École Supérieure Libre des Science Commerciales Appliquées

Program: MIBA

Group: Eslsca 31-D

Dr. Ahmed Shalaby

Case Analysis – Euro Disney

Presented by: Ahmed Mohamed Atef Beram.Maggie Maher HalimMostafa Ahmed AsakerAlaa Imam

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TABLE OF CONTENTS

SECTION 1: INTRODUCTIONBrief Summary on Euro Disney (opening day, crises loams, rescue, the tide turns and the time lines of main events)

SECTION 2: Key Quantitative and Qualitative performance IndicatorsProfitabilityGrowthMarket Share Company Weaknesses Process efficiency and effectiveness

SECTION 3: Performance Gaps Performance GAP 1: Not knowing what customers expectPerformance GAP 2: Not matching performance to promises Performance GAP 3: Not delivering the service standardsFinal analysis

SECTION 4: Analysis TOWS AnalysisThreatsOpportunities Weaknesses Strengths

SECTION 5: Conclusions of DiagnosesEnvironmental scanning was not properly fulfilled and grossly miscalculated Marketing strategies were not adapted to the French Culture Positioning was not properly done Marketing Plan and Marketing Mix were not properly set

SECTION 6: Solutions, What can be done?Disney Competitive advantage Differentiation StrategyGrowth Strategy - Intensive Strategy / Joint Venture with Management ContractsRecommended Entry Model

Section 7: Relevant lessons learned

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SECTION 1: INTRODUCTION (Background and History of Euro Disney)

In the beginning...Following the success of the Disneyland theme park in Anaheim, plans to build a European version first started around 1975, nine years after Walt Disney died. Initially Britain, Italy, Spain and France were all considered as possible locations, though Britain and Italy were quickly dropped from the list of potential sites because they both lacked a suitably large expanse of flat land.

The most likely site was thought to be in the Alicante area of Spain, which had a similar climate to that in Florida for a large part of the year; however the area was also beset by the notorious Mistral winds.

Eventually the French location won, and a site was duly investigated at Marne-la-Vallee, partly because of its close proximity to Paris, and also it's central positioning within Western Europe. A factor that was thought to be crucial to the park's future success if it was to attract sufficient visitors. The proposed location put the park within 4-hours drive for around 68 million people, and 2 hours flight for a further 300 million or so.

Michael Eisner signed the first letter of agreement with the French Socialist government in December 1985, and started to draw up the financial contracts during the following spring. Robert Fitzpatrick, a key organizer of the 1984 Los Angeles Olympics was appointed as the Euro Disney President, and the park slowly started to take shape, with construction starting on the 2,000 hectare site in August 1988.

In December 1990, Espace Euro Disney (an information Centre) was opened to the public to show what Disney were constructing. This was followed by the opening of the casting Centre on 1st September 1991 in order to start recruiting the hundreds of Cast Members that would ultimately operate the park's many attractions.

Opening Day...Euro Disney first opened to employees, for testing during late March 1992, during which time the main sponsors and their families were invited to visit the new park. The formal press preview day was held on April 11th 1992, and the park finally opened to visitors on April 12th 1992.

The opening day crowds expected to number up to 500,000 visitors, failed to materialize, however, and at close of the first day barely 50,000 people had passed through the gates. This may have been partly due protests from French locals who feared their culture would be damaged by Euro Disney, but whatever the cause the low initial attendance was very disappointing for the Disney company.

Crisis looms...By August 1992 estimates of annual attendance figures were being drastically cut from 11 million to just over 9 million. Euro Disney’s misfortunes were further compounded in late 1992 when a European recession caused property prices to drop sharply, and the massive interest payments on the startup loans taken out by Euro Disney forced the company into serious financial difficulties. The situation was worsened by the fact that the cheap dollar was persuading more and more people to forego Europe in favor of holidays in Florida at Walt Disney World.

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A brave face was put on the first anniversary of the park's opening, and Sleeping Beauty's Castle was decorated as a giant birthday cake to celebrate the occasion, however further problems were just around the corner.

In summer 1993 the new Indiana Jones roller-coaster ride opened, but disaster struck just a few weeks after opening when the emergency brakes locked on during a ride, causing some guest injuries. As a result the ride was temporarily shut down for investigations.

By the start of 1994, with the company in serious financial difficulties, and rumors circulating the park was on the verge of bankruptcy a series of emergency crisis talks were held between the banks and backers.

Rescue...Everything came to a head during March 1994 when Team Disney offered the banks an ultimatum, that Disney would provide sufficient capital investment for the park to continue to operate until the end of the month, but unless the banks agreed to restructure the $1bn debt that the park's construction and operation had run up, the Walt Disney company would close the park, and walk away from the whole European venture, leaving the banks with a bankrupt theme park and a massive expanse of virtually worthless real estate.

Euro Disney then forced the bank's hand by calling the annual stock-holder meeting for March 15th. Faced with no alternative other than to announce to the stock holders that the park was about to close the banks started looking for ways to refinance and restructure the massive debts. Then to further increase the pressure on the banks, Michael Eisner, Disney's CEO went public shortly before the stock-holder meeting and announced that Disney were planning to pull the plug on the venture at the end of March 1994 unless the banks were prepared to restructure the loans. Finally on March 14th, just before the annual meeting the banks capitulated, and agreed to Disney's demands, effectively writing off virtually all of the next two years worth of interest payments, and a three year postponement of further loan repayments. In return the Walt Disney Company wrote off $210m in unpaid bills for services, and paid $540m for a 49% stake in the estimated value of the park, as well as restructuring it's own loan arrangements for the $210m worth of rides at the new park.

Time line of main events:March 24, 1987 The Agreement of March 24, 1987, “for the creation and operation of Euro Disneyland in France,” is signed by the French Government, the Walt Disney Company, the Ile-de-France Regional Counsel, the Seine-et-Marne Departmental Counsel, the Parisian public transport authority (RATP) and the Public Planning Board (EPA) for the new town of Marne-la-Vallée.August 1988 Excavation work begins on-siteNovember 6, 1989 Stock market floatation (Paris, London and Brussels)April 1990 The first facades of the Disneyland Hotel are constructedSeptember 1991 The Casting Center opens in Noisy-le-GrandMarch 31, 1992 The Marne-la-Vallée–Chessy RER station is inauguratedApril 12, 1992 The Theme Park opensJune 1993 The “Indiana JonesTM, the Temple of Peril” attraction is inauguratedApril 23, 1993 The Disneyland Paris Convention Center welcomes the first joint meeting of the two major international organizations in the tourism industry: the European Tourism Commission and the European Commission of the World Tourism Organization

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February 1994 The first European Children’s Summit is hosted: over 300 children representing 14 countries reflect on the world of tomorrowMarch 1994 Inauguration of two new attractions: “Casey Jr., le Petit Train du Cirque” and “LePays des Contes de Fées”May 19, 1994 Inauguration of the TGV station at the Park entranceJune 8, 1994 Extraordinary General Shareholders Meeting approves resolutions related to the financial restructuringBy August of 1994 the park was starting to find its feet at last, and all of the park's hotels were fully booked during the peak holiday season.In October 1994 the park's name was officially changed from Euro Disney to "Disneyland Paris", in order to more closely link the park with the romantic city of Paris, and to disassociate itself with the poor reputation that has become linked with the phrase "Euro Disney". The end of year figures for 1994 showed encouraging signs as the previous year's UKP 650 million loss was reduced to around 200 million, despite a 10% fall in attendance caused by bad publicity over the earlier financial problems. By the end of March 1995 top Walt Disney executives were predicting that Disneyland Paris may break-even by the end of 1995.May 31, 1995 The “Space Mountain – from the Earth to the Moon” Attraction is inaugurated1994: Saudi Prince Alwaleed purchases a stake in the firm; the park's name is changed to Disneyland Paris.Helped by the opening of Space Mountain on June 1st 1995 in August 1995 Disneyland Paris and the Euro Disney resort complex announce a 22m GBP profit, followed by the first annual operating profit announced in November 1995.1996: The Company secures profits for the second consecutive year.2002: The Walt Disney Studios theme park opens.2003: Euro Disney faces bankruptcy.2008: the park was the most-visited attraction in Europe and reports more than 15 million visitors every year.

SECTION 2: Key Quantitative and Qualitative performance indicators

Profitability…

Euro Disney lost $921m in the first fiscal year - $2.5m per day: non-operating costs were extraordinarily high. Efficiency and economy became the watchwords – it took 20 months to start ironing out the operational issues

By September 1995, Euro Disney became profitable. o The European banks loaned Euro Disney $500m and forgave 18 months’ worth of interest charges

and deferred all principle payments for 3 yearso The Walt Disney Company spent $750m in further investment in Euro Disneyo The Saudi royal family invested up to $500m for a 24% stake in Euro Disney in 1994The turnaround ($35m in profit by 1995) was attributed to a new marketing strategy:o Entry prices and prices within the park were slashedo A new high-tech attraction that mimicked a trip to the moonIn 1995, Euro Disney S.C.A. reported its first ever quarterly profit of US$35.3 million

In 2002, Euro Disney S.C.A. and the Walt Disney Company announced another annual profit for Disneyland Paris. However, it then incurred a net loss in the three years following.

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In 2005, the Walt Disney Company agreed to write off all debt to the Walt Disney Company made by Euro Disney S.C.A.. As of 2007 the park was approximately US$2 billion in debt.

In August 2008, Disneyland Paris was the most visited attraction in Europe, receiving more visitors than the Louvre and the Eiffel Tower combined

Reports Fiscal Year 2009 Results:• Attendance of 15.4 million with an 87% hotel occupancy rate• Revenues decreased 7% to € 1,231 million, driven by a decline in guest spending• Net loss of € 63 million, as lower revenues were partially offset by a 2% reduction in costs and expenses• Generated Free Cash Flow, ending the year with € 340 million in cash and cash equivalents• Opening of Toy Story Playland at the Walt Disney Studios® Park in 2010

Commenting on the results, Philippe Gas, Chief Executive Officer of Euro Disney S.A.S, said:"During the fiscal year, we were faced with the most challenging economic environment in our history, which drove certain fundamental changes in consumer behavior. These changes included booking significantly closer to their visits, searching for promotional offers and travelling closer to their homes. As a result, we adapted our offers to address our guests' changing needs. This decision delivered record park attendance of 15.4 million and an 87% hotel occupancy rate, down from last year but high by industry standards. We saw our guest mix change, as attendance was driven by French and Belgian markets, offsetting significant weakness from Spain and the United Kingdom. These changes also impacted guest spending and hotel occupancy, lowering our revenues. Throughout the year we also balanced our promise of a high-quality Disney entertainment experience for our guests while managing costs.

The strength of the Disney brand and the attractiveness of our Resort as Europe’s number one tourist destination position us well when the recovery of the economies of our key markets and the leisure and tourism industry occur. We continue to invest in the long-term growth of our Company and we look forward to opening Toy Story Playland, inspired by the popular Disney-Pixar Toy Story characters and films, at the Walt Disney Studios Park in summer 2010."

Net LossFor the Fiscal Year, net loss of the Group amounted to € 63.0 million compared to a net profit of € 1.7 million for the prior-year period. Net loss attributable to equity holders of the parent amounted to € 55.5 million and net loss attributable to minority interests amounted to € 7.5 million. The net loss of the Group was driven by the decreased revenues and operating margin compared to the prior-year period.

Reports Fiscal Year 2010 Results• Resort revenues were stable at € 1.2 billion, with higher guest spending in the parks and hotels offsetting lower attendance and hotel occupancy• Real Estate revenues increased by € 42 million to € 60 million, due to a significant property sale• Net loss reduced by € 18 million to € 45 million• Cash increased by € 60 million to € 400 million, after repaying € 90 million of debt during the Fiscal Year

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Growth:

By 1993, after announcing their fourth-quarter results, losses were reported to be $517 million. In 1994, Prince Al-Walid agreed to invest up to $500 million for a 24 percent stake in the park. This cash infusion along with a change in local management led Disney back to the road of recovery. By 1996, Disneyland Paris became France's most visited tourist attraction.

With the recovery of Disneyland Paris, Disney's management has embarked on an ambitious growth plan. Their plans include the addition of the California Adventure Park at Anaheim and three new theme parks in Tokyo, Paris, and Hong Kong. Having a learned a lesson with Disneyland Paris, Disney plans on spending only $400 million of its own money for their new projects.

In 1994, the park's name was changed to Disneyland Paris, emphasizing its proximity to the French capital. The company also made concessions toward resolving its poor labor and press relations. The no-alcohol policy was changed, allowing wine and beer to be served at the park's restaurants, while the company lowered its admission prices, some of its hotel room rates, introduced lower-priced menu choices, and instituted discount pricing for winter admission. In addition, the TGV link to the theme park was completed in 1994, complete with a direct link up with the Eurostar Chunnel train service.

After narrowing its losses to FFr 1.8 billion on FFr 4.1 billion in revenues in 1994, Euro Disneyland turned profitable in 1995. The company also began moving forward on its Phase II development, attracting a Planet Hollywood restaurant and an eight-screen, state-of-the-art movie complex, owned by Gaumont, to the company's free-admission Festival Disney (renamed Disney Village in June 1997) entertainment complex located next to the theme park. The company also started construction on a second convention center and began eyeing plans to open a Disney Studios theme park on the site. Meanwhile, the passing European recession and stronger marketing campaigns were spurring increasing attendance, rising from 10.7 million visitors in 1995 to 11.7 million in 1996. Posting its second year of profits in 1996, Euro Disneyland seemed finally to be rousing from its European nightmare and moving into the dreamland Disneyland Paris should have been all along.

Attendance had surpassed 12 million visitors by 1997, making the theme park Europe's leading tourist destination. Hotel occupancy was also strong, encouraging Disney management to go ahead with its plans to open a second park. Construction began in 1999 on Walt Disney Studios, a destination featuring attractions based on cinema, animation, and television. The company believed that the addition would not only bring in over five million new visitors each year but entice travelers to stay longer.

Process efficiency, effectiveness

High service quality lied right at the core of the Disney formula. Service standards, park designs and ever operating detail were carefully managed to ensure that the plays and shows were flawlessly performed daily.

Notably, Disney’s stated goal was to exceed, not just satisfy, customer expectations every day.

Service delivery had been constantly controlled and refined throughout the franchise’s history.

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Hiring the right employees was a top priority for the company and the training process was highly complex and comprehensive to ensure that employees deliver the quality service that the company guaranteed

Potential employees had to go through multiple rounds of interview before receiving the offer the work at the company. Interviewers range from directors and managers to general peer employees, and group interviews were also conducted to test candidates’ behaviors in a group setting. It was Disney’s goal to recruit a large number of young and energetic people, many of high school and college age because such energy was critical to the Disney services.

The orientation program also consisted of classroom instruction in the company policies, facilities, resources, procedures, and extensive on-the-job training. Employees were taught to understand the challenge of guest service and extending oneself to guests. Superior performance was emphasized and expected. Ever employee was evaluated based on their energy level, enthusiasm, commitment and pride. Disney also maintained a variety of recognition programs for outstanding service delivery, including a wide arrays of service awards, banquets for long-time service, and other informal gatherings. Disney management understood the value of treating employees in the same way the company wanted the employees to treat guests. Because employees were highly valued at Disney, they are motivated to deliver high-quality services to the guests, and the virtuous cycle continued

Section 3: Performance Gaps

Performance GAP 1: Not knowing what customers expect

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Performance GAP 2: Not matching performance to promises

Performance GAP 3: Not delivering the service standards

Finally:

• Walt Disney overestimated the magic that was to be in introducing Europe's most lavish and extravagant theme park in April of 1992.

• Advertising messages had been mis-communicated, “Emphasizing glitz and size…not the rides or attractions”.

• Disney remained unsuccessful in attracting customers just by vigorous brand name promotion communicated through Mickey and his friends.

• European families found Euro Disney to be an “over-rated” promotion of American culture and lifestyle

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Section 4: Key Environmental Trends

Euro Disneyland presented huge challenges for Disney. Climate was a major problem. The long gray winter of Northern France created complex design problems that were absent from Disney’s sun-drenched California and Florida parks. However, the challenges posed by adverse weather conditions were mainly technical and amenable to careful analysis. The issues of culture were much less tractable.

France had been the most independent of the Western European powers in terms of its independent foreign policy and unwillingness to accept US leadership in world affairs. The announcement of the Euro Disneyland project was greeted by howls of outrage from the French media and from the intelligentsia who viewed the park as a “a cultural Chernobyl,” “a horrifying step towards world homogenization,” “a horror made of cardboard, plastic, and appalling colors, a construction of hardened chewing gum and idiotic folklore taken straight out of the comicsBooks written for obese Americans.”7 Euro Disney quickly became a focal point for anti- Americanism, fueled by multiple issues. For example, shortly after opening, Euro Disney was blockaded by farmers protesting US farm policies.

The design of the park incorporated many adaptations of French and European culture. Disney emphasized the European heritage of many of Disney’s characters and storylines (referred to by Chairman Michael Eisner as “European folklore with a Kansas twist”). Some attractions featured European adaptations: Cinderella lived in a French inn and Snow White’s home was in a Bavarian village. Other attractions were unique to Euro Disney: Discovery land (which substituted for Tomorrow land at other Disney parks) was based upon themes from Jules Verne and Leonardo da Vinci.; “Visionarium” was a 360-degree movie theater showcasing French culture; an Alice-in-Wonderland

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attraction was surrounded by a 5,000sq.ft. Hedge maze. Designing and constructing these European-themed attractions added substantially to the cost of Euro Disneyland.

Some “American” themed attractions were adapted on the basis of market research findings. For example, the finding that European visitors to Disney’s US parks responded positively to themes embodying the American West encouraged Disney to redesign several attractions around a Wild West theme – including a mining town setting for one ride, a “Davy Crockett” themed campground, and hotels named the “Cheyenne,” “Santa Fe,” and “Sequoia Lodge.”

Other adaptations were made to cater to European social behavior and culinary tastes. Concern over European aversion to queuing resulted in the provision of video screens, movies, and other entertainment for guests waiting in line. Disney’s no-alcohol policy was adjusted by allowing wine and beer to be served at Feastival Disney, an entertainment complex just outside the theme park. In the restaurant facilities, greater emphasis was placed on sit-down dining and much less on fast food. At a seminar at UCLA in 1990, Robert Fitzpatrick placed a major emphasis on the Company’s determination to provide the highest standards of quality at Euro Disney. This was evident both in the cuisine and in the furnishings and service standards of the hotels. In both areas, Fitzpatrick argued, quality was well in excess of the standards at Disney’s US parks.

Human relations management posed an even greater cultural challenge. Central to the Disney theme park experience was the way in which “cast members” interacted with the guests. Disney was famous for its meticulous approach to recruitment, its commitment to employee training, and the maintenance of rigorous standards of employee conduct. For example, Disney’s employee handbook spelled out a strict code with respect to dress and appearance, including: Pleasant appearance (straight teeth, no facial blemishes) Conservative grooming standards (facial hair or long hair is banned; no mustache; hair length is

specified to be no longer than 1 inch above the collar) Very modest make-up, very limited jewelry (for example, no more than one ring on each hand; size

of the earrings can be no more than 1/2 inch) Employees were instructed that their behavior on the job should be governed by three major rules:

“First, we practice a friendly smile; second, we use only friendly phrases; Third, we are not stuffy.”

Selection criteria were “applicant friendliness, warmth, and liking of people.” The rules for job applicants were spelled out in a video presentation and in the employee handbook, “The Euro Disney Look.” The rules went far beyond weight and height requirements, describing the length of the men’s hair, beard and mustache requirements, tattoo coverage requirements, and hair color specifications (for example, hair had to be of a natural-looking color, without frosting or streaking). Only moderate use of cosmetics was allowed. Women could wear one earring in each ear with earrings’ diameter not to exceed three-quarters of an inch.9 The goal was a nationality mix that would match that of Euro Disney’s customers, about 45 percent of whom were French. However, in response to local pressure and the greater availability of local applicants, some 70 percent of employees were French. At the management level, Disney relied on importing about 200 managers from other Disney parks and training 270 locally recruited managers (this involved training at Disney’s other theme parks).

Disney’s recruiting practices and employee policies produced a storm of protest. French labor unions started protesting right from the moment that Euro Disney started interviewing applicants. Representatives of the General Confederation of Labor handed out leaflets in front of Euro Disney’s HQ warning applicants that the Disney hiring practices represented “an attack on individual freedom.” Many of Disney’s US hiring and employment practices contravened French law. Workforce flexibility

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was limited by the restrictions on terminating employees with more than two years with the company and the high severance payments involved. There were also legal limits over the recruitment and dismissal of seasonal workers. As for Disney’s dress and personal grooming codes, French law prohibited an employer from restricting “individual and collective freedoms” unless the restrictions could be justified by the nature of the objective to be accomplished and were proportional to that end.

Section 5: Tows Analysis:

TOWS Analysis

Strengths – S

1) “Disney” Brand 2) Expertise: strong HR and

Management capabilities

Weaknesses – W

1) Lack of market knowledge

2) Lack of Research3) Pricing strategy

Opportunities – O

1) Geographical Location (Paris, Central Europe)

2) Length vocations for Europeans3) First in the Market as theme park

(Big)

SO Strategies

Market Penetration (1/1)

Market Development open new

European subsidiary (2-2/3)

Differentiation Strategy (Processes and value chain) – (2/3)

WO Strategies

Concentric Strategy work on an effective strategic management model with proper scanning for the external environment, launch new & related products (ie: develop product packaging) – (1-2/1-2)

Threats – T

1) Competition: French has its own lovable cartoon characters ( Asterix, the helmeted, pint-sized)

2) Cultural rejection to US investment

ST Strategies

Competitive strategy work on applying sales promotions, marketing campaigns adapted to the European culture, maximizing clients loyalty while ensuring profitable relationship (1-2/1)

WT Strategies

Retrenchment Strategy (outsourcing some of the activities) (1/2)

Section 6: Conclusion of Diagnosis

I. Environmental scanning was not properly fulfilled and grossly miscalculated The macro-environmental scanning: of namely, the political, the cultural, and the economic aspects of

Europe had been grossly miscalculated

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II. Marketing strategies were not adapted to the French Culture

III. Positioning was not properly done Focused on Operational effectiveness through: Assimilating, attaining and extending best practices by doing the same thing better (Focusing in glitz and

size)While neglecting,,, Creating a unique and sustainable competitive position by doing things differently to achieve a different

purpose (Focus on variety of rides and attraction)

IV. Marketing Plan and Marketing Mix were not properly set

Section 7: Solutions: What can be done about the key issues?

The firm’s success depends not only on how well each department performs its work, but also on how well the various departmental activities are coordinated to conduct Core Business processes

Disney’s Competitive AdvantagesDisney utilizes all aspects of each business segment to compliment each of their operations. For example, brand equity from the Lion King will be used to make consumer products and services that are to be sold in retail outlets and through Internet distribution. Disney will then use the success of the movies to incorporate the characters in the Theme Parks. So visitors to Disneyland or Disneyworld will now be able to talk and meet with Mickey and Minnie like usual but now they also get to play with Simba, Timon and Pumba. Disney can also use the characters in the movie to branch new rides and park experiences like with the introduction of Disney’sAnimal Kingdom, which is a Theme Park based off of animal care and education. The success of the Lion King film could also be parlayed into a half-hour animated cartoon to be broadcast to children on the Disney Channel or into a Tony-Award winning Musical/Theatrical production on Broadway.

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Disney is not only in the business of making a movie, creating your vacation, selling you tickets to a show, or music - they are in the business of creating an experience. This experience has been shown by how diligent and focused Disney is in expanding and incorporating new business opportunities into its mix.

Differentiation Strategy (Processes and value chain)

Target MarketDisney’s target market can be divided into multiple segments. These segments include the local community, base tourists, business tourists, and induced tourists. Attention should be paid to attract consumers in each of these market segments.

Pay attention on differing tourist habits and different client segment around the continent (values, norms, believes, consumption habits,,, ect)

The overall age bracket to target for Disney is families with children age 3-15. First time versus repeat visitors must also be considered in regards to park visitors

Review Marketing Mix (Product, Price, Place and Promotion) to match with different segments of clients

Disney, as a worldwide Entertainment entity has a strength in that they develop their own characters in their feature films, and can completely capitalize on their creations by further displaying them in the Theme Parks. In addition, Disney can get the most out of their characters on the merchandising aspect by selling products displaying their Disney logos and ideas.

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Growth Strategy Intensive Strategy - Joint Venture with Management Contract - Munich the best new location for Disneyland

Three main Markets have been studied (Denmark, England and Germany as follows:

Key Selection CriteriaThe following eight indicators were chosen to evaluate each of three countries. They are each weighted and will be used in the final country selection:• GDP Growth Rate• Tourism Infrastructure• Price Competitiveness in the T&T Industry

GDP Growth Rate Is the annual percentage growth rate of the GDP at market prices. The GDP itself measures the total output of goods and services for final use occurring within the domestic territory of the country.

GDP Growth rate (%)Denmark 1.4 England (UK) 1.9 Germany 2.1

Tourism Infrastructure Measures how efficiently a country’s infrastructure can be utilized in terms of tourism. It is a score that is evaluated on a 1-7 scoring platform.TOURISM INFRASTRUCT UR

E Tourism Infrastructure Denmark 5.3 England (UK) 6.2 Germany 6EASE OF DOING

Price Competitiveness in the T&T Industry Is an index that takes into account the pricing of taxes and airport charges, the country’s PPP, extent and effect of taxation, fuel price levels, and a hotel price index.

PRICE COMPETITIVENESS IN THE T&T INDUSTRYDenmark 3.4 England (UK) 3.4 Germany 3.9

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RECOMMENDED MARKET ENTRY MODEL

IntroductionChoosing an entry model of developing business operations is essential to the planning and operations of the Theme Park. The following section will address a potential entry model, pros and cons for it, and the final recommendation for Euro Disney in Munich.

Assessment of the Strategic Entry ModelOf the many different entry models that are available for foreign operations the following model has been chosen for the expansion efforts for Disney in the European market. The Joint Venture with Management Contract

The entry model that we believe provides the strongest prospects for Disney in bringing Euro Disney into reality is the Joint Venture model.

Our major factors to choose this model over the others is the ability for Disney to leverage the brand equity associated with BMW and Bertelsmann to the Theme Park. While licensing and a wholly owned subsidiary were viable options both had either too high of risk involved or a lack of control.

The Joint Venture model will provide the three companies, DISNEY-BMW-BERTLESMANN, with a foundation to build the Theme Park for the future.

The Model:

Definition: A wholly owned subsidiary is a 100% fully owned business operations of an international company into foreign market.

Discussion: The main players that would be involved in the wholly owned subsidiary model regarding Euro Disney Munich include;Disney- Equity Partner/ Park Management ContractorBavarian Motor Works (BMW)- Equity PartnerBertelsmann Media Worldwide- Equity PartnerGermany Federal GovernmentEuropean Union

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Main Equity Ownership will be broken down by firm:Disney- 30% Equity Ownership (Primary Equity Owner)BMW- 28% (Secondary Equity Owner)Bertelsmann MEDIA WORLDWIDE- 18% (Minority Equity Owner)Germany Federal Government: 14% (Minority Equity Owner)European Union: 14% (Minority Equity Owner)

The benefits for each corporation involved, this option looked the best and would provide for a strong foundation for this Theme Park based on innovation, environmental sustainability, and strong recognizable brands.

BMW provides: Patents: Efficient Dynamics Technology Brand equity Local market knowledge: worldwide customer database

BERTLESMANN provides: Media outlet Supplemental knowledge in entertainment marketing Local market knowledge Brand equity

Pros- Disney will be able to directly move into the German and European markets and leverage the brand equity

from BMW and Bertelsmann BMW brings key patents on environmental sustainability and engineering knowledge to the design and

operation of Euro Disney A Theme Park built with alternative energy in mind can be more efficient and reduce costs associated with

operations while maintaining the natural beauty of the region Bertelsmann brings a developed media base that can help Disney reach local German and European

markets.

Cons- Disney must share profits with other equity partners Disney will give up control some park operations in order to be compliant with the other equity partner

demands Decision-making will take longer as management teams from all parties must agree on plan of action prior to

going forward If venture is unsuccessful, can be costly in dissolution if more than one company is involved

The total cost of this venture at $4.4 Billion divided between these three corporations, as well as the German government and the European Union give all parties involved a sense of belonging and will create new jobs to benefit the current citizens of Germany.

We also feel strongly that one of our key players is also the German Federal Government.Working with the German Federal Government we will be able to give back to the local region we are pursuing by bringing jobs and tourism into local economies.

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Section 7: Relevant Lessons Learned

Beware of cultural differences when marketing overseas before settled in that particular market through: Adapting to local culture Know the importance of the external and internal factors that impacts the business which became a

key important factor. The cross-cultural marketing skill must be aligned with concrete cultural knowledge. The Quality of the data and information retrieved during the environmental scanning must be rigor Measuring the degree of cultural sensitivity and tolerance is considered a key factor Marketers must understand how their own cultures influence their assumptions about another culture".

Creating a unique and sustainable competitive position through providing a differentiating and distinctive value proposition to customers.

Great successes often don’t have staying power

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