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

10/28/02

Case: Euro Disney

Structure of Walt Disney

Revenue in 1991 Theme park $2,865 Theme park Hotels Other Filmed entertainment Consumer products
10/28/02

Responsible for 71 % 21 % 8%

$ 2,593 $ 724
Case: Euro Disney

WDC resorts:
Walt Disney World Resort (Orlando, 1971)
Magic Kingdom Disney MGM Studios Theme Park Epcot Center

Disneyland (Los Angeles, 1955) Others

Tokyo Disneyland: designed by WDC but owned and run by Oriental Land Company
10/28/02 Case: Euro Disney

Visitors
50 million 90 % repeat customers, 5 % from Europe Adults in late twenties with young children

10/28/02

Case: Euro Disney

Success factors
Creative imagination:
Park set-up Cartoons come alive Participation of visitors Parks are continually updated

10/28/02

Case: Euro Disney

Disneys stated goal is

To exceed its customers expectation every day.

10/28/02

Case: Euro Disney

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.

10/28/02

Case: Euro Disney

Service delivery has been under constant refinement.

Disney University.

10/28/02

Case: Euro Disney

Hiring process:
a peer interview process to select cast members a 45-minute interview session with a Disney personnel manager extensive orientation program in Disneys service standards

10/28/02

Case: Euro Disney

Service standards:
safety courtesy show efficiency

10/28/02

Case: Euro Disney

Certain messages reinforced throughout the training:

happiness measured differently by every guest and challenge to create customers perceptions are extremely fragile employees are on stage at every moment and should look to provide service fixing costumers problems is very important
10/28/02 Case: Euro Disney

Employees were evaluated based upon:

energy enthusiasm commitment pride

10/28/02

Case: Euro Disney

Success of Disney in Tokyo:

strong Japanese appetite for Americanstyled popular entertainment increasing trend in Japan toward leisure country which actively resisted many U.S. products appeal for Disneys brand of entertainment

10/28/02

Case: Euro Disney

The reasons why Tokyo Disneyland worked:

Young Japanese are very clean cut. Japanese are generally comfortable wearing uniforms Obeying their bosses Like to be part of a team. They are very patient. Japanese are always very polite to strangers.
10/28/02 Case: Euro Disney

Location of the Euro Disney site

1981: Bidding process involving Germany, Spain and France 1987: Agreement with the French government Central location Highly popular vacation destination The only disadvantage seem to be the inclement weather
10/28/02 Case: Euro Disney

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 tax The French government provided over $700 millions in loans
10/28/02 Case: Euro Disney

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
10/28/02 Case: Euro Disney

Financial Goals
Attracting 11 million visitors in the first year of operation Achieving operating income of $373 million at April 12,1992

10/28/02

Case: Euro Disney

Phase II
Disney MGM studios Park and additional hotel rooms Attracting 8 million visitors Disney budgeted $3 billion to complete Phase II

10/28/02

Case: Euro Disney

Theme Park Design

Phase 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
10/28/02 Case: Euro Disney

French Intellectuals proposed ideas about:

Cultural requirements Park design Grooming standards Eating habits

10/28/02

Case: Euro Disney

Research concluded that Europeans were interested in:

New York Disney land The Western United States

10/28/02

Case: Euro Disney

Actions taken:
Add 3 western theme hotels French was first language
Signs & 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
10/28/02 Case: Euro Disney

Start Up Process
Employment Marketing Disney Service and operations Problems

10/28/02

Case: Euro Disney

Employment
Hire and train employees 14000 people to fill 12000 jobs Another 5000 people for peak season

10/28/02

Case: Euro Disney

Marketing
Give the park a European flavor Advertised in magazines throughout Europe Sleeping beauty Castle Nestle

10/28/02

Case: Euro Disney

Service and Operations

Euro Disney University Disney Standards Diversity of Nationalities 270 managers and supervisors were cross trained 200 managers were imported employees
paid $6.50/hour generally worked 169 hours a month
10/28/02 Case: Euro Disney

Problems
Dress code Housing shortage Employees are leaving or being laid off Examples of employees

10/28/02

Case: Euro Disney

Visitors

9% Other 18%
18%

8%

40%
3.5%
10/28/02

3.5%
Case: Euro Disney

Decisions
Big issues prioritizing objectives:
Revenue outlook Cost problems Service delivery system

10/28/02

Case: Euro Disney

Decision sets
1st 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 investments Timing of investments Nature of investments
10/28/02 Case: Euro Disney

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 CultureWine not Served in Park Euro Disney not up to Standards of American Theme Parks Europeans Discover the Old West at Frontierland
10/28/02 Case: Euro Disney

Disneys concerns
Disney does not fit traditional French entertainment Competition from Paris entertainment industry Linguistic barriers Europe is multilingual Cultural barriers food habits, alcohol a part of diet, long lines Europe is multicultural with differences in perceptions for entertainment Lack of housing accommodations for staff Acceptance of Disney as part of American culture by the French? Cold weather could be a deterrent Expensive by European standards
10/28/02 Case: Euro Disney

Questions

10/28/02

Case: Euro Disney

Assess Disneys 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?

10/28/02

Case: Euro Disney

What is Euro Disneys target Market? What are the implications for the development and organization of the park?

10/28/02

Case: Euro Disney

Needs

Fantasy world

Being together with family Vacation

Have fun

families

Grandparents

Consumers
Young families. Young couples Middle/Upper class Walt Disney figures Entertainment Other Disney fans

High Services Level

The park Other facilities around and in the park, such as hotels, restaurants

Technology

10/28/02

Case: Euro Disney

Customers
Children Young families families Grandparents with grandchildren Disney fans People 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 Disney European people
10/28/02 Case: Euro Disney

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 Disneys entertainment
10/28/02 Case: Euro Disney

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 company deliver these services properly and efficiently? Have they done the proper research to make these conclusions? Does the level of service delivery and/or exceed the expectations of Europeans?

Does the company have the correct expectations about European consumers? Have they done the proper research to make these conclusions?
10/28/02

Does the company know what the expected standards are? Have they done the proper research?

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?

Case: Euro Disney

Service delivery:
Disney standard Disney University Treatment of employee's Integrate the cultures

10/28/02

Case: Euro Disney

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

10/28/02

Case: Euro Disney

Service recovery strategies

Fail-safe the service Welcome and encourage complaints Act Quickly
Fair interpersonal treatment
learn from Phase I experience Satisfaction surveys and employees as listening posts Empower employees to act quickly

Treat customers fairly Learn from recovery experiences Learn from lost customers
Project teams can be assigned to a problematic area to develop a solution Difficult for Euro Disney to identify lost customers

What lessons has Euro Disney learned which could be applied to the development of the second park?

10/28/02

Case: Euro Disney

Expected Service
Customer Gap

Customer

Perceived Service
Service delivery External communications to customers

Company

Gap 3

Gap 4 Customer-driven Service designs and standards

Gap 2 Company perception of consumer expectations

10/28/02

Case: Euro Disney

Evaluation
Inadequate marketing research orientation Lack of upward communication Insufficient relationship focus Inadequate service recovery

10/28/02

Case: Euro Disney

Adapt for the local market from the US model and if so, how?

10/28/02

Case: Euro Disney

Recommendations
Adapt to French standards & expectations Employee involvement in Euro Disney planning & operations Single theme for Euro Disney; focus on French culture Promote winter attendance through reduced costs and package plans Identify additional target markets (i.e., student groups) Before expanding, understand Disney fit with European cultures Package Euro-Disney with other Paris destinations Prepare to contract buses if public transport is disrupted. Leave some memorial for any villages/ people displaced by park. Give displaced people lifetime pass.
10/28/02 Case: Euro Disney

Questions

10/28/02

Case: Euro Disney

Thank you for your attention

10/28/02

Case: Euro Disney