Executive Summary
This report presents an opportunity analysis for an entrepreneurial concept of an amusement theme park based on the historical, mythical city of Cibola. The park would use unorthodox methods of design and offer an authentic historical and cultural experience. It is a bold and innovative idea, meant to disrupt the highly commercialized and unauthentic amusement park industry. However, it is also a calculated opportunity to fill a potential gap in the market for such an entertainment experience. As a result, according to the entrepreneurial theory developed by Schumpeter and expanded upon by Kirzner, this makes it a worthwhile concept with the potential to create a new industry equilibrium.
The report will conduct an environmental scan by entrepreneurial frameworks which suggest that cognitive adaptability should be practiced by investigating and analyzing the market. A futures thinking analysis is presented to explore potential opportunities for the implementation of the concept. Furthermore, a PESTEL and Porter’s Five Forces analyses are conducted to present various influences and realities of the amusement park industry along with potential customer segmentation. Furthermore, the report presents a feasibility analysis that seeks to address practical issues of implementing the idea. It is noted that the original design concept may be impractical both in cost and environmental factors. However, with modifications, the idea presents itself as financially feasible. Funding can be achieved progressively as more concrete planning is done for the project which would allow for equity financing to achieve the substantial starting capital needed for implementation.
Concept Description
The business concept envisioned for this project is to create a recreational theme park that would be a representation of the mythical Seven Cities of Gold otherwise known as Cibola. Using historical manuscripts for accuracy, the city will be constructed as described by popular legends of the 16th-century Spanish conquistadors. There would be exquisite attention to detail and authenticity of the project, including using gold as an actual construction material. It would be built inside a mountain for the location to have a unique and mystic atmosphere. This concept is most applicable to the amusement park and entertainment industry.
Vision
One of the earliest theories on entrepreneurship was proposed by Schumpeter, who suggested that its essence lies in the ability to depart from existing routines, disrupt the status quo with all systems and structures in place (Kirzner 1999). Entrepreneurship is the idea that causes disequilibrium and is the driving force behind capitalism. Kirzner later elaborated on the theory by explaining that an entrepreneur is not only driven by bold creativity but calculated identification of opportunities. Through the careful coordination of resources, an entrepreneur acts upon disequilibrium in the industry and creates the new equilibrium while tremendously profiting from the endeavor (Kirzner 1999). The vision for this project strongly adheres to these entrepreneurial theories as it seeks to revolutionize the industry. Amusement parks have become primarily commercialized on brand and recreation without offering visitors an authentic experience. The mystical concept of Cibola combined with the aesthetic and cultural value offered by the concept should serve as a unique outlier in a time when the industry is seemingly stagnating on ideas.
Core Competencies
Core competency in strategic management theory is a distinctive feature of a business which distinguishes it from competitors in the industry. It may consist of technology, process, expertise, or strategy. However, core competency is the ability to combine and balance its key distinctive characteristics to create an area of specialization (Schilling 2012). A core competency that is exemplified by the entrepreneurial concept is its unique and non-substitutable approach. It takes a rare idea and attempts to create an audacious innovation in the theme park industry and opening entry to a variety of markets such as entertainment. The planned use of location and construction materials is difficult to imitate as well.
When conducting opportunity analysis for this concept, the traditional causation perspective of entrepreneurship is followed. A predetermined outcome is set in the form of a concept created to create value and a unique amusement park experience in the industry. At this point, the opportunity is examined to select the most efficient methods of achieving this goal. It is a linear process that seeks to use the “process of discovery, evaluation, and exploitation of opportunities” to create a viable plan of action (Fisher 2012, p. 1022). This idea represents start-up entrepreneurship since it is a newly established business that is high risk. It is innovative in concept and can be flexible in its implementation since the theme is based on a mythical legend that leaves room for significant creativity during project development.
Environmental Scan
The framework for the entrepreneurial mindset suggests the presence of cognitive adaptability which allows being dynamic and flexible in the process of decision-making and uncertain environmental conditions (Kuratko 2016). Cognitive adaptability suggests asking questions that attempt to comprehensively investigate and understand the environment in the industry of an entrepreneurial concept. An opportunity analysis consists of conducting an environmental scan that presents essential information about entry into the industry and the potential for developing the concept in the said business environment.
Futures Thinking
In the development of an entrepreneurial concept, there are three aspects to innovation that should be considered: value generation from idea implementation, creativity and invention, and macro-level social change. Futures thinking in entrepreneurship consists of identifying a goal and then a method to achieve it. An entrepreneur seeks out the missing gap in industry or technology which may not even exist and seek to fill it through disruptive innovation and creativity (Yapp 2010). All of these aspects of futures thinking require leadership and critical analysis of a concept that can consider the current realities but be able to recognize any upcoming shifts that may occur in the industry.
The proposed city concept seeks to visualize a future for the amusement park and entertainment industry. It drives innovation by introducing an unorthodox design and location that are based on aesthetic creativity. The value would be generated by profit gains as well as providing infrastructure for public entertainment which contributes to social cohesion. In an industry driven by corporate and commercialized theme park concepts around a single brand, a trend may be set for more authentic and unique entertainment experiences from particular segments of the market.
PESTEL Analysis
Porter’s Five Forces Analysis
Industry rivalry is extremely competitive in the entertainment and theme park industry. Several large companies such as Walt Disney maintain a firm hold on consumer segments and continuously attempt to bring in new visitors by offering more content. Theme parks are dependent on visitors; therefore, buyer power holds considerable influence over the industry and makes customer attainment a key priority. Since theme parks provide an experience rather than a product, supplier power is not critical. However, parks are dependent on a variety of products and materials to support their function. Threats of new entrants to the market are relatively low due to high risks and a substantial starting capital necessary for construction. Threats of substitutes are high since theme parks follow similar patterns of producing entertainment based on similar content or ideas. Therefore, another park might recreate their version of Cibola since the intellectual property does not protect the idea.
Customer Segmentation and Needs Analysis
Marketing takes a significantly different approach in entrepreneurial contexts than traditional practices. Driven by innovation, entrepreneurs take a bottom-up approach to customer acquisition by using interactive marketing methods and informal networking to establish products. Instead of using the comprehensive and costly market analysis to target specific audiences, entrepreneurs choose to identify a market opportunity that attracts an initial customer base that gradually expands through word of mouth (Stokes 2000). This theme park concept would be appealing to many enthusiasts of history, mythical legends, and cultural exploration. That would continue to remain a primary customer segment for this concept. It would be critical to creating a high-quality family experience as well since that is a central concept to many major locations in the entertainment industry. The Cibola park would address the customer need for a unique cultural and aesthetic experience which is not based on the commercialization of its brand but rather a rustic authenticity for its atmosphere.
Feasibility Analysis
There is a common association between entrepreneurial activity and the concept of risk. These enterprises statistically face significantly high rates of failure and encounter various obstacles. Individual entrepreneurial decision-making significantly differs from that of managers or even corporate entrepreneurs who have the responsibility to protect a company’s interests. Therefore, entrepreneurs became the focus on opportunity and desensitized to risk through psychological motivation that prioritizes value creation and rapid growth (Busenitz 1999). However, every entrepreneurial should be evaluated for its feasibility as part of the opportunity analysis. It presents an outline of the practicality of materializing an idea into reality based on real-world parameters.
Design and Environmental Feasibility
The theme park design is based on a mythical legend and encompasses the construction of a model city using gold. From a design perspective, using gold bricks for construction is unfeasible due to practical concerns involving modern regulations and building codes. Buildings can simulate being of a particular material using external design but must have modern and sound structural integrity. Furthermore, the environmental aspect of choosing the location to be inside a mountain is impractical. Development in such areas is usually prohibited and strictly regulated since construction would cause significant environmental damage.
Financial Feasibility
The project’s initial investment cost is estimated at $90-110 million. Operating costs will range around $400,000 per year. The primary revenue stream will come from park visitors who would include ticket sales and additional purchases made inside. At an estimated $300 spent per visitor, the park would have to bring in close to 350,000 visitors to recoup initial investments. That is a realistic figure if the location is made easily accessible and near the major urban center or tourist destination. However, the gross revenue margins will remain low in the first years of operation. The cost-efficiency of using gold as a construction material is questionable. Technology allows us to use gold plating or chemical substitutes which are visually indistinguishable from the valuable material. Long-term financial feasibility should be investigated since the park does not currently offer an entertainment factor beyond a cultural or aesthetic experience that does not usually result in returning customers.
Funding
Entrepreneurial planning consists of a critical step in finding start-up capital. Financing can become more accessible once the economic feasibility of a project is determined and there is evidence of potential profit. An entrepreneur can achieve funding either through debt which places a burden on the individual or through attempting to find investors for equity financing that forces them to relinquish various degrees of control for the business (Kuratko 2016). Alternative methods of financing have become more popularised with the extensive outreach of social media. Crowdfunding offers an opportunity for people to support a business idea or project through numerous minor donations in exchange for potential rewards or products if the enterprise succeeds (OECD 2015).
An amusement park concept is a significant enterprise that will require a substantial start-up capital to create the necessary infrastructure. An individual entrepreneur would have to rely on a variety of funding practices. Crowdfunding may be a primary step to determine public perception as well as receive finances for the planning stages of the project. Furthermore, the project should be pitched to a large variety of venture capitalists that have expertise or interest in the industry. Due to the complexity and sheer size of a theme park concept, it would have to be financed by large-scale investors who would require surrendering considerable amounts of equity. Rule 506 of private placement regulation D can be applied here to achieve capital investment. Since the project would most likely cost over $100 million to construct, a corporate entity with legal distributions of equity and responsibility would be created that would take on debt to finance construction and implementation.
Reference List
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