Flags SWOT Analysis in Analyzing

¶ … Flags SWOT Analysis

In analyzing the strengths, weaknesses, opportunities and threats (SWOT) of Six Flags it's apparent that during the timeframe of the case study the company has many, many challenges to overcome. The brand is becoming increasingly associated with troubled youth including gang-related activity, especially Six Flags Magic Mountain (Hyman, 2006), in addition to quickly running out of cash and having its market valuation hammered by Bill Gates' negative comments about its value as an investment, Six Flags faces an even more fundamental challenge: dropping attendance. In the midst of these challenges this SWOT analysis is completed.

Strengths

Six Flags is the largest theme park franchise in the U.S. with 29 parks total and a focused and well executed strategy of having a park within 150 miles from 67% of the American population. Second, the company has been able to define the relationship between financial and customer loyalty metrics so they are able to predict how long-term investment will influence their overall performance. Third, the licensing of Warner Bros and Marvel DC comics has also significantly assisted Six Flags as well. Fourth, revenue per employee is growing quickly, reaching $32,049 in 2005, up from $27,776 in 2994 per the figures in the case study. EBITA Margin (%) is also progressing during the period of the case study, rising from 19.89 in 2004 to 23.14% in 2005. Corporate Alliances in vending show significant revenue potential over the long-term as well, as Six Flags looks to bring in name-brand vendors of convenience foods and quick-service restaurant partners to enable customers to have a 360 degree entertainment experience.

Weaknesses

The primary focus of the case study is on the many challenges the company has to overcome. First, the weakness of losing customers' loyalty in the critical second and third quarters of the year, which is when Six Flags generates up to 85% of its revenues, is a strategic weakness that immediately impacts the company's financials. Second, the underperforming stock price and resulting market valuation make the company an ideal candidate for an acquisition. Third, Six Flags has a history of being an M&a target, including Time Warner in 1991, meaning corporations looking to get into this industry inexpensively will also focus on this country. Fourth, the company in 2005 had a full senior management turn-over, signaling such a turbulent and uncertain internal economic environment. This resulted in very low levels of expertise on the board of directors as well. Sixth, the company had a very high and unpredictable level of spending in 2005, hiring 31,500 temporary workers for example. All of these factors taken together pointed to 2006 being a very difficult year from a profitability perspective.

Opportunities

Six Flags has consistently shown the ability to manage third party licensing and partnerships, as evidenced by the licensing of Warner Bros & DC Comics for example. The future of the company needs to concentrate on additional quick service restaurant (QSR) partners who have high brand name recognition. These include Coca-Cola, Pepsi, McDonald's and others in the QSR category. Second, the company could capitalize on the interest conglomerates have in investing in this industry, and sell off several parks. This would generate much-needed capital for new rides and capital equipment investments that are badly needed (Hyman, 2006). Third, the company needs to concentrate on its e-commerce and digital media strategies, which are weak during the period of time of the case. It is imperative and a great opportunity for Six Flags to concentrate on this area quite intensively.