The Disney Management
The Disney Management’s miscalculations on the expected revenues from Euro Disney reflect a glaring lack of meticulous planning and research on external and environmental factors that would have a bearing on the profitability of the business. Disney Management clearly relied on the perceived success of Disney’s business blueprint, which made them blind to the need to fine-tune Euro Disney according to the different cultural environment of France and the European consumers.
Moreover, Disney Management also failed to learn from their missteps early on, which only made it harder for them to make the business turn around. The arrogance of Disney Management prevented them from admitting that they committed grave errors in estimating the willingness of European consumers to spend heavily on the EuroDisney experience in the midst of an economic recession and made them neglect the fact that Europeans were more price sensitive and could find creative ways to evade the high premiums imposed by Disney Management on accomodations and meals.
B. Perhaps the biggest factor that contributed to the success of Tokyo Disneyland was the fact that it was planned by a cultural insider, Oriental Land, which was highly sensitive to the Japanese culture and hence was able to take advantage of Japanese’ positive regard for things related to the American culture. Likewise, the builders of Tokyo Disneyland apparently had more realistic projections in terms of the number of visitors and Japanese spending pattern so that they were more confident in developing the park through borrowed funds. C.
A better reading of the cultural differences between the American and European consumers would definitely have made EuroDisney more successful, as it would have enabled Disney Management to adjust prices and amenities in the earlier stages of planning and implementation. Moreover, a deeper knowledge of spending and consumption patterns of the target consumers of EuroDisney would have given Disney Management more realistic revenue projections and expectations particularly in the planning of real estate and hotel amenities within the park, which were costly to build but were very much underutilized as assets.
However, the situation also reveals that Disney Management clearly overestimated the revenue capacity of EuroDisney and neglected the burden of interest payments on funds loaned from creditors. Hence, greater sensitivity to European culture would have eased the dire situation but not solved the problem of profitability as Disney Management would still find it hard to meet the break even point for the entire venture. D. Clearly, Disney Management needs to be more cautious in studying the environment and culture of the places and regions where they operate.
For one, the Management needs to conduct more thorough studies on consumer behaviors and spending as influenced by the cultural and economic context of foreign countries and regions where they hope to establish theme parks. Second, Disney Management needs to do something about their arrogance and condescending attitude which is primarily responsible for their overbloated revenue and profit projections. Indeed, the current situation at EuroDisney affirms the fact that Europeans are more price sensitive than other visitors as EuroDisney Management had to lower down prices significantly to increase customers to 15.
3 million (Lahoud, 2009, p. 1). However, although the situation appears to be more positive compared to previous conditions, EuroDisney is still saddled with its huge debts, which could adversely affect the business in light of the new financial crisis hitting Europe. Work Cited: Lahoud, I. (2009, February). Speech at the Euro Disney S. C. A. Annual General Meeting. Retrieved March 29, 2009 from http://corporate. disneylandparis. com/CORP/EN/Neutral/Images/uk-2009-agm-ignace-lahoud-speech.
pdf Response: 1) I certainly agree that arrogance and the lack of cultural sensitivity was the main reason why EuroDisney opened as a flop rather than the tourist magnet that Disney Management envisioned it to be. This is evident in how the Management was clueless about the preferred schedule of European tourists and even food preferences and habits, which reflected badly on the Disney brand and reinforced the negative perception that Disney Management was arrogant and condescending.
However, I disagree with the suggestion that bringing in French business people to run EuroDisney would have solved the cultural problems encountered by Disney, as the Disney Management’s heavy handed attitude were more likely to limit the ability of these people to implement necessary changes. I agree with the second suggestion that it would have paid well if Disney Management heeded the voice of the people working for it in order to improve the overall operations of the theme park.
2) I agree that the lack of planning and research was an important factor in the failures and weaknesses of EuroDisney during its early years and the years that followed. In particular, the Disney Management did not bother to conduct an adequate research of Europe’s economic and cultural context and simply relied on the proven success of their other theme parks. This proved to be a very costly mistake, as the Disney Management was forced to take on huge debts for financing, which made even break-even points harder to reach.