Disney Vs French Government
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) The most fundamental requirement for a rational, efficient agreement is he ability of the parties involved to determine their interest in the negotiation in question. How successful were Disney and the French government in:
a) Identifying their underlying interests?
The interests of each side were quite different.
In fact, those of Disney were mainly financial interests, whereas those of the French governments were political and economic.
The other distinction highlighted is that the French interests were linked together, whereas those of Disney were different interest without links in between.
Disneys interests were clearly defined. But they have a strategy that put forward another side for the future park: Barcelona. Disney was more attracted by the French proposal but put the two in competition. Then they hope that the French government will make some concessions. For that they make Barcelona more attractive than it really was.
They wanted:
favourable land purchase terms : a direct investment basis (no licensing)
a financial scheme that will reduce their initial capital investment
to increase as much as possible the Disneys share of upside potential
the French government to make concessions on tax
the government to finance the improvement of the transportation infrastructures in the area
Their interests were well underlined. Indeed, concerning the investment question, the French site was really favourable as it is situated in the “villes nouvelles”, which went only through one authority called EPA (Etablissements Public dAmйnagement). This element is crucial for the duration of the negotiation. In fact, the more intermediaries there are, the longer the negotiation will be.
The other major advantage of the French project is that the French government is not reluctant to expropriate the land needed for the park.
Disney could have seen a positive point in the negotiation when the French prime minister signed the initial letter of understanding between the two parts. Indeed, the fact that the Prime Minister himself signed the letter implies how important the project was for the French government. Then Disney knew they were in strength position, and that they could obtain concessions from the French government.
On the other side, the French government had various interests. It put clearly in advance that their major interest was the employment and the revenues created by the project.
But there are other interests:
the development of Pariss eastern suburbs
the creation of 60 000 jobs, that will decrease unemployment
the impact on the construction industry, which went through a bad period
creation of revenue for French suppliers during the construction and operational phases
an impact on tourism, which would have a positive impact on the Frances balance of payments
if the project succeed France will appear as a dynamic country able to compete successfully for foreign direct investment
For the French government all these benefits would be the consequence of the instalment of the park in Marne-La-Vallйe. If the government succeeded in attracting the famous company, all their interests would be reached to some degree. French government also played double or quits.
To conclude we can say that the two parts were efficient in underlying their interests, but were they good enough to maximize them.
b) Maximizing their fulfilment?
The two parts had good skills in negotiation but this agreement was by its importance, a novelty for both parties. In fact, the importance of the public-private partnership involved in the project was unique. Disney was not used to this sort of agreement.
The negotiation took over a year as it implies a 30-year agreement between the French government and Disney.
We will pay attention to the major interest of the parties and see how they were successful in the negotiation.
Concerning the land issues, we know that Disney need a large amount of land. Moreover it wanted to own it directly. But the land was owned by a huge number of farmers. The French government helped Disney to acquire the land. For that it used of its “eminent domain powers” and referred to a PIG (projet dintйrкt general). It would be much easier for Disney to deal with only one interlocutor than with a multitude of landowners. The French government made a gift to Disney as it fixed a very attractive price for the land (FF11.10 a square meter), which was quite inexpensive for developed use.
The French government was useful as it cool down the protestations of farmers by offering them compensation.
Then Disney will benefit over 20 years of a progressive land purchase. That is to say that Disney can by land at the preset price.
It was important as the area will progressively be a resort area and a permanent place of residence.
Regarding all these benefits Disney had to make some concessions. It accepted to be limited in its development. The initial agreement will only defined in details the first Phase of the development and for the rest of the development only general approval were defined. At each initialisation of a new Phase, the EPA had to give an approval. Then the French government kept some control on Disney and on its interests. Moreover it made their partnership much deeper as the relationship interests become more important.
For this question, the two parties managed to reach their interests. But the French government obtained more importance and take profit of the concessions it made to Disney to take control on the development of the park.
Regarding the legal issues, Disney again obtained some concessions which represented exceptions in