Euro Disney: The first 100 days

By:

Leandro de Mello

M. D. Hemandra

Devenathan

Athi Shankar

Rajamurthukarpagam

Sivakumar

Startup

Opened in 1992 within budget (April 12, 1992 of $4.4 billion)

Beginning (additional) influences

Drop of shares due to first year loss

After 5 years still problems with visitors

“Cultural Chernobyl”

Structure of Walt DisneyRevenue in 1991

Walt Disney Attraction revenues (‘91)

Theme park $2,865 Theme park 71 %

Hotels 21 %

Other 8 %

Filmed entertainment

$ 2,593

Consumer products

$ 724

WDC resorts:

Walt Disney World Resort (Orlando, 1971)Magic Kingdom Disney MGM Studios Theme ParkEpcot Center

Disneyland (Los Angeles, 1955)Others

Tokyo Disneyland: designed by WDC but owned and run by Oriental Land Company

Visitors

50 million (1990)

90 % repeat customers, 5 % from Europe

Adults in late twenties with young

children

Success factors

Creative imagination:Park set-up

Cartoons come alive

Participation of visitors

Parks are continually updated

To exceed its customers’ expectation every day.

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.

Disney’s stated goal is

Service delivery

Service delivery has been under constant refinement.

“Disney University.”

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

Service standards:

safety

courtesy

show

efficiency

Certain messages reinforced throughout the training:

happiness measured differently by every guest and challenge to createcustomer’s perceptions are extremely

fragileemployees are on stage at every moment

and should look to provide servicefixing costumers problems is very

important

Employees were evaluated based upon:

energy

enthusiasm

commitment

pride

Tokyo Disneyland: The Success Story

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

The reasons why Tokyo Disneyland worked

Young Japanese are very clean cut. Japanese are generally comfortable

wearing uniformsObeying their bosses Like to be part of a team. They are very patient. Japanese are always very polite to

strangers.

Location of the Euro Disney site

1981: Bidding process involving Germany, Spain and France

1987: Agreement with the French government Central locationHighly popular vacation destinationThe only disadvantage seem to be the

inclement weather

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 taxThe French government provided over

$700 millions in loans

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

Financial Goals

Attracting 11 million visitors in the

first year of operation

Achieving operating income of $373 million at April 12,1992

Phase II

Disney MGM studios Park and

additional hotel rooms

Attracting 8 million visitors

Disney budgeted $3 billion to complete Phase II

Theme Park DesignPhase 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

French Intellectuals proposed ideas about:

Cultural requirements

Park design

Grooming standards

Eating habits

Research concluded that Europeans were interested in:

New York

Disney land

The Western United States

Actions taken:

Add 3 western theme hotels

French was first languageSigns & 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”

Start Up Process

Employment

Marketing Disney

Service and operations

Problems

Employment

Hire and train employees 14000 people

to fill 12000 jobs

Another 5000 people for peak season

Marketing

Give the park a European flavor

Advertised in magazines throughout Europe

Sleeping beauty Castle

Nestle

Service and Operations

Euro Disney University

Disney Standards

Diversity of Nationalities

270 managers and supervisors were cross trained

200 managers were imported

employeespaid $6.50/hour

generally worked 169 hours a month

Problems

Dress code

Housing shortage

Employees are leaving or being laid off

Examples of employees

Visitors

40%

3.5%

18%

8%18%

3.5%

9% Other

Decisions

Big issues prioritizing objectives:Revenue outlook

Cost problems

Service delivery system

Decision sets1st 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 investmentsTiming of investmentsNature of investments

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’

Disney’s concerns

Disney does not fit traditional French entertainmentCompetition from Paris entertainment industryLinguistic barriers – Europe is multilingualCultural barriers – food habits, alcohol a part of diet,

long linesEurope is multicultural with differences in perceptions for entertainmentLack of housing accommodations for staffAcceptance of Disney as part of American culture by the French?Cold weather could be a deterrentExpensive by European standards

Case: Euro Disney 10/28/02

Case Study Analysis

A few Questions we can ask

Is Europe a good (new) market?

What possibilities were there?

How was it executed?

Technology

Consumers

Needs

Entertainment

High Services Level

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

The park

Walt Disney figures

Fantasy world

Vacation

Being together with family

Have fun

Young families.

families

Young couplesMiddle/Upper class

Grandparents

OtherDisney fans

Customers

Children Young families familiesGrandparents with grandchildren Disney fansPeople 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 DisneyEuropean people

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

What issues will Disney face before it can successful deliver 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 level of service delivery and/or exceed the expectations of Europeans?

Does the company have the correct expectations about European consumers?

Does the company know what the expected standards are?

Does the company deliver these services properly and efficiently?

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?

Have they done the proper research?

Have they done the proper research to make these conclusions?

Have they done the proper research to make these conclusions?

Service delivery:

Disney standard

Disney University

Treatment of employee's

Integrate the cultures

Is Euro Disney proceeding with the next step of development good?

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

Service recovery strategies

Fail-safe the service

Welcome and encourage complaints

 

Act Quickly

Treat customers fairly

Learn from recovery experiences

Learn from lost customers

learn from Phase I experience

Satisfaction surveys and employees as listening posts

 

Empower employees to act quickly

Fair interpersonal treatment

Project teams can be assigned to a problematic area to develop a

solution

Difficult for Euro Disney to identify lost customers

Company

Customer

Expected Service

Perceived Service

Service delivery

Customer-driven Service designs and

standards

Company perception of consumer expectations

Customer Gap

Gap 3

Gap 2

External communications

to customersGap 4

Evaluation

Inadequate marketing research

orientation

Lack of upward communication

Insufficient relationship focus

Inadequate service recovery

RecommendationsAdapt to French standards & expectationsEmployee involvement in Euro Disney planning & operationsSingle theme for Euro Disney; focus on French culturePromote winter attendance through reduced costs and package plansIdentify additional target markets (i.e., student groups)Before expanding, understand Disney fit with European culturesPackage Euro-Disney with other Paris destinationsPrepare to contract buses if public transport is disrupted.Leave some memorial for any villages/ people displaced by park. Give displaced people lifetime pass.

Thank you

NE Questions?