Euro Disney

INTRODUCTION

Many companies throughout the United States and beyond are resorting to developing their business abroad. This is due to numerous factors such as the ability to cut costs through cheaper building material or labor, which leads to increg their revenues, functioning with more advantageous tax and labor laws, and expanding their market, just to name a few. The Walt Disney Company was one of those many American organizations to expand on foreign soil. Its first foreign venture proved to be so successful that the decision was made to further expand abroad. This next foreign expansion experience, named Euro Disneyland did not prove to be the successful venture that had been anticipated by its creators.

Euro Disneyland a theme park comprised of an updated, state of the art Disney's Magic Kingdom, is a subsidiary of the Walt Disney Company located outside Paris, France, and has experienced numerous complications from its inception. Because the Walt Disney Company executives were determined to adhere to American philosophies, they did not thoroughly investigate all aspects of the European environment. This failure to do adequate research caused the Walt Disney Company executives and visionaries to construct their American dream theme park on foreign soil with little if any regard for the practical reality of the physical, financial, and/or cultural environment of their chosen site. More specifically, the Walt Disney Company's "...biggest mistakes were its overambitious plans to develop the site, plus Euro Disneyland's financial structure itself, which depended on a highly optimistic financial scenario with little room for glitches" (Gumbel & Turner, 1994, p. A 12). These massive oversights were contributing factors to the problems faced at Euro Disneyland.

As a company planning on expanding abroad, it is helpful to study the history of companies which previously have developed in other countries. For example, studying the Walt Disney Company's venture into France will allow other companies to learn from the Walt Disney Company's experiences. Recognizing, understanding and avoiding their mistakes will allow a company entering a new country increased opportunity to succeed. Reviewing the Euro Disneyland venture from the site research investigation to the present day operation will be beneficial to a company considering expansion abroad.

THE HUMAN RESOURCE CONNECTION

The human resource professional often is involved in determining the optimum site for a business and is responsible for many other aspects of an international expansion, such as cultural evaluation of the site, employee selection, training, development, compensation, and evaluation, just to name a few. Thus, as a human resource professional it is pertinent to research companies which have succeeded and those which have not, in order to better prepare. Furthermore, human resource professionals must comprehend the laws, traditions, culture, and people of a country in order to minimize problems which can occur.

THE BEGINNING

In order to understand the issues involved in the Walt Disney Company's international expansion in Europe it is pertinent to review the background of Euro Disneyland. This can be done by looking at how the site, Paris, France, was chosen, at the signed agreement, at the risk management issues, and at the opening.

Why Paris?

The Walt Disney Company choose Paris, France, as the site of Euro Disneyland for many reasons. On April 15, 1983, the Walt Disney Company opened in Tokyo, Japan, their first theme park outside the United States. This theme park, Tokyo Disneyland became an instant hit. In fact, since the Walt Disney Company executives believed they learned so much about operating a theme park in another country, and since Tokyo Disneyland was an instant success, they began immediately to search for a site for a fourth park (Scimone, 1989).

To find a site for their fourth theme park, the Walt Disney Company looked to Europe where Disney films historically have done better than in the United States. Because of this film success, the Western European audience already was familiar with Disney entertainment and merchandise (Scimone, 1991). From 1983 through 1987 the company searched for sites in the United Kingdom, France, Germany, Spain, and Italy. Finally the possibilities were narrowed down to Costa del Sol in Spain and Paris in France. Although Spain had the edge due to its climate, France had a larger population and a spectacular transportation network (Scimone, 1989). The Walt Disney Company executives believed since Tokyo Disneyland located in a cold-weather climate and virtually the same latitude as Paris, was so successful, they would be able to operate in similar weather conditions in Paris. In fact, Disney executives admit that "...without the cold-climate (Tokyo) Disneyland success, they would never have picked Paris, which has the same or worse weather than Tokyo" (Anything but a 'Mickey Mouse', 1989). Thus, Paris was selected to be the site of their fourth theme park.

The site for Euro Disneyland is a "...parcel of prime suburban real estate in a mushrooming region called Marne-la-VallЋe" (Tully, 1986, p. 172). In fact, the land is one-fifth the size of Paris itself (Scimone, 1991). When the French government used its right of eminent domain to sell Disney the 4,400-acre (1,943-hectares) site at a fraction of its market value for approximately $7,500 an acre, there were bitter protests by the local farmers whose sugar beet fields had been farmed by the same families for a hundred years or more (Tully, 1986; Toy, Maremont, & Grover, 1990). The Walt Disney Company worked with the local farmers to avoid any potential problems. Their efforts were successful. The farmers were proud of the fact that people from many nations would be coming to their area of the world (Tully, 1986; Toy, Maremont, & Grover, 1990).

Marne-la-VallЋe is located in an ideal geographic location since it is 20 miles (32 kilometers) due east of the center of Paris and is halfway between the two international airports of Orly and Roissy-Charles-de-Gaulle. The French railway regional express network connects Marne-la-VallЋe with the Paris metro system, and major highways are nearby (Scimone, 1989). In fact, of more than 350 million Western Europeans, 17 million can reach the Euro Disneyland resort within two hours by car (Scimone, 1991) and 310 million can fly creating a "...denser market than the United States" (Toy, Maremont, & Grover, 1990, p. 61). With the scheduled opening (which took place May

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