A Critical Review of a Case Study of Euro-Disney
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Euro-Disney is an entertainment and recreational industry located in Paris, France. It is an affiliate of Walter Disney Corporation which has its headquarter located in the US (Xime, 2014 pp. 1-15) Euro-Disney opened its operations in France in the year 1992. It embraces business diversity and it is engaged in the following areas: studio entertainment, parks and resorts, media networks and consumer products. Recent studies indicate it has jolted its jaws to join the real estate business industry.
Euro-Disney was expected to make huge profits like its counterparts in Japan and China considering the huge amount the company invested in this lavish industry. However, contrary to its counterparts, the company failed to take off and instead made losses at escalated rates that left the top management to get worried of these reality trends. In order to revive the industry from scribbling, the management embarked on the educational training of its employees but all this was in vain. Educational training of employees is one of the methods used to improve the performance of workers in an organization but one is left to wonder why this dint happened for the case of Euro-Disney despite its efforts to revert the industry from falling.
b) The purpose of the case study
The purpose of this case study is to investigate the causes of failure of Euro-Disney to fail to take off while its allied branches in Japan and China were making profits.
c) Objectives of the study
The following are the objectives of the study.
i) To find out the causes of failure to take off by Euro-Disney in France markets industry.
ii) To find out the interventions proposed by the company to manage the crisis
iii) To investigate the effectiveness of mitigation measures used by Euro-Disney to overcome the problem
d) The significance of the critical analysis of this study
The analysis of this case study will provide an overview of cultural factors which future foreign companies should consider before investing in France. It gives a blueprint of how the culture of workers looks like in France. Different countries exhibit different types of cultures. Some of them are collective states while others are individualistic states. Individualistic cultures are easily manipulative while collective cultures are difficult to control therefore knowing the cultural differences in a foreign country plays a pivotal role in the success of a company. The case study will be used to understand how cultural collision plays a role in the stability of an organization and offer grounds of consideration on whenever a company intends to carry out global marketing.
A Systemic Literature Review
a) Cross-Cultural leadership competencies
As Deng and Gibson (2009) mention that in cross-cultural management competencies, pieces of research in leadership studies were much more focused on the effectiveness of performance of employees. The new perspective on cross-cultural leadership can be discussed in three aspects namely, transformational leadership (TL), emotional intelligence (EQ) and cultural intelligence (CQ) ((Deng & Gibson 2009 pp. 347-366). In cross-cultural contexts, people from different cultures have different understanding and interpretation of their leader’s actions, which require leaders have the sense of understanding and the way they interpret the actions (Deng & Gibson 2009 pp. 347-366).
Braun et al. (2013) point out that transformational leadership is related to expected outcomes of individuals and teams. In an individual aspect, TL is related to employees’ job satisfaction, influence by their supervisor’s motivation and behaviour (Braun et al. 2013). In the case of Euro-Disney, the former employee from local district concluded the reasons why he left only in 2 days were because of ‘brainwashing’ training and his supervisor over-timing lunch hour. It is obvious that Eur-Disney is failed in TL by not engaging the workforce. Kumar and Pansari (2015), states that the high rates of attrition can be attributed to the organizational failure to engage employees and build up loyalty towards the organization hence employees become less productive and quit the job. Since the company spends a lot of money in training and develops employees, the turnover makes all the effort in vain (Kumar and Pansari 2015). The culture awareness is one of the aspects that lead to disengagement. Parisian intellectuals claim Disney is the symbol of the American dream, the theme park is an assault of French culture, the ‘cultural Chernobyl’ that should be a boycott. The former employee recognized Disney’s training as ‘brainwashing’ reflecting that the organizational culture was not accepted by local employees. In addition, different from American style that lunch could be fast food holding in hand, French are seeming high on their lunch, they prefer eating leisurely lunch in a set time (Karadjova-Stoev& Mujtaba 2016). For the supervisor over-timing, the lunch hour must lead to dissatisfaction of employee.In team aspect, since individual values relative to the team value because of individual perceptions toward supervisor is part of team perceptions (Braun et al. 2013). In the case of Euro-Disney, the same teamwork model works effective in America and Japan, but a setback in France. The fact that 10% of 1000 employees left the Euro-Disney in the first 9 weeks reflecting that the team management of Euro-Disney was failed. An organization should act globally but think locally; otherwise, it would lack cultural awareness and cause failure on running (Karadjova-Stoev& Mujtaba 2016). Another former employee claims that the tops haven’t realized the European culture and the understanding of questions are different. As Karadjova-Stoev and Mujtaba (2016) mention that although the American culture seems as the international flavour, Americans have limited culture values of other cultures which affect their decision making in running organizations in a global environment.
When referring to EQ in leadership filed, the key domains that are discussed are as follows: self-awareness, self-management, social awareness and relationship management (Deng & Gibson 2009 pp. 347-366). Wong and Law (cited in Deng & Gibson 2009) recognized EQ as the key factor in leader performance by explaining social interaction involved leadership aspects namely emotional awareness and regulations which are affecting the quality of interaction. In the case of Euro-Disney, the awareness of the social environment where it was made operational and the relationship management systems were fair to say as a failure. Different from the success in Tokyo, Disney in Paris suffers from boycott due to lack of European cultural awareness. In human resource management, they followed the same team model as America and Japan, regardless of the unique of Europe situation, which makes local staff who are unsatisfied with ‘American dream’ more disgusted with the management actions. They claimed the staff training as ‘brainwashing’ and miscommunicate with their supervisors. Shumate and Blum (cited in Caruso, Fleming & Spector 2014) suggest that orientation and training programs should incorporate with EQ method, training the employees in order to enhance their cooperation, motivate and productivity, leading to profitable outcomes. Besides, Euro-Disney supervisors failed to understand staff’s emotional, which is relative to relationship building, against George (cited in Caruso, Fleming & Spector 2014) suggestion of developing emotional intelligence in order to reduce unconscious behaviours transference. As they over-timing the lunchtime of staffs and don’t understand what they want to explain, were depressed employees and lead to turnover.
As Deng and Gibson (2009) state that in the environment across cultures, leaders from other culture should focus more on the host culture and awareness to it. In order to enhance EQ of leadership, CQ with four key abilities like cultural awareness, motivational cultural adaptation, adaptive behaviour and effective cross-cultural communication, plays a significant role in making leadership effective. However, the success in America and Japan blinded the operator of Disney; they used the same team model in Euro-Disney, which lead to the setback in Paris. The huge number of turnover and dissatisfaction of employees reflecting the Euro-Disney didn’t use the CQ method in leadership management and fail to engage workforce, not to mention motivate employees. Maldonado and Vera (2014) define CQ as the ability to react and processing in multiple culture situations, achieve objectives in a creative way, which means leaders in a global environment should be flexible and adaptable. Disney in Europe applies mechanically of the management model which against the European cultural awareness, regardless of the unique characteristics of the nation. Moreover, it is clear that cross-cultural communication between local employees and supervisors is ineffective which lead to turnover. In organization aspect, turnover would increase the cost of training and affect the profit of the organization.
b) Theories of Cross-Cultural Environment
i) Layers of Culture
According to this theory, a country culture’s can be seen in the form of layers (Hill, 2008, 24). The outer layer refers to what the nationals of a given nation eat, language, cloth and so forth. The middle layer relates to the values, norms and how the given community defines what is right or wrong. The innermost layer represents the implicit culture. This particular layer is where leaders are supposed to fully understand these dimensions since it determines whether they will succeed in leading people in a given culture. On a broader perspective, culture can be seen as being fragmented into national, regional, gender, generational as well as social economic and organizations (Johnson, Lenartowicz, and Apud, 2006, 431). As one goes up the ladder, the level of specificity reduces. Relating this theory this to the Euro-Disney case, it is apparent that the company failed to incorporate all these aspects in Europe and evidently they misunderstood the Europeans and judged them superficially. That is why the anticipation they were having especially regarding the French flopped. For instance, they decided from afar that the French love little break first while the opposite was true. This theory dictates that effective leaders thoroughly comprehend all layers of every culture is their policies are to be successful. Apparently, Euro-Disney exhibited a poor understanding of this concept (Xime, 2014. N.p).
ii) The Three Levels of Uniqueness in Socialization
According to Hofstede-the proponent of the theory-, every individual has a unique way and patterns of thinking (Hofstede, 1994. pp.1-14). We feel differently and also act differently depending on what we learn throughout life. People find it difficult to unlearn these behaviours. This theory posits that culture is collective since it is discovered using shared values. The way we socialize is influenced by three major elements namely, our personality, our culture, and human nature. Some of the traits that we have majorly are either learned or inherited or both. Thus it will be very critical for ambitious leaders to be considerate regarding these traits since they most of the lead to different orientations (Lee and Peterson, 2000 pp. 410). Successful managers often look into all possibilities and packages within the local culture to that their policies are specifically tailored to meet their needs and demands. Failure to achieve this blend will result in ineffective since they are most likely to be out of sync with mainstream cultural practices. Euro-Disney generalized Europe as a block or as an individual whose behaviours can easily be predicted. Perhaps this was their biggest mistake since it proved to be very costly to their operations as well as overall organizational profitability (Xime, 2014. N.p ).
iii) Power Distance
This implies to the degree to which members of a given society especially those in the owe echelons of authority know and anticipate power to be unequally distributed. For instance, some countries and culture hand a wider power distance than others meaning that cross-cultural leadership is likely to succeed more in others. In high power societies, authority is deemed to be a fact of life; people live according to their structure in society, power is respected, and also the power is centralized. Contrastingly in a low power distance, social structures and classes are minimized, hierarchies are eliminated, and individuals are respected as well as the authority being decentralized. Policies by organizational leaders should be specific to cultures depending on the power distance in a given society. In a low power community, it is hard to influence people while the opposite is true in a high power distance society. Europe is a mainly low power distance society meaning that people know their liberties. The Euro-Disney had to strategize on how to suit these culture needs using this model.
iv) Collectivist versus Individualist Cultures
In a collectivist society, everything is shared on a community basis while in an individualist culture everything is meant to benefit an individual. In other words, in collectivist societies, people tend to mind about their neighbours and this comes out as some sort of socialism. On the other hand, individualist cultures do see people doing things in their own best interest and hence the close relationship to capitalism. Relating this theory to the case, France and Europe generally can be seen as a collectivist society in which every policy is supposed to help society. Thus, Disneyland failed to tackle this huddle much to its detriment (Xime, 2014. N.p). This is unlike American and Japan where cultures are hugely individualistic. For their Europeans, they were more concerned about their culture being threatened and thus opposed every strategy that the company employed.
v) Uncertainty Avoidance
In high uncertainty avoidance cultures, some rules govern behaviour, specific plans, minimal risks, and also people are after seeking consensus in case there is a misunderstanding. The opposite is valid in those societies that have a low tolerance for uncertainty since there are fewer rules that dictate behaviour, there is risk-taking, as well as there being a lot of generalization. Taking this into perspective, Europe is characteristic of a high uncertainty avoidance society since people respect the established regulating frameworks as regulating behaviour. On the face of this, Disney came with an approach that was seemingly having a lot of uncertainty. That is why they were opposed to all of the company’s propositions since they say them as being disruptive of their daily life (Xime, 2014. N.p)
c) Case synthesis
It is no doubt that Euro-Disney failed terribly in cross the cultural leadership method. This is because it demands a correct application of the discussed theories discussed above relative to culture. The company should now roll out a strategy to study major cultural practices and dimensions regarding Europe so that it gets it right. It should aspire to establish the power distance, the layers of the European society, and the degree of uncertainty avoidance as well as mastering how they can use these factors to their advantage. With this in place, this should go a long way into establishing the culturally correct practices that will attract and maintain customers to the facility for both the current and the long terms. Also, by ensuring cultural conformity, the company will avoid major collisions will dictate of mainstream culture especially those regarding dealing with employees, customers as well as the law. In this way, it should be able to realize its dream and replicate the success it had in Japan.
In the bottom line, the implementation of all these recommendations will in a great way help to facilitate as well as enhance better cultural integration by Disney. Moreover, not only will this lead to a turnaround in their fortunes but also, this will precipitate a long-term success in the European Market. In the essence, it is a key that the management continually strives to integrate well with the changing cultural dynamics in this market.
d) Reason of failure
Another important reason that has caused the business failure of Disney Land in France is the ineffective management of a virtual team. To be more specific, a virtual team refers to a team in which members do work from different geographical regions in order to coordinate activities of an organization (Cissé& Wyrick 2010). In particular, the members of a virtual team rely heavily on different kinds of electronic communication such as email, voice, and video conferencing services, and fax to collaborate with each other for the purpose of driving successful business outcomes (Hamersly& Land 2015 pp. 01-13). Although the virtual team has a number of benefits, ineffective management of a virtual team can cause many issues. In particular, cultural conflicts are more often than not experienced from members of a virtual team which reduces performance. Research indicates that cultural differences can lead to conflicts which can create a lack of trust that will affect collaboration (Ferreira & Da 2012 p.416-430). Culture difference can affect how people act, what people think, and what people believe. In particular, different cultural conflicts do arise in the virtual team because of value system differences exhibited by different cultures around the globe. Individuals’ values are expressed through what individuals say and do (Krome 2014 pp.103). Thus individuals working together from different background cultures may find that they approach and execute particular job tasks in a different way due to differences in terms of cultural values. Regarding the case of Disney Land in France, instead of an effective management the virtual team; the organization directly assimilated the American culture to France. This resulted in significant conflicts of cultural. For instance, in the Euro Disney, the France worker are required to comply with the strict adherence to codes similar to the other theme parks in the mother company in the United States and its Japan-based company. In particular, the human workforce is supposed to break its ancient cultural aversions and afford a smile and be consistently polite and welcoming to the park guest. They were also required to mirror the multi-national makeup of its guest. On top of this, the Disney Company brought their U.S. Pop culture to France and was keen at coercing its reinforcement to the “local cultural context”. The French are of the view that this is a cultural attack to their native culture; therefore they opted out to an unfriendly attitude towards the arrival of the Disney, including the protests from both intellectuals, and other sections of the local residents.
In addition, failure to effectively manage a virtual team is also reflected in the diminished physical interactions among the membership of the virtual team, which can, in turn, lead to a decreased level of productivity. Members of virtual teams can be adversely affected by the lack of physical interactions (Kimble, 2010 pp. 6-15.). For example, regarding the case of Disney Land in France, most of the communication in its virtual environment is task-oriented rather than humanistic relationship oriented. This has caused the social isolation effect in the virtual team in which the team members across different countries are not collaborating properly that lead to low employee productivity and greater stress.
The literature review above gives a clear analysis of the failures that made Euro-Disney perform dismally in the European market. The company had been used to the culture of the American dream whereby people take a snack for lunch and then return back to work within the shortest time possible. The case shows the opposite in France in which the culture of the people of France is the opposite of the culture of people from the United States. A cultural clash between the two countries illuminates how culture can easily destroy an organization of good reputation no matter the efforts that are geared towards its success. This case study shows how the company failed in totality in bringing into play the three theories of leadership which factor organizational culture in the management of an organization. The theory of layers of cultures views culture as an arrangement of three layers whereby the outer layer represents clothing, food, language and much more. The middle layer consists of what the culture of a community considers to be a normal and finally the inner layer consists of the implicit culture. Euro-Disney failed to consider the outermost layer which contains the eating habits of an organization which affected the performance of the company greatly. The company also was under control from the mother company which operated in the US. This led to the creation of a virtual group which relied heavily on electronic communication since face to face meetings proved to be difficult.
In order to prevent and reduce cultural conflicts in the virtual team at Disney, one effective strategy is to promote a collaborative organizational culture for the virtual team. Bellot (2011 pp.29-37)) indicates that organizational culture refers to a system of shared assumptions, values, and beliefs, which governs how the employees behave in organizations. Those shared values have a great effect on the workers in the company and dictate how they act, dress, and carry out their work task. Through building a collaborative organizational culture for the virtual team at Disney, it can promote the respect for all team members’ talents, interests, and expertise, to allow each team member to utilize their own knowledge and expertise to support other members to work toward the same team goal to promote teamwork effectiveness and efficiency (Bellot, 2011 pp.29-37). In particular, Bellot (2011 pp.29-37) also reveals that through building a collaborative organizational culture the virtual team members are required to build shared values and objectives for the team members. Especially, each virtual team member is required to be educated and trained regarding the values and norms of the company and the team in order for the team members to share the same norms and values to better collaborate with each other. On top of that, for the purpose of building common objectives for the virtual team members, managers should provide team-based rewards for the virtual team in order for all the team members to work toward the same direction for the purpose of obtaining the team rewards. Therefore, through forming a collaborative organizational culture for the virtual team, it can critically promote the team members to respect and offer support to each other, as well as working toward the shared objectives to improve virtual team efficiency and productivity.
Moreover, in order to enhance interactions among virtual team members, Disney should promote close communication among virtual team members. Lehtonen&Kampf (2014 pp. 1-25) indicate that regular communication among the team members in the virtual team plays a significant role to gather the team members together and to promote a sense of inclusion in order for the team members to be more committed to the team goal. For the purpose of facilitating close communication among the virtual team members, managers should establish and make sure that there will be a variety of communication tools and channels available to all the virtual team members in order for them to communicate frequently and simply at any time at any place. Examples of effective and simple communication channels and tools are teleconferencing, video conferencing, emails, and web meetings, together with other newly emerged networking media such as mobile apps social media (Lehtonen&Kampf, 2014 pp. 1-25). These communication channels and tools are able to offer greater opportunities for the virtual team members to participate, share ideas and work outputs, forming a closer relationship with each other, building trust and confidence among the team members no matter where they are located. This, in turn, can enhance the team efficiency and team productivity at Disney.
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