When you’ve walked up the Rue la Paix at Paris, Been to the Louvre and the Tuileries, And to Versailles, although to go so far is A thing not quite consistent with your ease, And–but the mass of objects quite a bar is To my describing what the traveller sees. You who have ever been to Paris, know; And you who have not been to Paris–go! – John Ruskin, A Tour Through France Michael Eisner, CEO of Disney Co. once noted, “As Americans, the word ‘Euro’ is believed to mean glamorous or exciting. For Europeans, it turned out to be a term they associated with business, currency, and commerce.
Renaming the park ‘Disneyland Paris’ was a way of identifying it with one of the most romantic and exciting cities in the world” This was maybe the reason why Walt Disney Company, a company renowned for its animated character, good films and theme parks, chose Paris for its second business venture outside the United States. In the 1980s, Eisner was able to export Walt Disney Company to Tokyo, and it was a huge success. Eisner wanted to make his Paris venture as successful as Tokyo Disneyland, however, the venture turned out to be a failure earning more debts for the company than actual profits.
What has gone wrong? What were the actors which had lead to the failure of Euro Disney? These are questions which make good learning questions for management students. This paper aims to answer the following questions:: 1. Why did Disney choose Paris over the other sites in Europe that it was evaluating? 2. What were the external environmental factors that contributed to Euro-Disney’s failure in the early 1990’s and why? 3. What were the internal factors that contributed to Euro-Disney’s failure and why? The Beauty of Paris
In order for us to know why Paris was the place chosen by Walt Disney for its business venture, let us first do a little background of this popular destination in the world. Paris, the capital city of France, is one of the most populated metropolitan areas in Europe (Stefan Helders, World Gazetteer). It is one of the world’s leading business and cultural centers today; in fact, Paris \is Europe’s biggest city economy, and is fifth in the World’s list of cities by GDP. It is also now known as one of the most popular tourist destinations. Paris has been a symbol for classical Romance.
However, in addition to its rich cultural heritage, Paris is also a magnet for corporate France, which is composed of innovative business companies, a motivated and skilled workforce and the political will to make business happen. According to the PARIS DEVELOPPEMENT, a project of the City of Paris and the Paris Chamber of Commerce and Industry, there are seven unique value propositions which makes it the right place to do business in, which are as follows, • Paris is one of the richest urban centers in the world, equivalent to 5% of the total EU GDP.
• It is located at the heart of the Ile de France which ties with London for first place as a city to do business in, benefiting from market proximity, excellent infrastructure, qualified labor and security. • Paris provides the nexus for several vibrant Trade Clusters – notably in the fields of design, digital and health. • It is a centre for innovative companies, backed by a strong tradition and range of R&D facilities. • Paris is a major decision-making centre, and it serves as a host to the headquarters of international organisations (European Space Agency, OECD, UNESCO…), and trans-national corporations.
• Paris is the world capital for trade fairs, conferences and exhibitions. • Paris is a beneficiary of an active local government that understands the needs of business and is putting resources to work in favor of creating, encouraging and promoting business. (Paris Developpement, 2006) Many business analysts have tried to explain the real motive in the expansion of Walt Disney Company abroad. It is believed that some of the reasons are cost cutting, in the form of cheap building material or labor.
Cost cutting further leads to an increase in revenue and to better functioning with tax and labor laws. H This further leads to a success in market expansion. This was probably the reasons why Walt Disney Company chose Paris, France as the site of Euro Disneyland. The first theme park outside US in Tokyo, Japan was a huge success. Scimone in 1981 believed that the Walt Disney Executives believed they learned so much about operating a theme park in anther country, so they looked at Europe as the site of a forth park.
This was because they have observed that Disney films have done better in Europe than in the United States. They believed that the public’s fascination wit Disney films could contribute to a future success of a Walt Disney Theme park in this area. Initially, there were two choices: Costa del Sol in Spain and Paris in France. Finally, the business executives of Walt Disney chose Paris because of ots larger population and its spectacular transportation network (Scimone, 1989). Paris also has a similar cold weather climate and latitude with Tokyo.
Thus Paris was selected. The site for Euro Disneyland is Marne-la-Vallee, a large parcel of land, once used for agriculture. This place is an ideal geographic location, in the sense that it is located halfway between the two international airports of Orly and Roissy-Charles-de-Gaulle. The mode of transportation which connects Marne-la-Vallee with the Paris metropolis is the French railway regional express, making it an accessible area. External environmental factors There were a lot of issues which had confronted Disney Euro from the start.
The idea of an American company running a French staff was a subject of debate and controversy. Critics have found it as a form of cultural imperialism or neoprovincialism. There were a lot of protest groups opposing the presence of Euro Disney in Paris. In June 1992, French framers had marched to Euro Disney in protest to American farm policies. All around, Euro Disney was met with criticism and protest. A journalist in the French newspaper Le Figaro wrote, “I wish with all my heart that the rebels would set fire to Disneyland.
“Ariane Mnouchkine, a Parisian stage director, named the concept a “cultural Chernobyl”; which later on became a phrase synonymous with Euro Disney, in its starting years. Another target of criticism and controversy is the fact that American executives demanded English to be spoken at all meetings. Euro Disney’s management has also made a set of rules for its staff, which involved the use of make up, facial hair, tattoos and jewelry for personal appearance enhancement. This was much for the traditional Frenchmen to bear.
As a result, French labour unions began to stage more protests on the streets, attacking the said appearance code, which appeared to them as “an attack on individual liberty. ” Indeed, this issues revolved around the fact that French culture was way too far different from American culture. Some protest parties have labeled Disney as being insensitive to French culture, individualism, and privacy. The French Law focused more on individual or collective liberties, more than the American law. It told the French citizens to exercise their rights whenever necessary.
In response to these reactions, Disney emphasized the fact that these efforts are for the good image and long term success of the park. Thor Degelmann, Euro Disney’s personal Director had remarked, “For us, the appearance code has a great effect from a product identification standpoint…without it we couldn’t be presenting the Disney product that people would be expecting. ” The Walt Disney Company had been known for the implementation of their strict rules and risk management requirements. This may be unacceptable to the Frenchmen, who wanted to preserve their rich cultural heritage and establish their own individuality.
Furthermore, Americans found it hard to deal wit the legal framework derived from the Napoleonic code. Shapiro in 1989 has illustrated a good example of the blending of two different systems, in the form of the difference in insurance laws in France and the United States. The French law requires an insurance policy that covers property damage and third-party claims stemming from construction-related defects. 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 French Laws. All of these problems are what a typical foreign company experiences when doing business abroad. Indeed, a great deal pf time, patience, understanding, education and willingness to accept and compromise are necessary in this process. An example of the clashing culture between the Americans and the French is the issue of banning alcohol in its theme parks. The French met this with protest, as their tradition is to give a glass of wine to a guest during mealtimes.
After much consideration, in May 1993, the Walt Disney Company changed its policy and allowed wine and beer in the Euro Disneyland theme park. American executives of the Walt Disney Company did not also understand the European breakfast norms. Disney executives, thinking that Europeans do not eat sit-down breakfasts, have reduced the number of restaurants serving breakfasts. This resulted to a cramped restaurant space jam packed with breakfast eaters who wanted bacon and eggs, a behavior that the Americans failed to realize before.