Case Study: What Do Disney & Home Depot Have in Common?

What do Disney and Home Depot have in common?  Both lost billions in global expansion.

Disney: Paris, France:  Since Disney’s 1st global expansion in Tokyo went very well (the Japanese culture already had an affinity for Disney characters), their 1st mistake was to assume that what worked in Japan would work equally well in France.  However, the French already had their own fairy tale characters that they loved. Additional insights about the country that weren’t initially understood included:

• French people drink wine with meals – Disney outlawed alcohol at this park. 
• Disney was told Europeans don’t eat breakfast, so they designed the restaurants in their hotels based on this, i.e., small restaurants for breakfast, and they assumed that the French would want croissants and coffee.   When they opened, there were thousands of people waiting to get seated for breakfast – and, they wanted bacon and eggs.
• Europeans have different vacation practices – typically taking the month of Aug.  Disney assumed they could influence the French to frequent the park in short mini-vacations.
• 2 years after opening, Disney was at its breaking point.  A Saudi investor gave them $500 million and suggested that $100 million be used to build a convention center at the park, which has been successful.  They also named a Frenchman as CEO. The name was changed to Disneyland Paris in 1994. In 1996, Disney finally became the most visited attraction in France.  

Disney: Hong Kong: Opened in Sept. 2005 – didn’t start turning a profit until Feb. 2013. 

Biggest Mistakes:

• The $1.8 billion theme park – was touted by Disney as its biggest, boldest effort to build its brand in China.  The “pint-sized” park was a disappointment with only 16 attractions and 1 thrill ride (Space Mountain), compared to 52 in Paris.  
• Given the previous long-standing “1 child per family” law, they needed to have attractions designed for all ages, especially Millennials.  They also underestimated the number of Mainland Chinese who would come to this park. Thus, those children were confused when the rides for children and songs (like “it’s a small, small world”) were in English and Cantonese – not Mandarin.

Home Depot entered China in 2006 – and by Sept. 2012, they closed all stores in China.

• China doesn’t have a DIY (do it yourself) culture.  Low labor costs and the “status” of hiring someone to do the work were a big factor.
• Chinese consumers don’t have role models from older generations.  Home ownership was non-existent 15 years ago when sometimes 3 generations shared a 300 square foot home.  A kitchen wasn’t necessary as many cooked in a common area outside their room.
• IKEA, on the other hand, has been extremely successful in Shanghai.  The 360,000 square foot store is packed with people shopping for furniture and household appliances.  The store offers 7,000 products and features a 500-seat restaurant and a spacious children’s playground.  People come to IKEA to experience the Western style of living or simply for the recreation.

IKEA is expanding because they’ve paid attention to local customers’ preferences.  Many homeowners live in condominiums – rather than single-family homes. They don’t have a garage, thus no room to store ladders and tools.  

Examples of Leveraging Differences for Innovation:

• The world’s renowned termite expert collaborated with architects to build an energy-efficient shopping center and office park that maintains a 75-degree temperature all year round with no air conditioning equipment – based on how termites construct mounds.
• A bathing suit developed for Muslim women (Burqini) has been a huge success – with 20% of sales now coming from non-Muslim women – but women who have sensitive skin, concerns about skin cancer, or are very over-weight).
• Volvo’s new safety features which cause a car to automatically stop before a collision was conceived by scientists who studied African Grasshoppers and their ability to not collide when they fly in swarms.  The African locust has a unique internal radar system composed of a giant movement detector behind its eyes.

All types of organizations are vulnerable to being sued for discrimination, from customers or employees.  Notable class-action discrimination lawsuit settlements include:

Denny’s	Racial Discrimination	1995	$54 million
Texaco	Racial Discrimination	1996	$176 million
Publix	Sex Discrimination	1997	$87.5 million
Coca Cola	Racial Discrimination	2000	$192 million
Voice of America	Sex Discrimination	2000	$43 million
Abercrombie	Race/Ethnicity/Sex	2005	$50 million
Toyota Motor Credit Corp	Racial/Ethnic Discrimination	2006	$159-174 million
Verizon	Pregnancy Discrimination	2006	$49 million
B&H Photo & Electronics	National Origin Discrimination	2007	$4.3 million
FedEx	Racial Discrimination	2007	$55 million
John Hancock	Racial Discrimination	2009	$24.4 million
Eastman Kodak	Racial Discrimination	2010	$21.3 million
Novartis	Gender Discrimination	2010	$175 million
TV Writers	Age Discrimination	2010	$70 million
Wells Fargo/Wachovia	Gender Discrimination	2011	$32 million
Burger King	Special Needs	2012	$19 million
Bank of America	Gender Discrimination	2013	$39 million
Merrill Lunch	Racial Discrimination	2013	$160 Million
Lawler Foods	Racial & National Origin Discrimination	2016	$1.042 million
MetLife	Racial Discrimination	2017	$32.5 million
Wells Fargo	Racial Discrimination	2017	$35.5 million