Factors that Contributed to EuroDisneys and Hong Kong Disneys Poor Performance - Assignment Example

Student’s name: University affiliation Marketing Introduction More often than not, a significant number of organizations make tragic marketing mistakes that adversely affect their profitability. Principal among these mistakes is the failure to understand the nature of business as well as the features of the industry in which they operate in. Moreover; poor planning and incompetence in the management of these organizations also play a crucial role in slowing the growth rates of these organizations. However, when all these factors change and the organizations are under competent and able management, the overall performance of these organizations significantly increase thus creating a remarkable impact in their respective industries across the world. EuroDisney Park serves as an excellent example of an organization that got it wrong in its operations thus adversely affecting its profitability. EuroDisney Park is an entertainment resort that began its activities at tea capital city of Paris in the early 90s. The park was a subject of debate and controversy. A significant number of the critiques were French people who were not comfortable with the invasion of their culture by the American culture via the resort. In particular, they deemed a significant number of the practices at the park to be a cultural imperialism because the culture at the park was American oriented. The controversy worsened with the fact that top management on the park was heavily from America yet it operated from France. These and other factors triggered strong opposition from the local people as they openly discouraged the local population from going to the park to receive services. They attacked the park terming it to be insensitive to the cultural diversity that existed across the world. In particular, the employment policy embraced by the management of the park then discouraged against the French people, and this was not taken lightly by many French people (Kaynak et al). The fact that the local people were discouraged from going to the park adversely affected the profitability of the resort in the long run. However, management of the resort made frantic efforts to rescue the collapsing resort by embracing new management and employment policies. The resort significantly increased its customer base after a major management overhaul. The resort has expanded to other countries where it has made considerable achievements in the recent past. Qestion.1: Factors that contributed to EuroDisney’s and Hong Kong Disney’s poor performance during its first year of operation It is evident that the EuroDisney Park and Hong Kong Disney parks experienced poor performance during their first years of operation. The fundamental reason for the poor performance of the EuroDisney Park is because it embraced a wrong market entry strategy. The marketing managers failed to do enough market research to understand the features of the new market they wanted to venture into. In particular, the park got it wrong in its pricing policy. T6he prices of the services and products that EuroDisney Park offered were slightly higher compared to other parks in the same market. This not only discouraged the new customer from visiting the park but also made their customers prefer other parks due to the cheaper prices offered. Moreover, the management of the park failed to diversify their operations to meet the expectations of different people with different backgrounds. The fact that American culture dominated the park adversely affected customer turnout at the park because other people with different cultures to disassociate themselves with the park. Moreover, the local people were not involved in establishing the business model of the park, and this made it hard for them to embrace the park. These factors adversely affected the customer turnout at the park thus leading to low profitability. The Hong Kong Disney Park also experienced significant challenges during its early year of operation. The factors that contributed to the dismal performance of the park include the massive initial cost outlay with little revenue generation during the first and second year of operation. The park managers failed to meet the revenue projections to cover the costs that they had incurred during the first year of operation. Consequently, the Hong Kong Disney Park found it difficult to meet its operational costs during the first year of operations and this adversely affected the profitability of the organization. Moreover, the entry strategy embraced by the management of Hong Kong Disney Park was not useful in that it lacked a competitive advantage over the other parks that were already operating in the market. The park was offering almost similar services that its established competitors were offering, and this made it be an underdog in the industry. These factors adversely affected the profitability of the parks’ operations during the initial years of operation. Question 2: Extent to which the factors were foreseeable and controllable. A significant number of the factors that led to the dismal performance of the Hong Kong Disney and EuroDisney Parks were foreseeable and controllable. For instance, the act of the management of EuroDisney Park of not including the French culture in the essential services and products offered by the park was a recipe for disaster. Every noble marketing manager can agree that whenever a business is venturing into new markets, prior market research needs to be conducted to ensure that all aspects that may affect the operations of the business are factored in. Thus, had the managers of the EuroDisney park did their prior market research perfectly, the opposition from the local people would have been reduced significantly. Moreover, the pricing policy was wrong because of poor market research. Being an entrant into the market, it was expected that EuroDisney Park could charge lower prices to attract customers. The management charged higher prices implying that they failed to conduct a prior market research. Consequently, the park lost a lot of potential customers (Baker et al). This could have been avoided if the marketing managers did a prior market research to determine the appropriate pricing policy to embrace. The Hong Kong Disney Park’s factors were also foreseeable, and they could have been controlled. Heavy initial cost outlay should be financed from the reserves of the organization and not from the operating capital of the organization. The fact that the revenue projections couldn’t meet the costs incurred was a recipe for disaster of the park. Moreover, as a new entrant, the park should have come up with unique services and products to enable it attracts customers from other parks that were already in operation. Thus, these factors were foreseeable, and management was in a better position to control them. Question 3: Role played by ethnocentrism in the story of EuroDisney’s Launch Ethnocentrism is a situation whereby certain individuals often judge other groups in the light of their cultural practices or their ethnicity and these is often based on language, religion, and behavior. This factor played a crucial role in adversely affecting the operations of the EuroDisney Park in Paris. The French people made reliable judgments about the practices and services offered at the park about the French culture. Many French people never approved the services provided at the park because they failed to embrace the French culture. In particular, they termed the practices and services at the park to be cultural imperialism by the American people. This adversely affected the customer turnover at the park leading to low profitability of the park (Hollensen). Thus, ethnocentrism was a key contributor to the dismal performance of the park in its first years of operation. Question 4: Cross-cultural marketing skills of Disney Disney Company has experienced tremendous challenges in venturing into other markets with different cultural practices. However, the company’s cross-cultural skills are not satisfactory because the early operation years in new markets have proofed to be difficult. For instance, the fundamental reason for the poor performance of the EuroDisney park in France is the failure of the marketing team to embrace appropriate cross-cultural marketing skills. However, the company has made significant improvements in the cross-cultural marketing skills as evidenced at the Hong Kong Disney Park (Shank et al). Thus, the cross-cultural marketing skills of Disney Company are yet to be fully effective. Question 5: Reasons why success in Tokyo made Disney management to be too optimistic about success in France and China The success story of Disney Company in Tokyo gave optimism to the managers of the company that they were to succeed in other countries. The reason because the managers were too optimistic is that fact that both cities shared almost similar factors. For instance, the consumer habits in both cities were similar, and the cities were cosmopolitan. Moreover, the fact that it was the first town to venture outside America gave them full confidence to believe that it was possible to succeed in other parts of the world too if they were armed with the same business model. Moreover, Tokyo, Hong Kong, and Paris cities being global tourist attractors filled the management of Disney to believe that they could have enough customers for their services and products. These are the factors that made the management confident to be too optimistic of succeeding in China and France. Question 6: why the France experience failed to help Disney to avoid problems in Hong Kong One expected that the experience at Paris could serve as a learning experience to Disney managers as they ventured into Hong Kong. However, this was not the case as they were not able to avoid problems in their new destination. The fundamental reason for the failure of the France experience to help the Disney management avoid challenges was that each city had unique challenges. Thus, trying to use the experience of one city as a learning lesson for the other was tragic since there were differences between the problems that each city had. Thus, the management of Disney had to make frantic effort to understand the nature of problems that each city faced for it to formulate appropriate policies to tackle the problems. Question 7: Benefits of the Shanghai development from the Hong Kong experience The fact that Hong Kong Disney is up and running will play a crucial role in determining the success of the Shanghai development. The management will learn from the challenges they faced when entering Hong Kong while venturing into Shanghai market. The fundamental reason as to why the challenges of Hong Kong will be of great importance to the Shanghai development is because both cities are from the same geographical area, and there are very slight differences in the cultural practices of the local people. Moreover, the Hong Kong Disney has already established the Disney brand in China and it will be much easier for the Shanghai development to succeed because lower advertisement costs will be required as people are aware of the products and services offered by the Disney company. Question 8: where next for Disney Company The fact that the Disney has succeeded in setting its operations in China, the company should consider venturing into India, South Africa or Korea. South Africa is a good destination because of its virgin economy. If the company considers venturing into this market, it will be among the pioneers in the industry, and this will give it a competitive advantage over any other future entrant (Papadopoulos et al). Korea will be another will be another potential destination as it has almost similar characteristics as China and the experience in Hong Kong will be an essential element in making it a success. Question 9: Preferred destination The company has many appropriate destinations in its quest to expand its operations globally. However, the most promising destination is India. The company should consider establishing a New Delhi Disney park because of the vast opportunities that the city has. For instance, the city is highly populated, and this presents an ideal customer base for the company. Moreover, the city receives a vast number of tourists annually, and this will be potential customers to the New Delhi Disney Park. Moreover, India has a stable economy that will be a big boost for any business venture. The experience gained from France and China will help management to conduct a prior market analysis to determine the appropriate entry strategy for New Delhi Disney Park. Works Cited Baker, Michael J. Marketing strategy and management. Palgrave Macmillan, 2014. Hollensen, Svend. Marketing management: A relationship approach. Pearson Education, 2015. Kaynak, Erdener, and Paul Herbig. Handbook of cross-cultural marketing. Routledge, 2014. Papadopoulos, Nicolas, and Louise A. Heslop. Product-country images: Impact and role in international marketing. Routledge, 2014. Shank, Matthew D., and Mark R. Lyberger. Sports marketing: A strategic perspective. Routledge, 2014. Read More