1. INTRODUCTION Six flags is the world’s largest amusement park based on the holding of properties and 5th largest entertainment place based on its visitor attendance In 2009, six flags served 23. 9 million guests; it is the largest by any Entertainment corporation. Company carries 14 properties in United States which includes water parks, thrill parks, games and family entertainment Centres. (Themeparkpost. com, August 30, 2012). Angus Wynne founded six flags Entertainment Corporation in the year 1961.
It was just started as Theme park at first, but now it offers amusement parks, games, restaurants, Zoological parks, children areas, concerts and shows.
It is a public listed company and listed on Newyork Stock Exchange (NYSE). This form has its corporate office in Newyork and headquartered at Texas. It is active in three countries such as United States, Canada, and Mexico with 39 operating parks. James Reid-Anderson is the current chairman and Al Weber is current CEO of the company. (USA Travel guide, 2012) Company’s net income is 13. 14 million (2011) and Revenue seems to 1.
013 billion (2011).
It carries about 1900 full-time employees and 27,000 seasonal employees. It carries a debt of 120 million, due to the lack of cash-flow. (Six flags, 2012). MISSION STATEMENT “To deliver family fun and create fond memories for all the guests”. This shows six flags acts as a place for family entertainer and fulfil the desires of the people. VISION STATEMENT “To make the customers delightful by providing world class products and services which meets the expectation of the people” This show the six flags are establishing their products and services with global standards of safety to satisfy customer needs.
VALUES AND OBJECTIVES: The goals and values of the six flags are: * To be environmental friendly to reduce waste and emissions. * To implement zero waste initiatives and minimize product footprints. * To increase and improve recycling process. These values act as a heart of six flags. They are not ready to negotiate or compromise on any of the factors to improve the company to the next level (Six flags, 2012). 2. ANALYSIS A. EXTERNAL ANALYSIS This analyse about the outside environmental factors such as demographics, social/cultural, customers, suppliers and competitors of SIX Flags. i) PEST Analysis.
* Political United States elections are likely to be held on November 2012. Even power changes, political stability will be always maintained there. Also both the people encourage tourism sector as it is one of the largest sector of revenue generation. During his rule, Obama visited Disney world and conducted election campaigns near Magic kingdom to support their views (Sara K. Clarke, Jan 19, 2012). This shows both have the positive views towards tourism sector. Hence we will not experience any problems at present, but it may happen in the future of political changeover. * Socio-Economic Factor.
There are two important factors which may affect the socio-economic culture of the Americans. They are: 1) Ageing of society – Importance of Singles and Empty nesters Like rest of the world, US are an ageing society. In Between 2000-2050, the age of group of 65+ is expected to increase by 135% in 2050. (Joshua M Wiener, Oxford journal). Hence there will be increase of only 32% in age group of 16-64. This show there will be not sufficient amount of younger generation people to enjoy the amusement parks. This is a kind of far external factors that may affect six flags (Joshua M Wiener, Oxford journal).
2) Increasing income of middle class people Even during the global economic crisis in 2008-2009, it affected the people with the high levels of income alone. But the middle class people balanced at that time and contributed for the economic development. This chart shows the middle class people economic growth globally. So this shows the level of GDP of country can be compensated with the income of middle class people rather than high class people. (Mario Pezzini, OECD, 2012) ii) Porter five forces * Rivalry In United States there are 5 major theme parks such as Walt Disney, Cedar fair, Universal Studios, Six Flags and Merlin Entertainment.
Every company provides different offers to attract customers towards them. For example, in Orlando, Universal studios and Disney gives tickets to customers with difference in $4or $5 dollars during summer. In six flags, they have joint venture with coke and provide discounts to persons who bring up their coke tin to the administrative office. But there is less probability on return on investment and profits. Hence six flags understand the market situation and made improvements in their operational excellence. (Doug kerr, 2011) * Bar-gaining power of customers.
It is not difficult to attract customers during the good economic conditions, but it is not easy to gain more customers during economic downfall. It happened twice for Six flags during 2001 terrorist attack and 2008 global economic crisis. (Economic Times, 2001) During 2009-10, every company showed their brand differentiations to prioritise their customers. Disneyland offered free admission to the birthday persons where six flags afford 7day package cost of resort at the rate of 4 days. Hence six flags have to attain customers towards them, at levels of economy. * Bar-gaining power of suppliers.
Bar-gaining power of suppliers in this industry totally depends on the latest technology which they offer. Suppliers are ready to spend money according to the additional featured provided by theme parks. International Association of Amusement Parks and Attractions (IAAPA), conducts convention every year to show the modern technology and allows theme park owners to bid it. This helps six flags to increase its standard with the help of technology. (IAAPA, 2012) * Threat of substitutes The biggest challenge that entertainment sector has to overcome is its competitors.
Cedar fair offers club activities and communities to show their differentiation. Disney offers two worlds largest cruise ships to show its superiority. So the people can turn their interest towards our competitors or other entertainment sections like cultural centres, botanical gardens and multiplexes. So service offered by Six flags should meet the expectations of customers and to overcome competitors. * Threat of new entrants Entertainment Industry is a vast ocean and it is not easy to succeed in that. Huge investment and People recognition is must there.
Many Companies like Hard Rock Park have undergone bankruptcy in spite of establishing this business. Hong Kong Disneyland is the only place where the new entrants succeeded. So there is less possibilities of new entrants in these industries (Pierson K Weber, 2012). B. INTERNAL ANALYSIS i) Value Chain Analysis To understand the competitive advantage and shareholder value of the company, it is better to split it up the management with value generating activities called value chain analysis. We are going to analyse primary activities and support activities separately. Primary activities * Operation.
* Six flags holds skilled staffs who are friendly with the customers. They also amuse the customers with their multi-talents. * Environment is developed according to it and it is eco-friendly for the atmosphere. Regular maintenance and recycling is carried out. * Marketing and Sales * Apart from advertisement and campaigns, “word of mouth” is the biggest promotion for six flags. * Special events are conducted for the important occasions like Olympics, FIFA and also for important festivals like Christmas and New-year. * Having joint promotion with Coco Cola for its promotion and discount prices.
* Service * Service is based on both the Family and Children Entertainment. * If customer hold lodging facility in Great Escape, resort of six flags then they will be given ticket with 20% discount. (Joshua M Wiener, Oxford journal). Support Activities * Infrastructure * Built according to the regulations of government and standards of fashionable. * Energy saving policies can be carried out by alternative energy sources. * Safety of people is considered as first priority in six flags. * Procurement * Themes used in six flags, United States will be seen in other countries such as Belgium and Canada too.
Hence they are basic attractions of six flags. * They also import products from Germany and United Kingdom as they are best exporters of Chain components and Steels. * Costume designers are brought down from different parts of the world to design new products and characters that attract people. * Human Resource Management * Recruit local people at all countries to overcome cross-country cultural issues. * Carries out an organised approach to the work. * Coaches sub-ordinate to understand the objectives and achieves the task easily. * Technology Development.
* Have its unique riding technological features. * Alliance with Tatweer will increase musical lovers to move towards six flags. * Developing its beach resorts, land acquisition and recreation parks on the coastal side of America. (Oswald A Mascarenhas, 2004) ii) Internal Strength and Weakness There are certain factors which describe the strength and weakness of the Six flags. * Strengths * Six flags implemented well executed strategy of having its theme parks in every 150 miles of America, which covers 67% of its American population. This is the greatest strength of Six Flags.
* They define and maintain relationship between customer loyalty and financial measures. So they are able to predict how long it will take to reap their investment cost. * Licensing with Warner Bros DC Comics help the company to reach the children very soon. * Alliance with fast food restaurant and convenience stores enables all around entertainment section inside one place for customers. * Weakness * Company began to lose its loyalty to customers because of unexpected breakdown of roller coaster and accidents that happened in last two years.
* Employee’s morale or attitude towards customers seems to be low in six flags. In spite of it 5 managers had been thrown away from job recently. * Popular rides like raging bull and batwings are operated with low capacity of people. * When compared with Walt-Disney and Cedan Fair, Six flags show less interest in maintaining cleanliness. (Miriam Marcus, 2008) Current Problem/Threat: Due to excess investment at same place and technology, six flags lost its financial growth and status in the market. It failed to control it cash flow and suffered a lot during global economic crisis.
Soon company convinced its shareholders and sold properties to control its debt. In 2010, a new CEO, Jim Anderson was appointed and he was working hard to maintain company’s cash flow with new board of directors. 3. STRATEGY FORMULATION: ALTERNATIVES i) Market Development: Finding a Asian Partner Six flags were founded in the year 1961. All through the years it concentrated mostly on the American continent. Still it did not open free hands to accept the globalisation policy. Also it experiences bankruptcy in the past and struggled in balancing its cash flows.
To overcome company’s financial position and regain its status in the market Six flags should undergo Foreign Direct Investment (FDI). It can invest on the world’s famous tourist destinations where people gather a lot throughout the year. Source: WTO, 2010 Our main Challenger like Disneyworld and Universal Studios entered Asian markets in the beginning of 21st century itself. Disneyworld emerged in Hong Kong and Tokyo; Universal Studios expanded it markets in Singapore and Japan. By the same way, Six flags can invest on the Asian emerging markets.
Because of software development and technological advancement, people around the world got addicted to Internet and Games. There are valid reasons to make investment in Asian markets. They are, * Even Asian people’s interest gets forward in technological improvement; still 60% of people in Asia give preference to their outdoor entertainment factors (Sports week, 2010). * Also Asian continent holds 40% of world richest persons (London Times, 2011). This shows people’s interest and economical condition are favourable to us to earn profit and solve our debt problems.
So, it is better to establish theme parks in Tokyo, China or Singapore. The factors to be considered before starting in a new country is * We need a huge initial cost * Countries rules and Regulations should be flexible. * There is also a kind of financial risk in this. So to overcome financial risk, we need an Asian partner who is eminent in major Asian countries. I recommend Oakwood or Media Asia Entertainment group will be the best choice of our Asian partner. This is because these two companies are in the Entertainment sectors for more than half-a-century and successfully done major projects in Asia.
ii) Product Development: Cutting the Cost using new Technology Six flags are always famous for its Roller-coaster drives. Sky-Coaster, Batman Bat-wing coaster and Wild one are the best roller coaster drives acknowledged by the people. In the fast moving world, people expect new and innovative factors almost in everything. Rivals like Cedar fair and Disneyland overthrow Six flags mostly in this factor. (Fox news entertainment, 2010) They have undergone a change in their offerings constantly like Night of joy and Art of Animation.
But still six flags adhere to old customs like Animal kingdom, wildlife shows and roller coaster drives. To be stable in American markets, six flags constantly needs a change. Holding the fame of world’s largest amusement park of 135 acres, Six flags can offer Adventurous games and more indoor games. Games like way out and Adventurous Island will give new thrills to the customers. ADVENTUROUS ISLAND3D GOLF Also Games like 3D Golf, 3D Football, 3D Bowling and 3D shooting can give people real life experience of playing these games. Along with Family entertainer, this place can change as heaven for youngsters and teenagers.
By implementing new technologies, cost of the company can be controlled. The factors to be considered before introducing the features are * Large space needed, as it is available with the six flags. * Safety measures should be carried out and ill-people and children should not be allowed for adventurous games. * World famous game designers and software developers are needed and cost should be invested on them. PRIORITISING THE STRATEGY Both the strategies are better way of gaining profits. But when comparing with using new technology it is better to go way with finding a new Asian partner.
Even the investment seems to be more in finding Asian partner, ROI can be achieved in a year and cash flow can be controlled soon. New technology takes a long time to achieve its targets and profits. So, I recommend Finding an Asian partner can be the primary goal and technology development maybe the secondary goal of Six flags in the future. 4. STRATEGY IMPLEMENTATION The above strategies can be implemented by the means of cost-benefit analysis, Marketing plan and HR plan. i) Cost-benefit Analysis Cost-benefit analysis is defined as the process of evaluating the business.
That evaluates whether the value of the project is worth able or not. It also explains about the company’s product and services that offer to the world. As per the previous experiences, the following data’s are tabulated. The below table illustrates the expected 1st year financial chart for the construction of Theme park at Hong Kong. This is the favourite tourist spot and business hub, where more than 10 million people visits here every year. S. NO| ELEMENTS NEEDED| TOTAL| 1| Our Asian partner Oakwood, who is the leader of entertainment and infrastructure will provide as land.
| -| 2. | Initial setup cost needed to be invested| USD$ 1 Billion| 3. | Expected First year Attendance| 2 Million people| 4. | Expected Cost of ticket sales/person| USD$ 60| 5. | Expected revenue Generated | USD$ 120 Million | 6. a)| ExpenditureFixed cost = Construction cost + Salary of workers + Maintenance| USD$ 30 Million| b)| Variable cost = Logistics + Transportation + Unexpected accidents + Insurance + Marketing| USD$ 30 Million| 7)| Expected profit at the end of 1st year| USD$ 60 Million($30 Million for six flags$30 Million for Oakwood)|.
(Six flags Texas, 2006) The chart below shows the break-even analysis of Six flags for its new establishment in Hong Kong. By doing break-even analysis we can say that Initial cost can be regained within 2 years. So the cash-flow of the company will become steady and the debts can be cleared as soon as possible. Shareholders can be given 15% of dividends every year and persons who invest more than $10 Million will be given 40% of company stocks. Reason for selecting Hong Kong:
The factors that enhance six flags to build its theme park in Hong Kong are: * Hong Kong is one of the world’s famous tourist spot where more than 10 million people visit every year. * The country encourages tourism sector, also it acts as the main revenue of the country and helps to increase its GDP. * Hong Kong gives subsidiary, incentives and tax exemptions for entertainment sector to encourage the tourism. * It also gives us option to take away 70% of profits and remaining to be re-invested in Hong Kong again. (HK Discovery, 2011)
Benefits for Hong Kong with the Help of Six flags * Our business generates job opportunities to local people. * It also Uplifts the people below the economic standard. * Asian people can no longer travel to American to enjoy the world famous Six flags roller coaster drives. * Getting the people out of cyber world and keeping them engaged in real time entertainment section. * Changing the perspective of the people. * Natural resources will be explored well. * Developing free lands and promoting tree plantations which are essential for the regular rainfall.
* So by doing this six flags show its social responsibility in Hong Kong along with its Entertainment region. ii) MARKETING MIX Marketing Mix can be defined as “Putting the right product in the right place in the right time with the right price”. This means it explains about the product, place, price and promotion of the company. PRODUCT Six flags are going to offer the products according to the interest and expectation of Hong Kong people. They are: * Roller coaster drives are the unique asset of Six flags. Hereafter Hong Kong people can experience it in their homeland itself.
* In Hong Kong six flags, apart from normal divisions like Animal Kingdom, Wild life shows and Roller coasters, six flags plans to open new sector at affordable cost * Adventurous Island, paint-ball shooting will be its new offerings which attract the teenagers and middle class people. * Apart from that it is better to add Garden fantasies, Rail road Entertainment and Street dance Entertainment which is the basic enjoyment features of European people. * In the above said offerings, six flags will shows the culture and tradition of western and American people through music and dance.
* Games like 3D golf; 3D racing will show its technological development and brand differentiation of six flags over its competitors. * Individual portions are allocated to disabled people and games like shooting water cannons and play grocery store will be included. * This again shows Six flags will be all-time family entertainer. PRICE Hong Kong six flags should offer their price in the affordable cost, since the world famous amusement parks like Disney land and Ocean Park are already doing their business there. * Tickets will be categorised basically into four divisions namely, 1) 1-day ticket.
2) 2-day ticket 3) Night tickets 4) Tickets for resorts and hotels Estimated cost for each section is given below with competitive prices for Disney and Ocean Park. 1) 1-day ticket 1 day tickets are offered with three different segments, for children’s, middle age people and Old aged people. Lowest ticket price will be off HK$100 for senior citizens and highest price with HK$399 for middle age people. 2) 2 day ticket The 2 day ticket is also offered with the three different categories in which children are provided low-cost ticket of HK$355 dollars and Middle age people are offered HK$499.
It is not easy to experience each game within a single day as six flags hold vast entertainment zones. Hence it offers 2 day ticket for the visitors to enjoy the thrill of six flags completely. 3) Night tickets Standard costs of Night tickets are fixed as HK$259 and children below the age of 3 are not allowed for this show. Laser lights show, cultural dance and street dance are the notable events of night shows. Night shows are organised near sea shores and foreigners can experience the beauty of Hong Kong during night times. 4) Hotel resorts.
As Hong Kong is the famous tourist spot and Business hub of Asia, six flags plan to offer resorts prices in both extremes to target family and business people too. Garden view resorts costs HK $1550 which will be its minimal cost for family and Sea view resorts which are offered in the rate of HK$ 1800-2500 for premium business customers. All the tickets and resorts can be booked through online with the help of six flags and some other tourism websites. Tickets will cost less as visitor’s book their tickets before 30 days of their travel plan. PLACE.
We are going to have Oakwood as the Asian partner, who are the leading entertainment company in the Asian continent. Our theme park is going to be established with 40 acres of land which will be situated near by Avenue of stars and Hong Kong convention and Exhibition centre. This place acts as a centre of attraction for tourists. Since the place is surrounded with Sea shore at both sides, Big Buddha statue at the North and Temple Street night market in the South. This place is not hot of the city, but it is situated very nearby beautiful sea shores of Hong Kong.
As there are 40 acres of land provided to us by Oakwood, we can have parking for more than 1500 vehicles a day. Recycling plants will be constructed inside the theme park to recycle the water used for indoor games. Also lot of trees are planted to protect the environment and for essential rainfall of Hong Kong. PROMOTION In entertainment business, promotion should be given equal importance to the level of establishment. There are lot of opportunities that enhance our business. As Oakwood is the doing Film and television production, we promote six flags through television advertisement and through theatre advertisement.
Hong Kong people shows lot of interest in music Industry. Hence with the help of Oakwood own theatre for musical and fashion shows six flags plans to reach the people. Along with that developing Android games for phones in the name of thrills available in six flags will also be a promotion for six flags. Creating Face book community and applications and conducting marathon races for AIDS patient will enhance the company’s brand to the extreme. Also DVD and photos about six flags will be sent to the people’s address who visits Six flags, Hong Kong for the first time.
These things will promote six flags and allows it to reach the minds of Hong Kong people easily. iii) HR PLANS John W. Baker (six flags) will be the head of development team for this project and Liz Hirsh Naftali (Oakwood) be the head of operations. Hence these two people are the senior most persons of both companies. Here Six flags is going to recruit both the full time and part time employees. Management staff will be appointed as full-time employees and workers will be appointed as part-time workers. Combination of Asian and American people looks after management works and local people will be given opportunity to explore them.
Training institute will be created to train the part-time workers, how they should behave to the visitors. Volunteers and service minded people are appointed to take care old people, disabled and Children’s. So, I recommend Six flags to implement the above strategies mentioned to regulate its cash flows and regain its market status. When these are implemented, then its market shares will increase very soon.
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