Disney Case Study

CASE STUDY PRESENTATION ON

FACTS OF THE CASE The $ 4.4 billion project was to be located on 5000 acres from 20 miles east of Paris. The city seemed to be an excellent location there were 17 million people within a 2 hr drive 41 million within a 4 hr drive 109 million within a 6 hr drive

Disney Officials were Optimistic About the Project. their UK parks, Disney land & Disneyworld were extremely successful

Tokyo Disneyland was so popular that on some days it could not accommodate there large pool of visitors.

However the Tokyo park was franchised to others & the Disney management felt that it had given up too much profit with the arrangement. This would not be the case at Euro Disney land.

DISNEY’S FINANCIAL PLAN FOR EUROPE ENTRY The Company’s share of the venture was to be 49% for which it would put up $160 million.

Other investors put in $1.2 billion, the french govt provided a low intrest $900 million loan, banks loaned to business $ 1.6 billion, & the remaining $400 million was to come from spl partnerships formed to buy properties & to lease them back.

REASERCH OF LOCATION OF AMUSEMENT PARK

FRANCE OFFER Central location in the heart of europe. Considerable financial incentives. The french govt promised to build a train line to connect the amusement park to the european train system.

Finally amongst france & spain france was choosen as the site for the park.

POST LAUNCH PROBLEMS FACED BY DISNEYLAND According to french ppl “ Euro Disney was nothing more than a transplanting of Disneyland into Europe. The park didn’t fit into the local culture.” French press accused Disney of “ Cultural Imerialism”

They also objected that french govt, as promised in the contract had expropriated the necessary land & sold it without profit to the Euro Disneyland development people.

IMPACT Signs reading “ Don’t gnaw away our National Wealth” & “Disney go home” began appearing along roadways. Due to which on opening day 50,000 visitors showed up, in contrat to 500,000 that were expected.

Many visitors were upset about the high prices. e.g:- B’coz of franc excahnge rate it was cheaper for them to go to Florida than to Euro Disney.

also, many of the employees objected to the pay rates & the working conditions. Employees also raised concerns about the variety of company policies ranging from personal grooming to speaking in English in co meetings , even if most ppl in attendance spoke french. As a result within 1 month 3,000 emplyees quit.

SOME OF THE OTHER OPERATING PROFITS WERE....... In U.S liquor was not sold outside of the Hotels or Specific areas. In japan this policy was accepted & worked very well. However Europeans were used to having outings with alcoholic beverages.

YEAR 1994 THE YEAR OF REFORM…….

PUMPING LIQUIDITY A major investor purchased 24.6% of the co & injecting $500 million of cash. Also Disney waived its royalty fees & worked out a new loan repayment plan with banks & new shares were issued.

In Oct 1994, Euro Disney officially changed its name to “Disneyland Paris” Also park changed its most offensive labor rules, reduced prices, & began being more culturally conscious. Alcohol beverages were not allowed just about any where.

The co also began making the park more appealing to local visitors by giving it a “ European” focus.

Disney Tomorrowland, with its dated images of the space gae, was replaced by a brass & wood complex called discoveryland. Which was based on the themes of Jules Verne & Leonardo da Vinci. The co also shot a 360 degree movie abt French Culture & showed it in a “Visionarium” exhibit.

SUCCEESS OF REFORMATION STRATEGIES Disneyland Paris reported a slight profit in 1996 & park has continued to make money since than. Although not a great deal (abt 50m annually).

Thank you….

Q1:- what are some of the characterstics of Multinational Enterprises that are displayed by the walt disney company?

Q2 :- Why did Disney take an ownership position in the firm rather than simply licensing some other firm to build & operate the park & setting for a royalty on all sales?

Q3 :- in what way did Euro Disney reflect the dtrategic philosophy of Walt Disney as a multinational enterprise?

Q4 :- Did Disney management conduct an external enviornmental analysis before going forward with Euro Disney? Expalin.