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 Responsible
1991 for
Theme park $2,865 Theme park 71 %

Hotels 21 %

Other 8%

Filmed $ 2,593
entertainment
Consumer $ 724
products
10/28/02 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

 Disney’s 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 Disney’s
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
customer’s 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 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

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% 3.5%

10/28/02 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 Culture-
Wine 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

 Disney’s 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 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?

10/28/02 Case: Euro Disney

What is Euro Disney’s 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 Other
Middle/Upper class Disney
Walt Disney figures fans
Entertainment

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 Disney’s entertainment

10/28/02 Case: Euro Disney

 What issues must a company think
through before extending a successful
service overseas?
What is the expected What is expected Are employees Does the level of
service for Europeans? out of design and sufficiently service delivery
service standards? screened and have and/or exceed the
the issues of supply expectations of
and demand been Europeans?
worked out to suit
European
demands?
Does the company have Does the company Does the company Does the company
the correct expectations know what the deliver these live up to its promises
about European expected standards services properly and communicate in a
consumers? are? and efficiently? satisfactory way to
Europeans?
Have they done the Have they done the Have they done the Have they done the
proper research to make proper research? proper research to proper research to
these conclusions? make these make these
conclusions? conclusions?

10/28/02 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 learn from Phase I experience

Welcome and encourage Satisfaction surveys and employees as

listening posts
complaints
 
  Empower employees to act quickly
Act Quickly
Fair interpersonal treatment
Treat customers fairly
Project teams can be assigned to a
problematic area to develop a
Learn from recovery solution
experiences
Difficult for Euro Disney to identify
Learn from lost customers 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

Perceived
Customer
Service

Service delivery External

communications
Company Gap 4 to customers
Gap 3

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