10/28/02case: euro disney euro disney the first 100 days
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10/28/02 Case: Euro Disney
Euro Disney
The first 100 days
10/28/02 Case: Euro Disney
Startup
Opened in 1992 within budget
Beginning (additional) influences
Drop of shares due to first year loss
After 5 years still problems with visitors
“Cultural Chernobyl”
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Structure of Walt DisneyRevenue in 1991
Responsible for
Theme park $2,865 Theme park 71 %
Hotels 21 %
Other 8 %
Filmed entertainment
$ 2,593
Consumer products
$ 724
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WDC resorts:
Walt Disney World Resort (Orlando, 1971)Magic Kingdom Disney MGM Studios Theme ParkEpcot Center
Disneyland (Los Angeles, 1955)Others
Tokyo Disneyland: designed by WDC but owned and run by Oriental Land Company
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Visitors
50 million
90 % repeat customers, 5 % from Europe
Adults in late twenties with young
children
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Success factors
Creative imagination:Park set-up
Cartoons come alive
Participation of visitors
Parks are continually updated
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To exceed its customers’ expectation every day.
Disney’s stated goal is
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This goal is supported by:
standard of service,
park design
operating details
human resource policies and practices
Disney “play” would be flawlessly performed day in and day out at each location.
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Service delivery has been under constant refinement.
“Disney University.”
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Hiring process:
a peer interview process to select cast members
a 45-minute interview session with a Disney personnel manager
extensive orientation program in Disney’s service standards
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Service standards:
safety
courtesy
show
efficiency
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Certain messages reinforced throughout the training:
happiness measured differently by every guest and challenge to createcustomer’s perceptions are extremely
fragileemployees are on stage at every moment
and should look to provide servicefixing costumers problems is very
important
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Employees were evaluated based upon:
energy
enthusiasm
commitment
pride
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Success of Disney in Tokyo:
strong Japanese appetite for American-styled popular entertainment
increasing trend in Japan toward leisure
country which actively resisted many U.S. products
appeal for Disney’s brand of entertainment
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The reasons why Tokyo Disneyland worked:
Young Japanese are very clean cut. Japanese are generally comfortable
wearing uniformsObeying their bosses Like to be part of a team. They are very patient. Japanese are always very polite to
strangers.
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Location of the Euro Disney site
1981: Bidding process involving Germany, Spain and France
1987: Agreement with the French government Central locationHighly popular vacation destinationThe only disadvantage seem to be the
inclement weather
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Contractual concessions with the French government
The French government agreed to extend highways and the railway
The French government agreed to build a high-speed TGV train extension
The French government would reduce the value-added taxThe French government provided over
$700 millions in loans
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Financial Facts
Euro Disney was 49 % owned by The Walt Disney Company and 51 % owned by Euro Disney S.C.A
Admission to the park cost $41 for adults and
$27 for children
The capacity of the park was 50,000 visitors
Cost estimates were determined by the consulting firm ADL
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Financial Goals
Attracting 11 million visitors in the
first year of operation
Achieving operating income of $373 million at April 12,1992
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Phase II
Disney MGM studios Park and
additional hotel rooms
Attracting 8 million visitors
Disney budgeted $3 billion to complete Phase II
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Theme Park DesignPhase 1
Theme Park
29 Rides and Attractions
6 Themed Hotels
Davey Crockett Campground
414 Cabins
27 hole Championship Golf Course
Restaraunts, shops, and entertainment options
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French Intellectuals proposed ideas about:
Cultural requirements
Park design
Grooming standards
Eating habits
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Research concluded that Europeans were interested in:
New York
Disney land
The Western United States
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Actions taken:
Add 3 western theme hotels
French was first languageSigns & employees were bilingual
Characters altered to meet French ideas
Disney did not offer wine within the park
Disney had many entertainment shops and foods
Disney was thought of as an “Imaginary Place, a culture without sin”
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Start Up Process
Employment
Marketing Disney
Service and operations
Problems
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Employment
Hire and train employees 14000 people
to fill 12000 jobs
Another 5000 people for peak season
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Marketing
Give the park a European flavor
Advertised in magazines throughout Europe
Sleeping beauty Castle
Nestle
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Service and Operations
Euro Disney University
Disney Standards
Diversity of Nationalities
270 managers and supervisors were cross trained
200 managers were imported
employeespaid $6.50/hour
generally worked 169 hours a month
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Problems
Dress code
Housing shortage
Employees are leaving or being laid off
Examples of employees
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Visitors
40%
3.5%
18%
8%18%
3.5%
9% Other
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Decisions
Big issues prioritizing objectives:Revenue outlook
Cost problems
Service delivery system
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Decision sets1st set of decisions:
Service system up to the standards and cost levels of the other Disney Parks
2nd set of decisions:How to market for achieving winter attendance targets
3rd set of decisions: Phase II
The level of investmentsTiming of investmentsNature of investments
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A day at Eurodisney
‘Trains on Strike; Tourists Unable to Reach Park’‘Euro Disney Visitors Complain of Long Lines and
High Prices’‘Guests find Euro Disney Employees Rude’‘Visitors Claim Euro Disney is a Fairy Tale come True’‘Europeans not Impressed with American Fast-Food’‘Disney Shows Lack of Appreciation for French Culture-
Wine not Served in Park’‘Euro Disney not up to Standards of American Theme
Parks’‘Europeans Discover the Old West at Frontierland’
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Disney’s concerns
Disney does not fit traditional French entertainmentCompetition from Paris entertainment industryLinguistic barriers – Europe is multilingualCultural barriers – food habits, alcohol a part of diet,
long linesEurope is multicultural with differences in perceptions for
entertainmentLack of housing accommodations for staffAcceptance of Disney as part of American culture by the
French?Cold weather could be a deterrentExpensive by European standards
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Questions
10/28/02 Case: 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?
To answer question divide it into parts:
Is Europe a good (new) market?
What possibilities were there?
How was it executed?
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What is Euro Disney’s target Market? What are the implications for the
development and organization of the park?
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Technology
Consumers
Needs
Entertainment
High Services Level
Other facilities around and in the park, such as hotels, restaurants
The park
Walt Disney figures
Fantasy world
Vacation
Being together with family
Have fun
Young families.
families
Young couplesMiddle/Upper class
Grandparents
OtherDisney fans
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Customers
Children Young families familiesGrandparents with grandchildren Disney fansPeople that can afford spending money on the
park (middle class and upper class)People who just want to go so badly that they put
other things aside to be able to go to Euro DisneyEuropean people
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Target Market
The majority of Disney visitors are
adults many of them are in the late
twenties and have young children. The rest
are people from four to sixty years who
have enough money to spend, to have a
good time with Walt Disney’s entertainment
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What issues must a company think through before extending a successful
service overseas?What is the expected service for Europeans?
What is expected out of design and service standards?
Are employees sufficiently screened and have the issues of supply and demand been worked out to suit European demands?
Does the level of service delivery and/or exceed the expectations of Europeans?
Does the company have the correct expectations about European consumers?
Does the company know what the expected standards are?
Does the company deliver these services properly and efficiently?
Does the company live up to its promises and communicate in a satisfactory way to Europeans?
Have they done the proper research to make these conclusions?
Have they done the proper research?
Have they done the proper research to make these conclusions?
Have they done the proper research to make these conclusions?
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Service delivery:
Disney standard
Disney University
Treatment of employee's
Integrate the cultures
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Should Euro Disney proceed with the next step of
development?
Euro Disney should first solve their problems before they expand
Euro Disney could apply the lessons
they have learned from the Phase I experience to Phase II
Service recovery strategies
Fail-safe the service
Welcome and encourage complaints
Act Quickly
Treat customers fairly
Learn from recovery experiences
Learn from lost customers
learn from Phase I experience
Satisfaction surveys and employees as listening posts
Empower employees to act quickly
Fair interpersonal treatment
Project teams can be assigned to a problematic area to develop a
solution
Difficult for Euro Disney to identify lost customers
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What lessons has Euro Disney learned which could be applied
to the development of the second park?
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Expected Service
Perceived Service
Service delivery
Customer-driven Service designs and
standards
Company perception of consumer expectations
Customer Gap
Company
Customer
Gap 3
Gap 2
External communications
to customersGap 4
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Evaluation
Inadequate marketing research
orientation
Lack of upward communication
Insufficient relationship focus
Inadequate service recovery
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Adapt for the local market from the US model and if so,
how?
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RecommendationsAdapt to French standards & expectationsEmployee involvement in Euro Disney planning & operationsSingle theme for Euro Disney; focus on French culturePromote winter attendance through reduced costs and package
plansIdentify additional target markets (i.e., student groups)Before expanding, understand Disney fit with European
culturesPackage Euro-Disney with other Paris destinationsPrepare to contract buses if public transport is disrupted.Leave some memorial for any villages/ people displaced by
park. Give displaced people lifetime pass.
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Questions
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Thank you for your attention