Euro-Disney, The First 100 Days

Question

Please see attached Case Study Guide Questions for the case, Euro Disney, The First 100 Days.
Share conclusions, recommendations for action, and supporting rationale.
A short discussion of the main points of the case will be prepared 3 pages, single-spaced with specific input to personal solutions.

Solution

Euro-Disney, The First 100 Days

Assessment of the Decision

            When making an investment decision, it is important to first perform an assessment and evaluate the soundness of the move. Therefore, Disney may employ several criteria to assess its decision to build a theme park in Europe. First, the company must consider the attendance to its parks over time. The second criterion to consider is costs. When planning the park’s construction, Disney needed to formulate a budget, and then assess all future costs against the budgeted estimates. The third aspect that Disney would need to consider is its profitability by comparing the costs against revenues. The company would also need to consider employee turnover as a determinant of its success. Finally, Disney should consider its overall performance as a product of various aspects.

            Disney assessed the first 100 days of its Euro Disney to gauge its performance. Firstly, company received 3.6 million visitors against its target of 7 million. Secondly, the company experienced a significant cost problem, as it needed 5,000 extra workers over initial estimates. Thirdly, Disney saw high rates of employee turnover at the beginning attributable to factors such as lack of employee housing and difficulty of roles. However, the overall performance was impressive, as the Euro Park seemed ahead of others at a comparable time. In spite of missing the mark in some areas, Disney’s decision to build a theme park in Europe was a wise one.

Euro Disney’s Target Market

            In developing the Euro Disney park, Disney had a specific target market. First, the company targeted the local French visitors given that the park is in Paris. The park also targeted European visitors coming from countries other than France. The target market significant implications for the park’s development. Consequently, the management decided to make it bilingual, featuring both French and English languages. In its bid to embrace diversity, the company made an effort to not only hire employees from France but also from other European nations as well as from outside Europe. Disney also featured a diverse food offering from around the world to accommodate the different tastes from around the world. Further, the target market also affected Disney’s marketing of the park such as featuring cross- promotion by Swiss company Nestle. 

Traditional Disney Theme Park Formula

            Undoubtedly, there are aspects that a company may apply to all markets the while it may need to customize some to suit each individual market. In Disney’s case, it may transfer some of the traditional Disney theme park formula aspects to Euro Disney due to their applicability across markets. The first is the theme park formula in terms of its values, quality, and imagination. All Disney parks feature several lands, each featuring unique rides and attractions. Apart from that, Disney also emphasizes on the proper treatment of all employees so that they can treat guests in the same way. Secondly, the organization aims to provide the same level of guest service across all its establishments globally. Disney works hard to ensure that each aspect of service exceeds its customers’ expectations. The eagerness to provide exceptional customer service is reflected in the company’s decision to install phones at its parks where staff can call and get answers to any questions as well as reading and acting on every customer letter that it receives. Further, Disney is also able to replicate the structure of its parks across its parks. Therefore, Disney can transfer these aspects to any theme park it builds.

            While Disney may apply some of the aspects to all its theme parks, some are applicable to specific countries. In the United States and Japan, the company did not serve wine because of its policies. However, that policy may not go down well with consumers in another market such as France where they demand to be served wine at the parks. Apart from that, French guests may not be as tolerant of long lines compared to Americans. Therefore, Disney had to think of measures such as entertainment to distract queuing customers in the latter market. In Japan, Disney had to consider hiring locals for senior positions since the culture there was not as supportive of expatriates managing locals compared to other markets such as France.

            Extending a successful serviced model requires careful consideration. Organizations are never guaranteed that what worked in one market will work in another (Dall’Olmo Riley, F., Singh, J., & Blankson, C. (2016). When seeking to replicate a successful business model across cultures, a company must assess how the local culture influences marketing strategies, lest it fails in its expansion attempts (Xie et al., 2016). The management of the organization must think through the ways in which cultural aspects present in their target market affect their ability to succeed there (Riley et al., 2016). According to Xie et al., (2016) Home Depot’s failure in China is an example of what happens when a company ignores local cultural aspects. The company succeeded in the US because of the country’s do-it-yourself (DIY) culture, something despised in China since many people deem manual labor cheap (Gao, 2013). Therefore, what succeeds in a given culture may not necessarily work in another environment.

            Ultimately, businesses need to apply various models when assessing the impact of culture on their ability to succeed in a particular market. Gao, (2013) proposes the CELM framework which is a four- factor host culture assessment tool. First, management must consider the people’s way of life, which is critical to understanding their needs. The evaluation makes it possible for the entity to tailor its service concept to serve the unique needs of the consumers. According to Ghemawat, (2017) culture determines business models, thereby affecting the probability of an organization’s success in a particular market. The second aspect that organization must consider is the business environment since it influences consumer behavior and attitudes. Gao, (2003) observes that cheap labor in China means that a significant number of people opt to outsource home improvement tasks. It is unlike in the US where many opt to do such work themselves because the costs may be prohibitive for them. Therefore, the management of a business must evaluate the environment and culture of a target market before replicating its business model.

            The third pillar of the CELM framework is the target consumer lifestyle. A business must assess the fit of its service concept with the lifestyle and aspirations of the consumers in its target market (Gao, 2013). It is important to note that consumers in different cultures have varied lifestyles, and organizations face the challenge of ensuring that their service models suit the lifestyle choices of the targeted groups. Finally, companies must also assess the consumer mentality of those in their target market. A mentality is a representation of the purpose in collective human activities and can affect the way people perceive a certain brand or make decisions. All these activities are part of an organization’s cultural intelligence (Ghemawat, 2017). Therefore, an organization should consider the aspects of the CELM framework when deciding on the expansion of a successful business concept to new cultures.

Implementation of Euro Disney’s Service Delivery System

            The first 100 days of Disney in Europe revealed problems within the company’s service delivery system that the company would need to address as well as things that it could have done differently. Firstly, the company should have made an effort to ensure that its service standards aligned with those of the French labor unions and that there were no conflicts between the two. Secondly, the firm could have put more effort into supporting its cast members and addressing other staff issues such as staff housing so that the firm would not have had a high rate of employee turnover. Thirdly, the firm should have implemented measures to avoid the build-up of long lines that are undesirable in Europe. Apart from that, the company should also have been more aggressive in addressing costs to avoid unplanned escalations. Further, Disney should have thought of tailoring its service delivery to suit local preferences by implementing measures such as serving wine at its Paris park.

Lessons Learned

            The implementation of the first phase of the Euro Disney provided lessons for the company, which it can apply to the development of its second European theme park as well to other ventures globally. For starters, Disney would need to perform market research to discern the unique customer needs. Secondly, the firm has to implement the right pricing to attract its desired number of visitor numbers. Perhaps the greatest lesson is on the need to consider local cultural aspects applicable to the business. In this case, Disney would need to assess the suitability of its service offering to the market and the needs of the consumers. Any deviations warrant a tweaking of its strategy so that the firm is able to serve its customers better. The firm should strive to have local management, as that would make it possible to have in place people who understand the unique needs of each market and who have the necessary local knowledge. While maintaining most of the original American aspects, the firm should adapt to the local markets in aspects such as the food served at each park. Therefore, Disney should strive to cater to the local preferences in each market.

Proceeding with the Next Step

            After implementing the first phase of the Euro Disney, the company has a decision to make regarding the development of the second step. Based on the available information, Disney should proceed but would need to make some changes in the process. Firstly, the firm would need to lower its prices to boost the number of visitors coming to the park. Secondly, it would also need to build more rides to accommodate more customer numbers. Thirdly, the firm would improve the friendliness of its staff as a way of enhancing the customer experience. Fourthly, Disney should coordinate its park marketing activities with film releases coupled with aggressive cross-promotion. Further, the firm should conduct proper training of its staff while implementing measures to attract and retain high-quality employees. Having the right employees is important to the future success of the organization. Ultimately, all these measures will help Disney to implement the next step of its development plan.

References

Gao, M. (2013). Culture Determines Business Models: Analyzing Home Depot’s Failure Case in China for International Retailers from a Communication Perspective. Thunderbird International Business Review, 55(2), 173-191. https://doi.org/10.1002/tie.21534

Ghemawat, P. (2017). The laws of globalization and business applications. Cambridge University Press.

Riley, F., Singh, J., & Blankson, C. (2016). The Routledge companion to contemporary brand management. Routledge.

Xie, Y., Chen, Z., Huang, X., & Qiao, S. (2016). Learning from Failure: How to Succeed in the Chinese Retailing Market. Proceedings of The 2016 International Conference On Management Science And Management Innovation. https://doi.org/10.2991/msmi-16.2016.30