NEEDS TO BE DONE IN HARVARD STYLE
someTitle 54. 55. 56. 57. Page257 Ibid. PattiWaldmeirandSundeepTucker.“DanonetoQuitJointVenturewithWahaha.” FinancialTimes,September30,2009. Dickinson,“Danonev.Wahaha.” Ibid. In-DepthIntegrativeCase2.1a EuroDisneyland OnJanuary18,1993,EuroDisneylandchairRobertFitzpatrickannouncedhewould leave thatpostonApril12tobeginhisownconsultingcompany.Quittinghispositionexactlyone year after thegrandopeningofEuroDisneyland,Fitzpatrickwithhis resignation removed U.S.managementfromthehelmoftheFrenchthemeparkandresort. Fitzpatrick'spositionwastakenbyaFrenchman,PhilippeBourguignon,whohadbeen EuroDisneyland'sseniorvicepresidentforrealestate.Bourguignon,45yearsold,facedanet loss of FFr 188 million for Euro Disneyland's fiscal year, which ended September 1992. Also,betweenApril andSeptember1992,only29percentof thepark's totalvisitorswere French.ExpectationswerethatclosertohalfofallvisitorswouldbeFrench. ItwashopedthatthepromotionofPhilippeBourguignonwouldhaveapublicrelations benefit for Euro Disneyland—a project that had been a publicist's nightmare from the beginning.Oneofthelowpointswasatanewsconferencepriortothepark'sopeningwhen protesterspeltedMichaelEisner,CEOoftheWaltDisneyCompany,withrotteneggs.Within thefirstyearofoperation,Disneyhadtocompromiseits“squeakyclean”imageandliftthe alcoholbanatthepark.Wineisnowservedatallmajorrestaurants. Euro Disneyland, 49 percent owned byWalt Disney Company, Burbank, California, originally forecasted 11 million visitors in the first year of operation. In January 1993 it appeared attendancewould be closer to 10million. In response,management temporarily slashedpricesattheparkforlocalresidentstoFFr150($27.27)fromFFr225($40.91)for adultsandtoFFr100fromFFr150forchildreninordertoluremoreFrenchduringtheslow, Luthans, F., & Doh, J. (2020). International management : Culture strategy and behavior. ProQuest Ebook Central
http://ebookcentral.proquest.comCreated from latrobe on 2020-09-07 03:51:56. C op yr ig ht © 2 02 0. M cG ra w -H ill U S H ig he r E d IS E . A ll rig ht s re se rv ed . wet winter months. The company also reduced prices at its restaurants and hotels, which registeredoccupancyratesofjust37percent. Bourguignon also faced other problems, such as the second phase of development at EuroDisneyland,whichwas expected to start in September 1993. Itwas unclear how the companyplannedtofinanceitsFFr8–10billioncost.Thecompanyhadsteadilydrainedits cash reserves (FFr 1.9 billion inMay 1993) while piling up debt (FFr 21 billion inMay 1993). Euro Disneyland admitted that it and the Walt Disney Company were “exploring potentialsourcesoffinancingforEuroDisneyland.”Thecompanywasalsotalkingtobanks aboutrestructuringitsdebts. Despitethefrustrations,Eisnerwastirelesslyupbeatabouttheproject.“Instanthitsare thingsthatgoawayquickly,andthingsthatgrowslowlyandarepartoftheculturearewhat we look for,” he said. “What we created in France is the biggest private investment in a foreigncountrybyanAmericancompanyever.Andit'sgonnapayoff.” IntheBeginning Disney'sstory is theclassicAmericanrags-to-richesstory,whichstarted inasmallKansas CityadvertisingofficewhereMickeywasarealmouseprowlingtheunknownWaltDisney floor.Originally,Mickeywas namedMortimer, until a dissentingMrs.Disney stepped in. HowcloseMickeywas toWaltDisney isevidencedby thefact thatwhenfilming,Disney himself dubbed the mouse's voice. Only in later films did Mickey get a different voice. Disneymademany sacrifices to promote his hero-mascot, including selling his first car, a beloved Moon Cabriolet, and humiliating himself in front of Louis B. Mayer. “Get that mouse off the screen!”was themoviemogul's reported response to the cartoon character. Then,in1955,Disneyhadthebrainstormofsendinghismoviecharactersoutintothe“real” world tomixwith their fans, and he battled skeptics to build the very firstDisneyland in Anaheim,California. WhenDisneydiedin1966,thecompanywentintovirtualsuspendedanimation.Itslast big hit of that era was 1969's The Love Bug, about a Volkswagen named Herbie. Today, Disney executives trace the problem to a tyrannical CEO named E. CardonWalker, who ruledthecompanyfrom1976to1983,andtohissuccessor,RonaldW.Miller.Walkerwas quicktoridiculeunderlingsinpublicandimpervioustoanypointofviewbuthisown.He made decisions according towhat he thoughtWaltwould have done. Executives clinched argumentsbyquotingWaltliketheScripturesorMarx,andthecompanyeventuallysupplied Luthans, F., & Doh, J. (2020). International management : Culture strategy and behavior. ProQuest Ebook Central
http://ebookcentral.proquest.comCreated from latrobe on 2020-09-07 03:51:56. C op yr ig ht © 2 02 0. M cG ra w -H ill U S H ig he r E d IS E . A ll rig ht s re se rv ed . Page258 alittlebookofthefounder'ssayings.MakingthewholesomefamilymoviesWaltwouldhave wanted formed a key article of Walker's creed. For example, a poster advertising the unremarkableCondormanfeaturedactressBarbaraCarrerainaslitskirt.Walkerhadtheslit painted over.With this as the context, studio producers ground out a thin stream of tired, formulaicmoviesthatfewerandfewercustomerswouldpaytosee.Inmid-1983,asimilar low-horsepowerapproachtotelevisionproductionledtoCBS'scancellationofthehour-long programTheWonderfulWorld ofDisney, leaving the companywithout a regular network showforthefirsttimein29years.Likeareclusivehermit,thecompanylosttouchwiththe contemporaryworld. RonMiller's brief reign was by contrast a model of decentralization and delegation. ManyattributedMiller'sascenttohismarryingtheboss'sdaughterratherthantoany special gift. To shoreMiller up, the board installed Raymond L.Watson, former headoftheIrvineCo.,aspart-timechair.Hequicklybecamefulltime. Miller sensed thestudioneeded rejuvenation,andhemanaged toproduce thehit film Splash, featuring an apparently (but not actually) bare-breastedmermaid, under the newly devised Touchstone label. However, the reluctance of freelance Hollywood talent to accommodateDisney'snarrowrangeandstingycompensationoftenkepthissoundinstincts from bearing fruit. “Card [Cardon Walker] would listen but not hear,” said a former executive.“Ron[RonMiller]wouldlistenbutnotact.” Toomanyboxofficebombscontributed to a steadyerosionofprofit.Profitsof$135 millionon revenuesof$915million in1980dwindled to$93millionon revenuesof$1.3 billion in 1983.More alarmingly, revenues from the company's theme parks, about three- quartersofthecompany'stotalrevenues,wereshowingsignsoflevelingoff.Disney'sstock slidfrom$84.375ashareto$48.75betweenApril1983andFebruary1984. Through these years,RoyDisney Jr. simmeredwhile hewatched the downfall of the nationalinstitutionthathisuncle,Walt,andhisfather,RoyDisneySr.,hadbuilt.Hehadlong argued that the company's constituent parts all worked together to enhance each other. If movieand televisionproductionweren't revitalized,notonlywould that sourceof revenue disappear,butthecompanyanditsactivitieswouldalsogrowdiminthepubliceye.Atthe sametime,thestreamofnewideasandcharactersthatkeptpeoplepouringintotheparksand buyingtoys,books,andrecordswoulddryup.Nowhisdirepredictionswerecomingtrue. His own personal shareholding had already dropped from $96 million to $54 million. Walker's treatmentofRonMiller as the shiningheir apparent andRoyDisneyas the idiot Luthans, F., & Doh, J. (2020). International management : Culture strategy and behavior. ProQuest Ebook Central
http://ebookcentral.proquest.comCreated from latrobe on 2020-09-07 03:51:56. C op yr ig ht © 2 02 0. M cG ra w -H ill U S H ig he r E d IS E . A ll rig ht s re se rv ed . nephewhelpeddriveRoytoquitasDisneyvicepresident in1977andtosetupShamrock Holdings,abroadcastingandinvestmentcompany. In 1984, Roy teamed up with Stanley Gold, a tough-talking lawyer and a brilliant strategist.Gold saw that the falling stockpricewasbound to flushout a raider andafford RoyDisneyachancetorestorethecompany'sfortunes.TheyaskedFrankWells,vicechair ofWarnerBros.,ifhewouldtakeatopjobinthecompanyintheeventtheyofferedit.Wells, a lawyerandaRhodes scholar, saidyes.With that,Royknew thatwhathewouldhear in Disney's boardroomwould limit his freedom to trade in its stock, so he quit the board on March9,1984.“Iknewthatwouldhanga‘ForSale’signoverthecompany,”saidGold. Byresigning,Roypushedoverthefirstofatrainofdominoesthatultimatelyledtothe result he most desired. The company was raided, almost dismantled, greenmailed, raided again, and sued left and right. But it miraculously emerged with a skilled new top managementwithbigplansforabrightfuture.RoyDisneyproposedMichaelEisnerasthe CEO,buttheboardcameclosetorejectingEisnerinfavorofanolder,morebuttoned-down candidate.Goldsteppedinandmadeanimpassionedspeechtothedirectors.“Youseeguys likeEisnerasalittlecrazy…buteverystudiointhiscountryhasbeenrunbycrazies.What do you thinkWalt Disneywas? The guywas off the goddamnedwall. This is a creative institution.Itneedstoberunbycraziesagain.” Meanwhile Eisner and Wells staged an all-out lobbying campaign, calling on every boardmember except two, whowere abroad, to explain their views about the company's future.“Whatwasmostimportant,”saidEisner,“wasthattheysawIdidnotcomeinatutu, andthatIwasaseriousperson,andIunderstoodaP&L,andIknewtheinvestmentanalysts, andIreadFortune.” In September 1984, Michael Eisner was appointed CEO and Frank Wells became president. JeffreyKatzenberg, the 33-year-old,maniacal production chief, followed Fisher fromParamount Pictures.He took overDisney'smovie and television studios. “The key,” saidEisner,“istostartoffwithagreatidea.” DisneylandinAnaheim,California Foralongtime,WaltDisneyhadbeenconcernedaboutthelackoffamily-typeentertainment availableforhistwodaughters.Theamusementparkshesawaroundhimweremostlyfilthy traveling carnivals. They were often unsafe and allowed unruly conduct on the premises. Disney envisioned a placewhere people from all over theworldwould be able to go for Luthans, F., & Doh, J. (2020). International management : Culture strategy and behavior. ProQuest Ebook Central
http://ebookcentral.proquest.comCreated from latrobe on 2020-09-07 03:51:56. C op yr ig ht © 2 02 0. M cG ra w -H ill U S H ig he r E d IS E . A ll rig ht s re se rv ed . Page259 clean and safe fun.His dreamcame trueon July17, 1955,when thegates first opened at DisneylandinAnaheim,California. Disneylandstrives togenerate theperfect fantasy.Butmagicdoesnotsimplyhappen. Theplace isamarvelofmodern technology.Literallydozensofcomputers,hugebanksof tape machines, film projectors, and electronic controls lie behind the walls, beneath the floors, and above the ceilings of dozens of rides and attractions. The philosophy is that “Disneyland is theworld'sbiggest stage, and theaudience is righthereon the stage,” said DickHollinger, chief industrial engineer atDisneyland. “It takes a tremendous amount of worktokeepthestagecleanandworkingproperly.” Cleanlinessisaprimaryconcern.Beforetheparkopensat8a.m.,thecleaningcrewwill havemopped,hosed,anddriedeverysidewalk,street,floor,andcounter.Morethan350of thepark's7,400employeescomeondutyat1a.m. tobegin thedailycleanuproutine.The thousandsoffeetthatwalkthroughtheparkeachdayandchewinggumdonotmix;gumhas alwayspresentedmajorcleanupproblems.Thepark'sjanitorsfoundlongagothatfirehoses with90poundsofwaterpressurewouldnotdothejob.Nowtheyusesteammachines,razor scrapers,andmops towedbyCushmanscooters to literally scour thestreetsandsidewalks daily. Ittakesonepersonworkingafulleight-hourshifttopolishthebrassontheFantasyland merry-go-round.Thescrupulouslymanicuredplantingsthroughouttheparkaretreatedwith growth-retarding hormones to keep the trees and bushes from spreading beyond their assignedspacesanddestroying thecarefullymaintainedfive-eighthsscalemodeling that is utilized in thepark.Themaintenancesupervisorof theMatterhornbobsled ridepersonally walkseveryfootoftrackandinspectseverylinkoftowchaineverynight,thustrustinghisor herowneyesmorethanthe$2millioninsafetyequipmentthatisbuiltintotheride. Eisnerhimselfpaysobsessiveattentiontodetail.WalkingthroughDisneyland one Sunday afternoon, he peered at the plastic leaves on the Swiss FamilyRobinson tree house,notingthattheyperiodicallywearoutandneedtobereplacedleafbyleafatacostof $500,000.As his family strolled through the park, he and his eldest sonBreck stooped to pickuptherarepieceoflitterthatthecleanupcrewhadsomehowmissed.Thisold-fashioned dedication has paid off. Since opening day in 1955, Disneyland has been a consistent moneymaker.Figure1providesatimelineoftheDisneythemeparks. Figure1HowtheThemeParksGrew Luthans, F., & Doh, J. (2020). International management : Culture strategy and behavior. ProQuest Ebook Central
http://ebookcentral.proquest.comCreated from latrobe on 2020-09-07 03:51:56. C op yr ig ht © 2 02 0. M cG ra w -H ill U S H ig he r E d IS E . A ll rig ht s re se rv ed . 1955 Disneyland 1966 WaltDisney'sdeath 1971 WaltDisneyWorldinOrlando 1982 EpcotCenter 1983 TokyoDisneyland 1992 EuroDisneyland Source:Koepp,Stephen.DoYouBelieveinMagic?Time,April25,1988,66–73. DisneyWorldinOrlando,Florida By the timeEisner arrived,DisneyWorld inOrlandowasalreadyon itsway tobecoming what it is today—the most popular vacation destination in the United States. But the company had neglected a rich niche in its business: hotels.Disney's three existing hotels, probably themostprofitable in theUnitedStates, registeredunheard-ofoccupancyratesof 92percentto96percentversus66percentfortheindustry.Eisnerpromptlyembarkedonan ambitious$1billionhotelexpansionplan.Twomajorhotels,Disney'sGrandFloridianBeach ResortandDisney'sCaribbeanBeachResort,wereopenedduring1987–89.Disney'sYacht Club andBeachResort alongwith theDolphin andSwanHotels, owned and operated by TishmanRealty&Construction,MetropolitanLifeInsurance,andAokiCorporation,opened during 1989–90. Adding 3,400 hotel rooms and 250,000 square feet of convention space madeitthelargestconventioncentereastoftheMississippi. In October 1982, Disneymade a new addition to the theme park—the Experimental PrototypeCommunityofTomorrow,orEPCOTCenter.E.CardonWalker,thenpresidentof thecompany,announcedthatEPCOTwouldbea“permanentshowcase,industrialpark,and experimentalhousingcenter.”Thisnewparkconsistsoftwolargecomplexes:FutureWorld, aseriesofpavilionsdesignedtoshowthetechnologicaladvancesofthenext25years,and WorldShowcase,acollectionofforeign“villages.” TokyoDisneyland ItwasTokyo'snastiestwinterdayinfouryears.Arcticwindsand8inchesofsnowlashedthe city.Roadswerecloggedand trains sloweddown.But thebadweatherdidn'tkeep13,200 hardy souls fromTokyoDisneyland.MikkiMausu,betterknownoutside JapanasMickey Mouse,hadtakenthecountrybystorm. Locatedonafringeofreclaimedshoreline inUrayasuCityon theoutskirtsofTokyo, Luthans, F., & Doh, J. (2020). International management : Culture strategy and behavior. ProQuest Ebook Central
http://ebookcentral.proquest.comCreated from latrobe on 2020-09-07 03:51:56. C op yr ig ht © 2 02 0. M cG ra w -H ill U S H ig he r E d IS E . A ll rig ht s re se rv ed . theparkopenedtothepubliconApril15,1983.Inlessthanoneyear,over10millionpeople hadpassed through itsgates,anattendance figure thathasbeenbetteredeverysingleyear. On August 13, 1983, 93,000 people helped set a one-day attendance record that easily eclipsed theold records established at the twoparentU.S. parks.Four years later, records againtoppledastheturnstilesclicked.Thetotalthistime:111,500.By1988,approximately 50millionpeople,ornearlyhalfofJapan'spopulation,hadvisitedTokyoDisneylandsince itsopening.Thesteadycashflowpushedrevenuesforfiscalyear1989to$768million,up17 percentfrom1988.Figure2providesabriefsummaryofDisney'sfinancialsituationatthe endof1989. Figure2Investor'sSnapshot:TheWaltDisneyCompany(December1989) Sales(latestfour quarters) $4.6billion Changefromyear earlier Up33.6% Netprofit $703.3million Change Up34.7% Returnoncommon stockholders'equity 23.4% Five-yearaverage 20.3% Stockpriceaverage (last12months) $60.50–$136.25 Recentshareprice $122.75 Price/earnings multiple 27 Totalreturnto investor(12months to11/3/89) 90.6% Source:Fortune,December4,1989. The204-acreTokyoDisneylandisownedandoperatedbyOrientalLandunderlicense fromtheWaltDisneyCo.The45-yearcontractgivesDisney10percentofadmissionsand5 percentoffoodandmerchandisesales,pluslicensingfees.Disneyoptedtotakenoequityin