2. Euro Disney’s Rough Start (Foreign Market Entry strategy)
1971
December 1985
Walt Disney purchased the land which fair value is in 1971.
France triumphs over Spain as the site for Disney’s new park
1. Foreign market selection procedure France competes Spain
1)
Spain government negotiate to pay 25% of construction cost and estimated to
have 4,000 mil customers per year.
2)
France government negotiate to construct Paris rail to other European area and
lend 22% of Debt
3) Paris have advantages
- Transportation Infra
- Densely populated area
- Popularity of Disney character
3. Euro Disney’s Rough Start (Foreign Market Entry strategy)
2. Customer Demand Estimation : 10% of population + α
: Specification: European vacation days is longer two weeks than American
vacation days
Entrance Customer
Population
California Disney
1,290
25,000
Florida Disney
2,850
25,000
U.S
4,140
50,000
Tokyo Disney
1,600
12,400
Japan
1,600
12,400
Euro Disney
?????
31,000
4. Euro Disney’s Rough Start (Foreign Market Entry strategy)
March
1987
France government and Disney CEO sign the final contract for the $2
c
billion park. A clause requires the new park to respect French culture.
5. Euro Disney’s Rough Start (Foreign Market Entry strategy)
.
October
1989
Euro Disney’s stock offering announce $11.3 per share with hoopla in Paris.
April
1992
Opening day, ceremonies broadcast to 30 countries. Stock Price: $28.18
c
a share.
c
1. Investment: 4.4 billion dollar
Financing structure
Source of Debt
14.1,
29.9,
68%
32%
Capital
4, 13%
France Government
45 bank
Debt
7, 23%
9.7, 33%
Disney Hotel bank
Real estate
9.2, 31%
6. Marketing Strategy –Implementation
Price
1. Estimating sales
1) entrance permission : adult 42.25 dollar,
2) hotel stay price: 340 dollar’s package
2. Skimming strategy
1) high price
2) differentiation of product, Service
3) the strategy of high profit per product
4) low price elasticity
Promotion
1. Hi-technology revolution: the facility with 12,000 car garage ,
moving walk.
Place
1. The background of selecting location in Paris
- France government plan long-term leisure industry
with Disney
- 0.75 billion Debt with low interest
- government’s intend: decreasing unemployment rate,
promoting Europe tourism, creating 30,000 opportunity
to work. Expecting inflow 1biliion per year as invisible
trade balance
Product (Service)
1. Adventure Land
2. American Capitalism: Adjusting of American culture with
France , United Kingdom, Deutch,
Italian culture. Providing multi
language guide
2. Frontier Land
3. Communication campaign: Providing Disney experience like
fair tale
4. Mainstreet-USA ( Sleeping Beauty's castle )
4. Media’s Public relation: inviting 2,500 newspaper, magazine,
broadcast company to introduce it.
3. Fantasy Land
5. Discovery Land: Jules Verne’s SF novel.
7. What went wrong??
1. After opening
1) Recession remain and decrease the sales
2) The 1 billion loss in the fiscal year , 1993 year September
3) Providing 17,500 mil emergency financing from Walt Disney to euro Disney.
increasing the indirect cost because of financing debt at that time foundation and debating about debt of
finance institution
2. The factor of failure
1) Cultural difference : French’s wine culture but American Popularity
2) Financing: Mistaking estimated demand of hotel, European lodging, food price, collection price,
Increasing Debts, interests cost and fixed costs
3) Labor law: Because of low sales in non-peak time, the try to decrease labors isn’t performing. French labor law is stiff
4) Environment and location factors
5) Competition
6) Customer’s Purchase tendency : Almost euro Disney customer prefer to decrease leisure time, to minimize the
hotel days to stay, to purchase cheap collection
8. Administrative improvement
1. The strategy of satisfy customer nees to think effiency, economic,
Mass marketing
1)
Discount price: discount price of staying in hotel after 1994, non-peak time
permission, changing collection from jewelry to T-shirt, set of crayon , Substitute
high class restaurant to self service restaurant.
2)
Strengthening education of internal workforce: providing deutch, Spanish
language
3)
Planning financing activity to capture property gain
4)
Opening Disney store near Champs-Elysées lead loyalty income
5)
Supporting additional lending 0.5 billion in European bank, exempt 18 month
interest, extending 3 month to repay principal.
9. Administrative improvement
2. Performance after
administrative improvement
1) Net income 3,500 mil in March
1995, Increasing sales, the
number of customer because
of providing new service
2) Desire to rebuild business plan
because of brokage analyst
10. Debate: Business Plan
1
Q1. Euro Disney has passed to open since two years. But Euro Disney made a mistake to decrease
income. So To overcome the business, there are two proposals, which is about investments to
makes branches or is about decreasing expenses to survive. So What about your opinions??
Q2. If there is project to invest in east Asia, what about business plan??
Education tourism
1. Exhibition to
increase sales
2.
Inflow fixed
customers from
1.
European
elementary,
middle, high
school students
for education
tour
Sports marketing
1. France FIFA
season using
electric bulletin
board and
character
marketing
2. Advertisements
and Mobile
promotions
Acquisition
1.
Increasing
branches for
globalization
near the Turkey
and Priha’s
existed leisure
facility to
provide
happiness
