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A study in Corporate Foreign Expansion

Walt Disney

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Page 1: Walt Disney

A study in Corporate

Foreign Expansion

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The Largest Media & Entertainment Company in the world.

The Walt Disney Company was founded on October 16,1923 in Los Angels, California by brothers Walter Elias Disney (1901-1966) and Roy Disney as the Disney Brothers Cartoon Studio.

Walt Disney was the voice of Mickey Mouse for two decades.

The walt disney company have its headquarter in burbank, California, U.S

Walt Disney first motion picture in 1928 short title “Steamboat”

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Why Euro Disney did not succeed in Europe?Walt Disney Company lacked understanding of the culture in Europe.

Europeans, with 4-5 weeks of vacation, took destination trips, usually by airplane, on their work vacations.

Europeans did not consider Euro Disney a vacation spot; only, a place to spend a day.

American culture replaced prime French farm land with Euro Disney.

French intellectuals considered the park a threat to future generations, who would lose their cultural identity and start speaking in English.

Europe’s most severe recession since World War II, lead to an inopportune opening for Euro Disney.

Enormous interest charges on US$ 3.56 billion in debt arose from the highly leveraged capital structure with various creditors, including: syndicate of 60 international banks and, the French government.

Adding to the weight of debt, construction was over budget by 30%

In the end, Euro Disney reported a $900 million loss in the first operating year.

Debt restructuring two years after completion of Euro Disney, lead executives to admit original business plans have “weaknesses”.

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Why Tokyo Disneyland succeeded?Tokyo Disneyland was the first international theme park by Walt Disney Company outside of the United States.

Opening of the park coincided with the introduction of five-day work week in Japan and a strong, growing economy.

Culturally, the Japanese were spending more time on leisure activities.

Tokyo Disneyland became the symbol of a new a Japanese lifestyle – enjoying free time with friends and family rather than constantly working.

Disney cartoons and films were extremely popular in Japan and 200,000 Japanese visited Disneyland each year.

Tokyo Disneyland made it possible for Japanese to visit the park without traveling to California. In addition, the fortunate location was accessible for 35 million Japanese within 90 minutes of driving distance.

Contrary to Europeans, Japanese vacations were short, which made Tokyo Disneyland a successful tourist destination.

Tokyo Disneyland was designed for adults, particularly young couples. Prices were steep ($40 for adults), but the families sacrificed other activities.

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What can be done to make Euro Disney a more profitable park?

Euro Disney should modify the sales strategy to suit Europeans.

At that time, individuals relied on travel agents and tour operators, which Disney had largely neglected. The company must actively cultivate relationships with tour operators to increase sales.

Marketing strategies must encourage tourists from neighbouring countries to visit Euro Disney.

The increase in visitors does not translate into profits; however, more foreign visitors will lengthen the average stay. Increasing length of on-site stay does translate into more auxiliary revenue: meals, rooms and Mickey Mouse ears.

Profit doesn't come from the theme parks but from high-margin businesses such as hotels, restaurants and shops.

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