...The Walt Disney Company (Disney) conducted a series of financial operations in developing its Euro Disneyland project in the spring of 1989. The whole process is a typical example of using project financing to aid the success of the investment in face of significant risk. The project financing approach: Is it the right way to do this? Project financing creates a separate legal entity organized around a specific business or risk. Despite its relative expensiveness and operational complexity, project financing significantly reduces the risk of the parent company while capturing a reasonable return. Moreover, the key to these financial operations lies in more efficient risk distribution among different communities. From Disney’s perspective, Euro Disney project involved many uncertainties in aspects like foreign currency exchange risk, market risk, political risk, and so on. Among these risks, some of them were even without control of the parent company. In this way, conducting project financial is an appropriate solution for Disney In order to complete the project financing operation, the deal was structured in such a way that it catered to mainly four different parties: Disney, French government, Europe investors and Creditors. Disney significantly reduced the financing risk by cooperating with French government. At the same time, they still locked in an attractive return by stake in the new project, management fee, licensing and other incentives. The French Government...
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...Disney Financial Statement ACC/300 March 16, 2015 Prof Brandy Havens Disney Financial Statement Debt and Investments The Walt Disney Company reported debt in a number of ways on their financial statements. The first place debt securities are shown is under Current Liabilities on the Consolidated Balance Sheet. The Current Portion of Borrowings, at $2,342 billion, lists that portion of debt that is due to be paid within the next year. The second place that debt appears on the Consolidated Balance Sheet is under Borrowings. Disney shows over $12.676 billion in long-term debt. Therefore, Disney’s total borrowings are approximately $14.8 billion. Upon further analysis, nearly 92% of Disney’s debt includes the issuance of U.S. medium-term notes with a weighted-average coupon rate of 2.73% and maturities that occur from 2015 through 2023. Additionally, Disney indicates another $5.9 billion in other long-term liabilities. According to Disney’s 10k filing, “Other long-term borrowing instruments are omitted pursuant to Item 601(b)(4)(iii) of Regulation S-K. The Company undertakes to furnish copies of such instruments to the Commission upon request” (The Walt Disney Company. 2014). The balance sheet also shows Investments as part of the reporting of Assets. For the fiscal year ended 2014, Disney reported $2.696 billion in investments. Nearly 92% of the investments are shown as “Equity Basis” investments. More specifically, Disney reports that the equity investments...
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...such situations, Dutch Sociologist Gerard Hofstede came up with a study named as Geert Hofstede’s Cultural Dimensions in which he laid stress upon five aspects naming Power Distance Index, Individualism, Masculinity, Uncertainty avoidance index and Long term Orientation. The case study in this paper focuses more towards the cultural difference between employees of Disneyland that are located in different countries. Using Hofstede’s 4 culture dimension, highlighting main cultural differences between United States and France: Disneyland is an American Idea of a theme park which serves as a recreational place for children and families. This theme park originally started from Anaheim, California (United States) and later on after receiving massive response from visitors all around the globe, the directors of the company started off with opening similar type of theme parks with the same name of Disneyland in Orlando (US), Tokyo (Japan) and at Marne-la-Vallee (France). Although Disneyland did not find much difficulties in starting off their operations in Orlando and Tokyo and attracting large number of visitors in both locations but the response at Euro Disneyland had been alarming for the company. The Euro Disneyland had 12000 employees and most of them were from France. With the American idea being implemented in France,...
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...Xavier Institute of management & entrepreneurship | EURO DISNEYLAND CASE ANALYSIS | CCM ASSIGNMENT | | | Augustine George (32)Balaji Subramanian (36)David Aditya Solomon (45)Eliza Mathew (52)Eliza Pani (53) | | EXECUTIVE SUMMARY The given case “Euro Disneyland” elaborates about the issues faced by the Walt Disney Company when expanding to international borders. It first begins with the history of how Disneyland became so successful and expanded to various states across the country. It then describes about its first international success namely the Tokyo Disneyland and the factors affecting it. The case then describes Disney’s decision of expanding into Europe. The various differences and problems faced in setting up of the amusement park. Some of the major issues in setting up of the park were: * Cultural differences between the European and the American market * Environmental and location factors for setting up the amusement park * Financing and initial business plan were not analysed thoroughly in synchronisation with external economic factors * French labour laws were not taken into account while inducting the workforce * Management issues such as different attractions in the park It was understood that the chief reason for Euro Disney’s failure was a lack of understanding of European culture on Disney’s part. Based on the understanding from the case following recommendations were made: * A study in history and an understanding...
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...The Fretful Euro Disneyland Abstract Wenhe Yue School of Management, Shenyang Jianzhu University Shenyang 110168, China E-mail: bobo1012@sina.com Euro Disneyland a theme park comprised of an updated, state of the art Disney's Magic Kingdom, is a subsidiary of the Walt Disney Company located outside Paris, France, and has experienced numerous complications from its inception. This article introduces the fretful of Euro Disney, analyzes the reasons why it goes to wrong and give the recommendation to overcome the rattrap. Keywords: Euro Disneyland, Cultural differences, Management hubris 1. Introduction Many companies throughout the United States and beyond are resorting to developing their business abroad. The Walt Disney Company was one of the American organizations to expand on foreign soil. Its first foreign venture Tokyo Disneyland proved to be so successful that the decision was made to further expand abroad. This next foreign expansion experience, named Euro Disneyland all hopes were high, with Michael Eisner, the chairperson of Walt Disney promising to make Euro Disney the “most lavish project that Disney had ever built”. He had an obsession with maintaining Disney’s high reputation, as Disney had already seen the success of California and Florida Disneyland. While Euro Disney did not prove to be the successful venture that had been anticipated by its creators. Euro Disneyland a theme park comprised of an updated...
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...Modes of Entry Subtitle: The Case of Disney By, Carlos Gonzalez Hernandez This thesis was written as a part of the master program at NHH. Neither the institution, the supervisor, nor the censors are -through the approval of this thesis- responsible for neither the theories and methods used, nor results and conclusions drawn in this work. International Modes of Entry: The Case of Disney 1 Abstract The case of Disney’s theme parks represents an opportunity to test major internationalisation theories in a setting of large investments with little chance for reversal of commitments. The purpose of the research is to study the benefit of different entry modes dependent on Disney’s Theme Parks value-generating resources and capabilities while conditioned to certain local industrial and institutional conditions in foreign markets. Five major theories and frameworks were used to analyze all four Disney’s ventures abroad. This resulted in 20 individual hypotheses analyzed. Results indicate that Disney followed a predictable internationalisation process in the cases of Tokyo, Hong Kong and Shanghai, but that it went off-path in the Paris one. In successful cases Disney followed a cautious approach, involving local partners to transfer and adapt the “Disney Experience”. In the case of Paris the company decided to enter the market alone, which neglected the unique needs of the local market. Page | 2 International Modes of Entry: The Case of Disney Table of Contents 1 2 3 4...
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...JÖNKÖPING INTERNATIONAL BUSINESS SCHOOL JÖ NKÖ PING UNIVERSITY Market ing Str ategic C hange in Expansion of D isneyland : Cases Study of Disneyland’s Overseas Expansion in Shanghai Master Thesis in Business Administration Author: Li Zhu & Dan Xu Tutor: Tomas Mü llern Jö ping nkö August 2010 Master Thesis Acknowledgements First of all, we would like to take the opportunity to thank our tutor Mr. Tomas Mü llern. Thanks to his guidance and valuable suggestions, we correct our mistake on time and finish our thesis in the end. From the first meeting to the last one, you are always concern us and the process of our writing. Every time, we handed in chapters, you always provided useful opinion to let us revise the thesis better and better. We thank you for patient guiding and providing us a good opportunity in our study to learn more and more. Secondly, we would like to thank Mr. Zhang and Edward. Thank you for taking time to find interviewees of our interview. You are busy with your own job, but you still use your private time to help us. You also share your experience about contacting skills with us. Last but not the lease, we are thankful to our families and friends who were helping and supporting us during this writing period. Li Zhu & Dan Xu Jö ping University nkö 2010 i|Page Master Thesis Master’s Thesis in Business Administration Title: Marketing Strategic Change in Expansion of Disneyland Authors: Li Zhu & Dan...
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...FRANCE: A CASE STUDY OF THE EURO DISNEYLAND NEGOTIATIONS Lauren A. Newell* In 1984, The Walt Disney Company (“Disney”) was riding the wave of success from its newest Resort,1 Tokyo Disney Resort (“Tokyo Disney”),2 which attracted 10 million guests3 in the first year alone,4 and its thoughts turned to further international expansion—this time, in Europe. After careful consideration of potential locations and preliminary negotiations with two European governments,5 Disney decided in 1984 to launch Euro Disneyland (“Euro Disneyland” or “EDL”)6 in Marne-la-Vallee, France. The ´ realities of opening and operating EDL in France were far different than Disney’s expectations when it began negotiations—so much so that the Resort narrowly escaped bankruptcy.7 For an “entertainment empire”8 like Disney, this was an unprecedented * Assistant Professor of Law, Ohio Northern University, Pettit College of Law; B.A., Georgetown University, 2004; J.D., Harvard Law School 2007. 1 As used herein, “Resort” refers to a Disney resort property, consisting of (unless otherwise indicated), Parks, hotels, all entertainment facilities, and the transportation systems that connect them. “Park” refers to a Disney theme park, including (unless otherwise indicated) the park grounds, rides, and attractions, and surrounding resorts, hotels, and other Disney-affiliated entertainment facilities. 2 Tokyo Disney was Disney’s third Park and first international venture, located in Tokyo, Japan. See The Walt Disney Co.,...
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...FRANCE: A CASE STUDY OF THE EURO DISNEYLAND NEGOTIATIONS Lauren A. Newell* In 1984, The Walt Disney Company (“Disney”) was riding the wave of success from its newest Resort,1 Tokyo Disney Resort (“Tokyo Disney”),2 which attracted 10 million guests3 in the first year alone,4 and its thoughts turned to further international expansion—this time, in Europe. After careful consideration of potential locations and preliminary negotiations with two European governments,5 Disney decided in 1984 to launch Euro Disneyland (“Euro Disneyland” or “EDL”)6 in Marne-la-Vallee, France. The ´ realities of opening and operating EDL in France were far different than Disney’s expectations when it began negotiations—so much so that the Resort narrowly escaped bankruptcy.7 For an “entertainment empire”8 like Disney, this was an unprecedented * Assistant Professor of Law, Ohio Northern University, Pettit College of Law; B.A., Georgetown University, 2004; J.D., Harvard Law School 2007. 1 As used herein, “Resort” refers to a Disney resort property, consisting of (unless otherwise indicated), Parks, hotels, all entertainment facilities, and the transportation systems that connect them. “Park” refers to a Disney theme park, including (unless otherwise indicated) the park grounds, rides, and attractions, and surrounding resorts, hotels, and other Disney-affiliated entertainment facilities. 2 Tokyo Disney was Disney’s third Park and first international venture, located in Tokyo, Japan. See The Walt Disney Co.,...
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...Aswath Damodaran! 2! First Principles Aswath Damodaran! 3! The Choices in Financing There are only two ways in which a business can make money. • The first is debt. The essence of debt is that you promise to make fixed payments in the future (interest payments and repaying principal). If you fail to make those payments, you lose control of your business. • The other is equity. With equity, you do get whatever cash flows are left over after you have made debt payments. Aswath Damodaran! 4! Global Patterns in Financing… Aswath Damodaran! 5! And a much greater dependence on bank loans outside the US… Aswath Damodaran! 6! Assessing the existing financing choices: Disney, Aracruz and Tata Chemicals Aswath Damodaran! 7! Financing Choices across the life cycle Revenues $ Revenues/ Earnings Earnings Time External funding needs High, but constrained by infrastructure High, relative to firm value. Moderate, relative to firm value. Declining, as a percent of firm value Low, as projects dry up. Internal financing Negative or low Owner’s Equity Bank Debt Stage 1 Start-up Negative or low Low, relative to funding needs Common stock Warrants Convertibles Stage 3 High Growth High, relative to funding needs Debt More than funding needs External Financing Growth stage Venture Capital Common Stock Stage 2 Rapid Expansion Retire debt Repurchase stock Stage...
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...Disney Case Analysis 3. What sort of company did Eisner inherit? Provide a brief summary of the company at the time Eisner took over (discuss each of its business lines in 1-2 sentences that highlight the most important issues). Eisner inherited a family entertainment company that began as a nonhierarchical organization where no one had titles and everyone was on a first name basis. Walt’s theory was that you didn’t need a title because you knew if you were important. Disney’s philosophy was to create universal timeless family entertainment and believed in the importance of family life maintaining its adherence to the Disney formula for family recreation. The company believed and always aimed to provide an experience that the families would be able to participate in and take joy in together and always with a commitment to excellent in all facets of the business. When Eisner took over the company’s financial performance had deteriorated. Disney was incurring heavy costs trying to complete projects on time i.e. EPCOT center and Euro Disney and the Disney Channel. He viewed “managing creativity” as Disney’s most distinctive corporate skill and pursued with the development of synergy through vertical integration. With this philosophy, Eisner inspired and managed Disney. Disney mushroomed with Eisner’s extreme corporate vision which he targeted at an annual revenue growth target and return on stockholders’...
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...Pace University DigitalCommons@Pace Case Studies Lubin School of Business 3-1-2002 Disney in Asia, Again Raymond H. Lopez Pace University Recommended Citation Lopez, Raymond H., "Disney in Asia, Again" (2002). Case Studies. Paper 3. http://digitalcommons.pace.edu/business_cases/3 This Article is brought to you for free and open access by the Lubin School of Business at DigitalCommons@Pace. It has been accepted for inclusion in Case Studies by an authorized administrator of DigitalCommons@Pace. For more information, please contact rracelis@pace.edu. CASE STUDIES No. 26 March 2002 Disney in Asia, Again? by Raymond H. Lopez, Ph.D. Professor of Economics and Finance Lubin School of Business Pace University DISNEY IN ASIA, AGAIN? by Raymond H. Lopez, Ph.D. Raymond H. Lopez is Professor of Finance at the Lubin School of Business of Pace University. Introduction INTRODUCTION “We could be getting close to the time for a major Disney attraction in the world’s most populous nation.” 1 “I am completely confident that Chinese people love Mickey no less than they love a Big Mac.” 2 Early in 1999, Michael Eisner, CEO of The Walt Disney Company, voiced his opinions concerning potential markets for his firm’s entertainment products and services. A major thrust for the new millenium would be development in Asia. The firm had now achieved a certain level of experience with owning and/or managing assets and operations outside the United States...
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...CASE 2-1 Ali Zein Kazmi February 1, 1999 THE NOT-SO-WONDERFUL-WORLD OF EURODISNEY -THINGS ARE BETTER NOW AT PARIS DISNEYLAND- 1. What are the factors contributed to EuroDisney’s poor performance during its first year of operation? Walt Disney overestimated the magic that was to be in introducing Europe's most lavish and extravagant theme park in April of 1992. The fiscal year 1992-1993 brought EuroDisney a loss of nearly $1 billion. Mickey, a major promotion tool of Disney management did not create reason or attraction enough for the European community, unlike at the sister theme park Tokyo Disneyland. European families found EuroDisney to be an “over-rated” promotion of American culture and lifestyle, contrary to what was seen by Disney's management as a family affair. In the initial years of operation this led to an overestimation of expected revenue and audience figures. Advertising messages had been miscommunicated, “emphasizing glitz and size…not the rides or attractions”. Disney remained unsuccessful in attracting customers just by vigorous brand name promotion communicated through Mickey and his friends. Moreover, families were reluctant to pay hefty price tags on accommodation and entertainment needed to enjoy the attractions of the park. Disney failed to manage a healthy relationship with partner organizations in the host country, which most importantly alienated them from their number one ally, the French government. Regional affairs in Eastern...
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...Introduction The Walt Disney Company was originally founded in 1923; a company committed to providing quality and wholesome entertainment experiences to people of all ages. The company is known for the following four segments, which consist of Studio Entertainment, Parks and Resorts, Consumer Products and Media Networks. The Walt Disney Company consists of five (5) Disneyland and Disney Park Resorts, in total. Two are located in the United States, one in Europe and two in Asia Pacific. The original Disneyland Resort was built in 1955, in Anaheim, California; followed by Disney World Resort, Lake Buena Vista, Florida in 1971. After the success of these two large theme parks in the United States, Disney decided to expand internationally. First Tokyo Disney Resort built in 1983, secondly, Disneyland Resort Paris (EuroDisney) which opened its doors in 1992, and thirdly, Hong Kong Disneyland, opening its doors in 2005. Case Study Questions 1. The factors that contributed to EuroDisney, now called Disneyland Resort Paris, poor performance during its first year of operation was the lack of knowledge of their target market, cultural differences between the USA and Europe, and the failure to take into account that “Paris is Europe’s most-popular city destination among tourist of all nationalities”. Disney did a bad job at understanding Europeans and their lifestyles. Unfortunately, for Disney the French were neither happy nor receptive to having what they called “America Cultural...
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...CASE 2-1 Ali Zein Kazmi February 1, 1999 THE NOT-SO-WONDERFUL-WORLD OF EURODISNEY -THINGS ARE BETTER NOW AT PARIS DISNEYLAND- 1. What are the factors contributed to EuroDisney’s poor performance during its first year of operation? Walt Disney overestimated the magic that was to be in introducing Europe's most lavish and extravagant theme park in April of 1992. The fiscal year 1992-1993 brought EuroDisney a loss of nearly $1 billion. Mickey, a major promotion tool of Disney management did not create reason or attraction enough for the European community, unlike at the sister theme park Tokyo Disneyland. European families found EuroDisney to be an “over-rated” promotion of American culture and lifestyle, contrary to what was seen by Disney's management as a family affair. In the initial years of operation this led to an overestimation of expected revenue and audience figures. Advertising messages had been miscommunicated, “emphasizing glitz and size…not the rides or attractions”. Disney remained unsuccessful in attracting customers just by vigorous brand name promotion communicated through Mickey and his friends. Moreover, families were reluctant to pay hefty price tags on accommodation and entertainment needed to enjoy the attractions of the park. Disney failed to manage a healthy relationship with partner organizations in the host country, which most importantly alienated them from their number one ally, the French government. Regional affairs...
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