Problem Statement –While Cedar Fair is steadily growing revenue to the 2013 estimated value of $1.1B, their operating profit percentage has ranged from 50% to -17% over the past 5 years and relies heavily on season pass sales and visitors over a limited operating period of 130 days, leaving them vulnerable to competitive moves by the market leaders in the Amusement Park Industry. (IBISWorld)
Analysis Plan / Data Used / Key Assumptions –The industry tends to be very sensitive to economic cycles and operates in a low-growth market with high market saturation. (IBISWorld) Cedar Fair is an industry leader due to its personnel, experience and financial strengths. Industry leaders are difficult to compete against. Very strong external forces in the Amusement Park Industry and suggests that consolidation is likely. Cedar Fair is the smallest of the rivals specifically identified in the IBISWorld Report. These issues may make Cedar Fair vulnerable to competitive actions or potential takeover by the other 4 major industry players. Research and The Five Forces Model will be used to diagnose the problem and find a solution.
Data Analysis and Tool Use – IBISWorld expects that in 2013, the top four players in this industry will account for 78.0% of total industry revenue. The number one player is the Walt Disney Company, which accounts for nearly on half of total domestic industry revenue. Disney dominates the top end of the market, owning the top five most visited amusement parks in North America. Universal Parks and Resorts, SeaWorld Entertainment and Cedar Fair each own a number of parks that attract well over 1.0 million visitors each year, giving them large market shares in terms of revenue. The industry has achieved maturity and has a very high population penetration rate in the domestic market, making strong growth in visitor numbers and revenue increasingly difficult. In addition, over the next five years, the industry will contend with increasing...