Learning Outcomes
At the end of the case study, students will be able to:
• Critically engage with legal issues in international business.
• Examine best practices when it comes to starting and sustaining a business in another country.
• Critically engage with ideas of marketing in a foreign context.
In the 1980s, the Disney Corporation observed that a large number of Europeans visited Disneyland in the United States, making a long and expensive journey to stay at the resort. In response to a high demand for entertainment and wholesome family time, Disneyland’s management decided to open a theme park in Europe. The new European theme park would reduce the travel time and expense for European fans who wanted to visit Disneyland. The opening of Tokyo Disneyland in 1983, which was an instant success, also spurred Disney’s expansion into Europe (Pozzebon, 2014).
The search for a perfect site began in earnest with dozens of sites identified throughout Europe. Disney’s management eventually settled on the town of Marne-la-Vallée, France, around a 45-minute drive from the center of Paris. The Disney Corporation signed its final contract with the French Government in 1987. Disney chose the site because of its central location; around 68 million people lived within a four-hour drive and 300 million within a two-hour flight. Additionally, the French Government offered Disney USD 1 billion in various financial incentives to construct the theme park (Francis, 2013). With these favorable conditions, Disney went to work and opened its doors to the public in 1992, with seven hotels attached to the complex providing a total of 5,800 rooms (Pozzebon, 2014).
Why Did Disneyland Paris Fail to Take Off as Expected?
The initial response to Disneyland Paris (originally called Euro Disney) was lukewarm. The Disney Corporation spent heavily on marketing and promotions to drum up support for the new project, yet Europeans in general and the French in particular were not particularly thrilled. A well-know Parisian stage director called the theme park a “cultural Chernobyl” and the French minister for culture announced that he would boycott Euro Disney’s opening (Francis, 2013).
Disneyland Paris’s Geographic Isolation
The location of the park in the suburbs of Paris, a 45-minute drive from the city center, felt “isolating” for many Parisians. Disney also purchased a large amount of land in and around Marne-la-Vallée, segregating the site from local Parisians. This land purchase furthered the perception of Disney as a “greedy” company, as it meant that only the Disney Corporation would benefit from the large number of tourists visiting the site.
Disney’s land purchases meant that tourists would never spend money in local French businesses as they were situated too far away (Matt, 2017). This, in a country that prides itself on its sense of solidarity and community, is one of the worst things that Disney could have done.
Additionally, Disneyland Paris’s out-of-the-way location means greater costs for potential attendees in a market where consumers are very price-conscious. The theme park is now connected to Paris by RER (regional express) trains, and there are direct trains to Disneyland Paris from London via Eurostar. However, this has not succeeded in boosting attendance to its 2009 high
Poor Marketing
The new Disneyland park is around 45 minutes from central Paris via car or public transport, and the entrance fees are extremely expensive from the French perspective. The tickets cost around USD 76 for an adult and USD 69 for a child. For those tourists strapped for time, the answer was very clear: they would visit Paris and skip Disneyland. This direct competition between Paris and Disneyland has not helped Disneyland Paris become profitable and indicates a lack of understanding about the European market. Oiana Master argues that Disneyland Paris’s marketing was flawed in having too many “Americanisms” and pricing the tickets out of many Europeans’ reach (Master, 2013). Disneyland Paris made the assumption that since U.S. tourists were paying a high price for hotels, the same behavior would be replicated in Europe as well.
In 2015, Disneyland Paris got into trouble over preferential pricing policies, as they were pricing tickets depending on where people lived (Petroff, 2015). The European consumer lobby BEUC stated that “unjustified price differences violate single market principles and restrict consumer choice. Under EU law consumers have a fundamental right not to be discriminated on the basis of their nationality or place of residence.” Subsequently, the company stopped its “geo-blocking” policy, which priced people from different regions differently.
Overby, Gardinal, and Woodruff (2004) argue that for both French and U.S. consumers, “perceptions of product and/or service value may be culturally sensitive.” They use the example of French wine to illustrate that while a French consumer may pick a certain brand for its qualities and consistency, a U.S. consumer might pick it because it is considered more sophisticated and European.
They point out that the way that a product and service is perceived is viewed through the lens of an individual’s cultural perspective; the subsequent evaluation takes place based on the consumer’s value hierarchy, which is determined by various aspects including the need for certain desired attributes, and ultimately, the manner in which that consumption takes place—in other words, a highly subjective and culturally informed process.
Cultural Differences
Cultural differences that impacted Disneyland Paris included how U.S. consumers approached sales and how Europeans saw the same phenomenon. While U.S. consumers are used to and encourage aggressive sales, this was not the way that Europeans are used to being sold items (Master, 2013). In addition, the idea of splurging on vacations is not a European ideal, where vacations are seen as a modest expenditure, unlike U.S. consumer habits.
The biggest mistake that hurt Disneyland was that they did not treat it as a European business, but rather a U.S. one based in Europe. “Disney treated it as an American view of Europe. It was mostly American advertising, aimed at kids,” which did not resonate with European audiences (Matt, 2017). There is also a cultural difference in terms of what a theme park is supposed to do. While U.S. visitors are used to spending several nights in a theme park and hundreds of dollars, Europeans see such visits as at best a day-long affair, returning to their own homes at night.
Can Disneyland Paris Become Profitable?
In 2014, the company announced that it would require a EUR 1 billion investment to boost business and attendance (Neate & Farrell, 2014). Part of the reason that it was struggling was because of the general condition of the European economy, and the French economy in particular (Pozzebon, 2014). Even though Disneyland Paris was Europe’s top tourist destination, it had been a victim of the global financial crisis, which resulted in many Europeans travelling less due to reduction in disposable income. Disneyland Paris, however, needed around 15 million tourists a year to sustain profitability. To make matters even worse, in 2015, Paris suffered a number of high-profile terrorist attacks, resulting in a decline of international tourists as holidaymakers chose other destinations regarded as safer. Shareholders were instructed to expect losses “in the order of €110 million to €120 million ($138 million to $150 million)” (Matt, 2017).
One of Disneyland’s biggest miscalculations was the amount of labor costs. The minimum hourly wage in France is around EUR 10 or USD 11, while the minimum wage in the United States is around USD 7. Disney anticipated labor costs to be in the range of 13%, but in 1993 the true figure was close to 24% and in 1994, just a year later, it increased to 40%. France’s strict labor laws mean that high labor expenditure is part of the cost of doing business in France—a factor that the U.S. company had not anticipated.
Data 1. Labor Tax and Contributions as Percentage of Commercial Profits in France Versus United States
Click here to view the online version of this case for optimal experience of interactive data embeds.
In addition, the early 1990s saw a period of economic downturn that affected many western economies, including France. In 1992 around 25% of Disneyland Paris’s 3,000 strong workforce resigned due to “unacceptable working conditions,” which also led to the cancellation of other projects (Matt, 2017). The company had to borrow money and also find investors from around the world to tide it over during these difficult times.
Cash infusion from Saudi Prince Alwaleed Bin Talal helped the company stay afloat, as reported by Arabian Business (Matt, 2017). In 2017, the Walt Disney company bought back all the shares that were sold earlier and the company seems to be in better shape now. Since 2014, conditions have improved for Disneyland Paris, but the initial period of about 20 years was a long, hard slog for the world-famous theme park. The company has managed to stabilize its annual attendance yet it is still around five million attendees short of the number it needs to become profitable.
So, has Disneyland Paris found its own identity as a French version of Disneyland Anaheim, CA? Kenzie and Harris, in a comparison of the two parks—Anaheim, USA and Paris, France—say that the castle in Paris is bigger and perhaps better. Disneyland Paris boasts regional delicacies such as crêpes and has healthier food than its U.S. equivalent. The rides (an example is shown in Figure 3) are similar in both the parks (Kenzie & Harris, 2017).

• 1. Identify at least three key factors from the case that caused difficulties for Disneyland Paris. What other key factors may have put Disneyland Paris in trouble?
• 2. What could the management have done differently to ensure success from the beginning?
• 3. What lessons about cross-cultural engagement and work do we learn from this case?
• 4. What advice would you give to the management of Disneyland Paris for a new country strategy?

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