Case Study Paradise Park

Dear Jill

Please find my analysis on whether to introduce the “preferred guest card” in order to increase the profit margin of the company.

Regards

Rajarshi Ghosh

IIM Udaipur

Situational Analysis: Paradise Park has nearly 19 parks in United States of America and about 23 million visitor visiting it. For consecutive two years the company has started to make losses. The main reason for this losses are

• Increase in labour cost has led to decrease in profit

• Increase in the insurance cost due to frequent mishap of industry has also led to decease in profit

• The cost of making new rides for attracting more visitors has also gone up

• Real-estate tax benefits which was awarded to it for creating huge local jobs were also expiring

Some of

Also there is going fear that the company may lose some of its customers to its competitors. So Julli Hoover has three option either to increase the customer base or to increase the spending of customer inside the park, or to have better experience of the customer. In order to encourage more customer to visit the park CFO Nathan came up with idea of “preferred guest card” in which visitors have to pay some extra bucks but in turn they will get some special privileges inside the park

Problem Definition:-

Should Paradise Park execute the new plan of “preferred guest card” in order to raise the profitability of the company?

Options:

1) The company can invest more in creating new rides, new attracting features so that more visitors are attracted to it

2) The company can create new parks in various urban and semi urban areas in order to increase its revenue

3) The company can lay off non-performing and non-critical labour in order to reduce expenses

4) The company can provide some discounts on food and rides in order to attract more visitors.

Criteria for evaluation:

This are the few factors which should considered while evaluating the

Also raising of new funds from investor can be one option, but again if the company still does not perform well and it is unable to attract new visitors and increase its profit margin then the company may run for bankruptcy or it may ruthlessly takeover by other companies. So investing in other new rides or to raise fund to create new park doesn’t seems to be viable option at this point of time. Again the real-estate benefit which the company used to get for employing urban population were expiring and also the labour cost was rapidly rising so reduce the financial burden , the company can lay off unproductive labour .This option seems to be quite obvious at this point of time. But company has to take care of the fact that this layoff should not create any negative impact on other workers. The company can also give discount on several of the rides and foods inside restaurant’s and this may in turn attract lot of visitors. One particular constrain that the company has to keep in mind is the time frame. The company need to implement its plan quickly before it is too