International operations

Length: 783 words

Background Information The major problem that occurs with international operations is the difference in understanding the culture. This report takes up the case study: Euro Disney: The First 100 Days” by Anthony R (1993), an unpublished case study for the Harvard business school, as the basic premise. However, the case goes beyond to evaluate the different culture problems the company faced, how it tackled these problems, and suggests some alternate strategies and additional points of improvement the company could have adopted. Company Background.

Euro Disney is the company that owns Disneyland Paris. The Park opened in the year 1992. The cost was approximately 4 billion USD, and the park which is built on a 4400 acre space is considered to be one of the world’s finest theme parks (Snyder, p. 2, 2002) The company was built over a span of 7 years but proved to be a very costly mistake in the first 2 years due to mistaken assumptions and incomplete cultural related research. At one stage the company was on the verge of bankruptcy with even the principal investor not ready to back the renovation and restructuring plans.

In an estimate the company lost over 1. 03 billion USD in the first 2 years of its operation, and was forecasted to lose to the tune of 1 million per day (Snyder, p. 3, 2002) The company however made a magnificent turnaround, but rectifying many of its mistakes, starting by changing its name. While it cannot be said that the company is fully recovered from its losses, there have been marginal profits enough to sustain the venture and predict a better future (Snyder, p. 13, 2002) Abstract

The report focuses upon the problems faced by Euro Disney in the first few years of its inception. The theme park which was built with the largest budget allocated to any theme park till date, had a tenth of its expected visitors, a mass resignation from hundreds of its employees, and negative vibes from the press and government when it started, and things went on to become worse. The turnaround that followed involved a massive effort to relearn cross cultural business. The case would be analyzed for the problems, the approach followed by the executive and some recommendations.

Problem Description Euro Disney had problems in every part of their venture. There were problems with the financial, themes, work force, logistics and even media relations. Yet all of these problems can be traced back to a single factor –not realizing the importance of cultural barriers . When the Disney people had opened the park, they had built up on their experience in other countries, chiefly Japan. The theme park in Japan had been wildly successful which led Disney people believe in the scope of theme parks in international locations.

Japan being a country from the conservative east had embraced the theme park. The Disney management then decided to open a park in Europe which they thought was culturally closer to the United States. (Grant n. d. ) The obvious flaw in the plan was that Disney management did not bother to research the cultural differences and their possible impact on the company strategy. The case study focuses on the problems which might occur when two seemingly similar cultures are assumed to think and act in similar ways, without properly analyzing the general public opinion.

The main point that would be analyzed would be the human resource of the organization which proved to be a huge barrier while the company began its operations in the country. Being an American company Disney management did realize that the ethnicity of the country is the closer to theirs. However, they failed to realize the differences between the people of the two countries, chiefly the way of thinking, the socio-economic conditions. The expectations of people in way of social and economic factors are very different.

Cross-cultural human resource management is a very big factor which influences the working of many multi nationals (Harvard Business School, 1993). The cross-cultural multi-national companies make special efforts to ensure that their employees are satisfied and happy. However, these efforts need to be channeled in the right direction to ensure efficient results. While Euro Disney management made many efforts the solutions came after the problems had already occurred.

Hence, the main problem lies in the improper analysis of the problem i. e. the effect of improper analysis of culture on starting ventures in new countries. (Grant n. d. ) It was seen that within the first nine weeks of operation some 1000 employees left the company, more than one half of whom left voluntarily. The company was also not prepared for this contingency having not gone through the French labor law thoroughly, which states that till two years the company people can be terminated easily (Harvard Business School, 1993).

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