When a company is highly successful in its own land it can think of expanding its business abroad. But before entering into the foreign market it needs some proper research regarding the issues of foreign culture, laws and regulations, political structure, economical conditions, competitions, environment, consumer behavior and so on. It should not be thought that the company who is successful to satisfy its own land’s customers, it can easily attract the foreign customers. If any company proceeds with this thought then they will face loss within short period. So it is important when a company is planning on expanding abroad, it will be helpful to study the history of companies, which previously have developed in other countries. A company also can learns and identify lots of things from the other company’s mistakes and success stories.
Walt Disney Company was one of the American companies who wanted to expand its business into the European country. The company did mistake not to making proper market research regarding the European market. They assumed that as the company was successfully run into the American market and got high range of acceptance from the American people; European people also accept it at the same way. Disney’s first foreign venture Tokyo Disney land proved to be so successful that the decision made to further expand abroad. This next foreign expansion experience names Euro Disneyland all hopes were high and it was promising to make the Euro Disneyland the most lavish project that Disney had ever built.
But this assumption proved badly wrong by its creator after running the business into the European market. Euro Disneyland a theme park comprised of an updated state of the art Disney’s Magic Kingdom 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.
APPROACHING THE PROBLEM
Question No. 1: Critically evaluate some of the areas that went wrong in case of Euro Disney.
Disneyland is known as one of the most entertaining theme park of the world. After the success of Tokyo, California and Florida Disney theme park the management expands this subsidiary of Walt Disney Company into Europe. But after having extensive research and planning they ignored some of the most important cultural aspects like environmental and location factors, labor law, financial, cultural difference and management hubris. The errors made by Euro Disneyland in various aspects are describing bellow: Environment and location factors: After examining over 200 locations in the Europe, Disney gave preference to the Europe’s biggest appeal for tourism. Considering the ease of transportation to the Disneyland management of Walt Disney chose the location on the east Paris while French advised to make it in west to decrease the long term population from the east. Beside that because of the French Colder weather than California and Florida they had to spend extra money to make waiting areas which protect visitors from cold wind and rain. And because of this cold weather visitors were not encouraged to visit the park on a year round basis.
Cultural Differences: In operating Euro Disneyland the management also made some mistakes those are as follows: 1. Walt Disney Company’s policy was not to serve alcohol in the parks in California, Florida and Tokyo, which they also wanted to extend to France. But in Europe a glass of wine for lunch is a given. So in this case Disney fails to see alcohol a normal beverage which initially created a big problem for them. 2. Disney misunderstood European Breakfast norms. They thought European do not eat a big breakfast and they also do not eat a sit-down breakfast. As a result restaurants were planned for small number of guest which created a negative Disney experience in the customer mind.
3. Cultural error in the Europeans approach to vacation time. American parents used to make frequent trip in the theme park where European parents make trip only in summer holidays. 4. Disney also made wrong assumption about guest stay in the hotels. They thought guest going to stay in the hotel for long time. They involve computer stations at the hotels. In US the average stay of guest in the hotel is four days where in Europe guest arrived early in morning spent whole day at the park, checked into the hotel late that night and than checked out early in the morning before heading back to the park. As there were so may guests checking-in and checking-out additional computer stations had to be installed at the hotel.
5. There was also a problem regarding the transportation of Disneyland. The management of Euro Disneyland arranged the transportation of Euro Disneyland in American. In US people prefer to ride although it is possible to walk, on the other hand Europeans choose to walk Rather than ride. As a result Disney arranged transportation around the park and from hotels to parks attractions. Management also could not estimate the numbers of visitors arrive by bus, so facilities for parking were inadequate.
Financing and initial business plan: Despite of several wrong decisions and arrangements, management also made mistakes in financing and business plan. 1. Management did many budget breaker activities. For example: ordering several last minute construction changes, ordering more than dozen wood burning fireplaces, removing two steel staircases etc. 2. They also did not consider the European recession at the time of offering Disney share on a little risk and also lost several opportunities to sign partners who could share the risk or else buy existing hotels. 3. Disney did not think about the value of different money currency of Europe. They wanted to attract not only the local people but also people of different countries of Europe which have different currency. Where in US and Japan there is only one currency.
But at the time of ticket pricing they did not follow the value of different currency which reduces the visitors. French labor laws: Euro Disneyland also did not consider European labor law which was also cut down the number of French visitors. Management Hubris: Though Euro Disney emphasized on European history in different features of their theme park, they also maintained American features with that. But Europeans Consider it as a bold and insensitive. For this Euro Disneyland was known as “Cultural Chernobyl”
Question No. 2: Do you think success story of one country should be always replicated to another country? No, it is not necessary that the success story of one country should be always replicated to another country. Every country has its own cultures, norms, values, environmental factors as well as economical issues. So every country is different from each other in different ways. In this case we can see that, after the successful business in California, Florida and Tokyo, American Company Walt Disney wanted to apply same business strategies into Euro Disneyland theme park. As a result of these types of ethnocentric attitude they had to face a number of difficulties in Europe. And at the end, management had to change their strategies according to European cultural, social and economical aspects.
Question No. 3: Suggest some of the areas of improvement that should consider at this point.
In this case some improvement areas have been suggested to the Euro Disneyland to reduce the complicated situation.
Euro Disneyland could initiate a promotion of offering yearly pass for a very low cost so that this may allow people who reside near the theme park can make frequent trip to Euro Disneyland.
Cultural differences needed to be addressed. Euro Disneyland should follow the culture of the European people and thereby serve them.
During the colder months Euro Disneyland should issue family passes so that parents need not to wait for the school summer vacation.
More seating arrangement should be implemented so that it can meet the demand for eating at park. As the price of the food was high that is why various number of food items should be reduced and small number of quantity foods should be introduced.
As revenues of food were low in Euro Disneyland compare to the Disney park due to the wrong assumption that European do not have much breakfast thereby arrange the seating plan into the restaurant. After understanding the fault Disney reacted quickly with prepackaged breakfast delivered to rooms and satellite locations.
According to the European culture wine should be served as it is considered as regular beverage by Europeans. It is important to study properly regarding the foreign lifestyle in where the company wants expand its business. Disney should get to know about liking and disliking of European people thereby serve them. Not all countries have same lifestyle and Disney should not impose the American lifestyle over there. Understanding the lifestyle of European countries is important to successfully run the business with low cost.
As Europeans are less attracted to buy the souvenirs so that is why it should be cut down the production of Souvenirs and thereby lowering the cost. All park vehicles should be sold out as European people choose to walk in park rather than using vehicles under utilization. It would be better if the car park were adjusted to suit buses that brought in tour groups. Disney should arrange more finance to eliminate the debt and this finance could arrange from bank and Walt Disney for the park. Disney should recruit European people to the top level for Euro Disney because the European manager can better interpret the culture and interest of European people rather than American manager who just study the other county’s culture. Euro Disney should not follow American labor law where Europe itself has its own labor law. Not every country has same labor law that is why Disney should adopt the European labor law. To lower the cost of labor in Euro Disney land it will be better to try training the workers to follow schedule on the day of the week and the time of year basis.
Question No. 4: In the paper a brief comparison was provided Or the French and US cultures. Compare your culture to that of the US, France or Japan.
CUTRAL COMPARISON AMONG USA, FRANCE ANG BANGLADESH
Drinking Habit| Although American people are accustomed with alcoholic beverage like wine beer etc, in family outing they prefer soft drinks, coffee, juices etc. That’s why alcohol is not served in all Disney parks in USA.| Drinking alcohol in every meal is part of French culture. for this reason not offering wine in Euro Disney was more than a culinary faux pas among the French; it was an insult (Holston, 2005)| Since Bangladesh is a Muslim country, Drinking alcohol is prohibited, and generally not accepted here. It is not a part of Bengali culture. All fast food shops including international ones like KFC, Pizza Hut serve non alcoholic beverage.| Breakfast Norm| Breakfast is generally light and rushed. | French people generally eat big breakfast. | Breakfast is considered the most important meal of the day. Healthy and medium breakfast is preferred.| Fast food| Fast food is an integral part of American culture.
They eat fast food at any time from morning to evening. McDonalds, KFC etc are more profitable in USA.| French people are proud of their own food culture. They like fast food, but only during mealtime. For example, the business model for the production of hamburgers to replicate exactly what people eat in Disneyland in California and Florida, did not work in the Euro Disney park. The reason is Disneyland park goers like hamburgers only at mealtimes. Such a scheduling situation posed serious problems to Disney as there were too many people hired to flip and serve hamburgers all day long (very little personnel was needed for morning and afternoon requirements).| People here like fast food, but only as snacks, not major meals. Besides ingredient like pork used in burgers, bacon, hotdogs which are famous in USA, is prohibited here due to religious reason. Recently KFC has launched a new product called Curry Crunch which carries the spicy flavor o this Indian subcontinent.| Eating Norm| They have a habit of eating little while walking or riding because of the notion that time is money. America has an exaggerated estimate of the value of time and is always in a terrible hurry.| They have a habit of sitting down to enjoy a massive meal.
According to them life is not to be disturbed by work. Standard lunch hour is much more flexible and unhurried. Sit back. Relax. Bon appétit!| People generally prefer to sit own to have a meal. Life is hurried, but people still find time to enjoy meal with family and friends.| Vacation duration | Americans take several short vacations. So they have round the year attendance in Disneyland Florida and California.| French people prefer few longer holidays to several short breaks. Therefore there were not a lot of people in Euro Disney parks during non vacation time.| People here get a lot of long and short holidays, like holidays during Ramadan, Durga puja, Eid-ul-ajha, summer season etc. That’s why theme parks like Fantasy kingdom, Water kingdom get almost round the year visitors.| Mode of transportation| Since they have short vacation time, they like to ride while visiting a park| They have longer vacation. So they like to enjoy the scenery by walking| Here people like to walk.| Interpretation of cultural symbols -(cartoon, drama, Souvenirs, colors)| America is famous for its cartoon characters like Mickey Mouse, Donald Duck, Goofy, and others.
They project different meanings. For example Mickey Mouse represents a Squeaky-clean, all American boy in USA.Souvenirs are considered as fun part of an experience.Disney uses purple a lot as Americans consider purple magical and mysterious color. They consider pink as related to Nazi homosexuals killing.| French culture has its own characters from novels (Jules Verne’s novels), theatrical drama (Moulin Rouge) etc. They have a different view o American cartoon characters which is slightly negative. For example, Mickey Mouse represents Cunning, street smart detective.Souvenirs are considered as tacky, waste of money.In Catholic Europe, purple is considered a symbol of death and crucifixion and pink as girly, romantic, sometimes symbol of royalty.| Cartoon character Mena is very famous in Bangladesh, which represents the discriminations against women in the country. They are also very welcoming towards the Disney characters. For example, here Mickey Mouse represents a Funny, cheerful cartoon. Souvenirs are used as mementos and gift giving.Both are bright, cheerful, feminine color.
Significant colors are- black and white for mourning, Green and red for green country and rising sun| Hospitability| Americans are very good in service.. According to them customers are always right. For example The success to Disney parks’ repeat guest visits is the employee-customer rapport. They train the employees to smile and “have a nice day” mentality towards the customers to make them comfortable.| French are not notorious for their hospitality. French workers dislike providing the smiles and friendly greetings so anticipated at any amusement park. To them faking a smile or overly smiling falls under an overarching concept called “emotional labor.”
That’s why Disney’s smile all the time did not work in Euro Disney.| Bangladeshi people are famous for their hospitability. Customer care service is a huge success here.| Dress code | Most American organizations follow strict dress code for employees. Disney has a look book which specifies hair length, makeup, ornaments etc.| French employees enjoy more freedom. Tattoo, high-end clothing, jewelry and accessories are part of French culture. Labor law allows them to be themselves.| Organizations follow dress code according to Bengali and Muslim culture. For example, There are limitations in wearing western dress for women, requirements for wearing specific color or logo for particular company. |
Conclusion & Recommendations
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 from the mistakes made by Disney can apply to any country on the globe. For example, the Walt Disney Company failed to properly understand the drinking habit of the Europeans. The lesson learned is that any restaurant company contemplating expansion into any foreign market should be intensely indoctrinated on the necessity of serving alcohol with every meal in that country. On the other hand, not all lessons learned are based on Disney’s negative experiences. The companies 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.
They can learn from this process and apply these newly acquired skills in similar situations anywhere in the world. Besides 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. Mangers 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 them 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.
Some recommendations for the companies looking for expanding their business in the foreign market are-
* Avoid Cultural Imperialism: Organizations should not make assumptions. Assumptions can be misleading. Before venturing into a new market they need extensive, in depth study based on exhaustive research into economy, law, culture, customs, habit, geography and other aspects of the host country or they can adopt to other existing successful company’s strategy, Any company opening new restaurants or hotels in a foreign country should research the local eating and drinking habit, vacation season and duration etc. assuming such things can cause financial loss. * Avoid Ethnocentric:
This is wrong to think that the local people will change their habit and follow the foreign rules just because they were successful in the home country. The organizations need to change their strategies according to the local customs, not the other way around. Forcing foreign country views may result in conflict and misunderstanding which in turn will destroy the goodwill and decrease revenue. Disney look did not work for French people because Disney was trying to make French look like American. So if any multinational company selects skirts-tops as part of the dress code in Bangladesh, it will not be acceptable to the majority of the local people.
* Customer Oriented Service: Products should be customer oriented. At the eng of the day, what customers want is the most important thing. Tokyo Disney was successful because the top managements there knew Japanese wanted an American Disneyland. But in case of Euro Disney, they could not anticipate what people wanted- an American or French or European Disney land. * Good Financial Planning: In every aspect of business operations, integrated assumptions relating to financial issues must be alleviated. The value of managing market risks has to be in proper phasing and every business environment factors has to be precisely reviewed and should be equipped with positive thinking and right business motivation in order to resolve issues and conflicts that are a part of business.
For example Disney did not anticipate the coming recession that costs them a huge financial loss. The company also spent a lot of money on the wrong items. * Complying with local Law: Domestic Labor law, insurance law etc must be followed by the foreign companies. Disobeying laws can create conflicts with labor, governments and others. 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. Instead, the Company had to abide by the laws of France. On the other hand Disney did not follow the payment issue in French labor law which created a labor dispute and cost Disney a significant number of visitors.