Euro Disney: From Dream to Nightmare, 1987-94

Euro Disney: From Dream to

Nightmare, 1987-94

116

TEACHING NOTE

Prepared by Robert M. Grant.

SYNOPSIS

The case examines Walt Disney Company's creation of its European theme park, Euro

Disneyland (later renamed Disneyland, Paris) over the period 1984 to 1994.

The period covers two main management decision points. First, Walt Disney

Company's decision to create Euro Disney. This involves addressing the questions:

Should Disney build a theme park in Europe? What should be the mode of entry (e.g.,

licensing or ownership)? How should Disney adapt its theme park to the European

social and cultural context? Second, in the light of the problems that have beset the

park during its first two-and-a-half years of operation, what should CEO Bourguignon

do now?

The account of Disney's decision to create a European theme park draws heavily

upon Euro Disney's prospectus that preceded the IPO of 1989. The case outlines the

history of Disney's theme park operations, including its first overseas foray with Tokyo

Disneyland. It goes on to describe the structure and organization of the Euro Disney

project, including the complex relationships between the French company that owns

and operates the park, EuroDisneyland SCA, and its minority parent, the Walt Disney

Company. The case outlines the business case for Euro Disney, including summaries of

the market analysis and the financial forecasts undertaken by Disney. The case allows

students to assess the arguments for Disney's establishment of a European theme park

and to explore the rationale for the multiple relationships between Disney and the park

(which includes minority equity ownership, a licensing contract, and a management

contract).

Copyright © 2002, Robert M. GrantThe second part of case describes the difficult startup experiences of Euro Disney

and closes with the situation facing the new CEO of EuroDisneyland SCA, Philippe

Bourguignon. This part of the case allows students to examine the reasons for Euro

Disney failing to achieve its performance targets, to consider some of the problems

facing a huge, highly complex, leisure project in an overseas country, and to consider

recommendations for both EuroDisneyland SCA and the Walt Disney Company.

TEACHING OBJECTIVES

The case is designed to accompany Chapter 13 of Contemporary Strategy Analysis. It

deals with three key issues concerning international strategy:

* evaluating an overseas expansion decision;

* the design of a foreign market entry strategy;

* the management of overseas subsidiaries, with special reference to the issues

of globalization versus national differentiation (particularly with regard to

adaptation to the national culture of the host country).

POSITION IN THE COURSE

I use the case in the part of the strategic management class that deals with international strategies.

ASSIGNMENT QUESTIONS

1. Evaluate Disney's decision to build a theme park in Europe.

2. Explain why Disney chose to enter Europe through a combination of equity

ownership, a licensing contract, and a management contract, as compared

with the relationship with its US theme parks (100% ownership) or with

Tokyo Disneyland (pure licensing)?

3. In what ways did Disney adapt to a French and European context? How effective was this adaptation? Should Disney have adapted more or less?

4. Advise (a) Philippe Bourguignon on what further actions he should take to

improve the financial viability of Euro Disney and realize its potential for

shareholder return, and (b) Michael Eisner on how Disney's interests in Euro

Disney can best be protected and furthered.

READING

R. M. Grant Contemporary Strategy Analysis(4th edn), Blackwell Publishers, 2002, Chapter 13.

EURO DISNEY: FROM DREAM TO NIGHTMARE, 1987-94

117 CASE DISCUSSION AND ANALYSIS

Should Disney Establish a European Theme Park?

I adopt a hierarchical approach to this issue: I begin with the overall attractiveness of

the theme park industry, look at the theme park business in Europe, consider Disney's

competitive advantage in operating a European theme park, then look at more specific

aspects for the Paris project. Hence:

1. Attractiveness