Six Flags Environment Analysis

Six Flags Environment Analysis

Six Flags Entertainment Corporation, formerly known as Six Flags Theme Park, is an American amusement Company headquartered in Arlington, Texas. The company also operates in the US, Canada, and Mexico. Notably, Six Flags owns the most parks and waterparks globally and is the seventh most frequented theme company by visitors globally. Six Flags is considerably failing, having filed a bankruptcy report in 2022 due to the failure to fulfill its debt obligations. This failure is attributable to several factors, including the political, legal, and socio-cultural environments in their areas of operation. Six Flags should analyze both domestic and international markets’ political, legal, and socio-cultural environments to determine the appropriate investment level to dedicate to each country.

Political and Legal Environments

According to Levitt (2014), Six Flags identifies government regulation as a vital political factor that negatively impacts a company’s profits. Ownership and operational activities of the Park subject them to health, safety, and environmental regulations across its areas of operation. In the 2013 10-K report, the company avers that such regulations pose uncertainty regarding future expenditures and liabilities. Six Flags Amusement Park, like other amusement Parks, produces wastewater, stormwater, and air emissions. Subsequently, the company is required to manage waste and other pollutants according to the requirements of the Environmental Protection Agency (EPA) (Levitt, 2014). Other state and local laws govern pollution management in different jurisdictions where Six Properties has properties. The specific laws that affect the company’s operations include the Clean Air Act (CAA) and the Clean Water Act (CWA).

Furthermore, amusement Parks are vulnerable to laws that require them to participate in the conservation and recovery of the environment. These laws include the Comprehensive Environmental Response and the Compensation and Liability Act (Levitt, 2014). These acts subject all theme Parks to legal liability for any incidents related to chemicals released from theme Parks. For instance, the company has to compensate victims for any illnesses resulting from hazardous chemicals released from the company’s parks.

The company is also vulnerable to new federal and state laws enacted to control safety standards. As a result, the company incurs the compliance cost required to comply with such regulations. Notably, some state monitoring and licensing programs require the Park to cater for monitoring costs. These costs keep changing because not all states have implemented the requirements, hence the likelihood that the company may incur more expenses in the future.

In the global environment, politics affect the company when there is heightened conflict in areas where Six Flags operates or sells its products. Once conflicts heighten, the company can no longer do business as usual. For instance, the recent Ukraine and Russia conflict led the company to withdraw toys, food, and other retail products sold in its Parks. Another legal factor affecting the company on the local and international stage is the risk of termination of Park lease agreements. Twelve out of twenty-seven of Six Flag’s theme parks are on land the company does not own (Levitt, 2014). To that end, the owners reserve the right to terminate leases if the company fails to remit the required rent, utilities, and applicable taxes on time. If the leases are terminated depending on the size of the respective Park, it could have significant financial implications for the company. Besides, conflicts arising from such terminations pose the risk of diverting the company’s management and resources from critical company activities.

Socio-Cultural Environment of the Global and Domestic Environments

Cultural Dimension	United States	Mexico
Power distance	Low power distance	High power distance
Individualism/ Collectivism	Individualist	Collectivist
Uncertainty avoidance	Low uncertainty avoidance	Moderately high uncertainty avoidance
Masculinity/Feminity	Moderately high masculinity	High masculinity
Indulgence/Restraint	Moderately high indulgence	High indulgence
Short-term/Long-term orientation	Short-term oriented	Short-term oriented

 Differences

Two of the six insights include uncertainty avoidance and power distance. Mexico scores high in both power distance and uncertainty avoidance (Najera, 2008). That implies Mexicans highly value hierarchical institutions, respect for authorities, and abhor uncertainty. In contrast, the US scores low on uncertainty avoidance and power distance. Another area of contrast between Mexican and American cultures on Hofstede’s dimensions relates to the scores on individualism. On the one hand, the US has a high score of 91, while Mexico scores lowly at 30 (Najera, 2008). This means that Americans have little concern for collective interests while Mexicans take care of each other’s most crucial needs. This insight relates closely to the aspect of certainty avoidance. On the one hand, since Americans do not value collective needs outside individual and family needs, they are not concerned with avoiding uncertain situations. On the other, Mexico’s low score on individualism means they are keen on how uncertain events may affect society’s collective needs.

Similarities

Socio-cultural similarities between the US and Mexico are based on Hofstede’s dimensions, including their score on masculinity. The US scores moderately high, while Mexico has a high score. This shows that both cultures believe in assertiveness, traditional role expectations, and the pursuit of money to show success (Najera, 2008). Another similarity between the US and Mexico based on Hofstede’s six dimensions relates to the score on indulgence. Both countries score highly on indulgence seeking, implying respective citizens highly value leisure activities. That means that US and Mexican citizens are likely to visit a Park to have fun if given a chance. Finally, both countries are short-term oriented, meaning people are willing to live in the moment rather than worry about the future (Najera, 2008). This cultural orientation is positive for Six Flags since people are ready and able to spend more time and have fun at the parks.

Economic Environment Analysis

The number of domestic trips to Six Flags parks is rising. One of the reasons contributing to the growing number of domestic visitors to the park is the rise in disposable income. Since the 2008/2009 US financial crisis, Americans’ disposable income has been growing, implying that more people are willing to visit Parks because they have more to spare. The increased domestic travel in the US has a lot to do with the economic recovery experienced over the years.

Based on Rostow and Galbraith’s economic model, Mexico is in stage five of economic development. That means Mexico is a more developed country based on Rostow’s standards (Willis, 2023). Rostow’s model classifies Mexico as a more developed country since it already has a traditional society. Also, significant industrialization has taken place in the country, implying that Mexico has a sufficient labor force to participate in production (World Economies, n.d.). Additionally, Mexico’s industrialization means an active working population with significant income can afford to pay for park visitations. Overall, Mexico has more than an average economy that can support Six Flag’s investment in the country.

Furthermore, the Rostow model places the US in the fifth stage regarding economic development. Notably, the US economy is characterized by a capitalist political system. Other characteristics include increased production of high-quality goods and services and service sector dominance (Willis, 2023). The majority of US citizens do not only spend money on basic living since they have enough to spare and spend money on luxury activities. That shows that US citizens are willing and able to spend time on leisure activities like visiting a theme park.

Conclusion

Six Flags Entertainment Corporation is considered a ‘worst’ company due to the unfavorable environmental factors affecting its profits. Domestic, federal, and state regulations targeting the regulation of pollution pause financial risks to the company. These regulations also apply at the international level. On the legal front, the lack of permanent ownership exposes the company to lease termination, which may have negative implications for the company’s financial position. Hofstede’s insights also show that cultural differences affect the company’s performance locally and globally.

References

Levitt, J. (2014). Strategic Analysis–Six Flags Entertainment Corporation. Strategic Analysis, 7, 29-2014

Najera, M. (2008). Managing Mexican workers: Implications of Hofstede’s cultural dimensions. Journal of International Business Research, 7(2), 107.

Willis, K. (2023). Development as modernization: Rostow’s The Stages of Economic Growth. Geography, 108(1), 33-37.

World Economies. (n.d.). World Economies. Saylordotorg.github.io. https://saylordotorg.github.io/text_international-business/s08-world-economies.html

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The company I chose as the “worst” company example is Six-Flags.

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https://saylordotorg.github.io/text_international-business/s08-world-economies.html

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Paper details.

Course Objectives:

Students will become familiar with business theories and approaches relating to various business environments (Domestic, Global, Technological, Political-Legal, Socio-Cultural, and Economic).

Students will evaluate the business environments and practices of selected companies.

Students will evaluate the business environments of a company identified as a “worst” company to learn why it is not successful.

Students will apply successful company strategies and business theory to recommend a successful strategy for the “worst” company.

The political environment includes all laws, government agencies, and lobbying groups that influence or restrict individuals or organizations in their society. The political environment also is about how changes in government policy might affect the business. The legal environment is about how legislation and related regulations in society affect the business, i.e. changes in employment laws on working hours.

The socio-cultural environment consists of how consumers, households, and communities behave and their beliefs. For instance, changes in attitude towards health, or a greater number of pensioners in a population. The socio-cultural environment will be language, aesthetics, education, religion, attitudes, values, social groups & organizations, and business custom practices. You will now begin to compare the social and cultural environments of the domestic and global cultures of your chosen “Worst” company. Continue to Lesson 6 for more information and details.

The economic environment comprises of economic factors, such as employment, income, inflation, interest rates, productivity, and wealth, which influence the buying behavior of consumers and firms. This week you will analyze the economic environment of both your domestic and global countries for your chosen “Worst” company. Continue to Lesson 7 for more information and details.

LO – 5 – Given a chosen company, the student will detect and evaluate the political and legal limitations and barriers for the company using both the Domestic and Global environments.

LO – 6 – Given a chosen company, the student will examine the effect of socio-cultural environmental factors that affect the company within its Domestic and Global environments

LO – 7 – Given two economic theories, the student will compare and contrast each theory using a chosen company’s Domestic and Global environments

PROMPT:

1. Identify and describe the political and legal environments/structures of the home and global.

2. Identify the socio-culture of the domestic and global environments (the countries) in opposing culture cultures using Hofstede’s clusters(s) the two countries fit

a. Identify the socio-culture parts of each country (you will need to examine these with the aid of Geert Hofstede’s 6 dimensions) https://geerthofstede.com/culture-geert-hofstede-gert-jan-hofstede/6d-model-of-national-culture/
b. How do these socio-cultural aspects of each country differ
c. What are the similarities

3. Using your chosen company’s domestic environment identify its economic environment. Compare and contrast the economic environment using Rostow and Galbraith along with your selected global environment.

FURTHER INSTRUCTIONS:

• Organize your paper using topic headings (APA format)
• Research requirement: Minimum of 2 sources, with at least one source from your required readings.
• Minimum page requirement: 4 pages in APA format not to exceed 6 pages.
• For further guidance please review the grading rubric for this assignment for guidance in preparing your essay

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