The Walt Disney Company Essay Example

such as legal and illegal economic activities, market and non-market economic activities, and the use of different translation software can contribute to supervisors making incorrect decisions during the information collection process.

Europeans believe that breakfast is not a customary practice, leading to dissatisfaction among local tourists when this service was not provided. The negative impact of external factors such as climate and geography also contributed to this crisis. Specifically, the humid weather in Paris hinders the operation of the outdoor theme park, as one-third of the month consists of rainy days which affect customers' willingness to participate in outdoor activities.

Additionally, Euro Disney is located 32 kilometers east of Manner-la-Valley and is not far from the city center, which offers alternative options at a reasonable price. This combination of factors has resulted in a lack of demand for overnight stays and reduced profits for the park's hotel. Furthermore, the declining economic conditions also played a role in pushing Disney into a crisis as their management teams failed to adapt during this period.

On the other hand, Hagen-Dads faced an economic recession but managed to seize the opportunity and ultimately succeed in the market.

Hagen-Dads conducted extensive research on the ice cream market and consumer psychology in order to differentiate itself from its competitors. As a result, it positioned its brand as providing a pleasant experience. It then launched emotionally-driven campaigns to promote a luxurious lifestyle and encourage people to pursue a high quality of life.

During the economic recession in 1991, Hagen-Dads saw a 400% increase in England. Similarly, visitors to Disneyland were also seeking an escape and a new way of life. However,

Disney's management failed to capitalize on this potential advantage. They were more focused on recovering their profits and did not consider the current environment or customer psychology. This led to a decrease in demand and revenue.

Furthermore, the lack of experience in operating theme parks also contributed to this crisis. Disney Paris's management team consisted of local employees who had worked in the target country for a long time, such as Philippe Gas, the president of Disney S.A.S and operator of Disneyland Paris.However, Philippe Gas has two years' experience in General Motors, which is different from the operation of Park. He believes that copying the successful Tokyo Disneyland is a good choice (Andrews A. 2010). This problem also affected other group members, such as Daniel Deere, Vice President of Human Resources, who has ten years' experience in the Burger King group (Manner-la- Valley, 2008). Although the opening group members have experience in business, they lack experience in running a park. Most of them have work experience in the US, indicating their acceptance of American culture. This means that their management allocation is not aligned with their development in the Euro market. Moreover, the French have an anti-American sentiment and boycott American products.

Simultaneously, Americans expressed little patience at the beginning and believed that their culture's popularity and high recognition would be fully accepted. This collision of French and American culture created a negative reaction and was a significant cause for failure in terms of organization value creation model. Additionally, factors contributing to the crisis include the management style, with the failure resulting from inaccurate information revealing aggressive and arrogant management style related to both inaccurate

information and lack of professional experience.

The management members of Euro Disney display blind arrogance, as they are overly confident in the success of their prior programs and believe that the same plans can be applied in the Euro market without any adjustments for the local culture. The American management team, compared to a local team, has focused on incorrect market positioning and should accept responsibility for this failure.

Additionally, the project managers have an excessive confidence and obsession with their previous operational experiences, imposing American management values, rules, and experiences onto Europe. They ignore the current situation in Europe and fail to take appropriate advice from local staff. This negatively affects the local employees, leading to lower job satisfaction and reduced self-motivation. Consequently, even visitors' enthusiasm is impacted negatively. The first manager, Robert Fitzpatrick, was so concerned before the opening that he believed they might have to refuse passengers during peak tourist season.

As we learned in class, business value can be created through improvements in labor practices, human rights initiatives, and environmental improvements. Euro Disney does not meet these criteria.

The Labor practice improvements at Disney require strict adherence to company rules regarding employee appearance. This includes men having crew cuts and being prohibited from having beards, as well as employees not being allowed to show tattoos. Female employees are only permitted light makeup and cannot dye their hair. These restrictions on appearance contribute to a worsening of labor practices, leading to lower employee motivation and a decrease in Disney's overall value.

Additionally, Disney's lack of proper facilities for drivers exacerbates the labor issues. With only 50 lounges available for over 2000 drivers needing rest,

the company fails to provide adequate support for its employees. These labor practice shortcomings further diminish employee motivation and contribute to the decline in Disney's value.

Disney also makes significant errors in regard to human rights. Without conducting thorough research, they assume that European culture does not include breakfast or alcohol consumption, which upsets the French population. Such disregard for cultural diversity weakens Disney's reputation and gradually erodes its value. Furthermore, Disney fails to prioritize improving the environment during the construction process, resulting in pollution and damaging their public image. This further undermines the company's business value.

One crucial factor that could enhance Disney's business value is making adjustments to its corporate culture in Europe. Instead of simply replicating their approach from Japan and the USA, Disney must adapt their strategies and practices to better align with European culture. By addressing these issues and adjusting their corporate culture accordingly, Disney can improve its business value and attract more customers.Although choosing to decrease investment risk can have its advantages, it may not generate sufficient profits to offset the expenses. One of the main factors contributing to this issue is cultural difference, which is closely linked to the fifth reason: anti-American sentiment. The Japanese hold the American culture in high regard, whereas the French tend to reject it. The French take pride in their own culture and possess a strong sense of self-esteem, resulting in limited acceptance of the Walt Disney brand. They are even fearful of being overwhelmed by American culture and its potential impact on their own. The Walt Disney Company, however, has imposed its culture and customs on Europe, a phenomenon known as cultural imperialism. Unfortunately,

the Walt Disney board failed to recognize that disregarding cultural differences could lead to economic loss and governance failure. Initially, management implemented a policy making English the official language of communication. This caused numerous difficulties in customer interactions as staff members were required to use English in their work. The official language rule further fueled French resistance against American culture within the public media. In fact, some radical individuals and activists even called for Disneyland and American culture to be expelled from their country. As labor practices improved, and due to the influence of Disney's traditional mindset, employees were mandated to strictly adhere to US grooming standards. For instance, men were required to keep their hair cut short so that it did not touch their ears.

Moreover, men are prohibited from having beards and must cover up their tattoos, while women are only allowed minimal makeup and cannot dye their hair. Additionally, Board members assess the situation in Europe based on US conventions. While most US tourists travel by car, the public transit system in Europe is well-developed, resulting in most people using public transport. As a result, Disneyland Paris only provides 50 lounges for drivers, despite over 2000 drivers needing a place to rest. All of these factors contribute to poor labor practices, showcasing Disney's significant human rights mistake.

Furthermore, without conducting research, Disney assumed that European culture was the same as their preconceived notions. This led to the exclusion of breakfast and alcoholic drinks, angering French people. The lack of attention to cultural differences and inaccurate predictions showcase the importance of cross-cultural awareness in overseas business expansion. These details further weaken Disney's value

by undermining human rights.

Lastly, environmental and local factors play a role in limiting Disneyland Paris' revenue. With only six months of favorable weather in Paris, the operating time is significantly restricted.

Most European countries have conservative and prudent cultures. However, the Walt Disney Company made a mistake by choosing a European country. During the preparation phase, Walt Disney attempted to purchase a 4400-acre farm land from French farmers. The company believed it would be as simple as buying land in the US, but the French farmers reluctantly left their homes, which increased the risk of management at the beginning.

As a result, it became difficult for the company to establish a good reputation in the public eye and avoid losing their business value. Another factor contributing to the challenges faced by Walt Disney was the financial structure and initial plan. This was compounded by the economic crisis in Europe, which was influenced by dynamic factors within the economy.

Between 1987 and 1999, three theme parks were opened in France, each costing nearly one hundred million dollars. However, by 1991, two of them had gone bankrupt. Despite this, the boards of Disneyland remained overly optimistic about their situation and believed that Disneyland would not face the same fate as these other failed theme parks.

Prior to launching their new project in Europe, the boards failed to consider the economic recession happening in Europe. Once European Disneyland opened in 1992, The Walt Disney Company quickly realized that they would not achieve their expected revenue targets. The European economy had been impacted and revenue was reduced, further increasing the management risk. Additionally, due to the recession, European tourists began saving more

and adopting more conservative consumer behavior compared to American tourists.Many individuals opted to bring their own food and were not willing to stay in the overpriced Disney hotel. One example is a family from the south of France called Coring who wanted to save money. After Coring and her husband took their three children to Disneyland for three days, she exclaimed, "That place is a financial drain! Every time we go somewhere, the kids always want to buy something." The average spending at Disneyland Paris is around ?200, which is half of what individuals spend at Disneyland Orlando. Both investors and shareholders struggled to make a profit at Disneyland Paris due to the low average spending per person, despite meeting the initial target for the number of visitors.

The issue lies not in the number of tourists, even though the economic downturn and higher prices for products and services have resulted in a decrease in visitors. Even before opening for 20 months, Disneyland Paris still managed to attract 18 million visitors. Disney's initial objective was to reach a specific income target by setting ticket and hotel prices. The board of directors believed that tourists would be willing to pay regardless of price. In comparison to the United States, Disneyland Paris charged significantly higher prices. A room at Disneyland costs $340 per night, equivalent to top hotels in Paris.

Disney management noticed that the hotel's average occupancy rate had plummeted to only 50%.Guests were not interested in spending more time and money on overpriced merchandise and services. The initial pricing strategy, known as skimming pricing, was a major mistake. This strategy involved setting a high price for a

product or service initially and then gradually lowering it over time. The intention was to quickly recover sunk costs before competition entered the market. However, the managers realized they also made an error in calculating the income. In the case of Disneyland Orlando, tourists typically stay for more than four days to visit the four theme parks. Therefore, Disneyland hotels are their only option for overnight stays. On the other hand, there is only one theme park in Paris, and most customers choose to spend the entire day there, arriving early in the morning and leaving at closing time. The managers' estimation of Disneyland Paris hotel incomes was completely incorrect. Another factor influencing the project is related to regulations and government support. The French government was eager to reduce unemployment and improve their status as a European travel hub. They expected the project to provide employment for at least 30,000 people and generate $1 billion in revenue from tourists annually. As a result, they offered generous and flexible preferential measures up to 48 billion French francs were given by the French government as fixed interest rate loans below market value and the tax on building construction costs was cancelled for Euro Disneyland (Euro Disney Annual Report). Additionally, road and rail connections to Disneyland Paris were built by the French government for free. The first manager, Robert Fitzpatrick, had concerns about the number of passengers during peak tourist season due to the proximity of 17 million Europeans living within a two-hour car ride of Paris and 300 million people within a two-hour flight (Robert R. Canning & Raymond H. Lopez, 1987). Legal issues also contributed to

Disneyland Paris facing financial losses, as French labor laws prevented employers from firing employees during off-peak seasons. This led to increased labor costs and numerous legal challenges. The reduction of employee benefits and delayed salary payments also resulted in extreme behavior among employees. Poor financial structuring further affected company profits, resulting in losses of $960 million by the end of 1993 and uncertainty about the company's future. However, it is important to note that despite these statistics, European Disneyland still generated operating profit, with the deficit primarily being attributed to operating costs. The Walt Disney Company raised $175 million in an effort to salvage the company.Hence, Walt Disney had heavy interests burdened. Only 32% of the capital is equity financing, with another $2.9 billion loan from the bank and a high interest rate of about 11% (Packmen.H. M.F. 1999). Borrowing the loan is usually very easy, and a large proportion of the debt has the advantage of reduced income tax, with profits being shared among minority shareholders. However, due to the company's financial high leverage, the increasing interest and administrative costs cannot be covered by the company's revenue. The Walt Disney parent company utilized the foreign direct investment strategy to control Disneyland Paris.

In contrast to Disneyland in Japan, the US Company relied on licensed technology transfer. This means that the US Company only collected royalties and a fixed percentage of revenue, which was only a small percentage of the total revenue generated. The US Company envied the large profits made by the Japan Company but could only obtain a small portion of them. According to US Disney's perspective, Disneyland Japan was in the right location

but used the wrong strategy, while Disneyland Paris had chosen the wrong location and strategy.

The competition from US Disney also had an impact, which is related to the second reason - external circumstances. For Europeans, nice weather is their preferred vacation option, making Disneyland Orlando and California a better choice for them to visit.During the currency crisis in Europe, there was a decline in the popularity of Disneyland Paris among foreign travelers. The recession in Europe increased the cost of travel to European destinations, making Florida a more attractive option due to lower prices and favorable weather. Unlike Europeans, foreigners are generally more interested in shopping and experiencing the historical beauty of Europe rather than visiting Disneyland. To address this issue, Disneyland Paris should implement a tiered pricing strategy to cater to different customer segments. This includes reducing hotel and souvenir prices. Additionally, the company should make necessary changes to the arrogant and entrenched board of directors, whose inaccurate information and management style contributed to the financial crisis and negative perception of the company.The suggestion is to quickly change the board of directors and establish the direction of this park. The direction should be based on American style but should include French details. This is necessary because the French style details are not attractive to French visitors and may make the park lose its uniqueness. For example, Disneyland in Paris includes French elements like the Less Mist©rest du Nautilus from the French novel by Jules Verne, but this makes European visitors feel bored. Additionally, visitors need comfortable experiences, but the "American style" service, such as non-alcohol restaurants and lack of breakfast services, upsets them. Europeans

are used to having breakfast and prefer more delicate foods and beverages. To improve customer experiences, the company should change service details to French style, such as language guides, restaurant food options, and staff actions. However, the overall framework of the park, including architecture, fireworks, parades, decorations, and so on, should still follow American style to provide a unique experience compared to other European parks. To conclude, in order to establish its own distinct character, Disney Paris needs to change its management team to break away from the nondescript mix culture type. Additionally, advertising should be utilized as a means to address the crisis of an anti-American attitude. The advertisements should avoid aggressive content that may lead the French to perceive American culture as "Culture Coherently." Instead, the focus should be on creating an environment that brings happiness and comfort to European visitors, offering a unique experience compared to local parks. Words or elements that may contribute to cultural erosion should be strictly avoided in advertisements. For instance, the commercial advertisement in 1992 included excessive American elements such as a passionate and modern performance by Michael Jackson, which both surprised French parents and excited children. This highlights how the Euro Disney Grand Opening TV show predominantly featured American shows, while only few French elements were incorporated through French Can-can performances and local bands that showcased a style different from the traditional "graceful, gorgeous, beautiful" French aesthetic. On the contrary, French parents prefer taking their children to Disneyland during long vacations rather than weekends, indicating an opportunity for Disneyland to advertise and emphasize the importance of family trips while focusing on new forms of entertainment that

can enhance family bonds.To decrease the crisis of anti-American sentiment, the employment environment and training style need to be changed. During a slow period, Disneyland should follow French law and redeploy their staff, rather than firing them or hiring casually. The most effective way to reduce costs is to redeploy employees to different departments. Additionally, during the off-season, employees can be retrained using a mentor strategy that takes into consideration their feelings and personal lives. In the long term, some employees are unsatisfied with their job positions and low income, so Disney management should establish a career development system that provides a systematic career path. Due to the high labor intensity, many employees complain about heavy workloads and the working environment. By reasonably allocating working time, efficiency and motivation can be significantly improved.

Adjusting the financial structure is also crucial for the company. Given the long-term development strategy and the crisis of the Euro financial recession, Disney must survive by changing its financial structure. The Disneyland cost of capital heavily relies on debt, resulting in high interest and loans during the European economic recession.

The financial structure should be adjusted to achieve a balanced financial structure, which involves increasing equity financing through the issuance of stocks and bonds. This is necessary because France restricts interest tax deductions on debt financing (Figure #2: The solution of the crisis in short term and long term). The implications of the failure of Europe Disney provide lessons to avoid similar situations in the future. These implications include the need for multinational operations to prioritize culture management.

When facing new problems and cultures, it is crucial not to be arrogant and

adhere to old rules. Disney's directors, known for their imperious and prodigal attitudes, failed to consider the sensibilities of the French people. This hindered the implementation of plans and operations. Therefore, effective cross-cultural management plays a key role in the success of enterprises. Disney's experience with transnational operations highlights the importance of understanding cultural differences, overcoming cultural conflicts, and conducting effective cross-cultural management.

In transnational operations, the lack of cross-cultural communication and management knowledge can result in cultural conflicts that affect work efficiency and increase internal friction within the enterprise (Figure #1: The process that culture difference leads to the failure in operation). Additionally, when entering new markets, company directors should establish appropriate pricing and handle relationships with different companies in different areas to prevent competition between them. During this time, Disney had a monopoly position as there were only a few theme parks available.

As a result, they believed that inflexibility in pricing was a drawback for customers, so they set high prices to maximize profits in the US. However, they faced an economic crisis which resulted in Europeans not being as affluent as before. Consequently, they could not afford the higher prices and took measures to avoid them, such as seeking alternatives. Furthermore, due to lower prices at Disney in the US and the weaker US dollar currency, Europeans found it cheaper to visit the US Disney, leading to a decrease in European visitors for Paris Disney.

Lastly, conducting research and acquiring accurate information before entering new markets is crucial to avoid mistakes in competitive strategies.

After conducting thorough research, we can fully grasp the distinctions between different areas and make necessary adjustments to

improve public acceptance. Additionally, by understanding the host country's politics, economy, culture, and laws while considering environmental information, the company can analyze the advantages and suitability within their organizational culture and customer demand.

Moreover, by comparing cultural differences, the company can identify local market preferences and enhance their ability to withstand market pressures. This also allows them to adjust their economic structure according to risks and meet consumer needs. Fourthly, it is important for companies to establish a scientific and effective governance system.

As observed in the case of Disney management, they seem to be excessively confident in their success without acknowledging the impact of cultural differences. Their arrogant attitude leads them to ignore these differences. Furthermore, Disney's regulations have become more strict, resulting in compliance-focused approaches that are costly and have shown little improvement.

Governance can be understood as a strategic mechanism that aligns structures, systems, policies, and cultures during decision-making processes.In order to ensure the company's success, it is important for them to establish preventive controls that can eliminate potential errors, as well as detective controls that can identify existing errors. Additionally, by implementing effective governance and adhering to the CRAFTED principle, the company can ensure that the board listens to various opinions in order to make informed decisions. It is also crucial for a successful company to have cross-cultural management and leverage cultural differences to gain a competitive advantage. By building "two-way" cross-cultural communication channels, the company can adapt to the local culture and values of the host country.