The document discusses the challenges faced by Disney in Europe, including miscalculations in revenue projections and cultural differences affecting attendance and spending habits. It highlights management mistakes, economic conditions, and the financial difficulties that ensued, leading to a significant drop in earnings by 1999. The key takeaways emphasize the importance of cultural sensitivity, caution against overconfidence, and the risks associated with high leverage in business ventures.

1. Disney-Euro
Disney and
Other Stumbles
By
Audrey Savabien
and
Aleksey Narko

2. Optimism
4,4
billion

20
miles
5000
acres
X6
=5200
rooms

3. Attendance/Population
ratios
“My biggest fear
is that we will be
too successful”

4. Location Decision

5. Financin
g
$

6. Major
miscalculations
RESULTS
Revenue projections not
being met

7. Attempts to
recover
•20 months to smooth the wrinkles
•More affordable prices
•Efficiency vs Economy
•Heavy interest

8. What went Wrong ?

9. External factors
• Economic recession in Europe
-> Affect the attendance
-> Affect the almond spent in Disney’s good
• Difference of culture
-> European are more Prices Conscientious
-> Not the same mobility

10. Internal Factors
• Using a model which was proof in US and
Japan but doesn’t work in France
-> Breakfast, Wine, restroom for bus drivers
• Management Mistake
-> French mindset v.s US management
• Insensitivity of economics conditions
-> Too much depts.
-> Breakeven points to much high

11. The worst thing is not to look ahead!!!

14. • European Bank funding
For 500 millions $
Conditions : Disney should
-> Invest 750 millions $ to bail out its affiliate
-> eliminate for 5 years lucrative management fees
and royalties
• A member of Saudi royal family
For 500 million $

15. Growth of earnings from 1995 to
1997
• 3rd quarter of 1995 : benefit of 35
millions $
• 1996 : 11,7 million visitors (up from 8,8
million 3 year before)
• November 1997 : name changing and
new situation updated in Forbes
magazine

16. Later problems of Walt Disney
Company
• In 1999 : 41% drop of earning
• Cause of previous earnings, investment in
new enterprises but with low generations
of profits
• Growth of ratings with ABC networks, bus
Disney sell itself fo 1 billion $ a year to the
national football League

17. •Legal problems, Disney is accused
of underreporting earning and
exagering expenses.

18. Resume : what can be learned
• Beware of the arrogant
mindset especially with
new situations and new
cultures
• Great success can be
Ephemeral
• High Leveraged
situations are
dangerous
• Beware with Prices
Strategy