equity ownership, a licensing contract,
and a management contract, as compared with the
relationship with its US theme parks (100% ownership) or with
Tokyo Disneyland (pure licensing)?
Disneys choice of entry: This combination allows Disney to
Optimize return through both
Bottom line return from receiving dividends : Equity
ownership
Top line return paid out of revenues
- A licensing contract allows Disney to collect loyalty fees (10%
on admission and 5% on others)
- A management contract: a fee on revenue and incentive

Q2. continue.
Minimize risk

- This choice of entry gives Disney still gain upside even EURO
Disney made loss
- Equity stake allows Disney to take advantage from owning
shares at modest price and Land appreciated value
- Versus Tokyo Disney, Disney can still hold control over EURO
Disneys management and operation
- Versus LA and Orlando Disney, EURO Disney SCA is a French
owned company which let Disney access to the necessary
resources needed for the park (Land, infrastructure,

Q3. In what ways did Disney adapt to a French and European context?
How effective was this adaptation? Should Disney have adapted more
or less?

Disneys cultural adaptation

Product adaptation
Because Disney has a strong concept as their whole concept seem to
drive the park, it is best to keep those mood and tone with other Disney
parks. Therefore, the adjustment was done through the service offering.
For example,
- EURO Disney tried to serve the better standard cuisine, restaurants
and hotels, and customer interaction regarding the European culinary
taste. However, European visitors behave just like US visitors where
they prefer fast food sit-down lunch at the park.
- Disney believes that Europeans will not bear any thing
unsophisticated.

Q3. continue
Management adaptation
Human Relation: Employer-Employee relation, work norms,
employment regulations which are very different from US.
For example,
- The recruitment process is based on the appearance such as
height, weight, make-up and grooming.
- Cast members must follow a strict code with respect to dress
and appearance.

Q3. continue
Although Disney has spent a large resource in adapting, there were not a clear understanding of
culture differences.
Therefore, the adaptation was not effective regarding..
- Misinterpret of Europeans social and culinary taste
It turned out that local visitors still prefer fast food over sophisticated meals during visiting the park.
Restaurant wallpaper was covered in Moroccan leather.
Insufficient breakfast facilities
- HR strategy:
Recruitment process is too personal judged and Disneys hiring practices violate the French labor law
as it attacks individuals freedom. This finally produced a huge storm of protest by a French labor
union.
Work force flexibility was limited for French workers.
The work hours are too long for French workers.
Trainings are US based model where most of the managers are EXPAT and the trainings are done
overseas, resulting in a weak understanding in local market.

Q4.

Advise Phillippe Bourguignon on what further actions he

should take to improve the financial viability of Euro Disney and
realize its potential for shareholder return
Consider what has go wrong at EURO Disney
Financial projection
- Assumption based on the experiences from the existing parks (Tokyo and Florida) and it
may not a precise indicator for France
- Using per capital expenditure to set the admission price is too optimistic: High price of
admission, food, and souvenirs
* This cost Europeans higher than just visiting Orlando theme parks with a more
comfortable climate.
Operational difficulties
- HR system and trainings are US based approach.
- Long period of waiting line
*This caused the transferring of Disneys capabilities cost at higher operating expenses.
* Cost incurred higher than estimated

Q 4.1

continue

Ineffective cultural adaptation

- Misjudge the European cultures: Europeans will not tolerate any thing
unsophisticated (using the Moroccan leather wallpaper)
- Design problems: absence of toilet facilities, breakfast facilities

* Most of the cost overrun because of sophisticated decorations

Wrong Timing
- EURO Disney opened just during the economy crisis where the demand was low.

*Europeans then were not that enthusiastic with the theme park visiting
*Revenue has not reached the projected target

Q 4.1

For Phillippe Bourguignon

In order to reduce cost and boost up revenue

Here are the recommendation.
Disney has already done a good restart by changing the name to Paris
Disneyland to reduce the controversy toward American culture image of
Disney.
HR Management should be more decentralized to help cut cost:
- Hiring procedure should be more technical and skills related not an
appearance based.

- Outsourcing the local consultants is another interesting option to help

Disney understand more about local market and government regulations.
- Training should be done in France in order to understand more about
European tourism, being more competitive.
- Hiring more part-time workers during busy summer season.

Q 4.1

For Phillippe Bourguignon

Readjust the financial model

the assumption need to be reconsidered as to know a more precise target
sales, costs and a more suitable admission price.
Reviewing of the culture adaptation to boost the attendance:
Adding the localized feature theme inside the park is a good alternative
to convey the message to the Europeans that this is their park. The
increasing of popularity can extend the length of visitor stays
Continue Phase 2: this would bring
- Economies of scope to operation: 2 theme parks can share cost of
human resource, marketing, administrator and maintenance
- Utilizing the park space during winter: Being a destination resort can
bring more tourists
Renegotiate with the French government

Q4.2 Advise Eisner on how Disneys interest in

Euro Disney can best the protected and furthered
Although EURO Disney is a French owned
company and not even a Disney subsidiary,
Eisner who represents the whole Disney should
ensure the public that Paris Disneyland is on the
way renewed and Disney will also fully inject the
venture.
Eisners public appearing can introduce the new
name of Paris Disneyland
Disneys action can persuade the banks allow the
postpone the loan repayment and interest
payments

GROUP 5: Presentation
Aroonroong Srivaddhanaprabha ID:
5749084
Kawin Phuangthong ID: 5749135
Tharinee Plucksataporn ID: 5749141
Yavaporn Wongcongsawat ID: 5749148
Ronarkrit Chinitsarayon ID: 5749205