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 Halim
Mostafa Ahmed Asaker
Alaa Imam

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TABLE OF CONTENTS
SECTION 1: INTRODUCTION
Brief 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 Indicators

Profitability
Growth
Market Share
Company Weaknesses
Process efficiency and effectiveness

SECTION 3: Performance Gaps

Performance GAP 1: Not knowing what customers expect
Performance GAP 2: Not matching performance to promises
Performance GAP 3: Not delivering the service standards
Final analysis

SECTION 4: Analysis
TOWS Analysis
Threats
Opportunities
Weaknesses
Strengths

SECTION 5: Conclusions of Diagnoses

Environmental 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 Strategy
Growth Strategy - Intensive Strategy / Joint Venture with Management Contracts
Recommended 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-site
November 6, 1989 Stock market floatation (Paris, London and Brussels)
April 1990 The first facades of the Disneyland Hotel are constructed
September 1991 The Casting Center opens in Noisy-le-Grand
March 31, 1992 The Marne-la-Vallée–Chessy RER station is inaugurated
April 12, 1992 The Theme Park opens
June 1993 The “Indiana JonesTM, the Temple of Peril” attraction is inaugurated
April 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
February 1994 The first European Children’s Summit is hosted: over 300 children representing 14
countries reflect on the world of tomorrow

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March 1994 Inauguration of two new attractions: “Casey Jr., le Petit Train du Cirque” and “Le
Pays des Contes de Fées”
May 19, 1994 Inauguration of the TGV station at the Park entrance
June 8, 1994 Extraordinary General Shareholders Meeting approves resolutions related to the
financial restructuring
By 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 years
o The Walt Disney Company spent $750m in further investment in Euro Disney
o The Saudi royal family invested up to $500m for a 24% stake in Euro Disney in 1994
The turnaround ($35m in profit by 1995) was attributed to a new marketing strategy:
o Entry prices and prices within the park were slashed
o A new high-tech attraction that mimicked a trip to the moon
In 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 Loss
For 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 comics
Books 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:

Strengths – S Weaknesses – W

TOWS Analysis 1) “Disney” Brand 1) Lack of market knowledge

2) Expertise: strong HR and 2) Lack of Research
Management capabilities 3) Pricing strategy

Opportunities – O SO Strategies WO Strategies

1) Geographical Location (Paris, Market Penetration (1/1) Concentric Strategy work on an

Central Europe)
2) Length vocations for Europeans
3) First in the Market as theme park
(Big)
effective strategic management
Market Development open new model with proper scanning for
European subsidiary (2-2/3) the external environment, launch
new & related products (ie:
Differentiation Strategy develop product packaging) – (1-
(Processes and value chain) – (2/3) 2/1-2)

Threats – T ST Strategies WT Strategies

1) Competition: French has its own Competitive strategy work on

lovable cartoon characters ( Asterix, applying sales promotions, Retrenchment Strategy
the helmeted, pint-sized) marketing campaigns adapted to (outsourcing some of the
2) Cultural rejection to US investment the European culture, maximizing activities) (1/2)
clients loyalty while ensuring
profitable relationship (1-2/1)

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

II. Marketing strategies were not adapted to the French Culture

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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 Advantages

Disney 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’s
Animal 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 Market
Disney’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 Criteria

The 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 6
EASE 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 INDUSTRY

Denmark 3.4 England (UK) 3.4 Germany 3.9

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RECOMMENDED MARKET ENTRY MODEL

Introduction
Choosing 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 Model

Of 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 Contractor
Bavarian Motor Works (BMW)- Equity Partner
Bertelsmann Media Worldwide- Equity Partner
Germany Federal Government
European 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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