As soon as a company acquires stability and success in its own country, its management team starts thinking about expanding the services or products they produce to the global market. Frequently, such a strategy brings enormous success and provides good profit. However, there are cases when some crucial factors are not analyzed before expanding. In such situations, not only do the organizations lack the profit they expected to gain but also they may experience severe disadvantages and losses. The case of Euro Disney in France is one of the most well-known examples of an unsuccessful expansion campaign.
The major mistake of Disney’s expansion process that is noted by analytics is that the company used an ethnocentric management approach (Karadjova-Stoev & Mujtaba, 2009). This method involves establishing the home management style in a foreign country. A common assumption, which is also a common mistake, is that what works well in one’s native country should also work well in another one. However, Disney’s human resource (HR) team did not take into account a large number of cultural differences between the Americans and Europeans, which led to a number of failures.
Although Disney’s chairman Robert Fitzpatrick had many connections with France, he made a number of mistakes when predicting the situation (Matusitz, 2010). One of the biggest problems was misjudging the Europeans’ vacation habits (Karadjova-Stoev & Mujtaba, 2009). While in America, people often took their children away from school to take them to Disneyland, in Europe, such a tendency was not popular. The HR team’s hopes to alter Frenchmen’s vacation preferences failed, which led to the division of the park’s work into high and low seasons. The division into seasons led to another serious issue – the realization of differences between labor law in France and the US (Karadjova-Stoev & Mujtaba, 2009). French employees refused to be sent home in low season – the practice that was frequently employed in America. The need to accommodate to the country’s labor law and create a stable schedule for all employees also caused problems for Euro Disney.
Some of the greatest losses appeared due to the miscalculation of Europeans’ eating and drinking habits (Karadjova-Stoev & Mujtaba, 2009). The primary aim of coming to the park was entertainment. However, since the people were staying for the whole day, they felt the need to eat something during their stay. As it appeared, Europeans’ food norms differed greatly from Americans’ ones. One of the biggest mistakes was not allowing any alcohol in the theme park whereas French people did not imagine lunch without a glass of wine (Karadjova-Stoev & Mujtaba, 2009). Also, Europeans preferred sit-down breakfast and lunch, and Disney’s team did not predict such a demand.
Another example of an organization that made mistakes during its expansion process is the introduction of eBay to the Chinese market (Lu, 2011). The major mistake made by eBay was that it wanted to win the audience by its methods without adjusting the latter to the local requirements. One of the most considerable shortcomings was that users were not able to communicate with a seller and had to rely on other buyers’ feedback. Such a practice was popular in the US, but it was not accepted well by the Chinese users. Therefore, eBay in China made the same mistake as Disney in France – both companies wanted to introduce their product in a foreign country without accommodating to local people’s needs.
The major lesson learned from eBay’s expansion is that it is necessary to evaluate the requirements of prospective customers prior to introducing one’s products or services in a foreign country. Another issue to be considered is that local organizations producing similar functions may be favored by the customers who may feel distrustful of a foreign company. Thus, it is necessary to perform a thorough analysis of a local market and take into account all details before trying to win the attention of the new audience.
References
Karadjova-Stoev, G., & Mujtaba, B. G. (2009). Strategic human resource management and global expansion lessons from the Euro Disney challenges in France. International Business & Economics Research Journal, 8(1), 69-78.
Lu, J. (2011). American internet companies’ predicament in China: Google, eBay, and MSN messenger. Javnost – The Public, 18(1), 75-92.
Matusitz, J. (2010). Disneyland Paris: A case analysis demonstrating how glocalization works. Journal of Strategic Marketing, 18(3), 223-237.