Walt Disney Moving International - MSUM, MGMT 458 - Research Assignment

2250 words - 9 pages

Walt Disney
The First International Move: Tokyo
MGMT 458
“We keep moving forward, opening new doors, and doing new things, because we're curious and curiosity keeps leading us down new paths.” This is a quote from Walt Disney, a man that prided himself on innovation, creativity, and curiosity. In 1923, Walt Disney founded the Disney Brothers Studio with his older brother Roy, in California. Walt Disney had a vision, he imagined a place where children and parents could both go and create new memories, together. The more he dreamed of this magical park, the more elaborate it became. Although, World War II put those dreams on hold, Walt continued to come up with new ideas and creations for his park. Finally in 1953, Walt and Roy bought a 160-acre lot in Anaheim, California for the first Disneyland (Just Disney).
Construction for Disneyland began on July 21, 1954 and had a meager twelve months before it was scheduled to open. The magical little park turned into a seventeen million dollar Magic Kingdom and was ready to open on July 17, 1955. Six thousand invitations were mailed in honor of the grand opening, but by mid-afternoon over twenty-eight thousand ticket holders stormed the park, unfortunately, most of these tickets were counterfeit. Opening day was complete chaos, with temperatures up to 110 degrees Fahrenheit and, due to a plumbers strike, few water fountains operated in the vicinity. They ran out of food and water due to the unexpected number of counterfeited tickets and the tar was so hot that women’s heels were getting stuck in the black goo. Besides the devastating opening day, the park’s luck eventually turned. By 1965, ten years later, fifty million visitors had visited Disneyland. Disney’s philosophy was to create universal timeless family entertainment, Walt knew the importance of family interaction, because of this, the company was focused on fostering an experience that families could enjoy together. As Walt said himself, “You’re dead if you aim only for kids, adults are only kids grown up, anyway” (Just Disney).
Disney also took a different approach to their management style, it was ran as a flat, non hierarchical organization, where everyone, including Walt, used their first names and no one had titles. Walt was driven to achieve creativity and quality so he emphasized teamwork, communication, and cooperation. He even pushed himself and his staff so hard that he suffered a nervous breakdown in 1931. In 1966, Walt died from lung cancer, however, many workers were fiercely committed to Walt and the company and they established their second location in Orlando, Florida in October 1971. Walt died prior to the Florida park opening, but Roy continued leading Disney until 1971 when he was laid to rest. The legacy continued after the Disney brothers were gone, their original team still remained, all of which were trained by the Disney brothers themselves (Just Disney).
A quote from Walt before he passed away was, “Disneyland will never be completed. It will continue to grow as long as there is imagination left in the world.” Little did we know, just how right Walt was in his thinking, the next step was to continue the Disney expansion into an international phenomenon. Disney opened their first international amusement park in Tokyo, Japan on April 15, 1983. The park opening in Tokyo was not a fluke, and much design, planning, and research went into making Disney’s dream a reality. We will now explore the marketing, management, and financial strategies used by the Disney Brothers to make such an international move to Tokyo (The Official Disney Fan Club).
The man who was in charge of figuring out where to go next exactly was their WED Director of Research and Planning, Frank Stanek. Stanek narrowed the international move down to two location, Europe and Japan. First, he needed to understand the potential markets of Japan and Europe in order to decide where the first international Disney would be most successful. Stanek focused on the receptiveness to the Disney brand, economic stability, growth factors, cultural characteristics, and travel patterns. One memorandum read in early 1973, “While both Europe and Japan can support a Disneyland project, Japan offers the highest potential for success even though it may be more difficult to execute” (The Official Disney Fan Club).
The Japanese had also done a study of European and American leisure facilities in interest to replicate it in their home country. Through this study, they showed a great interest in Disneyland and America and they even invited the top Disney executives to Japan in 1974. There they discussed Disney’s possible participation in designing, constructing, and operating a Disneyland-type theme park on Tokyo Bay. Disneyland decided to move forward with the Japanese as their first international Disney movement. A big reason for this decision was that their population was about 110 million at the time and they had the economy to support the park. Japan had also just experienced a post-war industrial growth and transitioned to a highly urbanized population from a predominantly agricultural base. This growth created heavy population concentrations and benefited their quality of life which then increased the desire and demand for leisure time facilities to offer more variety and sophistication than before. Increases in incomes and a trend toward shorter work weeks, combined with increased vacation time contributed to a 20% annual growth in the leisure industry. A theme park here was surely going to capitalize on Japan’s emerging leisure-time consciousness and growing disposable income (Linhart, Ted).
There was a large area of land fifteen minutes from the center of Tokyo perfect for the first Oriental Disney. The property was under joint development by the Oriental Land Company (OLC) which had been using a portion of the location for landfills, and for developing commercial and residential projects. To grant the right to reclaim and use the land, China (the prefecture where the land was located) required that OLC devote a portion of the land to the public good. Introducing Disneyland to Japan would meet that requirement for OLC and would also do so in a very popular way, now that Disney and Japan had the land design and constructon could begin (Linhart, Ted).
At the beginning, Tokyo Disneyland was going to be named Oriental Disneyland which of course did not stick and would now be politically incorrect throughout history. In a document to OLC, titled Feasibility Analysis Oriental Disneyland Executive Summary, it is stated that “Oriental Disneyland will appeal to all residents and visitors to Japan; however, it is projected to capture substantial support from residents of and visitors to the Kanto District.” That district held a large portion of Japan’s population of 30% or around thirty - three million people which was over three times the population in Disneyland’s major market area of California. While the majority of visitors were predicted to come from the Kanto District, Japan’s excellent transportation system was planned to make the park easily accessible to all areas of the country. Actual attendance to “Oriental Disneyland” was predicted to be ten million guests in the first year and fifteen million by year five. These numbers translated to revenues ranging from 30 billion - 66 billion yen or $100 million - $220 million U.S dollars annually.
Another problem that Disney faced was deciding how big to make the mark in Tokyo. The projected attendance of seventeen million would require the park to handle 125,000 visitors a day and more specifically, 100,000 guests per hour. This amount of traffic was described as exceeding Disney World’s capacity by more than two times. The big debate was that a park that size was too much to take on immediately, WED recommended to start with a park that could handle 45,000 guests per hour and then eventually expand to 60,000 guests per hour over the next five years. This would mean that it could only take 12 - 15 million visitors each year, less than the 17 million who planned to attend (Linhart, Ted).
The first expansion made by Disney into Tokyo obviously included a lot of preplanning. Although the park was wholly owned by Japanese partners, it was designed by WED Enterprises to look just like the U.S. parks and Disney would maintain all creative rights. When it was first announced in 1976 that the next expansion would be in Tokyo, it took 7 years, until it was first opened in 1983. The first part of the new park was signing the basic agreement, the Contract on Construction and Operations of Tokyo Disneyland, which was done in April 1979. This was followed by sending nine Tokyo management employees to Disneyland California where they would spend one year training in America covering all the park operations in order to bring back the same business model to Japan. It was not until November 28th, 1980, when the construction plans were approved by Chiba Prefecture and on December 3rd, the groundbreaking ceremony was held.
The construction of the park was started in January of 1981. However, the price of the park was blowing way over budget, which was quite substantial because the starting budget was already set at 100 billion yen. The president of Japan at the time, Takahashi, was insistent on having the real thing, he did not want to skip out on any of the design aspects. Creating the real thing for this country ended up ballooning the total cost to 180 billion yen. While the construction was underway, the hiring agency in Japan had their own work cut out for them. They were tasked with the jobs of finding 3,000 part time cast members to join the Disney Tokyo operation. As if this was not a large enough job, the infrastructure was not developed enough to allow 3,000 part time worker to make their transport to work uncomplicated. It took six months after the opening of the park for the workers to finally be able to travel to and from work without congestion problems.
Today Disney has six Disney locations throughout the world, California, Florida, Tokyo, Paris, Hong Kong, and Shanghai these six locations consist of eleven different Disney parks. As we have covered the history about the first international expansion of Disney into Tokyo, we will now look into why Disney was so successful in Tokyo, as well as some of the greatest international failures that Disney experienced. One of Disney’s greatest successes was the international expansion to Tokyo and one of Disney’s greatest failures was the Disney theme park in Paris. We will explore more of how this happened and why one was so successful as the other was such a failure.
Some viable reasons that Tokyo Disney was so successful are dense population, stable climate, and high disposable income. In 1985, Paris had three times fewer people than Japan, it rained much more in the winter than it did in Japan, and the annual income in Paris was significantly lower. Not to mention that EuroDisney was over twenty miles outside of the downtown facilities, compared to Tokyo’s six. These factors are very strong external factors that play into the success of the Disney in Tokyo and the failure of the Disneyland in Paris (O’Keefe). But was it only external factors that made Tokyo successful and Euro Disney unsuccessful? This is obviously not the case, Disney missed many red flags from the European culture that would have easily steered them away from opening this location, especially at the time in which they opened it in 1992. There were cultural differences missed, lack of financial control, and labor laws that were not followed. These include the importance of education held in Paris, parents were not willing to take their children out of school to attend this theme park. Also, the budget was almost doubled without the demand or population to make up for the deficit, prices rose due to Disney trying to make up for the overbuilt park and the park goers were just not there. Disney also, knowing controls the uniform and personality of their staff, and in Paris this was not acceptable because labor laws do not allow for a company to take away the employees individuality. This was a major back for Disney, as for finding staff and for getting the government to back their ideas.
Due to many of these factors, it is clear why Disneyland Paris was not a complete hit. It is also obvious to see that there was much more research and development put into the international move to Tokyo, than there was to the move to Paris. We found throughout our research that the most important part of taking Disney international is the idea of their research, complete and clear research needs to be done in order to find the locations and parks that are most likely to succeed throughout the world. With Disney’s first international expansion to Tokyo research was a huge part of their business plan and model, they spent many years analyzing the market, the populations, and the demographics, Disney knew all aspects of their customers and it allowed them do exactly what they wanted and needed to do in order to succeed.
Just Disney. (2018). Disneyland’s History. Retrieved from: http://www.justdisney.com/disney land/history.html#lightbox/1/.
Linhart, Ted. (2016). A Rare Look at How Disney Decided to Build Tokyo Disneyland. Retrieved from: www.disneyavenue.com/2016/11/a-rare-look-at-how-disney-decided-to.html.
O’Keefe, Matt. (2015). 26 Reasons to Regret the Existence of Disneyland Paris. Retrieved from: https://www.themeparktourist.com/features/20150821/30494/how-euro-disneyland- derailed-disney-decade.
The Official Disney Fan Club. (2017). Disney History. Retrieved from: https://d23.com/ disney-history/.

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