364 CASE STUDY 1» MCDONALD'S: HALF A CENTURY OF GROWTH “We invest about £35m a year in training people. We have become much more ofan educator than an employer of people’ Not does she accept the idea of ‘McJobs’ (mneaning boring, poorly paid, often temporary jobs with few prospects). ‘That whole McJob thing makes ‘me so angry. It’s snobbish. We are the biggest employer of young people in Britain. Many join us without qualifications. They want a better lifé, and getting qualifications is something they genuinely value’ q Surviving strategies ‘Yet, in spite of its difficult period, the company has not only survived but through the late 2000s has thrived. In 2009 McDonald's results showed that, in the USA, sales and market share both grew for the seventh consecutive year, with new products such as ‘McCafé premium coffees, the premium Angus Third Pounder, smoothies and frap- pes, together with more convenient locations, extended hours, efficient ‘drive thru’ service and value-orientated promotions. In the UK, changes to the stores’ décor and adapting menus have also helped stimulate growth, Jill McDonald’s views are not ‘untypical of other regions: ‘We have probably changed more in the past four years than the past 30: more chicken, 100% breast meat, snack wraps, more coffee - lattes and cappuccinos, ethically sourced, not at rip-off prices. That really connected with customers. We sold 100 million cups last year’ Senior managers have put McDonald’s recent growth down to the decision in 2003 to reinvent the company by becoming ‘better, not just bigger’ and by implementing its ‘Plan to Win’. This focused on ‘restaurant execution’, with the goal of ‘... improv- ing the overall experience for our customers’. It provided a common framework for its global business, yet allowed for local adaptation. Multiple improvement initia- tives were based on its ‘five key drivers of exceptional customer experiences’ (people, products, place, price and promotion). But what of McDonald's famous standardisa- tion? During its early growth no franchise holder could deviate from the 700+-page ‘McDonald's operations manual, known as ‘the bible’. Now things are different, at least partly because different regions have developed their own products. In India, the ‘Maharaja Mac’ is made of mutton, and the vegetarian options contain no meat ot eggs. Similarly, McDonald’s in Pakistan offers three spicy ‘McMaza meals’, Even in the USA things have changed. In at least one location, in Indiana, there's now a ‘McDonald's with a full service ‘diner’ inside, where waitresses serve 100 combinations of food, on china - a far cry from Ray Kroc’s vision of stripping out choice to save time and money. @ Note on the case 1 This case originally appeared in Slack, N., Brandon-Jones, A., Johnston, R. and Betts, A (2012) Operations and Process Management, 3 edition. Harlow, UK: Pearson Education.DISNEYLAND RESORT PARIS Nigel Slack In August 2006, the company behind Disneyland Resort Paris reported a 13 per cent rise in revenues, saying that it was making encouraging progress with new rides aimed at getting more visitors. ‘I am pleased with year-to-date revenues and especially with third quarter's, as well as with the success of the opening of Buzz Lightyear Laser Blast, the first step of our multi-year investment programme. These results reflect the group’s strategy of increasing growth through innovative marketing and sales efforts as well as a multi-year investment programme. This performance is encouraging as we enter into the important summer months’, said Chairman and Chief Executive Karl L. Holz. Revenue for the quarter ending 30 June rose to €286.6 million ($362 million) from €254 million a year earlier. The results helped to boost overall profits at Disney Company, and the com- pany’s stock price soared, Yet, it hadn't always been like that. The fourteen-year history of Disneyland Paris had more ups and downs than any of its rollercoasters. The company had hauled itself back from what some commentators had claimed was the brink of bankruptcy in 2005. In fact, from 12 April 1992 when Euro Disney opened through to this more optimistic report, the resort had been subject simultaneously to both wildly optimistic forecasts and widespread criticism and ridicule. An essay on one critical internet site (called ‘An Ugly American in Paris’) summarised the whole venture in this way: ‘When Disney decided to expand its hugely successful theme park operations to Europe, it brought American management styles, American cultural tastes, American labor practices, and American marketing pizzazz to Europe. Then, when the French stayed away in droves, it accused them of cultural snobbery.” The ‘magic’ of Disney Since its founding in 1923, the Walt Disney Company had striven to remain faith- ful in its commitment to ‘producing unparalleled entertainment experiences based on its rich legacy of quality creative content and exceptional storytelling’. It did this through four major business divisions: Studio Entertainment, Parks and Resorts, Consumer Products and Media Networks. Each segment consists of integrated businesses that worked together to ‘maximise exposure and growth worldwide’. “ounce: This ease was prepared by Nigel Slack of Warwick Business School, Warwick University, United Kingdom, using published sources of information, It does not reflect the views of the Walt Disney Company, who should not be held responsible for the accuracy or interpretation of the information lo Views contained in this case, ILs not intended (o lusteate either good or bad management practic. Copyright © 2006 Nigel Slack.366 CASE STUDY 2 » DISNEYLAND RESORT PARIS In the Parks and Resorts division, according to the company’s description, cus- tomers could experience the ‘magic of Disney’s beloved characters’. It was founded in 1952, when Walt Disney formed what is now known as ‘Walt Disney Imagineering’ to build Disneyland in Anaheim, California. By 2006, Walt Disney Parks and Resorts operated or licensed 11 theme parks at five Disney destinations around the world. ‘They were Disneyland Resort, California, Walt Disney World Resort, Florida, Tokyo Disney Resort, Disneyland Resort Paris and their latest park, Hong Kong Disneyland. In addition, the division operated 35 resort hotels, two luxury cruise ships and a wide variety of other entertainment offerings. But in the history of the Walt Disney Company, perhaps none of its ventures had proved to be as challenging as its Paris, resort, Service delivery at Disney resorts and parks The core values of the Disney Company and, arguably, the reason for its success, origi- nated in the views and personality of Walt Disney, the company's founder. He had what some called an obsessive focus on creating images, products and experiences for customers that epitomised fun, imagination and service. Through the ‘magic’ of legendary fairytale and story characters, customers could escape the cares of the real world. Different areas of each Disney Park are themed, often around various ‘lands’ such as Frontierland, Fantasyland, Tomorrowland and Adventureland. Each land contains attractions and rides, most of which are designed to be acceptable to a wide range of ages. Very few rides are ‘scary’ when compared to many other entertain- ment parks. The architectural styles, decor, food, souvenirs and cast costumes are all designed to reflect the theme of the ‘land’, as are the films and shows. Although there were some regional differences, all the theme parks followed the same basic setup. Over the years, Disney had built up a reputation for imaginative rides. Its ‘imagineers’ had years of experience in using ‘auto animatronics’ to help rec- reate and reinforce the essence of the theme. The terminology used by the company reinforced its philosophy of consistent entertainment. Employees, even those work- ing ‘back stage’, were called cast members. They did not wear uniforms but ‘costumes, and rather than being given a job they were ‘cast in a role’ All park visitors were called ‘guests’ Disney employees were generally relatively young, often of school or college age. ‘Most were paid hourly on tasks that could be repetitive even though they usually involved constant contact with customers. Yet, employees were still expected to main- tain a high level of courtesy and work performance. All cast members were expected to conform to strict dress and grooming standards. Applicants to become cast members were screened for qualities such as how well they responded to questions, how well they listened to their peers, how they smiled and used body language and whether they had an ‘appropriate attitude’. All Disney parks had gained a reputation for their focus (some would say obsession) with delivering a high level of service and experience through attention to operations detail. To ensure that their strict service standards were met they had developed a number of specific operations policies. © All parks employed effective queue management techniques such as providing information and entertainment for visitors.CASE STUDY 2 + DISNEYLAND RESORT PARIS 367, ‘© Visitors (guests) were seen as having a role within the park. They were not merely spectators or passengers on the rides, they were considered to be participants in a play. Their needs and desires were analysed and met through frequent interactions with staff (cast members). In this way they could be drawn into the illusion that they were actually part of the fantasy. ‘© Disney's stated goal was to exceed its customers’ expectations every day. © Service delivery was mapped and continuously refined in the light of customer feedback. ‘© The staff induction programme emphasised the company’s quality assurance pro- cedures and service standards. These were based on the four principles of safety, courtesy, show and efficiency. © Parks were kept fanatically clean, © The same Disney character never appears twice within sight - how could there be two Mickeys? ‘© Staff were taught that customer perceptions are both the key to customer delight, but also are extremely fragile. Negative perceptions can be established after only one negative experience © Disney University was the company’s in-house development and learning facility with departments in each of the company’s sites. The university trained Disney's employees in its strict service standards as well as providing the skills to operate new rides as they were developed. © Staff recognition programmes attempted to identify outstanding service delivery performance as well as ‘energy, enthusiasm, commitment, and pride’ © All parks contained phones connected to a central question hot-line for employees to find the answer to any question posed by customers. Tokyo Disneyland Tokyo Disneyland was owned and operated by the Oriental Land Company. Disney had designed the park and advised on how it should be run. In return, they received 10 per cent of all admissions revenues, and 5 per cent of food and souvenir revenues. The Tokyo project was considered a great success. Japanese customers revealed a significant appetite for American themes and American brands, and already had a good knowledge of Disney characters. Feedback from visitors at the Tokyo park was extremely positive. Visitors commented on the cleanliness of the park, the efficiency of staff members and the courtesy with which they were treated. Visitors also appre- ciated the Disney souvenirs (a wider range than in the American parks) because giving gifts is deeply embedded in the Japanese culture. Although the Tokyo park was almost identical to Disney's Californian park, there had been no complaints about the dilution of Japanese culture by so strong an American-themed entertain ment. The Japanese operators had added many new attractions since its opening Many signs were written in English, as were cast members’ name badges. Similarly, many of the live shows and attractions were conducted in English and although almost all visitors to the park were Japanese, only one out of its thirty restaurants sold Japanese food.368. CASE STUDY 2 » DISNEYLAND RESORT PARIS ‘The success of the Tokyo park was explained by one American living in Japan: “Young Japanese are very clean-cut. They respond well to Disney’s clean-cut image, and I am sure they had no trouble filling positions. Also, young Japanese are generally comfort- able wearing uniforms, obeying their bosses, and being part of a team. These are part of the Disney formula, Also, Tokyo is very crowded and Japanese here are used to crowds and waiting in line. They are very patient. And above all, Japanese are always very polite to strangers.” Disneyland Tokyo had opened in 1982. Because Disney was wary of losing money on the Japanese venture it decided not to own the Tokyo site ~ a decision it came to regret. Disney also regretted allowing hotels owned by other companies to be built at its earlier US Disneyland parks, to the extent that Disney only owned about 25 per cent of hotels in the vicinity. It decided that it would take full control of Euro Disney and all its hotels q Disneyland Paris By 2006 Disneyland Paris consisted of three parks: the Disney village, Disneyland Paris itself and the Disney Studio Park. The village was comprised of stores and restaurants; Disneyland Paris was the main theme park; and Disney Studio Park had a more general moviemaking theme. Yet, the idea of a European park was not new. Because many of Walt Disney’s most successful animations were taken from European literature, he had always wanted to build a park in Europe. In the event, his wish wasn’t completed until 25 years after his death, But when the Walt Disney Company planned its European venture, its reputation was riding high and it was confident of success, At the time of the European park's opening, more than two million Europeans visited the US Disney parks, accounting for 5 per cent of the total visitors. The company’s brand was strong and it had over half a century of trans- lating the Disney brand into reality. The name ‘Disney’ had become synonymous with wholesome family entertainment that combined childhood innocence with hightech ‘imagineering’ Alternative locations Formal plans to build a European Disney Park were first considered as early as 1975. Initially, as well as France, Germany, Britain, Italy and Spain were all considered as possible locations, though Germany, Britain and Italy were soon discarded from the list of potential sites. The decision soon came to a straight contest between the Alicante area of Spain, which had a similar climate to Florida for a large part of the year, and the Marne-la-Vallée area just outside Paris. Certainly, winning the contest to host the new park was important for all the potential host countries. The new park promised to generate more than 30,000 jobs. It was the French location that eventually won out, partly because of the close proximity to the large population of the Paris conurbation and the city’s attrac- tion as a tourist centre. Also, its central positioning within Western Europe was thought to be crucial too if it was to attract sufficient visitors. Early concerns that the park would not have the same sunny, happy feel in a cooler climate