Case Analysis for Disney's Yen Financing

Other hedging methods such as issuing longer maturity Eurodollar note was not feasible because of the Disney’s temporarily high debt ratio. Also, Euroyen bonds are not an option because Disney was not eligible to issue them under Japanese regulations.

It then describes Disney’s entry into Europe. The various entry barriers, decision making, differences and problems faced in setting up of the Euro Disney.

Euro Disney marketers have recognized a trend. People are going to theme parks during the weekends for adults as well as children entertainment. Indeed, there is an existing need for entertainment of this kind. Therefore, an opportunity exists in the European market that Euro Disney could have taken advantage of.

The parks and resorts component of Disney Corporation in the United States include the Walt Disney World Resort in Florida, the Disneyland Resort in California, Aulani, a Disney Resort and Spa in Hawaii, the Disney Vacation Club, the Disney Cruise Line and Adventures by Disney. Internationally, Disney also has parks and resorts with Disneyland Paris, France, Hong Kong Disneyland Resort in China, Shanghai Disney Resort also in China, and has licenses the operations of Tokyo Disney Resort in Japan. These parks and resorts all have Disney themes. Walt Disney sells admission to all theme parks around the world but also offers numerous

The Walt Disney Company, which is commonly referred to as Disney, is an American diversified international mass media corporation based in Burbank, California. The company is the largest media corporation across the globe with regards to its revenue. Walt Disney Company has a history that dates back to 1923 when it was founded by Walt and Roy Disney brothers. Since its inception, the company has developed and

Since its beginning in 1923, Walt Disney Company and additional affiliated companies remained devoted to making the highest events of entertainment based on rich inheritance of quality, happy, creative and incomparable telling of stories. In the last decades, Disney moved to wider market, having launched the Disney Channel on cable and divisions of

The wonderful world of Disney is alive and well all over the world, in the United States, China, Japan and Paris, bringing in an impressive 2.2 billion dollars and boasted a record number of nearly 134.4 million visitors worldwide, according to Themed Entertainment Association. (Themed Entertainment Association, 2014) Disney Paris, unlike other Disney parks, has not seen the same kind of success, due to a variety of issues, including cultural, financial, and business related decisions they did not factor well into the European market. It was not until Disney (US) bailed Disney Paris out, not once, but many times, before profit was seen by the popular European attraction.

The advantages of listing of a foreign exchange include greater exposure, opportunities in foreign markets that might otherwise be unattainable, and higher profits. The disadvantages are much the same as in the setup; recurring foreign taxes, trade margin fluctuations, and other foreign trade barriers.

1) What are Aspen Technology’s main exchange rate exposures? How does Aspen Tech’s business strategy give rise to these exposures as well as to the firm’s financing need?

Tokyo Disneyland was opened to the public on April 15, 1983. This amusement park was owned and operated by an unrelated Japanese corporation. The Walt Disney Company received royalties, paid in Yen, on certain revenues generated by Tokyo Disneyland. This new overseas business venture was bringing some concern about the foreign exchange risk to Disney. The management team at the Disney has been considering hedging future Yen inflows from Disney Tokyo since 1985. Mr. Anderson, the director of finance at The Walt Disney Company, focused his attention on a possible 15 billion ten-year term loan with an interest rate of 7.5% paid semiannually. On the other hand, Goldman Sachs, who had been working with

Aspen has become a public company with more risk adverse investors who want to invest in the core business of the firm and not assume any foreign exchange risk. Foreign exchange risk is a core risk to Aspen’s business because they have many customers outside of the United States. We believe that transferring this risk to the customers would limit Aspen’s growth on the foreign markets: Aspen should keep its current marketing strategy, which includes credit installment payments and payments in local currencies for Japan, the UK and Germany. The current risk management program hurts the company because it doesnot consider Aspen’s expenses abroad that balance sales exposures to currency fluctuations. We then recommend that

Disney parks are known for their clean and well designed atmosphere. However, they felt short in providing the same experiences to Euro Disney customers. Euro Disney failed to deliver the high level of customer service standard to Disney theme parks are known for their, as well as failing to provide the service needs that were unique to the European market.

Walt Disney overestimated the magic that was to be in introducing Europe's most lavish and extravagant theme park in April of 1992. The fiscal year 1992-1993 brought EuroDisney a loss of nearly $1 billion.

Euro Disney was set up not as a franchise, Walt Disney opted for direct investment in this case to reap most of the profits, by reducing third party, unlike their other properties.

The main problem of the Euro Disney was that all calculations made by Walt Disney Company were based on parks in the USA and Japan considering Europe as a mass of people rather than many countries with different languages and cultures. Americans see theme parks as a destination where you can stay between 4 and 6 days. In Europe, Euro Disney was seen as a part of the experience when traveling to Paris. The cost was also a problem for the park. A night in a hotel inside the park costs as much as a high quality hotel in the French capital. So, given that the park was located 40 minutes by car from Paris, visitors preferred to spend a night in the romantic city of Paris.