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Strategic Management Case Study of Disney Paris - Essay Example

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Euro Disney commenced its operations on 12th April 1992. Disneyland was already successfully working in California, Florida and in Tokyo. Unlike the Tokyo Disneyland, here Disney decided to invest their own money and stay an owner. The company found that there was a good market for the Disney characters across the world and Europe was no exception…
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Strategic Management Case Study of Disney Paris
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Download file to see previous pages On the contrary, when the Euro Disney went on line, it was welcomed with both fanfare and protests by the French. France wanted to have Disneyland in their country competing with Spain. After satisfactory negotiations with French Government, Disneyland decided on setting up the theme park near Paris. In 1989 when the contract was formalised, the mood was upbeat and the country was contemplating on making large tourist money by drawing crowds to Paris. But once the construction work started and the employees of nearly 10,000 were called for interviews, it was found that the Euro Disney will continue to be more American than Europe or even French. The company started making record losses for the next five years before turning green. This case study is about the circumstances that led to this failure and the steps that were taken at that time. We will also discuss the steps that need to be taken in the future to ensure smoother and substantial progress in the working of the Paris Disney.
Companies work as large distinct social systems adapting to the cultural background they develop in and thrive. National cultures are the major sources from which the corporate cultures evolve and develop (Frost et al, 1991).
1.
Euro Disney's Plan and Actual
The company had the following plans and targets in place with respect to the flow of funds and patronage for the company:
1. Tapping the large 16 million populations who lived with in a radius of 160 kms from the site was a major attraction for the management of Euro Disney. The Europeans received longer vacations and summer vacations compared to the Americans which should be resulting in better results.
2. The company targeted to get 11 million visitors in the first year of operation.
3. The company had an ambitious plan for capital investment. During the first phase of the construction the Magic Kingdom Theme park was done. Following this, Disneyland was to have its second theme park adjacent to the first one, the Disney-MGM studios.
4. The company targeted to have an average spending of USD 33 would be done by every guest.
5. Labour costs were expected to be maintained at around 13% of the sales figures.
During the roll out of Euro Disney, the average daily inflow of visitors to the park was at around 30,000 visitors in the summer months of the inauguration. However, over the entire year the flow of people dipped down during the winter months and the company had only about 9.8 million visitors for the entire full year in contrast to their planned target of 11 million visitors. In most of the other Disneyland in Florida or in Tokyo there were a number of people who stayed back in Disneyland hotels. These were not the day visitors but 'period-visitors'; whereas in the case of Euro Disney there were more number of day-visitors than period visitors. This meant in addition to the number of people who are visiting Disney land being less, the amount of money each one of the visitors will be spending is also going to be less. It was found that it was almost 10% less than what was expected out of them. In addition, the labour costs that were estimated to be around 13% rose to over 24% of the sales figures. This also meant that the company was facing an acute financial crisis in less than one year of its operations. Most of the companies are expected ...Download file to see next pagesRead More
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