Friday, March 4, 2011

EuroDisney Case Study

Case One: EuroDisney


1. What factors contributed to EuroDisney’s poor performance during its first year of operations?

Even though Disney has a theme song that says “It’s a small world after all”, the world remains quite diverse. The biggest factors that contributed to the poor performance during the first year of EuroDisney’s operations were: a poor understanding of the marketplace, the issues and the cultural differences between two nations and two differing approaches to business and life. The major factor was ethnocentrism of the American leaders counterbalanced by French national insecurities. I have to suggest that the powerful and perhaps arrogant leadership style of Michael Eisner contributed to the problems. Even so, the problems were wider than that. Assuming that people would come from all over Europe as part of the business plan but failing to comprehend how diverse those consumers would be was another major part of the problem. Even though Europe has recently united as the European Union, they have been strongly distinct and independent cultures for centuries.

Disney failed to understand the French national character, their insecurities over cultural invasion after having been an occupied nation twice in the last century and their deep commitment to maintaining their identity and liberty. The arrogance of the French is based on insecurity as a global minority and the arrogance of the Americans was based on a wide open optimism and global success. The collision of the two ‘arrogancies’ was “formidable” as the French say.

2. To what degree do you consider that these factors were a) foreseeable, b) controllable by either EuroDisney or the parent company Disney?

A study in history and an understanding of the characters of Europe and the European market place would have enabled the Disney executives to anticipate many of the problems. Some problems were controllable and others were inevitable. Those that were inevitable, however, needed an approach that would soften the reaction rather than exacerbate it. It was inevitable that the choice of France as the location would ruffle French feathers. Their history of occupation shaped their reaction. Their coolness to all things anglophile is legendary. If we simply consider an individual personality, it would be easily understandable that a proud woman who had been enslaved and brutalized might have some lingering issues with dominant behaviour and may especially have trouble looking into the eyes of her rescuers who had seen her at her worst.

Even so, they chose France perhaps for its cache in the American psyche (more ethnocentricity). The dominance of the American executive insisting on only English being spoken was like pouring gas on the situation in a culture that monitors words which are absorbed from other languages by an official government body. The idea of pushing business according to an American ethos was an affront to the French who take their liberty and unionization very seriously. Coming from the union free Southern United States, the clash was profound. These were all quite predicable for anyone who cared to see beyond their own ways.

3. What role does ethnocentrism play in the story of EuroDisney’s launch?

The truth is embodied in this seemingly ambiguous statement “you don’t know what you do not know”. The trap is that when you do not understand or know something there is no little red light that says “you don’t get it”. In fact, there is no perception at all that there is something missing. Ethnocentricity carries us deeply into this trap and Disney fell head long into it. They certainly had the resources to get marketing opinion from European sources that would have saved them millions in mistakes. I think though, that the powerful personality of Eisner, coming off of several victories where he forced his vision through the objections of the American business community to win big and be therefore validated set the entire EuroDisney enterprise up for failure. Eisner and his trusted team believed that any opposition or obstacle had to be overcome with strength of will and vision and that collaboration would not serve the vision well. Add to this the spectacular success of Disney in Tokyo and all of his personal input verified his approach. Unfortunately, it takes three points to make a pattern and he had only 2. Consultation was the only way to avoid the nightmares encountered in France. The culture was so different from America or Japan that there was little frame of reference in common. Believing all Europeans enjoyed the same sausage or Europeans vacationed in the same way that Americans did was easily corrected by cultural awareness that would not have cost much but they were too ethnocentric to even know the questions to ask. I imagine they had no ears for those who tried to tell them. Sausage might just be sausage to Eisner who probably did not eat it but to Europeans, it is as distinct as different wines.

Attempting to impose American values, such as nondrinking on the French or appearance rules would have been easily understood as a mistake if they had even asked. I also know from a course in Children’s literature that the Disney version of fairytales like Cinderella were almost unrecognizable to those who had grown up on the European (original) versions of the stories. Thus, Disney did not even have the transfer of cultural understanding in the tales that they assumed that they had.

4. How do you assess the cross-cultural marketing skills of Disney?



I imagine that they are significantly better now but they were dismally unequal to the task at the time. They simply did not do their homework. In a nation of couturier fashion and elegance, to emphasize size and glamour was ‘tres gauche”. Bigger and better is a selling feature of the American psyche not of the French. They eat one croissant not a dozen donuts. They buy one designer handbag rather than 6 knock offs. The assumption of a common bond over fairytales was erroneous. The belief that the society functioned like the American society was just wrong because the French are highly unionized, and quite highly socialized in a political sense. Liberty and independence are even more ingrained among the French than the Americans. They believe they invented the concepts and the Americans high jacked them for their constitution.



5. Why did success in Tokyo predispose Disney management to be too optimistic in their expectations of success in France? Discuss



In Japan Disney found an insatiable curiosity about American ways and American forms of play because of the rebuilding of Japan by the Americans who dropped the bombs on Hiroshima- their conquerors. Japan had been broken by and then rebuilt upon an American capitalistic model. (Please do not read criticism into this. I am not sure Truman had any choice given the personality and military spirit of Japan). The Japanese had been inundated with American cultural icons since world war two and Disney cartoons were a staple in Japanese experience. The success of Disney was more the success of the Japanese people at adapting to a new world after defeat than a triumph of marketing and cultural understanding. Unfortunately, the success without much cooperation, deeper understanding or adaptation led to the false belief in the Disney magic touch world wide.





6. Do you think the new theme park would have encountered the same problems if a location in Spain had been selected? Discuss



I think that the choice of France over Spain was an error. The Spanish people do not have the same issues with Americans as the French do. Americans tend to be more competent in Spanish than in French and they have a greater experience with the Spanish culture and personality because of their exposure to Latin American cultures and immigrants. Even Hemmingway fought on Spanish soil during their civil war. Moreover, Spain is a favoured vacation destination in Europe for many other European nationals. The warmer, sunnier weather and the more welcoming culture would have all worked to the advantage of Disney. Like Japan, Spain was a defeated nation after WW2 and needed help in rebuilding. The civil war and the alliance with the Axis left them bankrupt rather than proud. Spain needs and wants tourism and welcomes it more hospitably than France does. Spain would have been more challenging than Japan but far less challenging than France. There certainly would have been some protest against Americanization but it would have been at a reduced level. Never the less, it would still have been important to hire local cultural experts because the fairytales would not have translated there either and the cultural and business norms would have been unique unto themselves. If Disney had tried to employ the same lack of cultural sensitivity and awareness that they did in France many of the problems would also have happened in Spain.



7. In light of the near-bankruptcy in 2005 evaluate the proposed plans to strengthen Disney’s appeal to the French market.



Renaming the resort to Disney Paris was an important first step in placating the French and realigning the Disney management to the proper pattern of thought. Europeans may have joined in an economic Union but they still hold nationalism near and dear to their hearts. Under direction of the new CEO Disney also introduced a European character from a fresh start called “L’Homme Citouille” (This is brilliant as the French tend to enjoy this sort of character as attested to by the character “Le Bonne Homme” which is a snowman and an important character in Quebec and symbolizes their winter spirit.) Helping to shape the infrastructure to bring more inexpensive flights to Charles De Gaulle airport was also brilliant. Understanding the French and European vacationing styles led directly to the new passes enabling visitors to enjoy two sites rather than one. Disney Paris provides a lot of employment in a country racked by unemployment and has become the most visited site in France surpassing the Eiffel Tower and the Louvre combined. That is a significant improvement and I think Disney Paris is here to stay. (I wonder if Disney has considered an attraction based on the “Little Prince” series of books which are French and provide a huge canvass for attractions and interactive adventures?)



8. Now that Disney has begun work on the new Hong Kong and Shanghai locations, where and when should it go next? Assume you are a consultant hired to give Disney advice on the issue of where and when to go next. Pick three locations and select the one you think will be the best new locations and select the one you think will be the best new location for Disneyland X, and discuss.



Australia, Brazil and India are the locations that I would consider. India loves Hollywood and has created its own Bollywood. It is fascinated with American culture but has a knack for hybridizing the content. The Indian culture tends to embrace technological advancement and its myriad festivals make it likely that they would embrace DisneyIndia.. English is widely spoken and the population of the second largest nation in the world is certainly attractive from a business perspective. It has a young population with more than half the citizens under 35. Unfortunately, its poverty rate while it would provide plenty of unskilled labour and its lower per capita income of PPP approximately $1000 US per year makes the level of economic development still too low in my opinion. This is a nation to watch and it remains third on my list for expansion by Disney when the individual buying power increases.

Australia is an obvious choice for its distance from other locations so that it would not cannibalize other locations attendance and the fact that it is English speaking. It is also close enough to the Asian markets that people from Japan might enjoy the variety. English language would facilitate the transfer of technology and fairytales to Australia. It would still be vital to have in country expertise pertaining to culture and business. At a per capital income of $40,000 US according to the World Bank statistics, the buying power is satisfactory but the population numbers only about 21 million people which is less than the size of Canada. It is, however, a more compact nation which enables easier travel to the Disney location. Canadians are able to access the American market through easy transportation so it is well serviced and loves Disney World. I think the similarities in the national characters make it likely that Australian (with the requisite grumbling) would love it too. It has long enjoyed Disney movies as an adjunct to its own culture so it has been primed for this expansion as well. Australia should remain on the list for future expansion especially as it has such a distinct set of animals but it rates second on my list.



The final country and my choice for expansion is Disney Brazil. It is a powerful emerging nation with a strong culture. It emerged strongly from the recent economic troubles and its GDP is growing. Brazil is the world’s fifth largest population with an estimated 192,272,890 people. Their GDP is $1,612,539 Trillion (9th) with a per capital income of $10,455 adjusted to $7,737. At this level of individual income, vacations become accessible for the general population. It is in a good location to service Latin America, the Caribbean and South America. A problem might arise in the language barrier between Portuguese and Spanish, however. While the country is a mix of diverse ethnicities, the language is quite uniform across the entire country. The native population alone would be sufficient to support the venture. As always, it would be vital to have in country consultants and experts to determine appropriate attractions, marketing and business processes. In all of the locations, I think it is likely that American tourists will be drawn to worldwide Disney sites for the familiarity and a sense of safety in their travels.

9. Give your choice of local X for the newest Disneyland, what are the operational implications of the history of EuroDisney for the new park?



Disney has extensive experience now in opening theme parks. In such a successful organization I have to believe that they learn from their mistakes. After all Walt Disney is said to have gone bankrupt before making it big with Disney animation and he certainly set the example for learning and prospering from his errors. Disney also corrected the ‘personality’ factor when they dismissed Eisner and chose someone much more humble to replace him. The lessons were difficult but I believe that they will take the financially painful lessons – the only kind I believe that corporations learn from- and translate it into more profitable launches in the future. Disney will do their homework in future. They will understand the culture, the country, this history and the potential difficulties before embarking on a new venture. In addition, they will have a team of nationals and Disney staff who speak the language fluently to help the American team. Finally, they will have a group ready and able to handle media and cultural crises promptly and tactfully.

4 comments:

  1. you saved me.. God bless!!

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  2. same here, answered allllll of my questions!

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  3. Do you think that Shanghai development will benefit from the Hong Kong experience?

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  4. Can we get the Shanghai version of the same question please?

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