4 Forecasting

“Inventory Is Evil”

Posted on by spr1323nnadeem


Apple, Inc. is one of the largest, most innovative companies in the world, selling not only electronic gadgets for users of all skill levels, but also how it manages inventory and forecast for its demand. The company has devised new inventory management strategies that have become a benchmark in the electronic industry and examples to many other companies worldwide.

These newly implemented benchmarks not only minimized inventory costs, but simultaneously helped Apple smoothly sail through high profile product launches without giving scope to competitors or allow them to catch up with competitively similar products. The case not only covers inventory management techniques at Apple, but also provide basis for calculating the internal fund requirements of the company based on projected sales.

In the electronics business, companies desire to minimize inventory storage as much as possible to avoid the risk that it won’t move to consumer hands. However, when a company underestimates the anticipated demand of a product and produces fewer units than expected, this results in a shortage of inventory, leading to a loss in both customers and market share. Therefore, a fundamental practice for a manufacturer is to keep as little inventory on hand as possible. As Apple’s agenda is perceived, they try to keep the right balance of inventory in all of their stores to satisfy customers demand.

Marketing products quickly saves the company storage costs and avoids the devaluation of products due to the continuous improvement of technology both internally and by new innovations from competitors. The best way to keep the inventory at minimized level is to invest and focus on supply chain and marketing continuously. To increase production, it is wise to hire contractors for manufacturing equipment instead of owning one. By doing so, the company will focus on promoting the inventory management in order to sell that specific line of products speedily at the fixed price.

Tim Cook, the manager of Apple, believed inventory loses somewhere between 1-2% of its value each week under standard conditions, the same way milk goes bad soon after the carton is opened. Operating under this philosophy, he put Apple in front of other competitors, such as Dell, by improving the way of moving inventory, where he claimed that “inventory is evil”.

There are a few ratios that show how quickly companies can liquidate inventory. For instance, the “days of inventory” ratio measures a company’s performance and provides a better idea to investors of how long a company takes to turn its inventory into sales, with shorter periods being better. Likewise, “inventory turnover,” shows that a low turnover can mean poor sales and thus products will be sits in a warehouse losing their value; on the other hand, high turnover means strong sales and relatively empty warehouses.

 

 
What sort of inventory management practices can other companies learn from Apple, Inc.?

 

 

 

Sources:
H., Victor. “Apple’s Secret Sauce for Success Is Inventory Management.” Phone Arena. N.p., 29 Mar. 2012. Web. 28 Apr. 2013.
http://www.phonearena.com/news/Apples-secret-sauce-for-success-is-inventory-management_id28558

Niu, Evan. “Does Apple Have a Little Inventory Problem?” (AAPL). N.p., 5 Mar. 2013. Web. 28 Apr. 2013.
http://www.fool.com/investing/general/2013/03/05/does-apple-have-a-little-inventory-problem.aspx

“What Is Apple’s Inventory Management Secret? | QuickBooks Manufacturing Blog.”QuickBooks Manufacturing Blog. N.p., 17 Apr. 2012. Web. 28 Apr. 2013.
http://quickbooksmanufacturing.wordpress.com/2012/04/17/apple-inventory-management-secret/

 

Follow LeanPath: Way to reduce food waste

Posted on by spr1333rmortha

Among 150 hotels, hospitals and universities, the University of Massachusetts Amherst is utilizing an innovative method to reduce food waste conjured by a company called LeanPath.

According to LeanPath, the issue of food waste is getting to be tremendously harmful for energy and water resources. Being the biggest source of waste in the United States, food waste accounts for $8 billion to $20 billion worth of waste annually. This is because about 4% to 10% of food bought is wasted rather than consumed.

What exactly is this waste? What LeanPath tracks is not exactly what we think of when we think of the term “food waste”. It is not the food our moms tell us to “finish because kids in Africa are starving”. The food waste that LeanPath targets is focused to tackle the root of the problem. It is the food that is wasted even before it reaches the plate. This can be anything from meat to vegetable trimmings. Imagine you are making mashed potatoes. How much of the potato are you really peeling? How much potato skin are you discarding? Leanpath can measure and put a dollar amount to all of these questions.

How does LeanPath help and what does it do exactly? Quite simply, LeanPath provides the means for establishments to track the food they are wasting. Employees can do this by weighing their waste on the scales provided by LeanPath.  The employees enter in the type of food, size of container, type of meal and the reason it is being discarded in to the LeanPath machines. The machine then calculates the waste into a dollar amount using their special software. All of this would cost the establishment about 5,000 dollars. Though the software doesn’t provide the employees with solutions to reduce food waste, it provides them with useful charts and graphs that help the employees make these decisions. The employees and their managers then meet up once a month and brainstorm best practices to reduce the waste they are calculating on the LeanPath scales.
How effective has this been? Specifically, the University of Massachusetts Amherst has saved $300,000 dollars after it has started using LeanPath’s methods. I think that this is a great start to saving a lot of waste in the food industry. I do think LeanPath would be more effective if they gave practical solutions to reuse food that is intended to waste rather than giving facts and charts. With LeanPath’s program now, it looks like only the institutions that are most dedicated to sustainability will benefit from LeanPath’s products. This is why more commercial institutions like restaurants and food courts are not using LeanPath. Anyone can weigh the food waste but there needs to be an active desire to come up with solutions to reduce food waste in order to make this program more effective.

Can LeanPath eventually reach more commercial industries? Do you think it needs to alter its program to do so? If so, how?

Links: http://www.businessweek.com/articles/2013-04-11/dont-throw-that-out-leanpath-harnesses-data-to-fight-food-waste

Boeing Dreams On

Posted on by spr1312dkansara

Boeing’s 787 Dreamliner, which is supposed to be the most fuel efficient Airlines, hasn’t stayed in the skies for long due to its lithium-ion battery issues. Recently, the 787 Dreamliners have had overheating battery problems in January due to which they had to halt services. Two of the aircrafts from Japan, one All Nippon Airlines and the other being Japanese Airlines, had to be grounded due to electrical fire in the batteries. Later, the entire 787 Dreamliner fleet was grounded totaling 50 planes, which has cost Boeing about $600 million.

Leading engineers and battery experts made alterations to the electrical systems. Boeing stated they put ten teams of about 30 engineers worldwide to fix the problem. The engineers covered the batteries in a stainless steel box. They redesigned the batteries to reduce the chances of short circuit. They installed new and higher quality batteries, battery chargers, and exhaust systems in order to help in the occurrence of overheating.

Boeing expressed that they went in great depths to discover the reason behind the problem; however, the quality control and maintenance sectors failed to detect the potential cause of the electrical fire. Furthermore, Boeing chairman and chief executive also stated that the repairs of these 50 planes will be finished by the end of April, and they will start deliveries of 787 in next month, May. He further asserted, “Our first priority in the days ahead is to fully restore our customers’ 787 fleets to service and resume production deliveries.” The plane will then be safe to fly, authorities have stated. But the question of the cause still remains a problem.

The Dreamliner has done good business, especially in Asia and the Middle East as they depend on long-range flights more and since the airline is made up of lighter weight composite materials and provides great fuel economy. But since experts could not untangle the enigma behind the fires, people may still be skeptic about trusting the safety of the planes. This could even result in people switching to planes with conventional technology rather than the innovative, yet malfunctioning 787s, which can highly damage Dreamliner’s predicted sales.

Moreover, Larry Loftis vice president and general manager of the 787 program mentioned that there is a possibility that they may never be able to find the real cause. Nonetheless, he declared that this calamity will not impact the expansion of other jets and “would not derail Boeing’s plans to double 787 production to 10 a month by the end of the year.” He even announced that this will also not postpone the upcoming edition of the 787, known as 787-9.

With that said, how would this affect the time ahead for 787? How would this tarnish its image and hurt future sales?  Should they alter their forecasted sales due to this incident?

 

Sources:

http://www.nbcnews.com/business/dreamliner-set-fly-week-boeing-fixes-battery-6C9542306

http://money.cnn.com/2013/04/19/news/economy/boeing-dreamliner/index.html

http://www.guardian.co.uk/business/2013/apr/24/boeing-787-dreamliner-repairs-completed-may

http://www.guardian.co.uk/business/2013/apr/22/boeing-repairs-dreamliner-batteries

Where is my phone?

Posted on by Dom

The HTC One, High Tech Computer Corporation’s leading phone is currently experiencing worldwide delays. As of April 24th, AT&T, Sprint, and T-Mobile are the sole wireless communications service providers that offer the cell phone for sale. Unfortunately, potential clients will be disappointed upon hearing that the phone will be delayed; potentially for several weeks. Originally the HTC One was scheduled to launch in mid-March, but supply issues have pushed back the release for over a month.

Over the prior year, HTC’s profits have dropped to a record low $2.83 million. This accounts for a 98% drop in profits. The HTC One is the paramount flagship model and in order to turn around the company, it must sell well. In March alone, HTC moved only 300,000 phones to nationwide retailers in three countries as supply bottleneck issues arose. HTC indicated a shortage of camera components as the problem responsible for the mass delays. By the end of April, J.P. Morgan Securities’ supply chain checks forecast 1.2 million phones shipping as well as 2.0 million in May.

Oddly enough, the main competitor of the HTC One, the Samsung Galaxy S4, will also be delayed until April 29th on T-Mobile. The Galaxy S4 will be launching on six carriers, however only T-Mobile has set a definitive launch date. In order to cope with the anticipated sales forecasts, Samsung is currently producing 10 million units monthly. T-Mobile will likely be the first carrier to launch with the Galaxy S4 but is already experiencing delays before pre-ordering is available. Once the five other carriers set their release dates, demand will go up and Samsung may not have enough available phones for the amount demanded.

Anticipated sales forecasts generated for both HTC and Samsung may not be realistic over the next several months as both corporations are struggling to produce enough inventory for the demand. This, however, brings up a question of quality. If HTC and Samsung are rushing to mass produce these phones to clear the backorders, will the quality of the phones suffer, or will crashing methods have to be implemented to speed up project length?

In our class we discussed bottleneck situations and how that may jeopardize the timeliness of the process but this article also brings up forecasting models. Unfortunately forecasts are just predictions. When unanticipated situations arise, these forecasts may not be accurate; as exemplified in HTC’s case. Stock markets also rely heavily on forecasts, thus a company may decrease or increase in value today pertaining an act that will be committed in the future. Only time will tell how long consumers will have to wait for their phones as both companies are working relentlessly to produce more phones.

Do you believe that HTC and Samsung should have prepared better for this problem and stockpiled phones ahead of time to avoid this situation?

Which company do you feel will tackle this issue most effectively?

 

References:

Brown, Justin. “HTC One US Bottleneck Won’t Clear Until After Galaxy S4 Is In Stores?” SidhTech RSS. N.p., 20 Apr. 2013. Web. 24 Apr. 2013. <http://www.sidhtech.com/news/htc-one-vs-samsung-galaxy-s4-us-release/1003194/>.

Davies, Chris. “HTC One Turnaround Tipped as Supply Bottleneck Loosens.” SlashGear. N.p., 15 Apr. 2013. Web. 24 Apr. 2013. <http://www.slashgear.com/htc-one-turnaround-tipped-as-supply-bottleneck-loosens-15277830/>.

Epstein, Zach. “BGR.” Samsung Galaxy S4 Deemed a Winner: Shipments Seen Topping Early Estimates. N.p., 5 Apr. 2013. Web. 24 Apr. 2013. <http://bgr.com/2013/04/05/samsung-galaxy-s4-sales-estimates-414846/>.

Harvey, Cynthia. “HTC Profits Drop 98%.” Datamation. N.p., 8 Apr. 2013. Web. 24 Apr. 2013. <http://www.datamation.com/news/htc-profits-drop-98.html>.

Kovach, Steve. “Samsung Galaxy S4 Delayed On T-Mobile Until April 29.” Business Insider. N.p., 23 Apr. 2013. Web. 24 Apr. 2013. <http://www.businessinsider.com/samsung-galaxy-s4-delayed-on-t-mobile-2013-4>.

Tofel, Kevin C. “HTC One Launch: Available at 2 Carriers; Web Orders for 1; Delays for Dev Edition — Tech News and Analysis.” GigaOM. N.p., 19 Apr. 2013. Web. 24 Apr. 2013. <http://gigaom.com/2013/04/19/htc-one-launch-available-at-2-carriers-web-orders-for-1-delays-for-dev-edition/

It’s Not Easy Growing Green

Posted on by spr1313aperrotin

They call it weed because it can grow anywhere but it requires rigorous effort.

 

Making a legitimate business out of marijuana requires high labor costs and extreme costly maintenance. Hundreds of Medicinal Marijuana Entrepreneurs have gone under because of competition or cost. The CEO of Pink House Blooms, Elliot Klug (pictured above) explains, “In order to survive in any business, you’ve got to be cost effective, so that was one of our drivers.”

Pink house and other commercial growers are required to document the life of each plant from the time it’s a cutting to the time its flowers are sold and the state of Colorado requires cameras in every room that has plants to prevent marijuana from entering the black market. These extra requirement are not comparable to any other industry or cheap either.

The Marijuana flower is trimmed by hand because the machine would damage their Trichomes, the part of the plant that is rich in the high-inducing THC. This results in high labor costs.  Payroll can make up more than a third of production costs. Retaining employees who learned their trade by growing clandestinely, is also a challenge because “they aren’t used to being part of a regular society”, says Jason Katz, chief operating officer of Local Product of Colorado.

Growing space can cost $100 or more per square foot and Pink House Blooms has a 6000 square foot warehouse. To have operation costs as inexpensive as possible they use every inch of their warehouse. To save on air conditioning costs, Pink house developed a system that uses water to cool the powerful lights that make marijuana grow.  Those lights, causing a $14,000-a-month electric bill, are on 24/7 making their electricity bill a huge portion of their expenses and preventing the company from paying back the borrowed money.

The employees may have gauges and there are Pink Floyd posters covering the walls but it is not as mellow as one would think, It is a tough business. They have supplier issues because many companies do not want to be associated with a pot-growing business.

Is this still a touchy subject or is there something  operations managers do to convince suppliers to work with them?

Operations Management for this industry is not typical at all. They have to create new equipment specialized for their product because it cannot be found on the shelf. This business could have high costs because it is relatively new.

Is it possible that over time, operation managers will find better ways to lower their costs? Any specific ideas?

Colorado and Washington has approved the use of Marijuana for Medicinal use and recreational use effect by next year. Will a higher demand leading to higher profits  make it possible for these companies to increase production efficiency?

What methods might this industry use to forecast. Why might the naive approach lead to too much forecasting error?

Source: http://online.wsj.com/article/SB10001424127887324345804578426963236807452.html?KEYWORDS=marijuana

Google- Future and Change

Posted on by spr1332khsieh

Over the past year Google has been on a shaky path.  Google’s mobile sector did horribly compared to Apple.  Major competitors were constantly outperforming Google’s productivity and sales.  Despite the threats Google has faced, the company is not worried about their competitors.  According to the article, Google’s shares rose 26% over the past year while their major competitor’s (Apple) shares fell 36% from the previous year.  Google is very optimistic about the future.

 

Google C.E.O., Mr. Page, still holds his head up and says “As C.E.O., it’s also super important to keep focused on the future,” Mr. Page said. “Companies can tend to get comfortable doing what they’ve always done, with a few minor tweaks. It’s only natural to want to work on things you know. But incremental improvement is guaranteed to make you obsolete over time, especially in tech.” (New York Times)

 

I definitely think this is the right attitude to have.  Many companies think of great ideas but then after time they lose the innovation that drives customers wanting more.  Especially since technology is constantly changing, it is so important to keep pivoting ideas.  Google is currently focusing on different strategies and future technology products to help Google gain the creative edge against competitors.  Major projects that Google is thinking about launching are cars that drive themselves and glasses that connect to the internet also known as Google Glass. (Talk about a major headache).  But these ideas are what keep people talking and coming back to see what is going on.  Companies need to keep changing their ideas in order to be successful.

Also the C.E.O. of Google knows that introducing new products  and sales are very important to the business, but that is not the only thing to focus on.  He is a firm believer in control.  He states that the “its core business is being run more efficiently”.  Controlling staff, spending, quality will all impact the company as a whole.  By focusing on efficiency, that will improve the overall quality of the company like we discussed in class during the red bean experiment.

According to the article it seems that the C.E.O. of Google is very proactive which is a good management and leadership skill to have.  He knows that the main focus is quality, which is an important aspect to a company.  He consistently works very hard at improving quality and puts an emphasis on change.  Whenever Google faces a problem or a potential threat, Google responds actively in order to fix the problems.  They focus on the issues head on in order to reduce the possibility of any future threats towards the company.

 

Hopefully Google will really follow through with their future products and have a better year than last year.  I cannot wait to have a car that drives itself!

 

Source:  http://www.nytimes.com/2013/04/19/technology/googles-earnings-beat-expections-but-revenue-does-not.html?ref=technology

Is the Oil-Tanking Industry Sustainable?

Posted on by spr1322cleahy

Due to the poor economy, the oil industry is having a rough time enduring transportation costs from country to country.  For decades, oil tankers have been the main source of transportation, carrying up to two million barrels of oil between the Middle East, Asia, and the United States. Unfortunately for the oil tanking business, operation costs over the past few years have been much more expensive than they have been in the past.  This increase in price makes the shipping of the popular and much demanded natural resource nearly impossible and not worth it.  Unlike what is usually the case, globalization in this situation for example is more costly to this particular industry than it would be to drill into our own soil.  The only problem is that we find a larger supply of oil in foreign countries than we do our own.

To get an idea of how much this is costing the oil firms, analysts look at the forecasts from previous years.  This collection of data has shown that the industry has lost more than $26 billion dollars in the past four years, and operation costs are higher than ever.  To operate one of these extremely large vessels, it costs anywhere from ten to twelve thousand dollars per day.  In 2007, operation costs peaked at $309,601 per day.  That is unbelievable! Because these carriers are only making roughly $7,000 a day, there is a huge deficit.  While such oil companies continue to lose so much money daily, they cannot possibly stay in business.  The supply chain is not working in favor of firms; therefore, sustainability of the business comes into question.  So what should these oil tanking firms do?  How can they cut costs?  Is it possible to adjust the supply chain or is it a lost cause?

I think that at such a loss like this, the amount of ships in operation should decrease drastically, causing less expenses to be paid.  That is the only way they can keep their heads above water, although they are already sinking in debt.  New York’s Overseas Shipholding Group filed for bankruptcy last year, and I am sure they will not be the last to do so.  I feel for these dying companies because many of them entered into contracts before the economic crisis occurred, and now they are stuck in a failing industry, losing more than they gained from the contracts to begin with.

Other possible options for consumers that effect the oil firms is innovation.  It is not uncommon to see on TV or read in the newspaper alternatives to oil resources.  At the Chicago Auto Show every year, concept cars are on display that use battery powered systems to replace oil.  These are more cost efficient and do not require the use of oil tankers.  What do you think will be the result of the oil industry failing?  How do you think consumers should react to this? How do you think the government should react to this?

Sources:

http://online.wsj.com/article/SB10001424127887323741004578418652461117968.html

https://www.google.com/search?hl=en&site=imghp&tbm=isch&source=hp&biw=1440&bih=686&q=oil+tankers&oq=oil+tankers&gs_l=img.3..0l7j0i5l3.1094.2780.0.2865.11.9.0.2.2.0.99.568.9.9.0…0.0…1ac.1.9.img.jaBIJkaaITU#imgrc=UIoFamHBsuSHxM%3A%3B47hJKcJOVD494M%3Bhttp%253A%252F%252Fwww.shippingherald.com%252FPortals%252F0%252FVessels%252Foil-tanker.jpg%3Bhttp%253A%252F%252Fwww.shippingherald.com%252FAdmin%252FArticleDetail%252FArticleDetailsTankers%252Ftabid%252F102%252FArticleID%252F8877%252FNordic-American-May-Double-Oil-Tanker-Fleet-as-Asia-Spurs-Demand.aspx%3B1190%3B1074

 

 

Taking the guesswork out of Supply Chain Management

Posted on by Glenn Joseph


Fuel consumption represents nearly 37% of average per-mile trucking costs.  In today’s time, with the advancement of technology, more and more companies are tapping in to technologies that allow for better risk management to improve efficiency and lower the risk of avoidable scenarios that were once considered “the cost of doing business.”  Many large companies such as Procter & Gamble and Whirpool have begun working with companies such as Breakthrough Fuel, which work with many shippers across the country to help provide strategy on fuel management.

Clients using Breakthrough Fuel’s model only pay actual fuel costs for particular routes on particular days, this allows for a savings on fuel consumption.  Breakthrough Fuel also has multiple locations from which a manufacturer can ship from which allows manufacturers to ship based on distance from their destination or the cheapest trucking costs.  To help aid in the transfer of shipments, there has been mass improvements to inventory tracking such as with the use of radio frequency identification (RFID) technology.

With the use of RFID technology and GPS, shippers can know exactly where a certain item is within a container.  This use of RFID chips helps alleviate errors in packaging and shipping such as when working with
parts for bigger items.  Think about a time where you will be able to place all of your groceries in a shopping cart at the supermarket and as you walk out, an RFID scanner will automatically scan all your groceries for you and display a price for each item without the hassle of you having to wait in line.  With the use of RFID technology I really believe that soon that is how our shopping will be.  What do you think are some other good uses for RFID technology?

Firms that ship in less-than-truckload (LTL) amounts need to make sure that they are shipping goods quickly in order to meet the high demand from their customers.  This idea of using LTL services provides shippers a way to send out shipments more quickly but at a higher price.  With the use of RFID technology, a shipper can carry multiple loads from different companies and be able to manage and control where each individual package gets delivered.  Say Walgreens and Dominick’s both need a certain brand of product, the manufacturer can use a logistics management company such as MIQ Logistics to make sure that their product gets to both Walgreens and Dominick’s stores in a certain location with the help of RFID chips to track and monitor the packages.  Certain transportation companies even provide their drivers with mobile devices to manage the inventory within their truck.  Shippers are working on delivering shipments damage free, within a reasonable amount of time, and with confidence that their shipment will arrive in the right location when needed.

What can you see as the advantages or drawbacks to using the LTL technology described above? Do you see any ways of improving this system?

 

 

Sources:

“Science Comes To Shipping.” Fortune Magazine 8 Apr. 2013: S1-S4. Print. (Also available here: http://www.timeincnewsgroupcustompub.com/sections/130408_Freight.pdf)

 

HTC One vs Samsung Galaxy S4 Marketing Campaigns

Posted on by spr1322jmei

 

As everyone might or might not know, the HTC One and Samsung Galaxy S4 launched in April and will be available for purchase by cell phone carriers soon. That being said, they are competing with one another head to head. Both phones are highly anticipated by the general public, and both HTC and Samsung had been doing a lot of marketing for their upcoming phones. HTC is known to have great products, but poorly executed advertising for their phones. On the other hand, Samsung is known for dumping large amounts of money to market their phones thus creating hype among people for their products. HTC recognizes their weakness and is making drastic changes to promote the HTC One.

For the launch of the HTC One, they will not only be focusing on traditional marketing. They will also be doing new media and viral marketing, and from that they will be relying on people’s positive word-of-mouth to help promote the phone. HTC is taking on the concept that Apple has in marketing their products, which is to allow customers to have a hands on experience with their products before buying it. To do so, HTC had set up 11 temporary retail stores in the malls of the United States to allow customers to go and test the phone out. In addition to that, HTC has set up “HTC Live Experience Tours” in populated tourist locations with boom box looking stands to emphasize that the HTC One speakers are Beats by Dre audio. Furthermore, HTC One will be advertising the phone in sites and apps for tech savvy people who are constantly on their phones and on the internet. But is this enough to compete with Samsung’s marketing campaign? I myself tried to get my hands on a HTC One by preordering it with T-Mobile, but it is already sold out. Does this show that HTC’s marketing campaign was a success?

Meanwhile, Samsung has set the standards high with the launching of the Galaxy S4 last month (March 2013). They have built up much hype for the S4 and people were eagerly waiting for its launch because its predecessor the Galaxy S3 was so successful. When it came time for the unboxing of the Samsung Galaxy S4, they put on a theatrical show for the public that can be streamed live on YouTube. There were more than 423,000 viewers that were watching the event as Samsung showcased the long awaited phone at the New York’s Radio City Music Hall. However, after the unveiling of the Samsung Galaxy S4, people thought that the phone did not live up to the hype. People thought there wasn’t a major product differentiation between the S3 and S4. That being said, do you think that consumers make their purchasing decision based on how the companies have promoted their product?

Sources:
http://www.chicagotribune.com/business/breaking/la-fi-tn-samsung-galaxy-s4-debuts-20130314,0,7829765.story

http://www.chicagotribune.com/business/breaking/la-fi-tn-htc-viral-marketing-samsung-20130404,0,1529131.story

How Six Flags could learn from this class

Posted on by spr1322tgutheil

http://socal.catholic.org/images/local_ad/2010024016magic.jpg

Six Flags Entertainment Corporation filed for bankruptcy protection in 2009 after years of being in devastating amounts of debt, poor management and multiple changes in who owned the company. This initiates the first issue as there is no way there can be a good way to manage a large company like this with so many changes in leadership. By the time the people that work for Six Flags got used to the new style of leadership, the ownership changed again therefore messing up the whole system again. A long-term plan should have been established with somebody that would be there the whole time this be through the different stages of ownership.

The company started doing a little bit better again in mid-2010, and today in 2013 analysts say that the company can have a good season ahead of it as it has new attractions that can improve the attendance and therefore the revenue. Through finally having good management again the company has improved season pass sales, less discounting and more financial income through parts of the business such as dining. What the earlier owners and managers should have realized is that forecasting plays a huge role in how their business is doing. They should have realized that discounting is good but definitely can not be the end all be all as it may attract people, but there has to be a line draw to make sure it is still profitable for the company and therefore the employees.

The fact that there are a lot of new rides and attractions posts a lot of opportunity in terms of that a lot more people will start showing up. One of the reasons that Six Flags Corporation had been struggling is that old customers were getting saturated with the rides and attractions that were available to them because they had been to the parks so often. With the new rides a lot of the long-time goers will start going again and the season ticket sales will go up again.

Management also mentioned that this will not be the old Six Flags ever again as it will establish a new business plan and “has willingness to rethink its business model and track record of success.” It seems as if this new set of management knows how to promise the company future success, but the question is if it will actually be able to successfully implement all of these new strategies to guarantee they won’t slide into losses again. The keys to success for a company like Six Flags are good forecasting for what needs to be done in order to get a lot of tickets sold, good management of the employees and facilities, along with making sure the rides and attractions provide variety and do not get boring.

http://www.businessweek.com/ap/2013-04-19/credit-suisse-initiates-coverage-of-six-flags