Brief Company Description
Six Flags Entertainment Corporation is the world's largest regional theme park company with $1.2 billion in revenue and 18 parks across North America (Overview, 2015). For over 50 years, Six Flags has been providing thrilling, world-class entertainmetn to millions of families, teens and young adults (2010 Annual Report, 2015). The company, known for its cuttng-edge roller coasters (USAToday, 2015), has entertained millions of families for more than 53 years (Investors, 2015). Mark Shapiro, President and CEO of Six Flags Inc, announced, "At Six Flags, our mission is to surround the best rides in the world with entertainment from the fileds of music, theater, sports, film and television" (Investors, 2015). With huge profit earnings, Six Flags did not choose to expand its branch theme parks bindly, but choosing to develop its preeminent community outreach program, Six Flags Friends. "Six Flags Friends is a series of programs thourghout Six Flags parks that make a difference in our communities by encouraging local involvement, supporting the mission of various non-profit organizations, and bringing the thrill of Six Flags to children and families across North America" (Community, 2015).
Six flags has a proud past. The Six Flags chain originated in 1959 with the creation of The Great Southwest Corporation by Angus G. Wynne and other investors. Construction of "Six Flags Over Texas" started in 1960, and the park was opened the next year for a short (45-day) season(Shaw, 2013). In 1984, as a result of its acquisition of Great America, Six Flags acquired the rights to Time Warner/ Warner Bros. ' Looney Tunes animated characters for use in Six Flags properties. It licensing agreement with DC Comics and Warner Bros. Consumer Products allows Six Flags the exclusive theme park rights to many of the world's greatest cartoon characters and super heroes, from Bugs Bunny and his Looney Tunes friends to DC Comics Super Heroes Batman, Robin, The Green
Lantern, Wonder Woman and The Flash.(History, 2015) But in 2009, the global economy was hard hit by the financial tsunami and also on June 13, 2009, the corporation filed for Chapter 11 bankruptcy protection. It successfully exited the restructuring on May 3, 2010(Wikipedia).
Accounting to amusement park and attractions industry statistics, There are more than 400 amusement parks and attractions in the United States. Today about 375 million guest annually in North American. In 2011, theme parks, amusement parks, and water parks generated a total direct economic impact of approximately $55.4 billion. There are 25 percent of Americans surveyed visited an amusement park within the last 12 months, with 43 percent of Americans indicating they plan to visit an amusement park within the next 12 months(IAAPA, 2011)
Walt Disney Parks and Universal Parks are its main competitors. Six Flags' core competency is connected to the ownership and operation of amusement parks.
More specifically, it is their ability to operate parks with innovative thrill rides, water parks, and zoological parks.
Their competency can be broken down further into their implementation and operation of rides, theming acumen, concession sales and retail sales:
(Six Flags Entertainment Corp: Business Source, 2014)
financial statement:
External Analysis
According to Six Flags' 10-K filing (2013), government regulation poses a potential negative influence on its net profits. Six Flags' ownership of property and its operations are subject to environmental, health and safety regulations, which create a level of uncertainty with regard to the future of environmental liabilities and expenditures (Six Flags, 2013). Amusement parks and theme parks are producers of waste water, air emissions and storm water and hence are required to comply with the environmental, health and safety laws as required by Environmental Protection Agency (EPA) and other state and local authorities. Some of the laws that they need to comply with include the Clean Water Act and the Clean Air Act. Additionally, amusement and theme parks handle, store and dispose hazardous substances. As a result they are required to comply with the Conservation and Recovery Act as well as the Compensation and Liability Act among others (Six Flags, 2013). The liability costs related to these acts could affect the company's operations substantially. The parks are also regulated by state regulatory agencies that have a jurisdiction over a number of operations. Also, the amusement parks are susceptible to newly enacted laws at federal or state levels which may require them to incur costs of compliance (O'Brien & O'Brien, 1996).
The amusement park industry has witnessed increased growth after a decline in revenues due to the 2009 economic recession. A number of factors suggest that the industry may witness continued growth in revenues and attendance in the coming years (Fridson & Alvarez, 2002). First, the total number of Americans conducting domestic trips has been significantly rising after witnessing declines in the years 2007 and 2009. The figure is expected from 700 million to 800 million trips by the year 2019. This growth in trips would greatly boost the amusement park industry. On a similar note, there is a high likelihood that consumer spending would grow significantly by two to three percent over this period. With a high number of Americans regaining employment and disposable income, they are more likely to pursue leisure activities such as visits to amusement and theme parks (Fridson & Alvarez, 2002).
The amusement park industry is heavily reliant on teenagers aged between ten years and nineteen years (Vogel, 2007). This age group forms the primary consumers for the industry. Consequently, a change in demographics in this age group will eventually lead to changes in attendance of these parks. In future, it is highly likely that that this age group will decline due to the declining birth rates. The declining birth rates would lead to substantial drop in this age group. As a result, the amusement parks are obligated to attract other age groups or attract a larger population of its primary consumers in order to maintain and increase attendance (Vogel, 2007).
The industry employs technology in three key areas that include cost cutting, seasonal updates and the improvement of the overall experience of the guests. Amusement parks in the recent years have been investing heavily on technologies that will reduce their energy consumption. Such technologies have included high-efficiency ice machines and newer water filtration systems among others. Apart from cost cutting, amusement parks use technology for seasonal updates. During the cold winter months, most parks are usually closed. To ensure that they attract new customers for the incoming season, they install newer technological rides, such as roller coasters, that are compliant with the weather changes. Furthermore, amusement parks have to install technologies that will enhance visitor experience such as online ticket sales and new vending machines. These technologies reduce the waiting time for entrance to parks (Vogel, 2007).
Suppliers
The bargaining power of suppliers is high. Roller coaster manufacturers are the main suppliers of amusement parks because they develop the hallmark features. These manufacturers include Arrow Dynamics, Giavanola, Premier Rides and Vekoma among others. These companies have supplied about 72% of roller coasters in the United States. Giavanola and Arrow Dynamics have increased their operations in the recent years (Vogel, 2007). Consequently, there has been a manufacturers consolidation and hence less competition for the amusement parks' industry.
New Entrants
The threat of new entrants to the industry is relatively low. The barriers to entry to the industry are very high. First, the industry is controlled by Walt Disney, Universal Studios, Cedar Fair and Six Flags (O'Brien & O'Brien, 1996). These companies are able to enjoy the economies of scale established and leverage on the established practices. Also, it is a highly capital intensive industry. The large acreage of land, public facilities and the creation of rides make it a very expensive industry. Technological change is also high hence making it a hostile environment for new entrants.
Substitutes
The threat of substitutes is very high. This is mainly because of the limited leisure time of the consumers and their discretionary spending. As a result, there are a number of leisure activities that compete for a consumer's time such as video games, movies, sports events, hotels and restaurants and tourist destinations.
Rivalry
The rivalry among the amusement park companies is very high. The industry is intensely competitive. Rival companies continue to develop new rides and attractions to be able to compete with both the national and regional rivals. An example of this rivalry is Universal Studios allocating $265 million to Harry Porter and Walt Disney developing a section worth $500 million for Avatar. Innovation has also been a key area for rivalry in the industry.
Buyers Influence
The industry experienced major losses during the economic recession. With many of the consumers faced with unemployment and job insecurity, they were less willing to spend on leisure activities. Recreational activities such as visiting amusement parks were highly affected with the recession given that they were "unnecessary" expenditures. As a result, many parks were pushed to offer discounts to consumers. Consumers may also opt for cheaper amusement parks or alternative leisure activities during harsh economic periods. Harsh weather also prevents consumers from visiting certain parks. As a result, the bargaining power of buyers is high.
Internal analysis
Current generic business-level strategies:
Quantitative and qualitative evidence of business level strategies:
Mission statement:
Today, Six Flags has committed itself to setting the standard for amusement park diversion. Our 18 topic, water and zoological stops crosswise over North America are better than anyone might have expected, offering today's families and children a finish recreation of different times along with different amusements at one time. The firm's authorizing concurrence with DC Comics along with the Warner Bros. permits Shopper Products to Six Flags, the restrictive amusement park rights to a great number of the world's most noteworthy characters of different cartoon, for example from Bugs Bunny along with its Looney Tunes companions, empowering Six Flags to offer our 26 million visitors a full character project, including character meet along with the welcomes or suppers. Also provides photo and signature opportunities and new retail choices. Visitors of all ages can come and enjoy here as it has activities for all. For the sake of recreation it is a recreation site for families they come and enjoy here which ultimately fulfills the mission of firm (John, 2013).
Strategies:
Since ascending out of liquidation in 2010, it has place enthusiastically for the development of new things and innovative rides. For example, sixty percent of its capital has been devoted to modernization. This address gives or takes nine percent of its wage and is for the most part $100.09. Innovations are recommended by its CEO Jim in few areas to maintain its position and to make little perfection.
Resources:
Six Flags has adjusted its promoting to target neighborhood visitors to nearby stops. This is methodology contrasts from their Mr. Six publicizing battle used preceding insolvency. A substitution is entitled for promoting crusade as "Go Big!" and "Go Big", the people who live by are welcomed here for enjoyment through different marketing strategies like using local media. Remarkably, numerous Six Flags is the first one that has caught the first-individual features in particular with park rides. Online pages have been also created by the firm for marketing purposes so that they can intimate with people. Therefore new revelries have been settled by the parks. In general, these movements have concurred along procurement of neighborhood showcasing and online networking ability that can help in the advancement of park (John, 2013).
Profitability
In investigating its method, for the amusement different profitable strategies are used by the park authorities that include the ticket system or the subscription strategies. . The five year normal of net revenue speaks to the five year normal rate for net salary from income (after assessment, working costs, profits and hobby). It is an exhibition of an organization's capacity to control costs. Degree of profitability is of eminent importance because of "arms" competition that uses to happen in the park. In 2013 over ten developments were made for the park. By making new rides, its building up a situated of altered resources that will remain there for a long time.
Evaluation of effectiveness of firm's business level strategy
VRIO analysis:
Value:
Organizations work mechanical rides, water rides, diversions, shows, themed displays, refreshment stands and different attractions. There are four key monetary main thrusts. These strengths incorporate Domestic treks by US inhabitants, buyer spending; time spent on relaxation and games, and inbounds trips by non-US occupants. Residential outings can be influenced by various elements including fuel costs for autos and aircrafts (Bolton, 2010).
Rarity:
Six Flags likewise utilizes the business level procedure of corner separation, which implies that they work inside of a particular and little specialty and offer some kind of "uniqueness" to the client; it has a certain level of quality and the client is willing to pay for this "uniqueness".
Inimitability:
Six Flags does confront some outside dangers and inward shortcomings, however. This incorporates the battling an overwhelming (outside) "weapons contest" of ride venture, additionally incorporates a powerlessness to pull in more seasoned markets and a trouble to respond to severe climate (Bolton, 2010).
Organization:
After the understanding of the quality, irregularities along with the imitability of this firm one have to look upon the organizational strategies and its incentives. The firm can appreciate a time of managed upper hand. Many parts have made this firm compelling. Six flag provides people of all age different incentives so that they would come and visit the parks.
On local levels they use to do provide amusement direction that becomes attractive for the people. Control of Administration frameworks incorporate both formal and casual intends to settle on beyond any doubt that directors' choices adjust to this current company's methodologies (Wheston, 2011).
Competitive advantages:
The business level system is considered corner because of the demographics that are actually separated of this industry. As indicated by IBIS, 32% of customers among the business are more youthful than the age of 18. This measurement demonstrates that a bland target showcase that is outfitted towards more youthful individuals. Consequently, the technique executed in Six Flags Corporation must speak to more youthful individuals and Six Flags must have the capacity to effectively advance and actualize advertising procedures that will attract these youthful purchasers. To do this, Six Flags methodologies focusing on more youthful people with their overwhelming publicizing and advancement strategies (Bolton, 2010).
Potter's forces analysis of firm:
The four P's of Six Flags comprise of their item, place, cost, and advancement. The item Six Flags offers to its clients is delight and amusement parks. This is their essential administration and serves Six Flags their plan of action. To execute a fruitful plan of action, Six Flags offers favorable circumstances and advantages to the end shopper with a quality item that the client sees as fulfilling (Wheston, 2011).
Through the SWOT analysis of Six Flags, Six Flags has the best thrill rides in the world and owns high reputation on its adventure experiences. Also Six Flags owns many loyalty adventurous adults. The brand image and marketing develops very well in the USA. Moreover, Six Flags is famous on its unique and innovative rides all over the world to help the Company build s stronger brand equity. However, Six Flags also own some weaknesses that need to improve. First, the product is not diversified and result the target customers are too limited. Not all age's consumers can visit to Six Flags. Although the brand awareness is very popular in the North America, it is looks like the brand awareness is not famous all over the world. Not too many foreigners know the Six Flags. Moreover, the supply chain is poor for the Six Flags. There are a lot of limitations from supply chain and result high costs. To increases it sales and attracts more consumers to come to the Six Flags, our group thinks there are a lot of opportunities for the Company. First, Six flags can utilize its strengths like high reputation on its adventure facilities to open the international markets like Asia, Europe and so on. According to our research, there have 108.7 million people in Asia visited to the amusement park, and there have 58 million people in Europe visited to the amusement park (Judith). By analyzing these data, it can find that the market potential is huge in theses countries. With the development of the social media marketing, Six Flags can use some popular social media accounts to enhance its brand awareness all over the world. According to the online researches about social media (Abu&Irshar&Mohammad, 2012), most people prefer spending at least four hours per day on social media (Exhibit 1) and most prefer using social media before making buying decision (Exhibit 2). Social media is a good way for the Six Flags to increase its brand awareness and rise the sales in a short time. Six Flags can create some official accounts on Facebook, Instagram, Twitter and other popular social media tools. Through these tool, the Company can create interesting campaigns to attract more followers to follow the Company's website. Another good opportunity for Six Flags is to develop more facilities not only for the young people but also for the older generations. However, Six Flags also face some threats. First, the competition in this industry is fierce. The biggest competitors are Disneyland and Universal studios. These two companies has already own a high market share in the whole industry. Also they have a high reputation not only in the USA, but also very famous all over the world. In addition, these companies enjoy the economic of scale and they can save more costs. To compete with the competitors, Six Flags should develop more unique patent adventure facilities, these patents facilities are value, rare and costly for competitors to duplicate and can help the company to get a sustain competitive advantage.