Euro Disney Project Management Failure 1

Euro Disney Project Management Failure

AMDS 8135 Project Management
Dr. Louis Taylor
April 8, 2008







A Graduate Research Report Submitted for AMDS 8135 Project Management
In Partial Fulfillment of the Requirements for the
Ph.D. in Applied Management & Decision Science- Information Systems Management

Euro Disney Project Management Failure 2
I certify that I am the author of this paper and that any assistance I received in its
preparation is fully acknowledged and disclosed in the paper. I have also cited any sources from
which I used data, ideas or words, either quoted directly or paraphrased. I also certify that this
essay was prepared by me specifically for this course.
Electronic Signature Gwen R. White
April 8, 2008

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Table of Contents
Abstract ........................................................................................................................................... 4
Introduction ..................................................................................................................................... 5
Information Concerning Euro Disney ............................................................................................. 6
Problems with Euro Disney ............................................................................................................ 8
Revised Project Management Ideas for a Better Euro Disney ...................................................... 10
Conclusion .................................................................................................................................... 12
References ..................................................................................................................................... 13

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Abstract
Project Management brings together various skills and knowledge to complete a project.
Euro Disney was a project that was completed in 1992 with large fanfare but it became evident
before the end of the year the project was a failure. There were many procedural mistakes made
during the construction of the project. The project ignored cultural norms, economics, risk
management, location issues and climate problems. Management was determined to construct
Euro Disney, no matter what the cost. Unfortunately, it failed miserably and Disney spent even
more money repairing the mistakes made.

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Introduction
Project Management has existed for a very long time but it did not have the same level of
respect that it has demanded in the past ten years. There are many projects that can be compared
to the principles of project management. Companies that were considered excellent in the past
may no longer be regarded as excellent today, especially with regard to project management
(Harold Kerzner, 2004). Initially project management focused on behavioral and quantitative
tools which only scratched the surface of the tools used today.
Now, project management has moved to require not only did we get it done but
implementation measures including did we get it done, how much did it really cost, were we
effective and would we do it that way again?
Euro Disney is a project that was doomed from the beginning. The question of did we
get it done? was accomplished but the remaining implementation requirements were not
addressed.
The Standish Report classified information technology projects in three categories:
Resolution Type 1 or project success: The project is completed on-time and on-budget,
with all features and functions as initially specified.
Resolution Type 2 or project challenged: The project is completed and operational but
over-budget, over the time estimate, and offers fewer features and functions than
originally specified.
Resolution Type 3 or project impaired: The project is canceled at some point during the
development cycle (The Standish Group, 1995).
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Although the report is designed for IT, its concepts can apply to a construction project too.
Euro Disney is classified as a resolution type 2, project challenged. The project continued
but had major problems during and after the completion.
Information Concerning Euro Disney
A variety of projects are managed including construction and information technology.
Euro Disney was a construction project which started in 1989 and continued until 1994. Initially
the project was seen as a failure, but management bailed it out by changing its approach. Poor
management and decisions led to Euro Disney almost not opening in 1994.
Euro Disney was an All American concept forced upon European soil. Many of the
Disney theme parks were very successful including Disneyland in California, Disneyworld in
Florida and Disneyland Tokyo. Since the first three parks were successful, why not create
another in a market that seemed to be ready for the Disney Experience.
Why did Disney feel Europe was a proper location for a theme park modeled after
Disneys Magic Kingdom? Because management felt it was ready. As we will see, lack of
research both managerially and culturally, lead to the major problems of Euro Disney.
There was a sentiment of overwhelming arrogance when it came to planning the park.
The Disney management assumed that since the park was successful everywhere else, why not in
Europe?
The Disney executives started with a few locations including the United Kingdom,
Germany, Spain, Italy and France. Factors such as weather, market conditions and location were
considered. Finally the executives narrowed their decisions down to France and Spain. France
was chosen due to the similar climate as Tokyo, Japan.
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The actual location was not inside Paris France but Marne-la-Vallee, a small region
located about 20 miles east of Paris. The location was a 44,000 acre site, purchased at a fraction
of the market due to eminent domain enacted by the French government in the interest of the
Disney Corporation (Burgoyne, 1995).
The transportation system provided the greatest benefit due to the location between
Frances major airports, the promise to build a major highway directly linked to the park and the
Paris train system.
Another factor that swayed management was the population density of the Greater Paris
area. In comparison to Spain, there were more people within a two hour radius than the United
States. Not to count potential guests that could fly, drive or ride the train to the park. Overall it
seemed like a very sound business decision.
The parks official language was French and included some attractions with names in
other languages like Spanish, English, German and Italian.
On paper the park was a good idea. On April 15, 1992, the theme park opened and all
were curious to see this huge monstrosity. Euro Disney was a virtual replica of Disneyland in
California and Japan with a little European flair. The park had a goal of entertaining a million
guests per year.
The park met its initial goal of 11 million guests but the profits were lacking. Matter of
fact the Disney Corporation lost $905 million by September 1993 and by December 31, 1993
$1.03 billion (Gumbel, 1994).
Eventually the park turned itself around and became profitable by July 1995. What were
some of the problems experienced by Euro Disney in relation to project management?
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Euro Disney was doomed from the beginning. The plan for the part was sold from the
aspect of an American prospective but not a European one. Overall the plan was an arrogant not
well thought out, misguided effort in taking a totally American concept, forcing it on another
county assuming they would grasp the concept.
Problems with Euro Disney
Project risk management is an organized means identifying and measuring risk, and
developing selecting and managing options for handing those risks. The risk management
process should be iterative, meaning that as the steps are performed from planning through
monitoring, there is feedback from the monitoring step comparing actual vs. planned progress to
the risk handling and analysis steps (Harold Kerzner, 2004, pp. 336-337). There were many
assumptions made about Euro Disney due to the success of the park in three other locations.
Normally Disney has a very strict set of construction guidelines but their lack of flexibility made
it hard to complete this project profitability.
The Disney Corporation tried to make a square peg fit into a round hole. The application
of American risk management ideas to a French risk management cannot work. American
organizations must be careful and understand not everyone shares the views nor understand how
important risk management really is to a project. The French were very different in their risk
management procedures.
The Disney Corporation was not prepared for some of the practices of the French risk
management executives. One example included the level of insurance carried on a project. The
French required a ten-year owner/contractor insurance policy that covers property damage and
third-party claims stemming from construction-related defects (Burgoyne, 1995). Disney
wanted a three year contract but could not due to the rules for French risk management.
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The financial risks of the Euro Disney project were great. Since the land was purchased
at a discount price, the executives decided that they could resell the remaining portions of the
property for a higher price and make a profit offsetting losses. According to risk management
principles, the economic outlook should be reviewed along with inflation prospects, currency
exchange rate fluctuations, the financial status of the parent organization and the ability to make
payments, positive cash flow, letters of credit and financial procedures (Harold Kerzner, 2004).
A major recession presented itself around the time of the opening of the park making the
real estate market plummet. The extra land purchased could not be sold for a profit. People did
not spend as much money as Disney desired therefore reducing the overall profits of the park.
The risk management department did see the potential for a recession in the near future of the
park because they were too optimistic about making a profit due to previous successes
elsewhere.
Another problem with the Euro Disney was the management in place. The manager who
was in charge was familiar with French culture but only on the surface. He had lived there for a
short time but in reality he was an American. According to risk management, the managerial
staff must be knowledgeable of the project and the surroundings. If the manager is not
knowledgeable, there is room for failure.
There were many changes made to the project during the construction. A change control
system was in place to help alleviate the potential for escalating the costs of Euro Disney.
However, if there was a change control system, it was ignored especially by upper management.
Michael Eisner was notorious for making last minute changes to the park or the hotels without
following the established protocol. Change is acceptable but when it becomes uncontrolled, the
controls designed to maintain integrity are compromised (Coley Consulting, 2007).
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Revised Project Management Ideas for a Better Euro Disney
Euro Disney would not have been a failure if I was in place as the project manager. The
project would have been thought out properly and many of the overlooked areas would be
included as a part of the overall project to make it more of a success.
Periodic, scheduled review of identified risks, risk responses and risk priorities should
occur during the project. Risk identification and monitoring is an ongoing process throughout the
life of the project (Heldman, 2007). Euro Disney executives did not complete a proper risk
assessment nor did they continuously monitor the potential risks.
One requirement of the project would have been to require more cultural research before
planning any portion of Euro Disney. The European market is vastly different from the
American market and the Japanese markets. Assumptions concerning success cannot be made
ever.
All attendance predictions are based on parks in the United States and Japan which is also
quite Americanized. All calculations treated Europe as a general mass of people rather than
many individual countries (Zimmer). An American company must learn to be respectful when it
brings its ideas to other cultures.
Not everyone sees what we as Americans see, or do they find value either. It is vitally
important to research other cultures including their norms, the way they work, what kind of food
is desired and an understanding of the economic situation of the area. The cultural aspects could
include European themes like castles, knights, queens and kings.
It was not safe to assume that Europeans would visit an American amusement park that
was located in Europe. Europeans visit American parks because they were vacationing and it
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was easy to include the visit as a part of the American experience. Knowing this, the park would
need more of a European flair to make the customers more comfortable.
The name of the park should have been changed. The concept of Euro Disney makes it
not appealable to the French or the Europeans. The name Euro Disney suggested the park was
not French. The French thought the park was too European and the Europeans thought the park
was to Americanized (Shan, 2005). A name change would be in order to make the park more
appealable to all those in Europe. Unfortunately, Euro Disney executives treated all the people
in Europe as one large population base. The residents resented the fact that they were all lumped
together and to top it off by the Americans.
It would be very important to hire a local manager for the project instead of importing an
American or one that lived in France. The manager has to be native to the area to provide the
project with insight from the right prospective. Disney would also have to relinquish control to
the manager of the foreign project to ensure that the project runs correctly and also includes
various aspects of the local culture. The project manager would be able to assist in these areas.
The hotels in the area were in direct competition with the hotels in Paris. Visitors would
come to the park but not stay for long due to the expense. One major change would be to lower
the prices of the hotels to encourage visitors to stay in Disney and spend money in the park.
Finally the price of admission would be reduced and parted out to once again encourage
Europeans to spend money based on their habits. The one price for all does not work for
European tastes. Euro Disney managers have underestimated how hard it is to change the
behavior of its customers spending habits. Indeed, not having the choice and paying only one
price is not a European and surely not a French habit: people like enjoying various reductions
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and price variety. Half day tickets or reductions for large families are more European (Euro
Disney: An American in Paris).
Conclusion
The desire of a company to expand overseas is becoming more and more popular, but
sometimes it comes at the expense of bad research and non attentiveness. The executives made
many errors including lack of cultural research, last minute changes to the project which
increased the costs and assuming that one park was successful so would the others.
Unfortunately all of these items led to disaster for Euro Disney but they were able to
come back and make the park relatively successful. On the surface, it seems that principles of
risk management were ignored. Risk should be reviewed and changes made to ensure the
success of the project. When a company expands in another country, the company must review
all aspects of culture, risks, economics and lifestyles. Not doing this leads to project failure. The
failure of Euro Disney can be used as a learning tool of what not to do for other companies that
are considering expansion to a foreign market.

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References
Burgoyne, L. (1995). Case Study - Euro Disney: It's Limited Success. Retrieved March 31, 2008,
from SikhNet:
http://www.sikhnet.com/sikhnet/discussion.nsf/By+Topic/d6402b26cf4fb3b4872569e000
521b98?Open
Coley Consulting. (2007). Why Projects Fail. Retrieved April 10, 2008, from Coley Consulting:
http://www.coleyconsulting.co.uk/failure.htm
Euro Disney: An American in Paris. (n.d.). Retrieved March 25, 2008, from UppSala
Universitet: http://fek.uu.se/ikt/MoSh04/fil/2a.htm
Gumbel, P. &. (1994, March 10). Mouse trap: Fans like Euro Disney but its parents goofs weigh
the park down. Wall Street Journal , A1.
Harold Kerzner, P. (2004). Advanced Project Management: Best Practices on Implementation.
Hoboken: John Wiley & Sons, Inc.
NetoAlvarez, S. J. (2003). Project Management Failure: Main Causes. Bowie: Bowie State
University.
Project Management Failure - Why Projects Fail. (2008). Retrieved April 1, 2008, from
Database Design Resource: http://www.databasedesign-resource.com/project-
management-failure.html
Shan, R. (2005, November 11). Euro Disney: From Dream to Nightmare, 1987-1994. Retrieved
March 25, 2008, from http://fek.uu.se/ikt/MoSh04/fil/2a.htm
The Standish Group. (1995). The Standish Report: Chaos. Retrieved March 31, 2008, from
Educause: http://www.educause.edu/ir/library/pdf/NCP08083B.pdf
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Zimmer, P. (n.d.). Why Euro Disney Failed. Retrieved March 25, 2008, from Patrick Zimmer:
http://www.patrickzimmer.co.uk/why_eurodisney_failed.htm