Walt Disney Company's
Euro Disneyland Venture
A study in corporate foreign expansion
by
Lyn Burgoyne
INTRODUCTION
Many companies throughout the United States and beyond are resorting to developing their business abroad.
This is due to numerous factors such as the ability to cut costs through cheaper building material or labor, which
leads to increasing their revenues, functioning with more advantageous tax and labor laws, and expanding their
market, just to name a few. The Walt Disney Company was one of those many American organizations to
expand on foreign soil. Its first foreign venture proved to be so successful that the decision was made to further
expand abroad. This next foreign expansion experience, named Euro Disneyland did not prove to be the
successful venture that had been anticipated by its creators.
Euro Disneyland a theme park comprised of an updated, state of the art Disney's Magic Kingdom, is a
subsidiary of the Walt Disney Company located outside Paris, France, and has experienced numerous
complications from its inception. Because the Walt Disney Company executives were determined to adhere to
American philosophies, they did not thoroughly investigate all aspects of the European environment. This
failure to do adequate research caused the Walt Disney Company executives and visionaries to construct their
American dream theme park on foreign soil with little if any regard for the practical reality of the physical,
financial, and/or cultural environment of their chosen site. More specifically, the Walt Disney Company's
"...biggest mistakes were its overambitious plans to develop the site, plus Euro Disneyland's financial structure
itself, which depended on a highly optimistic financial scenario with little room for glitches". These massive
oversights were contributing factors to the problems faced at Euro Disneyland.
As a company planning on expanding abroad, it is helpful to study the history of companies which previously
have developed in other countries. For example, studying the Walt Disney Company's venture into France will
allow other companies to learn from the Walt Disney Company's experiences. Recognizing, understanding and
avoiding their mistakes will allow a company entering a new country increased opportunity to succeed.
Reviewing the Euro Disneyland venture from the site research investigation to the present day operation will be
beneficial to a company considering expansion abroad.
THE HUMAN RESOURCE CONNECTION
The human resource professional often is involved in determining the optimum site for a business and is
responsible for many other aspects of an international expansion, such as cultural evaluation of the site,
employee selection, training, development, compensation, and evaluation, just to name a few. Thus, as a human
resource professional it is pertinent to research companies which have succeeded and those which have not, in
order to better prepare. Furthermore, human resource professionals must comprehend the laws, traditions,
culture, and people of a country in order to minimize problems which can occur.
THE BEGINNING
In order to understand the issues involved in the Walt Disney Company's international expansion in Europe it is
pertinent to review the background of Euro Disneyland. This can be done by looking at how the site, Paris,
France, was chosen, at the signed agreement, at the risk management issues, and at the opening.
Why Paris?
The Walt Disney Company choose Paris, France, as the site of Euro Disneyland for many reasons. On April 15,
1983, the Walt Disney Company opened in Tokyo, Japan, their first theme park outside the United States. This
theme park, Tokyo Disneyland became an instant hit. In fact, since the Walt Disney Company executives
believed they learned so much about operating a theme park in another country, and since Tokyo Disneyland
was an instant success, they began immediately to search for a site for a fourth park.
To find a site for their fourth theme park, the Walt Disney Company looked to Europe where Disney films
historically have done better than in the United States. Because of this film success, the Western European
audience already was familiar with Disney entertainment and merchandise. From 1983 through 1987 the
company searched for sites in the United Kingdom, France, Germany, Spain, and Italy. Finally the possibilities
were narrowed down to Costa del Sol in Spain and Paris in France. Although Spain had the edge due to its
climate, France had a larger population and a spectacular transportation network. The Walt Disney Company
executives believed since Tokyo Disneyland located in a cold-weather climate and virtually the same latitude as
Paris, was so successful, they would be able to operate in similar weather conditions in Paris. In fact, Disney
executives admit that "...without the cold-climate (Tokyo) Disneyland success, they would never have picked
Paris, which has the same or worse weather than Tokyo". Thus, Paris was selected to be the site of their fourth
theme park.
The site for Euro Disneyland is a "...parcel of prime suburban real estate in a mushrooming region called
Marne-la-Vallee". In fact, the land is one-fifth the size of Paris itself. When the French government used its
right of eminent domain to sell Disney the 4,400-acre (1,943-hectares) site at a fraction of its market value for
approximately $7,500 an acre, there were bitter protests by the local farmers whose sugar beet fields had been
farmed by the same families for a hundred years or more. The Walt Disney Company worked with the local
farmers to avoid any potential problems. Their efforts were successful. The farmers were proud of the fact that
people from many nations would be coming to their area of the world.
Marne-la-Vallee is located in an ideal geographic location since it is 20 miles (32 kilometers) due east of the
center of Paris and is halfway between the two international airports of Orly and Roissy-Charles-de-Gaulle. The
French railway regional express network connects Marne-la-Vallee with the Paris metro system, and major
highways are nearby. In fact, of more than 350 million Western Europeans, 17 million can reach the Euro
Disneyland resort within two hours by car and 310 million can fly creating a "...denser market than the United
States". With the scheduled opening (which took place May 1994) of direct rail links to Great Britain via the
English Channel there were countless additional potential guests. Thus, due to its transportation availability,
Paris offers Euro Disneyland a wealth of potential guests and employees (Grey, 1989).
The Agreement
On March 23, 1987, the Walt Disney Company signed a contract with the French national, regional and local
governments, which promised Disney: favorable loan terms; that the rapid transit railway system would be
extended to the theme park from Paris; that two interchanges would be built to link Euro Disneyland with a
main highway; and that a special station for high-speed trains would be constructed at the park. Unlike the Walt
Disney Company's wholly-owned American theme parks, and Tokyo Disneyland where Disney receives license
fees from Mitsui and Oriental Land Corporation, Euro Disneyland is a public company with 51% of equity
owned by EC individuals and institutions (Anything but a 'Mickey Mouse', 1989). The other 49% of the shares
are owned by the Walt Disney Company who maintains management control of the company (Grey, 1989).
The Walt Disney Company promised new jobs and contracts for local suppliers which resulted in red carpet
treatment from France. More specifically, Euro Disneyland planned on hiring 12,000 new Cast Members
(employees). About 6,000 would work in Euro Disneyland's Magic Kingdom, 5,200 in hotels on the property,
and the remainder in recreation and support facilities. The area was suffering high unemployment at the time
and the Walt Disney Company executives believed the economic benefits to the region would be great since
they would employee so many local citizens and since tourism generates revenue without requiring such costly
social services as schools and hospitals.
Risk Management
Once the Walt Disney Company executives chose Paris, France, as the site for their fourth theme park, they had
to integrate American risk management techniques into a French environment. This integration of differing
management techniques is typical with any company doing business abroad. However, a great deal of time,
patience, understanding, education, and willingness to accept and/or compromise are needed from all parties
involved in order to make this integration successful. The Walt Disney Company has been known for their strict
construction and risk management requirements which they wished to impose upon the French workers.
Likewise, the Walt Disney Company had to cope with language barriers and an unfamiliar French legal
framework derived from the Napoleonic code. Thus, this joint venture caused many conference sessions to
determine how to best integrate American and French risk management practices covering a multitude of
diverse risks (Euro Disneyland combines American, 1989). It was important to each side for them to join their
philosophies and requirements into a system which would work for Euro Disneyland.
A good example of the blending of two different systems is the difference in insurance laws in France and the
United States. A ten-year owner/contractor insurance policy that covers property damage and third-party claims
stemming from construction-related defects was required by French law. The Walt Disney Company would
have preferred to purchase a three-year contract as would be allowed by American standards, but could not
since they were developing in another country. Instead, the Walt Disney Company had to abide by the laws of
France.
An issue which the French were against was the installation of sprinklers in the hotels. Such an installation is
not mandated by French law. The French believe the sprinklers are not necessary since "...their hotels are built
with superior construction, building materials and compartmentalization, and are equipped with smoke alarms
that would quickly summon firefighters". Thus, since Euro Disneyland was a French Company, the French did
not believe they needed to install sprinklers. The Walt Disney Company believed in such sprinkler installation
and embarked on an education program to explain why they wanted the French contractors to install the
sprinkler system. Once the Walt Disney Company presented a film on fires depicting how quickly flames can
spread, explained about potential delays in firefighters arriving at a hotel, and discussed the difficulties in
finding the location of the fire, the French approved the installation of the sprinklers.
These are only two examples of many situations which were discussed by the Walt Disney Company and the
French during their risk management meetings. In a wrap-up meeting of risk management issues in the
construction of Euro Disneyland Stephen M. Wilder, director of corporate risk management at The Walt Disney
Company believed, "The result of compromise and learning is a program that is far superior to what an
American company or a French company would have done in isolation".
Opening Day
On April, 12, 1992, despite a few protests, the Walt Disney Company's fourth theme park, Euro Disneyland
opened its doors to the public with essentially the same attractions as in the other Disney theme parks in
California, Florida, and Japan. Euro Disneyland executives hoped to attract 11 million guests a year, more than
twice the number that visits the Eiffel Tower. Half of the guests were excepted to be French. Euro Disneyland
was confident that with its superior investment, professionalism and French government assistance, it would
succeed. If it did not, it would most likely be the fault of the weather and not of any French cultural chauvinism.
Unfortunately, the dream of succeeding did not become a reality and eventually Euro Disneyland brought in
new management and made other changes in order to save Euro Disneyland.
THE PROBLEMS
Although Disney believed they had hit a "gold mine" by developing their fourth theme park just outside of
Paris, in time they would learn this was not the case. Euro Disneyland's target of 11 million guests in the first
year was met, but revenues did not roll in as had been planned. In fact, Euro Disneyland reported a $905 million
loss for the fiscal year that ended in September 30, 1993, and by December 31, 1993, Euro Disneyland had
amassed cumulative loss of 6.04 billion French francs or 1.03 billion US dollars.
It should be noted, Euro Disneyland's first chairman, Robert Fitzpatrick, an American, won kudos for setting up
the park, yet he stumbled over day-to-day operations. Fitzpatrick spoke French, knew Europe well and his wife
was French. But he seemed to be "...caught in the middle and quickly came to be regarded with suspicion by
some on both sides". Numerous times he attempted to warn Disney executives that France should not be
approached as if it were Florida, but his warnings were ignored. He was replaced in 1993 by Frenchman
Philippe Bourguignon. The all-American enterprise suddenly had raced to put on a European face. Bourguignon
was responsible to "...ensure the park goes native without losing the American feel that is its main draw".
Although there was a change in the head of Euro Disneyland there are problems which it faced with the old
management and still faces problems with the new management. Among these problems are included their
optimistic assumptions, staffing and training, cultural issues, interest rates, marketing, communication, and
convention business.
Optimistic Assumptions
The Walt Disney Company, overly ambitious in their venture, made several strategic and financial
miscalculations. In addition it gambled, incorrectly, that the 1980's "...boom in real estate would continue,
letting it sell off assets (discussed below) and pay down the debt quickly". Further, it relied too heavily on debt
when the interest rates were beginning to increase. Another costly assumption was that Disney believed it could
change certain European habits.
Budget - Breakers
The Walt Disney Company wanted to build a state of the art, as near to perfect as possible, theme park. In order
to meet this goal the company frequently attempted to build and rebuild, with no regard for the "bottom-line"
construction cost. Michael Eisner, the Chief Executive Officer of the Walt Disney Company, ordered several
last-minute construction changes, known as budget-breakers, which further increased Euro Disneyland's debt.
For example, one cold day before Euro Disneyland opened Eisner warmed himself by a Paris hotel lobby
fireplace and ordered more than a dozen wood-burning fireplaces for Euro Disneyland despite the added
construction cost and upkeep (Solomon, 1994). Another example of an Eisner budget-breaker was his decision
to remove two steel staircases from Euro Disneyland's Discoveryland. He wanted them removed because they
blocked a view of the Star Tours ride. It was estimated the cost to remove the staircases was approximately
$300,000.
European Recession
Euro Disneyland executives and advisors failed to see the signs of the approaching European recession.
"Between the glamour and the pressure of opening and the intensity of the project itself, we (the executives)
didn't realize a major recession was coming". As the recession began to develop the French real-estate market
tumbled (discussed below), thus, destroying Euro Disneyland's hopes of selling their assets and receiving
revenues. In addition, the recession caused French and European disposable incomes to shrink, causing families
to think twice about taking an expensive trip to Euro Disneyland.
Furthermore, Euro Disneyland did not realize the magnitude of the impending recession and when given
numerous opportunities to sign partners who would share the risk or buy the existing hotels, Disney refused.
Euro Disneyland did not want to give up any of the potential revenues once the recession was over.
Real Estate Market
The Walt Disney Company executives involved in the development of Euro Disneyland were determined they
would not repeat two mistakes which they had made in past ventures. One mistake was allowing other
companies to build lucrative hotels surrounding their theme park, as happened at Walt Disney World in
Orlando, Florida, where the Walt Disney Company owns only 14% of all hotels. The other mistake was in
letting another company own a Disney theme park, as in Tokyo, Japan, where Disney just collects royalties
from an immensely profitable attraction. Thus, in France the Walt Disney Company bought far more land then
it needed in order to eventually build 700,000 square meters of office space, a 750,000 square meter corporate
park, 2,500 individual homes, a 95,000 square meter shopping mall, 2,400 apartments and 3,000 time share
apartments.
Euro Disneyland planned to develop the land and then sell it to prospective buyers, making a large profit. In
addition, this would allow Euro Disneyland stringent control over designing and building of future areas within
the resort and then the ability to sell off the completed commercial properties in due course and at a large profit.
In fact, Disney budgeted for real estate to account for 22% of revenues in 1992, 32% of revenues in 1993, 40%
of revenues in 1994, and 45% in 1995. Euro Disneyland executives must have known rather rapidly that the
financing structure for the resort was in trouble. Unfortunately, this revenue generating plan never really "got
off the ground" due to the collapse of the real-estate market which, in turn, caused the demise of the planned
development around the theme park. Thus, Euro Disneyland did not receive revenue from property development
as had been anticipated.
Operational Errors
There were numerous errors made regarding the overall operation of Euro Disneyland. For example, from its
American experience the Walt Disney Company thought Monday would be the light day for guests and Friday a
heavy one, and allocated staff accordingly. In reality the reverse was the case. In fact to this day, the company
still struggles to find the right level of staffing at a theme park where "...the number of visitors per day in the
high season can be 10 times the number in the low season". Furthermore, to add to the operation problem is the
difference in employee acceptance of conditions of employment. In Orlando Cast Members are accustomed to
and have learned to accept being sent home if they are not needed. However, in Paris, French Cast Members
feel extremely irritated by and have a very difficult time accepting the inflexible scheduling.
Another example of operational assumptions at Euro Disneyland involved the bus drivers. The Walt Disney
Company built the French bus parking spaces much too small. Bus drivers were unhappy as they had a very
difficult time fitting their busses into their designated spots. In addition, the Walt Disney Company provided
only 50 restroom facilities for bus drivers and on peak days there would be 2,000 drivers.
A final example of the operational errors made by Euro Disneyland involved the computer stations at the hotels.
Euro Disneyland executives assumed guests would stay at the park for several days. This in fact did not happen.
Many guests arrived early in the morning, spent the day at the park, checked into the hotel late that night, and
then checked out early the next morning before heading back to the park. Since there were so many guests
checking-in and checking-out, additional computer stations had to be installed at the hotels in order to decrease
the amount of time the guests stood in line.
Labor Costs
Before the opening of Euro Disneyland executives had estimated labor cost would be 13% of their revenues
(Meltdown at the cultural, 1994). This was another area where the executives were wrong in their assumptions.
In 1992 the true figure was 24% and in 1993 it increased to a whopping 40%. These labor cost percentages
increased Euro Disneyland's debt.
Staffing and Training
Before Euro Disneyland opened the Walt Disney Company built offices in Marne-la-Vallee in order to recruit
their Cast Members. In just 12 months 12,000 Cast Members had to be recruited, hired, trained, and housed.
This is a challenge for any company, "...but it is more complex for Disney, whose employees (Cast Members)
become more like members of a theater troupe". Euro Disneyland recruited through job fairs, a popular
European recruiting technique. In two days, 1,000 applied. However, since the Walt Disney Company's
requirements for employment are so high, for every 10 candidates interviewed only one was hired. To
complicate the hiring process, there were language requirements since the official languages of Euro
Disneyland are French and English. Preferences were given to trilingual applicants because it was hoped that
the park would draw guests from all over Europe.
Once the candidates were hired Euro Disneyland's challenge was to train the Europeans, half of them French, to
be Disney Cast Members. "Every employee goes through human resource training, then additional training in
requirements of specific jobs". The success to Disney parks' repeat guest visits is the employee-customer
rapport. Thus, the largest challenge Euro Disneyland encountered was implanting a "have a nice day" mentality
and teaching 12,000 European employees to smile the "Disney smile" all day.
Throughout training and employment ALL Cast Members learn they must adhere to the company's strict 13
page manual of dress codes, known to Cast Members as the "Disney Look." The Europeans did not understand
this "Disney Look". The "Disney Look" is a rigid code of Cast Member appearance that imposes a wellscrubbed, all-American look. It details the size of earrings to the size of finger nails to the no tolerance rule
regarding facial hair and dyed hair. It is difficult for the Europeans to adhere to an "American look" since they
are not American and they believe this requirement has stripped them of their "individualism". Furthermore, the
French "...were hardly specialists in service". In December 1994 Euro Disneyland was taken to French court
contesting the Walt Disney Company's strict dress code. The Europeans believed the dress code violated French
labor law. As a result Euro Disneyland restructured their French dress code. However, the French believed that
the Walt Disney Company just instituted a new policy not as a result of being taken to court but in an attempt to
patch up the rocky labor relations at the theme park.
Cultural Issues
Although European public acceptance of the theme park itself has not been a problem for Euro Disneyland there
has been a different type of cultural clash. Most Europeans believe there is cultural imperialism. Europeans
have not taken to the "...brash, frequently insensitive and often overbearing style of Mickey's American
corporate parent". Disney executives' contentious attitudes exacerbated the difficulties it encountered by
alienating people with whom it needed to work. "Its answer to doubts or suggestions invariably was: Do as we
say, because we know best".
Cultural Operational Errors
There were various errors made in the operations of Euro Disneyland which affected the French culture. An
example if this is the Walt Disney Company's policy of serving no alcohol in its parks in California, Florida,
and Tokyo which it extended to France. This caused astonishment and rebellion in France where a glass of wine
for lunch is a given. After much consideration, in May 1993, the Walt Disney Company changed its policy and
allowed wine and beer in the Euro Disneyland theme park.
Another example is the Walt Disney Company's belief that it understood European breakfast norms. Disney was
told Europeans did not eat sit-down breakfasts. This resulted in Disney downsizing their restaurants before Euro
Disneyland opened. Once it opened the restaurants were bombarded with breakfast eaters. In fact, they were
"...trying to serve 2,500 breakfasts in a 350-seat restaurant at some of the hotels". Further, guests wanted bacon
and eggs rather than just coffee and croissants. Disney reacted quickly with prepackaged breakfasts delivered to
rooms and satellite locations.
In much the same vein, the Walt Disney Company had difficulty realizing that the Europeans were accustomed
to eat at a set time every day. Where Americans are content to wander around the parks with lunch in their
hands, a large majority of the European guests would converge on the restaurants at 12:30 p.m. expecting to be
seated for a leisurely lunch. This caused the lines to be very long. To complicate matters further, once the
Europeans reached the front of the line they were told they could not have wine or beer with their lunch. Thus,
the Europeans did not have a positive "Disney experience" while eating their meals. In addition, it was difficult
for Euro Disneyland's managers to staff for these one or two hour "rush hours."
A final example of a cultural error is the Europeans approach to vacation time. The Europeans are reluctant to
take their children from school for a vacation in mid-session whereas Americans do it frequently. Also, the
Europeans prefer a few longer holidays rather than several short breaks. The Walt Disney Company was
convinced that it would be able to "Americanize" the European habits. Unfortunately for the Walt Disney
Company, this was not the case.
Per-capita Spending
There also were miscalculations made by the executives regarding the per-capita spending of the guests at Euro
Disneyland. The Walt Disney Company had assumed that guests visiting Euro Disneyland would spend large
amounts of money as they did in the United States and Tokyo. More specifically, the Walt Disney Company
calculated that each guest would buy $33 worth of food and souvenirs per day. This did not happen. In fact,
spending is about 12% less then predicted. Further, Europeans' per-capita income is lower than the Japanese,
and they are likely to spread their money over long vacations, not four-day spending sprees.
European guests came to the theme park paying the steep entry fees ($43 for adults and $30 for children), but
spent less per-capita on food and merchandise than Americans. This may be due in part to the fact that many
guests spend as much time on the rides as possible because of the high admission price (30% more than Disney
World in Florida) and less time shopping for souvenirs (Euro Disney: The not-so-magic, 1992). American and
Japanese consumers do not leave the theme parks empty handed, whereas Europeans do. This resulted in lowerthan-expected revenue by Euro Disneyland.
Interest Rates
The total construction cost of Euro Disneyland was $4 billion. Disney put in just $170 million in equity capital,
while public shareholders, who own 51% of the shares put in $1 billion in equity capital. Thus, the remaining
$2.9 billion was borrowed, at high rates running as much as 11%. “Thus, from the start, the project was highly
leveraged". To further complicate the matter, due in part to Michael Eisner's budget-breakers (as discussed
above), there was an additional necessity to borrow more money. This second set of loans increased the amount
of money owed which is what ultimately "...handcuffed Euro Disney" With high interest rates, large loans, and
lower than expected revenue Euro Disneyland was in financial trouble.
Marketing
Euro Disneyland was marketed with the assumption that it was "...a complete vacation destination that offers
enough to keep a family happily occupied for a week". This marketing strategy was obsessed with depicting the
park as large and completely eliminating the emotional aspect of the park. As discussed above, French guests
only stayed at the resort for a night or two and did not stay a week. Instead of marketing the park in the
American-style appeal of "...bigness and extravagance", Euro Disneyland should have concentrated on the
emotional aspect, marketing that guests would have a unique, extraordinary family experience they would never
forget. The American-style bigness approach insulted Europeans.
Furthermore, the marketing was flawed in emphasizing glitz and size over attractions. There was little showcase
of the exciting adventures and characters explaining to the guests what they could do and see in the park. Rather
the French saw Euro Disneyland as "American imperialism-plastics at its worst...It showed tremendous
arrogance on Disney's part".
Euro Disneyland made a huge mistake not considering the views of the French when developing their marketing
strategies. The Walt Disney Company agrees there may have been marketing mistakes, but it blames the
mistakes to lack of data on how Europeans would react to the "Disney Magic" (Euro Disney: The not-so-magic,
1992).
Communication
Investors believe they are victims of Euro Disneyland since the Walt Disney Company poorly communicated its
difficulties. For example, as of July 1994 the Walt Disney Company executives were communicating to the
investors they still planned on building Phase II, a second theme park at Euro Disneyland. That following
November the executives reported a $905 million loss and Disney itself took a $350 million write-off. Shortly
after that announcement and to the total astonishment of the investors, Eisner casually mentioned in a French
magazine interview that Euro Disneyland might close due to its losses.
Additionally, communication with the media has been very poor by the Euro Disneyland executives. Those
managers who dealt with the media would not return phone calls, much less answer questions. Realizing they
made a huge error, it has become Euro Disneyland executives' goal to improve their reputation with the media.
Convention Business
According to Turner & Coleman (1994), one of the few pieces of good news about Euro Disneyland is that its
convention business exceeded expectations from the beginning. In fact, convention space at Euro Disneyland's
themed New York Hotel, located adjacent to the park, was overbooked and more capacity was needed. Euro
Disneyland did not anticipate the success of its convention facilities. Had it done so, it could have increased its
conference groups and revenue. Euro Disneyland is now frantically trying to increase its convention facilities.
THE RESOLUTIONS
Much has happened with Euro Disneyland since its opening. Although there have been successes at Euro
Disneyland the high debt incurred along the way has caused the financial problems to become the number one
priority. In order for the park to remain operational the debt must be lowered.
Disney's Rescue Package
On March 14, 1994, Walt Disney Company proposed a restructuring "rescue" plan which would decrease the
amount of Euro Disneyland's debt. The centerpiece of the plan is a 6 billion francs rights issue where 51%
would be underwritten by 61 banks and the rest taken up by Walt Disney, which has a 49% stake in Euro
Disneyland (Euro Disney's wish, 1994; Euro Disney creditors, 1994). A rights issue is an offering which allows
rights to purchase shares, usually at below market prices, to existing shareholders in the same proportion as
their present ownership. Thus, the banks would spend about $500 million and make other concessions for their
51% shares, where as, the Walt Disney Company agreed to spend about $508 million to bail out its 49% shares
as well as buy certain Euro Disneyland park assets for 1.4 billion francs (about $240 million) and lease them
back at terms favorable to Euro Disneyland.
In return, the Walt Disney Company agreed to waive royalty and management fees for five years, saving Euro
Disneyland about 450 million francs a year. Following the five years, the original royalty fee will be cut in half
(Euro Disney's wish, 1994). The plan would lower Euro Disneyland's debt to about 10 billion francs (about
$1.69 billion), from the current 20 billion francs. In addition, the bank agreed to forgive 18 months of interest
payments on the debt and would defer payments for three years saving Euro Disneyland about 1.9 billion
francs. This plan increases Walt Disney Company's tie to the theme park since its initial investment in Euro
Disneyland was just $160 million.
It should be noted that at the time the "rescue" plan was instituted, the Walt Disney Company continued to own
49% of the shares. At that same time the Walt Disney Company was discussing with Prince Al-Walid bin Talal
bin Abdul-Aziz Al-Saud, from Riyadh, Saudi Arabia, the option of investing about $500 million in Euro
Disneyland and buying as much as 24% of Euro Disneyland shares of stock. In January 1995, Brian Coleman
wrote that the Walt Disney Company now owned 40% of Euro Disneyland shares, indicating that the parties
had completed the deal.
As of January 25, 1995, Coleman (1995, January) reported Euro Disneyland's "rescue" plan had sharply
narrowed its losses for the fiscal first quarter due to financial restructuring and higher revenues which gave a
large boost the theme park. During that same time period, the theme park had a 3% rise in its revenue from 828
million francs to 854 million francs. For the fiscal year ended in 1994, Euro Disneyland reported a net loss of
1.8 billion francs. Furthermore, on July 26, 1995, Coleman (1995, July) reported that Euro Disney posted its
first profit. During Euro Disneyland's third quarter its profit was $35.5 million.
Disneyland Paris
Euro Disneyland unofficially changed its name in September 1994 to Disneyland Paris in order to adapt to
"...European tastes and turn around continued losses and reported slumping attendance". Through the emphasis
on the name recognition of Paris, Disney executives hoped to capitalize on its proximity to the French capital
(Euro Disney mulls renaming park, 1994). It was hoped that this would result in increased attendance and
revenues.
Downsizing
In order for Euro Disneyland to hold down costs and increase revenues it has cut 950 administrative posts, or
8.6% of its overall work force (Euro Disney plans to slash, 1993). In addition, responding to complaints
regarding high entrance fees and hotel prices, Euro Disneyland has broken a Walt Disney Company taboo by
introducing cut-rate entry and room rates for the off-season. Another first is that it is offering a lower-priced
'After 5' evening entrance ticket.
Marketing Changes
The Walt Disney Company is changing its marketing philosophy in order to expand its efforts to countries such
as Israel and Africa. Rather than market Euro Disneyland as vacation destination for a period of time, the Walt
Disney Company decided to market it as one of many stops on a month-long European itinerary (Euro Disney
weathers fickle, 1993). Furthermore, Euro Disneyland executives believe it is pertinent to turn consumer
attention away from its balance sheets and back to Disney characters and attractions so they are down playing
the financial difficulties and emphasizing what to see and do at the park.
Labor Disputes
To end numerous labor disputes over long-hours and poor pay, Euro Disneyland has "...shifted away from
imported American working practices and towards a more French approach". This new approach set a
maximum working week and annualized hourly work schedules. In addition, it reclassified jobs using the
French method which allowed French citizens the ability to recognize their standard French job classifications.
As a result, Euro Disneyland won greater acceptance and willingness to be flexible from its work force.
CONCLUSION
The Walt Disney Company's venture of Euro Disneyland is an excellent source of study, training, and learning
for human resource professionals involved in possible foreign expansion. Although Euro Disneyland is located
in Europe, the lessons learned and experiences gained can apply to any country on the globe. For example, the
Walt Disney Company failed to properly understand the eating habits of the Europeans. The lesson learned is
that any meal providing company contemplating expansion into any foreign market should be intensely
indoctrinated on all aspects of the eating habits of people in and near that country. On the other hand, not all
lessons learned are based on Disney's negative experiences. The human resource professional could profit by
studying the methods used by the Walt Disney Company and the French in their integrating different risk
management procedures into one, resulting in a far superior program. The astute human resource professional
can learn from this process and apply these newly acquired skills in similar situations anywhere in the world.
A move by any company to any foreign market should not be made without an extensive, in-depth study based
on exhaustive research into every applicable aspect of the economy, laws, culture, climate, interests, customs,
life-style habits, geography, work habits, just to name a few. The list could go on and on with one area leading
to another.
In order to determine the best way for a business to enter a new foreign market it should review past business
experiences which have settled in that particular market. Through these past experiences the business
contemplating entering the market would have the ability to increase its chances of success as well as decrease
its chances of failure.
In the case of Euro Disneyland a new business entering the European market would learn various problems the
Walt Disney Company encountered during negotiations, construction, and operation of the theme park. The
human resource professional can use this increased knowledge regarding Euro Disneyland's problems in
conjunction with the other businesses which entered the European market in order to optimize his/her business
chances of succeeding. Furthermore, the information from Euro Disneyland and other companies will allow the
human resource professional the ability to make adjustments and have an edge in his/her negotiations,
construction, and operation in order to decrease potential problems and increase financial revenues.
©1995 by Lyn Burgoyne.
Case Study
Due: December 6th, 2023 (Analysis 4-6 pages)
Case studies give you an opportunity to develop problem solving skills and to think critically. This case study
will reinforce theories and concepts that are in your text and in Creating Magic.
Identify the problems
Describe the reasons for the problems
Describe the impact of these problems/situations
What did Disney do right?
What were the costs incurred?
What should Disney have done differently?
What should the management have done differently?
If you were management what are some action plans, techniques or recommendations you would make?
Describe Euro Disney today. (see Internet: Disneyland Paris)
How did Disney recover?
Discuss how you think this situation could have been prevented?