Wald Press
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Executive Summary
Paradise parks were the entertainment parks started by Mr. Francis by an idea of relaxation and shared humanity. The park was performing well right from the start but the problem begins later on and for the last two years it made loses. CFO of the park, Nathan Cortland came up with an idea to resolve the problem. Jill Hoover, CEO of the park along with other members were not sure about the proposed idea as it was against the companys values and culture. So the topic of discussion is whether Nathans idea can enhance Parks performance or undermine it?
Word Count : 99 words
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Situational Analysis
The whole case revolves around Jill Hoover, CEO of the park and the daughter of the founder and Nathan Cortland, CFO of the park. Paradise parks were making profit right from the start, but the problem begun from the last two decades when their profits had remained slim. And finally for the last two consecutive years they made loses.
The reasons for this problem could be many. The competition was growing in the industry and many new players were also entering, fighting for the same set of customers. The labour costs were rising due to low unemployment in late 1990s. Due to a series of industry mishaps insurance rates had also soared, the capital costs of building the new rides were also rising. And the real-estate tax benefits that the Park received originally were also expiring. All these factors resulted in high operational costs and finally decrease in revenue. So the company had to come up with some innovative ideas to avoid the threats of bankruptcy or a hostile takeover.
To increase revenue, the park was left with only three options, i.e. to increase visits per customer, increase average spending per visit, or attract new customers. The park came up with discounting idea which increased the revenue from in-park spending but this was offset by the loss in gate receipts, leading the whole idea of revenue improvement nowhere. And the maturity in the industry was making it more difficult achieve any of the three options.
To solve this problem Nathan Cortland, the CFO, came up with an idea of preferred guest cards, in which they would have a separate queue for the card holders. According to him, this would boost revenues by offering specialized service and giving people quicker access to rides at a premium price. It would increase the visits per customer and would also attract new customers. But Jill and other members of the park were not comfortable with the idea and believed that it was against the companys tradition and culture. However they also realized at the same time that they have to make Paradise Parks profitable in order to hold on to it.
Problem Definition:
One problem with the park was financial, as the profit and the revenue were going down, they could not invest in many new and different rides and also it was not possible for them to buy new parks for different segments. And the other problem was the dilemma to accept Nathans idea or not.
All these problems narrows down to one major problem i.e. how to increase revenue.
Decision Criteria:
The decision criteria to select one of the available options should keep the following things in mind.
As the company is going into loses so the first criteria is to increase revenue and to turn around loses into profits.
ROI has to be calculated before implementing any option and the cost of implementation should also be taken into care.
Company should keep a track of customer satisfaction also, as it will result in increase visits per customer, increase average spending per visit and will attract new customers.
They should keep companys image in mind before implementing any option as that will keep the companys values and culture alive.
Keeping all these criteria in mind, the company should make the decision of selecting the best alternative which will benefit the most.
Options:
The various options available with the Paradise Park to choose from are:
Preferred Guest Cards: As suggested by Nathan to introduce a separate queue for the cards holders, this will lessen the rush in queues and will also attract more affluent customers who would otherwise ignore the whole experience.
In-house advertising: They can allow others to advertise ( using posters or stalls etc. ) in side the park, and thats how the company can increase their revenue also.
Differential Pricing: They can use different price for different seasons i.e. they can charge a bit high on the pick hours and pick seasons as compared to what they will charge on non-pick