Improving Disneyworld Paris Financial Position and Competitiveness - Assignment Example

Improving Disneyworld Paris’ Financial Position and Competitiveness Introduction In 1992, the Euro Disney Group opened the Disneyland® Paris theme park in France. This vast operation was the first of its kind in Europe; and quickly became a resort destination for multiple demographics. To date, the Disneyland theme park has drawn more than 275 million guests since 1992. It is ranked one of the most popular tourist destinations in Europe. The Current Situation Euro Disney’s economic profits in the years immediately after it was launched fell far below expectations. Even though the Disney executives carefully carried out an extensive analysis of the market conditions in Europe and France, in specific, there were significant failures that happened. The problems were caused by an assortment of issues such as the wrong evaluation of market conditions and expectations about France’s future economic development, the happenings in the property market, highly priced tickets, and cultural misunderstandings. In spite of its popularity in Europe, the Disney Park in Paris has not registered as many guests as identical theme parks in America and Asia (Okumus, Altinay, and Chathoth 2010). What is evident is that there was not enough research conducted on the demographic and cultural characteristics of France, as well as the rest of the European mainland, before the launching of the theme park in 1992. There are very distinct differences between European and American culture. According to Dennis (2014), investors from the parent company, Walt Disney in America, did not take into account the fact that European customers did not have similar entertainment objectives with their American counterparts. It was presumed that customers would come to Disneyworld Paris from all over Europe. However, there was no research into factors such as the diversity of European cultures, the definitions that each of these cultures attribute to the concept of entertainment, and the aspect of cultural imperialism (Karadjova-Stoev and Mujtaba 2009). Owing to the fact that the European Union was already a functional entity at the time of the launching of Disneyworld Paris, it was presumed that this would facilitate easy travel between different European Nations. The creators of Disneyworld Paris also did not take into account the cultural differences between America and the European mainland. It is a fact that France is distinctly proud of its own culture; and is not easily influenced to embrace other cultures (Yue 2009). Furthermore, Europe was experiencing recession when Disneyworld Paris was officially opened. The strength of the French Franc served as a deterrent against currency exchange for potential European customers from other nations. There was significant interest charges accumulated due to the existence of a capital structure that was highly leveraged. The construction budget was exceeded by thirty percent. The $900 million loss registered in the first year of operation was a result of management fees, royalty and debt service (Gonzalez-Hernandez 2011). SWOT Analysis of Disneyworld Paris Euro Disney, which kept the slogan of its parent company- Where Dreams come True- was the only Disneyland resort located in Europe when it was launched. The resort was marketed to young families with small children and promised a magical experience for all guests. It was expected that tourists would visit from all over Europe along with France. Strengths -Disneyland Paris had a parent company that was known all over the world for its unmatched theme parks. This gave it an edge as it could benefit from Walt Disney’s unparalleled global brand presence. -Disneyland Paris’s characters have enormous merchandising capacity and are a significant income source -The theme park receives more than 16 million visitors every year Opportunities -Disneyworld Paris can leverage its brand presence to attract even more guests from developing as well as developed nations -Disneyworld Paris’s location is easily accessible to customers from different continents -Many citizens in developing economies have increased spending money and are interested in regional and international tourist destinations. Disneyworld Paris could benefit from this rising demographic -France and Europe, in general does not have as many theme parks as the United States. Disneyworld Paris could still market to the local population. Weaknesses -The ticket prices for Disneyworld Paris are quite expensive -There have been a number of accidents in the past that have brought the theme park negative publicity. Threats -Disneyworld Paris is constantly compared to the theme park in the USA and is viewed as being lacklustre -Due to the technological innovations being introduced by rivals such as Futuroscope and ParcAsterix, Disneyworld Paris has to keep introducing new features to remain relevant -European as well as Asian tourists prefer to visit the resort in the USA and not Euro Disney (Karadjova-Stoev and Mujtaba 2009). How to Improve Competitiveness In future, to remain relevant, Disneyworld France will have to take into consideration economic, competitive, and cultural factors in order to have sustained profitability. To improve its competitiveness, Disneyworld Paris has to come up with a sales program that is more attuned to the European culture. There is a real difference between how European and American customers view entertainment complexes. European customers tend to value quiet places that allow for genuine relaxation (Newell 2013). Areas such as the Disneyworld Paris operation tend to be overcrowded with many excited small children. While Americans may view this as being the archetypical definition of ‘fun’, the majority of Europeans do not. It is a fact that Europeans feel that America has encouraged the incidence of cultural imperialism all over the world. This promotes the American way of living over all other cultural lifestyles. The resentment of this attribute could affect the way Europeans view American entertainment spots that are set up in the European mainland (Gonzalez-Hernandez 2011). In regards to economic factors, it is extremely important for Disneyworld Paris to come up with practical strategies that will assist in the elimination of the existing debt. Disneyworld Paris also has to take into account the fact that there are competitors such as Warner Brothers, Universal Studios, and Six Flags that have already started investing in the European market for theme parks and resorts. To improve sales, Disneyworld Paris can amend sales plans to suit European customers. For example, it could invest in creating relationships with European tour operators and travel agents (Cherunilam 2010). It could also invest in presenting additional packages that will lure customers to stay for longer periods when they visit. The increase in terms of customers, does not necessarily translate to immediate profits (Gershon 2009). Customers have to be interested in spending their money in various existing amenities within the theme park. Profits typically come from high margin operations such as restaurants, hotels and gift shops. References Cherunilam, F. (2010) International business: text and cases, Rekha Printers Private Limited, New Delhi. Dennis, J. (2014) ‘Disneyland Paris resort to undergo revamp as part of Walt Disney’s €1bn rescue plan’, Travel Weekly, no. 2240, p. 6. Gershon, R. (2009) Telecommunications and business strategy, Routledge, New York. Gonzalez-Hernandez, C. (2011) ‘The case of Disney’, Master Thesis within the main profile of International Business, viewed November 11, 2014 from . Karadjova-Stoev, G. & Mujtaba, B. G. (2009) ‘Strategic human resource management and global expansion lessons from the Euro Disney challenges in France’, International Business & Economics Research Journal (IBER), vol. 8, no. 1. Newell, L. A. (2013) ‘Mickey goes to France: a case study of the Euro Disneyland negotiations’, Cardozo Journal of Conflict Resolution, vol. 15, no. 1, p. 193. Okumus, F., Altinay, L. & Chathoth, P. (2010) Strategic management in the international hospitality and tourism industry, Butterworth-Heinemann, Burlington. Yue, W. (2009) ‘The fretful Euro Disneyland’, International Journal of Marketing Studies, vol. 1, no. 2, pp. 87-91. Read More