Business 109

Six Flags Case Study

Section 23

Kristina Heredia

1/27/2011

SID 860854150

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I. Issue/ Problem Identificationa. Major Issue

The major issue in this case deals with the downturn of Six Flags, and the management’s

strategy to turn it around to be a profitable set of theme parks.

b. Central Factsi. Six Flags’ Business

Angus G. Wynne opened the first Six Flags in 1961 in Texas. Since then, it grew to open

29 theme parks including water and safari parks. Time Warner eventually became the owner of

Six Flags in 1991. After seven years, the business was sold to Premier Parks who owned several

different types of amusement parks around the country. In the year 2000, all of the Premier Parks

took the name Six Flags. “By the end of 2005, the company was the largest amusement operator

in the United States” (pg. 943). Two thirds of the U.S. population lived within 150 miles of any

Six Flags location. Six Flags was also legally entitled to use the Warner Brothers and DC Comic

characters in their theme parks and advertising.

ii. Six Flags’ Strengths

Six Flags had many strengths which contributed to its popularity; the major one being its

numerous locations. With its record of 29 operating theme parks, it allowed for many of its

visitors to be in close range of their locations. Unlike theme parks such as Disneyland, Six Flags

was seen as an attractable destination for a one or two day visit. This allowed for customers to

visit the parks often. Another strength of Six Flags was that it had the rights to the Warner

Brother’s characters. These characters are a well known and well liked which attracted its young

customers to the parks.

iii. Six Flags’ Weaknesses

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Six Flags has been in financial turmoil for many years now. Since 1998, they have not

been able to turn a profit. The company has been struggling to keep down debt and raise its share

value. Bill Gates, who is a major shareholder in Six Flags, was very unhappy with the financial

standing of the company. Daniel M. Snyder, who is also a major shareholder, had the same

feelings as Gates. Together, they had a combined ownership of over 20% of the company’s

stock. Once Snyder became Chairman of the Board in 2005, he organized a management

turnaround. Both he and Gates felt that it was necessary in order for the company to survive.

While this was a respectable plan, it left the new management team with players who have not

been with the company long. They were not fully experienced within the company and did not

have the familiarity that the old managers had. This carried a high risk factor for the company.

iv. Six Flags’ Opportunities

With the new management in place, Six Flags has the opportunity to turnaround the

company for the good. The new CEO, Mark Shapiro, has experience in his career with holding a

prior CEO position in the past. The old business strategy was not working out for the company,

which can be shown in their past financial data. Shapiro’s plan to focus more on customer

satisfaction can help Six Flags turn into a more prosperous company. As more people begin to

enjoy themselves at any of the various locations, they will go to the parks more frequently and

tell their friends to go as well.

v. Six Flags’ Threats

There are several companies that offer similar experiences as Six Flags does, such as

Cedar Fair and Disneyland. These companies are in competition with Six Flags, and during this

time of recession, many families have to choose wisely where they want to spend their

recreational money. In their new business strategy, Six Flags must figure out a way to outdo their

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competitors. Their financial standings and large amount of debt also poses a threat to Six Flags.

It will take some time to have their company be profitable again. With a new management team

in place, people, especially shareholders, are going to want rapid results.

c. Sub-Issues

A sub-issue which is involved in this case is the closing of the various locations of Six Flags.

Due to their poor financial standings, the company had to close down some of their parks to pay

for their debts. They could no longer afford to keep these places open, and they decided it would

be best to use the salvage money to pay past expenses. The closing down of these locations was a

difficult decision to make for the new management team, but they knew it had to be done.

II. Stakeholder Analysis and Management Evaluationa. Stakeholder Analysis

The major stakeholders who are relevant to this case are the shareholders. With the share

value decreasing, the shareholders became concerned with their investments. Two of the major

shareholders, Gates and Snyder, became so concerned that they decided to take matters into their

own hands and change management. Companies have responsibilities to their stakeholders, and

with the profit losses of Six Flags, the company had to turn things around.

b. Evaluate Central Management Decisions and Their Effectiveness

Before the turnaround of management, the old management team seemed to turn the once

profitable theme park business into a debt filled company. Even though creating many parks

which could be visited by most of the country was one of their goals, it actually turned against

them. Once the recession hit, many families had to watch their spending. Six Flags was one of

the spending areas that families had to cut out of their budget. The company had to eventually

decide to shut several of their parks to cover past debt. Once the new management team took

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over, they decided that they would turn around the parks by offering much more value for the

customers’ money. They wanted to make sure their parks were not just for roller coasters and

rides; they wanted to showcase their entertainment capabilities throughout the entire park. This

management decision was geared toward directing the company into producing profits once

again.

III. Recommendationsa. What Management Recommendations Would You Make?

Six Flags should close many more of their theme parks and change to be more of a

vacation destination like Disneyland is. This is the best strategic decision because this would

allow the parks to seem more “rare” and “appealing”. By closing many more of their parks, they

would be able to pay off more of their debt. However, it would also lower the number of parks

across the country, causing its customers to have to travel farther. If the current management’s

plan to appeal to customer satisfaction works, people will be impressed with the parks’

entertainment value and they will not mind traveling farther.

b. Alternatives

The alternatives presented in the case are not the best solution because they need to be

coupled with my strategy to close down many of their locations. The solution to amplify the

family’s experience at Six Flags is a good strategic plan, but there also needs to be a plan to cut

down on a significant amount of their debt.

IV. Implementation Focus more on customer service and entertainment Shut down many of their locations Have Six Flags be a vacation destination for families Lower the amount of debt significantly

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SWOT Table

StrengthsS1- Numerous LocationsS2- One or two day visit destinationS3- Rights to Warner Brother’s characters

WeaknessW1-Large amount of debtW2- New, unfamiliar management team

OpportunityO1- New start to turn around the companyO2- New focus on customer satisfaction

ThreatsT1- Competitors with similar productsT2-Shareholders are looking for rapid results