NONPROFIT MANAGEMENT

CASE COLLECTION

AKRON ZOOLOGICAL PARK 1991

F. Bruce Simmons, III

University of San Francisco

College of Professional Studies
Institute for Nonprofit Organization Management
2130 Fulton Street
San Francisco, CA 94117-1047

Copyright © 1999, University of San Francisco

Permission granted to purchaser only to reproduce for classroom use.
Unauthorized duplication of copyrighted material is a violation of federal law.

CS-0023
 AKRON ZOOLOGICAL PARK 1991

F. Bruce Simmons, III

Case Abstract

Although the Akron Zoological Park made it through recent turbulent

and difficult times, to keep the zoo open and financially solvent, the
CEO believes she needs to develop new programs and add new
facilities to the institution. Yet, she must balance the costs of this
approach with the flows of operating revenues. This case serves to
illustrate how a nonprofit institution can respond to technological,
economic, and social changes.

PLEASE NOTE: The material contained in this case does not

necessarily represent actual people or conditions.
 AKRON ZOOLOGICAL PARK 1991

Background

Zoos are perceived as custodians of our cultural wildlife heritage and educators of the
skills of conservation. Acting alone, zoos can collectively maintain about 1500 species of
rare and endangered birds and animals. This represents less than one-half of one percent of
the species that are expected to become extinct during the next ten years. Zoos are
strategically placed to inform and to educate the public. More people annually visit zoos than
enter all U.S. National Parks. Collectively, more people attend North American zoological
facilities and programs than the combined number of persons who attend professional
football, basketball, baseball, and hockey games. Zoos have remained a strong attraction for
the people of the United States.

Collectively, during 1990, member institutions of the American Association of

Zoological Parks and Aquariums had 102,187,739 visitors; over $711 million in operating
budgets; $408,072,905 in combined capital improvements; 3,681,570 support organization
members; over 24,267 acres in parklands; and more than 842,000 specimens from among
36,746 species of mammals, birds, reptiles, amphibians, fish, and invertebrates. Zoological
parks, aquariums, and botanical gardens come in all sizes. For example, the largest institution
had 4,300,000 visitors and an annual operating budget of $50 million. The smallest institution
had 3,000 visitors. Another had a $96,325 budget.

Approximately 38 percent of A.A.Z.P.A. member institutions had annual operating

budgets of less than one million dollars. However, seventeen percent had budgets in excess of
six million dollars. The association, at its annual 1989 meeting, awarded membership to the
Akron Zoological Park. This recognition established that the zoo is one of the best 160
institutions in the Western Hemisphere.

During the late 1970s in Akron, changes in consumer preferences for radial
automobile tires, the internationalization of the rubber industry, the economic ravages of
rapidly increasing general price levels, and changes in governmental priorities almost resulted
in the permanent closing of the Akron Children's Zoo. Sagging attendance and a low level of
family memberships did not help matters. Faced with the uncertain prospect of continuing its
zoo operations, the city of Akron sought to reduce, or eliminate, its financial commitment. As
a response, the Akron Zoological Park was organized as an eleemosynary corporation under
Section 501(c)3 of the Internal Revenue Code. The board of trustees contracted with the city
to operate the zoo.

During the 1980s, the major employers in the Akron area were buffeted by the winds
of change. For example, Firestone was purchased by Bridgestone, General Tire changed its
name and sold off its broadcasting affiliates and its tire operations, Michelin acquired the
combined Uniroyal-Goodrich company, and Goodyear had to sell several of its divisions to
 Simmons--Akron Zoo
Page 2

fend off an attempted takeover. In the 1980s and 1990s, many area corporations were
pursuing the strategies of delayering, destaffing, and operating under the just-in-time
manufacturing philosophy.

History

Residents of Akron, like people in many other cities, created their zoo by donating
animals to their city. Earlier this century, two brown bears were given to the city of Akron.
The city fathers constructed an appropriate facility in a neighborhood park. Subsequently,
other individuals established a Museum of Natural History near the Perkins Park bears. In
1953, both facilities were combined to create the Akron Children's Zoo. By the late 1970s,
the city's ability and willingness to satisfactorily husband its animals was questioned. The
future of the zoo as a community resource and its continuing operation were in grave danger.
In response to this turmoil, the trustees of the Akron Zoological Park contracted with the city
to manage and operate the zoo.

While contemplating the future direction of the zoo, and mindful of the severe
financial constraints, the zoo's trustees decided to restrict their animal husbandry to North,
South, and Central America birds, animals, and reptiles. The old Mother Goose exhibits were
eliminated. They were replaced by more natural and native animal environments. These
animal exhibits contain the zoo's collection of 183 specimens which represent 66 different
species of birds, reptiles, and animals.

During the past seven years, the zoo has expanded its operations. Although it
continues to follow the Western Hemisphere exhibits policy, the zoo opened an animal clinic,
renovated its "petting zoo" barnyard, and constructed a gift shop, an alpaca exhibit, a
concessions area, a reptile building, and a North American River Otter exhibit. New
maintenance facilities and educational display areas were built. Also, the zoo has completed
phase one of its educational signs installation.

Purpose

The mission of the Akron Zoological Park is to manage its resources for the recreation
and education of the people of Akron and surrounding communities and to promote the
conservation of wildlife. To be successful, the Akron Zoological Park must maintain its
image as a quality place where its visitors desire to spend their time. They seek to keep their
animal exhibits clean and neat so that they are easy for all to see and enjoy. Flowers and
plants abound. As resources become available for construction and continuing operations,
they add new exhibits and new activities. For example, their attendance increased from
63,034 people in 1986 to its record of 133,762 people in 1988. As a unique institution, the
Akron Zoological Park presents a balanced program of education, recreation, conservation,
and scientific activities.
 Simmons--Akron Zoo
Page 3

Operating Season

On account of its northern climate, the zoo conducts its open season from mid-April
until mid-October. Except for Halloween and the winter holidays, the zoo is closed for the
winter months. It reopens for one week during Halloween. For the month of December, it is
decked out with over 150,000 yuletide lights. Its operating season is shorter than many of its
local competitors. Also, it is totally dependent on the largess of nature. For the 1990 year,
the Akron area experienced its wettest weather in its recorded history. More than 57 inches of
rain and snow were received. New Orleans; San Juan, Puerto Rico; Miami, Florida; and
Mobile, Alabama, are among the lush locales that generally have this type of wet weather.
The 1990 weather far exceeded the spring, 1989, record precipitation. Additionally, in the
month of December, 1989, local records for the coldest temperature on this date, the lowest
windchill factors, and the most snow were broken. Because of the record cold and snow,
several evenings of the Holidays Lights were canceled. Attendance at this event in 1988 was
over 48,000 patrons. In December, 1989, the Holiday Lights' attendance did not exceed
21,000 people.

The variations in weather also effect crop yields and the prices of fresh animal foods.
A drought in 1988 and too much rain in 1989 and 1990 affected the costs of feeding the
animals. Weather can cause variations in the cost of animal feed. In less extreme climatic
circumstances, the zoo may be able to achieve its target attendance goal. Although its
surrounding community suffered a declining population level, from 524,472 people in 1980 to
514,990 people in 1990, the zoo seeks to attract an annual attendance equal to forty percent of
its community. This goal may be too ambitious. The target audience for any zoological park
tends to be young children and their parents. The Akron Zoo's community contains a high
percentage (approximately two fifths) of senior citizens. Nevertheless, as indicated in Exhibit
One, since the zoo has become better known as an innovative community resource, the annual
attendance has doubled.

Membership

Membership in the Akron Zoological Park is available to all. Becoming a zoo member
means one has unlimited, no charge admission to the zoo grounds during the operating season
plus reciprocal admission at over one hundred thirty other zoological parks, aquariums, and
botanical gardens. Members receive a quarterly newsletter and invitations to members only
events. There are differing types of memberships—for example, family, grandparents, donor,
patron, zookeeper, safari leader and director's club. Each type of membership reflects
different levels of financial support for zoo activities. As indicated in Exhibit Two, during the
past several years the number of memberships have increased. As the variety and number of
activities have increased, membership and attendance more than doubled.

Providing good customer service to the zoo's clientele pays dividends. Part of
customer service is providing exciting events at the zoo. As indicated in Exhibit Three,
 Simmons--Akron Zoo
Page 4

during 1991, the zoo promoted several newsworthy and special events. These events serve to
attract community media recognition. In return, this community attention increases annual
memberships.

Edzoocators

This unpaid volunteer group began in 1970s. These volunteers have no responsibility
for the direct operations of the zoo. In 1983, the zoo created the position of education curator.
One aspect of this position is to coordinate this group's educational activities. As volunteers,
members of this group are trained to provide on site and off grounds educational programs
using the zoo's birds, reptiles, and animals. They provide guided tours of the zoo grounds,
give presentations at local schools, provide a speakers' bureau, and appear on radio and
television programs. They also receive free admission to the zoo grounds.

Outreach Programs

In order to take the zoo's services to those who are not able to visit the zoo's location,
two zoomobile programs were created. The fur, feathers, and scales and the rain forest
offerings provide the opportunity for people to learn about the zoo's conservation mission and
its animals in a personal way. These individuals are taught to respect the animal and to
preserve its dignity. For a nominal fee, plus gas mileage if located outside the city, the zoo's
educational services are available for citizens groups, day care centers, schools, and other
community organizations. If you are not able to travel to the zoo, it can come to you. If you
can visit the grounds, the zoo offers a summer day zoocamp program and the opportunity for
your child to celebrate a zoorific birthday party. Also, the zoo established a highly popular
and well-known teen volunteer program. Young adults between the ages of 14 and 18 years
are trained and permitted to handle the animals while working one or two days per week at the
zoo.

Advertising

Akron and Summit County is situated just south of Cleveland, Ohio. Cleveland is a
major metropolitan area. It has television stations that are affiliated with all four major
networks. It has three independent and one public broadcasting station. By contrast, Akron
has one affiliate, one independent, and one public broadcasting station. Since many people
view Cleveland television broadcasts, the local residents are generally more conversant about
Cleveland events then they are about Akron's.

To gain media exposure in this market, the zoo must create media events. It must
develop exciting activities that pass the threshold as newsworthy. Unlike the Cleveland
MetroParks Zoo, the Akron Zoo does not possess access to sufficient funds so as to permit it
advertise on commercial television. Budgetary pressures just do not permit advertising
expenditures. The zoo remains totally dependent on public service announcements, the zoo's
 Simmons--Akron Zoo
Page 5

public television series, and press coverage of the activities at the zoo.

Promotional Programs

The zoo creates newsworthy activities and conducts several promotions. For example,
in the spring when the animals give birth to their young, the zoo conducts a contest to name
the new arrivals. In order to create the opportunity for members of the community to learn
first hand about the animals within the zoo's collection, the zoo sponsors an annual
expedition. In the past, these expeditions have taken participants to the Amazon of Peru, the
forests of Belize, the sea turtles and rain forests of Costa Rica, and the Galapagos Islands of
Ecuador. In July, 1992, the zoo offers its members the opportunity to travel to Kenya. The
local press has been quite supportive in reporting these globe trotting activities. In Exhibit
Three, the scheduled 1991 events are listed. These events have served to generate media
attention. Many activities are but a few years old. They are a strong reason that zoo
attendance increased.

Safety

In the event of an animal escape, zoo employees have a written procedure to follow for
the recapture of the animal. As a good citizen, the zoo management through its risk
management and safety audit program aims to ensure a safe environment for the visitor,
employee, and the animals that inhabit the zoo. The zoo management remains committed to
improving the quality of its exhibits and the habitats of their animals. For example, in
conformance with A.A.Z.P.A.'s Code of Professional Ethics mandatory standards, exhibit
animals are marked with identifying numbers. This animal marking system facilitates the
proper care and security of the animal, bird or reptile. Animal acquisition and disposal,
breeding cooperation, and research for the health and preservation of endangered species is
coordinated with other zoos. Cooperative research with colleges and universities is performed
within written policy guidelines. As part of its strong commitment to customer service, the
personnel of the zoo constantly strive to adhere to high standards of safety and professional
conduct.

Administration

The president and CEO of the zoo is Patricia Simmons. She believes that her main
function is to ensure the fiscal and conservational integrity of the zoo. She strives to maintain
and improve the zoo's excellent customer service. A zoo employee for seven years, her
contributions have resulted increases in her operational authority and various promotions.
She possesses a diverse background. Her training and education are in fishery administration,
fundraising, fine arts, and management. She possesses a graduate degree in arts management.
A community organization, Leadership Akron, honored her contributions by enrolling her in
its 1989 class. On April 17, 1989, the trustees adopted the business corporation structure of
governance and elected Simmons as the president and CEO. Simmons holds a seat and a vote
 Simmons--Akron Zoo
Page 6

on the board of trustees and is a member of the executive committee.

The board of trustees oversees the policies of the zoo, sets the guidelines for
memberships, and promotional activities. The board sees that all financial statements are
audited by independent public accountants. Each trustee is elected to serve a three-year term.
There are currently 24 trustees. The executive committee consists of the president plus the
five elected trustee officers and the chairs of three standing board committees. The officers,
who are elected annually and have a limit on the number of years in office, are the chairman
of the board, two vice chairmen, a secretary, and a treasurer. The three standing committees
are planning and finance, promotion and sales, and animal care and education. The board has
quarterly and annual meetings.

Organization

The director of zoo operations, Pat Barnhardt, is provided via a grant with the city of
Akron. He supervises the animal curator and keeping staff as well as the maintenance and
security crews. When his father was the Akron Park's superintendent, he learned first hand,
as a volunteer, about the daily aspects of zoo operations.

The employees of the zoo are nonunion and non-civil service. As depicted in Exhibit
Four, there are twenty full-time zoo employees. The education curator is responsible for the
informational activities and coordinates the efforts of the volunteer groups. The public
relations person seeks to obtain recognition for zoo events in the local media. The business
manager supervises the accounting procedures and the daily commercial operations.

It is the zoo's policy that hiring, promotion, and employee transfer are based strictly on
individual merit without favoritism or discrimination. A strong antinepotism policy is in
place. For example, should an applicant for employment be under the direct supervision or
within the same department as a relative, the zoo will not hire the relative of the employee.

Other Area Nonprofit Institutions

With greater competition for private gifts and grants, the decline in the availability of
donations due to changes in federal taxation law, and weather related gate receipts from
clientele patronage, the zoo must consider the actions of its competitors. The Akron
Zoological Park must successfully compete for resources within its community. Currently
there are four other museums: the Historical Society, Hale Farm and Village, the Art
Museum, and Stan Hywet Hall and Gardens (see the brief description of each institution is
provided in Exhibit Five). The most recent addition to the local museums is the National
Inventors' Hall of Fame. Its organizers have announced an intention to raise forty million
dollars from the community to construct a physical facility. Funds that are raised for this
endeavor will necessarily not be available for other community institutions. When coupled
with local universities' fundraising activities, the competition for the community's resources
 Simmons--Akron Zoo
Page 7

and their allocation will be very intense.

A survey of current admission prices and operating statistics is given in Exhibit Six.
The other institutions charge higher fees and have different sources of funding. For example,
the historical society receives its funding from the county government. The zoo's admission
pricing policy serves to keep it sensitive to other area attractions.

Financial Status

The zoo's ability to survive remains a function of its gate receipts, memberships,
creative special events, donations, and its many volunteers. Nearly 75 percent of all operating
funds are generated from zoo events and activities. During four of the past five years,
excluding the grant contracted for with the city, the zoo received an average of $124,000 in
donative grants. During the same period, membership sales increased by a net 144 percent,
ticket and merchandise sales increased by more than 78 percent.

Financing its activities remains an important consideration to zoo management. The

zoo has looked into alternate sources of financing. They have explored the feasibility in
placing before the voters a property tax levy to sustain zoo operations. Also, they have
discussed with the other area nonprofit organizations the possibility of a joint tax levy. These
other institutions receive funding from other sources and believe that they must not join with
the zoo in a joint effort as their access to these other funds would be placed in serious
jeopardy. The zoo has been left alone in its struggle for fiscal integrity. Recently, a
committee of the regional chamber of commerce (A.R.D.B.) studied the financial feasibility
of merging the zoo with the county MetroPark system. Since executive management desires
to reduce the uncertainty and to secure a more reliable source of operating revenues, they
supplied whatever information the committee requested. At this time, the committee report
has not been made public.

Audited financial statements are provided in Exhibits Seven through Twelve. Since
nonprofit accounting is somewhat different from conventional business accounting practices,
a brief description of the accounts is necessary. The unrestricted fund accounts for all
revenues and expenditures that are not accounted for in other funds. The unrestricted
expenditures for each calendar year are financed principally by admissions, donations,
memberships, concessions, and a grant from the city of Akron. The restricted fund accounts
for all grants and other revenue that are designated for specific uses by their benefactors. The
plant fund accounts for all the acquisition and deletion of building and equipment plus related
depreciation. Land is leased from the city of Akron for nominal consideration. Depreciation
is straight line over an applicable five to twenty-year period. Buildings typically represent
approximately 80 percent of the amount. Deferred membership income is recognized at the
time of receipt but is amortized to operations over the one year membership period. Deferred
restricted contributions are recognized at the time of receipt and are recorded in operations
when the expenditure for the specific purpose is made. Inventories are stated at the lower of
 Simmons--Akron Zoo
Page 8

FIFO cost or market. Contributed utilities and benefits are provided by the city of Akron.
The city also supplies the utilities to the zoo and provides the salary and benefits one city
worker.

Along with the sky-rocketing increases in veterinary and trash disposal costs, the rapid
escalation in health and liability insurance also are a major concern. The availability of health
care insurance is not guaranteed. Few insurance companies are interested in writing a policy
for an employer with only seventeen employees. Those that are interested want to select only
a small number of employees and leave the others without insurance. Should the zoo have
one employee who is deemed to be a high risk by the issuing company, there may be no
insurance available for any employee. The dilemma remains how to obtain health insurance
for all employees at an affordable rate.

As the costs of fringe benefits increase, the salary level available for the employee can
not rise. This places the dedicated zoo employee at a distinct financial disadvantage relative
to an employee at the city of Akron. The city of Akron wages are among the highest for
municipal employees in the state of Ohio. By contrast, the basic wage rate at the zoo is the
legally prescribed minimum wage. Recent increases in the federal minimum wage have
significantly raised annual wage costs. One half of the employees received a pay raise from
the enactment of this recent legislation. Without corresponding increases in revenue the zoo
could become a victim of this legislation.

Although, it possesses federal nonprofit status the zoo must seek to ensure that its
sources of income equal or exceed its operating and physical plant costs. Its continued
existence and its promotion of wildlife conservation remain totally dependent on its ability to
generate revenues and to reduce its expenses.

Admissions Policy

The park is open to all persons who follow the general admission rules. These rules
are printed on the visitor's brochure. All visitors must wear a shirt and shoes. No alcoholic
beverages are permitted. The zoo reserves the right to remove visitors who prove to be
unruly, harass the animals, feed the animals, enter into the exhibit areas, or liter the park.
 Simmons--Akron Zoo
Page 9

Master Plan

The zoo is located in Perkins Park. The shade trees serve to keep the grounds
relatively free from the harsh effects of the sun. The zoo consists of twenty five acres and
stretches across two plateaus. Between the upper and lower level there is a comparatively
steep natural incline. This incline runs throughout the middle of the zoo. The current master
grounds plan, developed in 1983, is shown in Exhibit Thirteen. Nationally, zoos are
responding to rapid changes in accreditation requirements. Since the Akron Zoo is now an
accredited institution, it too must change. The terrain hinders the access to the grounds for the
handicapped and disabled. Also, to improve zoo access, a higher quality of washroom
facilities is necessary.

To continue to provide great customer service, the zoo will also need to expand its
parking area. On days of special events when the crowds number near three thousand people
or more, the parking space is inadequate. The zoo does have some space within its fenced
perimeter in which it can expand parking. However, the zoo is in Perkins Park. By
expanding into this park, the zoo could double its size. Yet this presents a dilemma. To
expand and to construct new exhibits will increase admissions, but it will require increases in
both capital and operating funds. Without additional parking and concession areas the zoo
will not be able to increase its gate receipts. Further, extra exhibits can mean that customers
will remain longer in the zoo and are likely to purchase more concessions and souvenirs.
Continued pursuit of its educational and recreational objectives can become a financial
burden. Failure to follow its expansion strategy is risking organizational decline and
acceptance of the uncertainty of present financing. Zoo executive management will not
accept a secondary community status.

Survey Report on the Zoo

The zoo contracted with the local university to conduct a study of zoo clientele.
Telephone surveys were made the last week of September, 1989. Interviewers received 757
usable responses. In general, those people who patronize zoos have a positive overall
evaluation of the facility. They favorably rate its cleanliness, safety, convenience, and animal
displays. Approximately, one half of the respondents avail themselves the opportunity to use
the Akron zoo. The zoo satisfies the current customs in terms of features and facilities.

However, nearly two fifths of the people interviewed report never going to a zoo (see
the results of this survey Exhibit Fourteen.) The basic reasons given for not attending a zoo
are a "dislike of zoos," "no time for a visit," "lacking in transportation," "the children are
grown," and simply "I do not have an answer."

When asked about the zoo, many people responded that it is too small. Seventy five
percent of its patrons and two thirds of the general public expressed concern at the relative
smallness of the facility. The respondents offered suggestions for five additional facilities
 Simmons--Akron Zoo
Page 10

they would like the zoo to construct. These requests include "more exhibits for the children
with visitor involvement," "a railroad," "bring back the black bears," and to "add more small
cats and monkeys."

To understand the needs of zoo customers better, the survey asked whether the
respondents visited any other attractions in the area during 1989. The responses indicated that
the zoo's clientele attended five other area institutions. These were the Cleveland Zoo, Sea
World, Stan Hywet Hall and Gardens, Hale Farm and Village, and Geauga Lake Park
Amusements. Three fifths who attend the Akron Zoological Park also visit these competing
facilities.

Zoos, aquariums, and botanical gardens are evolving away from their origins in the
museum community. They are caretakers of life in an age of extinction. They focus on life
and its diversity. The employees and board members are concerned with the zoo's future
viability, prosperity, and perspective.
 Simmons--Akron Zoo
Page 11

DISCUSSION QUESTIONS

Although the zoo made it through these turbulent and difficult times, its president remains
mindful that yesterday's achievements do not guarantee tomorrow's survival. Under the
guidance of this CEO, the zoo expanded its operations and facilities, increased its annual
attendance, and received A.A.Z.P.A. accreditation. In order to keep the zoo open and
financially solvent, the CEO believes she needs to develop more animal exhibits, restroom
facilities, parking spaces, and community outreach programs. Yet, she must balance the costs
of this approach with the flows of operating revenues. The zoo CEO is currently searching
for a course of action to follow. What would you recommend? If you advise adding
employees, exhibits, or events, how would you obtain the funds to build, operate, and employ
them?

F. Bruce Simmons, III

College of Business Administration
University of Akron
 Simmons--Akron Zoo
Teaching Notes--Page 1

TEACHING NOTES

The purpose of this case is to provide the student in a policy course with a current real
world general management case. The zoo management followed an expansion strategy through
product development and market penetration. Since real problems are complex and messy but
very interesting, tackling a real set of policy issues remains the best way to develop practitioners.
The CEO of the Akron Zoological Park needs assistance. As a nonprofit firm in a turbulent
environment, the zoo is faced with survival through revenue generation and cost containment.
Where does she lead the zoo next? Why?

The Akron Zoological Park seeks to achieve success as a recreational resource and to
influence public attitudes for the benefit of wildlife. It is strategically located in its marketplace.
Since more women visit zoos and more women are now having babies, demographic trends are
favorable. The zoo's primary audience is preschool-age children and those who bring them to
the zoo. Public perception is that animals and children go well together. With a limited number
of places and activities where preschool age children can be taken while away from the home,
the zoo is in a strong market position. However, a zoo experience is a passive, socially
unstructured, noncompetitive activity. As children mature into teenagers, the visit to the zoo
loses its appeal. As the young adults become parents, the zoo regains its former status as the
place to visit. The zoo provides a safe, convenient location where family values can be shared
and enjoyed.

This case serves to illustrate the effective efforts made by the zoo and Akron community
through individual initiative as a response to technological, economic, and social changes. The
zoo has lowered its per capita visitor operating costs and increased its annual attendance. It has
been recognized as an outstanding micro-zoo and has received American Association of
Zoological Parks and Aquariums accreditation.

Major Issues in the Case

Zoos, aquariums, and botanical gardens are evolving away from their origins in the
museum community. They are caretakers of life in an age of extinction. They focus on life and
its diversity. They are concerned with the future, prosperity, and perspective. In recent years,
some questioned whether the Akron Zoological Park would survive. The board and its
management have sought to answer this question with an affirmative approach. Does the zoo
have a
future? How can it raise the capital and operating funds? Do changes in the weather have a
significant impact on the financial health of the zoo? What will be the zoo's future? During the
past few years, the zoo's track record of improvement on a variety of fronts has been substantial.
Since a large percentage of attendees make repeat visits, the zoo strives to continue its
development and to serve its community.
 Simmons--Akron Zoo
Teaching Notes--Page 2

1. How does the zoo continue to increase its annual attendance?

2. How can the zoo strengthen the public's awareness of its educational, recreational,
and conservation purpose and programs?
3. How can the zoo improve the working conditions for its employees and its animal
collection?
4. How can the zoo continue to reduce the ratio of operating costs as a proportion of
annual attendance?
5. How can the zoo obtain a more secure source of financing?
6. How can the zoo better meet the needs of their clientele?
7. How will demographic trends, variations in climate, and competitive pressures
impact its operations and finances?
8. Since the zoo is a complex business, how does it effectively balance all the above
issues and yet not shoot itself in the foot?
9. How could the zoo balance the dilemma of building new attractions as a way to
increase park admissions yet keep capital construction and service maintenance
costs low?

Mission

The zoo desires to manage effectively its resources for the recreation of the people of
Akron and surrounding communities and the conservation of wildlife. The zoo provides an
atmosphere where learning, recreation, conservation, and social interaction can occur.

Objectives

What are the goals of the zoo? As a complex business, the zoo seeks to achieve success
in many endeavors. Among these are the following:

1. Education of its community in animal husbandry and conservation.

2. Recreation and relaxation as a preferred family destination.
3. Conservation of endangered animals and of the natural environment.
4. Survival and the acquiring of operating funds.
5. Maintaining excellent customer service.
6. Safety of its employees, visitors, and animal collection.
7. Building the facility as prospectively outlined in its master plan.
8. Achieving a high market penetration. As a rule of thumb, a zoo's target annual
attendance should be equal to fifty percent of its service area's population. For
this zoo, it should be 220,000 annual visitors.
9. Planning the long term direction of the micro zoo. For example, can the planning
ideas of the CEO be implemented?
 Simmons--Akron Zoo
Teaching Notes--Page 3

Ratio Analysis

Ratio analysis is dependent on accounting data. Accounting is a social measurement

system that uses the arithmetic operations of addition and subtraction. Its concepts are socially
determined and expressed. They are derived from the value system in which they operate.
Accounting standards are developed from within the framework provided by these concepts.
Financial accounting reports are governed by these accounting standards, or generally accepted
principles. Accounting principles are the rules or standards that
underlie all financial statements. To be considered a generally accepted accounting principle,
the American Institute of Certified Public Accountants' (AICPA) Code of Ethics Rule 203 must
make it an enforceable standard. Current financial reporting practices for nonprofit
organizations are not enforceable standards. Since no specific AICPA guideline mandates
uniform reporting, each
licensed accountant is permitted to employ his or her own professional judgement in preparation
of the financial statements. As a consequence, each zoological park, aquarium, or botanical
garden can posses a variety of financial data reporting formats.

Ownership of the physical facilities can be an important determinant of the accounting

procedures that a zoo will follow. Since 1980, the Financial Accounting Standards Board
(FASB) has accepted jurisdiction for the development of accounting standards for nonprofit
organizations. However, the Governmental Accounting Standards Board (GASB) has
jurisdiction over all governmental entities. Thus, zoos that are part of city government will
follow GASB. But zoos that are independent entities will follow FASB. These two governing
bodies do not always agree. For example, FASB has issued Accounting Standard No. 93. Thus,
as of 1991, all nongovernmental zoos are required to recognize and report depreciation for all
fixed assets used in operations. In effect, this will increase the recording requirements for those
assets that are used in unrelated zoo activities and for donated assets. As assets are written off
the books through depreciation methods,
zoos will need to replace them from their surplus of revenue and support.

Although, both FASB and GASB are overseen by the Financial Accounting Federation
(FAF) there does not yet exist any agreement on this and other issues. As an industry, or a
collection of organizations who have similar missions, zoological parks, aquariums, and
botanical gardens have different accounting practices (source: F. Bruce Simmons, III. 1990.
Zoological Planning and Financial Ratio Analysis. American Association of Zoological Parks
and Aquariums Proceedings. Indianapolis, Indiana).

Understanding the financial condition of the nonprofit institution is an integral part of

deciding how to respond to the pressures created by unfavorable technological and economic
conditions, per capita reduction in governmental assistance, and the increasing competition for
resources and customers. Alone, ratio analysis does not provide sufficient evidence for pride nor
panic. It remains but one factor in management's thinking.
 Simmons--Akron Zoo
Teaching Notes--Page 4

These measures serve to provide the student with information about the operating support
of the zoo. Various measures are as follows:

1. Liquidity ratios serve to estimate the capacity of the zoo to pay its bills as they
come payable.
a. Current ratio: unrestricted current assets divided by unrestricted current
liabilities.
b. Quick ratio: unrestricted current assets less inventory divided by
unrestricted current liabilities.
c. Available funds ratio: cash and short term investments divided by
unrestricted current liabilities.
2. Debt capacity measures the ability to engage in debt financing.
a. Debt equity ratio: plant debt divided by net investment in plant.
3. Sources of the funds obtained can be separately reviewed.
a. Contribution ratio: source of revenue divided by total expenditures.
4. Uses of funds can be calculated to indicate those activities engaged in by the zoo.
a. Expenditure ratio: expenditure by function divided by total expenditures.
5. Net operating results equal the restricted and unrestricted revenues less current
expenditures divided by total revenues.

In the 1990 Dun & Bradstreet service, Botanical and Zoological Gardens [SIC Code
8422, page 195] are represented by ninety-five financial statements and are broken into
solvency, efficiency, and profitability ratios.

Internal Analysis

Strengths:

1. Excellent reputation as an innovative micro zoo.

2. Pleasant outdoor experience within a park lie setting with a good physical
plant under the trees that protects the summer visitor from the harsh sun.
3. Low annual per capita visitor operational expenditures.
4. Excellent volunteer programs.
5. Reciprocal membership entry privileges at other zoos.
6. Extra land is available for development.
7. Price inelasticity of demand within a specified range and with a
competitive ceiling as established by others admission prices.
8. Strategic planning performed by management.
9. Corporate business organization structure.
10. Tenure of key personnel.
11. As a micro zoo, visitors can leisurely tour the grounds and"see it all." It is
not too enormous so as to be overwhelming.
12. For adults, the zoo is the least expensive attraction.
 Simmons--Akron Zoo
Teaching Notes--Page 5

13. The other institutions do not possess as low as an operational budget per
visitor as does the Akron Zoo.
14. During the past several years, the zoo has lowered its operational costs by
approximately eighteen percent. Clearly, the zoo is the low cost provider
on a relative basis.

Weaknesses:

1. Limited media advertising and reliance on generating newsworthy events.

2. Limited parking space on extremely busy days.
3. No stroller rental.
4. Comparatively steep inclined terrain and associated disability limitations
for some patrons.
5. Insufficient brand name animals due to limitations on species collection.
6. Open only during a six month summer season.
7. Low visitor involvement with animal exhibits.
8. Limited concessions area.
9. Comparatively low salary for dedicated employees.
10. Long term financial instability.

Environmental Analysis

Opportunities:

1. Conservation and breeding programs.

2. More women than men visit zoos.
3. Local area has gained an increase in tourism.
4. Favorable population demographics, "baby boomers" are having children.
5. Parents and grandparents of target audience have increasing levels of real
disposal income.

Threats:

1. Finances and attendance are sensitive to the business cycle.

2. Climate has four seasons and excessive weather in the summers and at
Holiday Lights can drastically decrease paid admittances.
3. The zoo is vulnerable to competitive pressures.
4. Changes in elected city officials can alter support for the zoo.
5. An increasingly litigious society facilitates unwarranted but expensive
and resource draining lawsuits.
6. Changes in the minimum wage law have drastically increased employee
wages.
7. Climatic changes affect crop yields and animal fresh food purchase prices
 Simmons--Akron Zoo
Teaching Notes--Page 6

in a broad random fluctuation.

8. The costs and availability of grounds and health insurance.
9. Increasing costs of trash removal services and veterinary care.
10. Changes in the Internal Revenue Code effect donation receipts.

Prospective Alternatives

Since there exist several methods by which an instructor could have analyzed the
environmental and internal aspects of the zoo, shown below are the more feasible alternatives.

1. Seek to create more community awareness of the zoo and its mission by:
a. Developing educational programs for use by the local media;
b. Creating newsworthy events; and
c. Placing volunteer opinion columns in the suburban weekly papers.
2. Strongly focus on meeting customer needs by:
a. Providing a good orientation in reaching the zoo grounds;
b. Creating adequate parking;
c. Maintaining high quality rest room facilities;
d. Cleanliness of grounds and exhibits;
e. Providing a playground and plenty of seating and picnic tables;
f. Targeting children' activities, such as pony rides; and
g. Adding a strong personal touch by placing volunteers at each exhibit to
educate the visitor.
3. Improve the dollar return from concessions by adding stroller rentals, gifts and
souvenirs, and refreshments.
4. Construction of exhibits for brand name animals.
5. Outreach to tourists as a secondary market.
6. Increase community involvement and become a year round operation by offering
special events to counter seasonality.
7. Obtain voter approval for a property taxation levy to anchor financial stability.
8. Because demand for zoo admissions is relatively price inelastic, and competitors
charge higher prices, increase the gate admission price.
9. Undertake visitors' surveys to better comprehend how the existing customer base
can be better served and to encourage repeat visits.
10. Increase customer time spent in the park by adding "interactive" displays and
increasing opportunities for customer to purchase more items.
11. Rally community civic pride about the zoo as the "best" in the nation or world at a
particular animal husbandry aspect.
12. Add a foundation (for example, Friends of the Zoo) to the organizational structure
and have it exclusively focus on fundraising3 for the zoo.

Prospective Recommendations
 Simmons--Akron Zoo
Teaching Notes--Page 7

Zoos, aquariums, and botanical gardens are evolving away from their origins in the
museum community. They are caretakers of life in an age of extinction. They focus on life and
its diversity. They are concerned with the future, prosperity, and perspective. How will we live
in our future? The zoo CEO is currently searching for the better course of action to follow. The
instructor and student are welcome to make recommendations. Although the case illustrates the
complex nature of zoo operations, there remains so much to be learned. The author encourages
the submission of written comments.

Time requirements

Since it is presumed that the course instructor adheres to the typical business policy and
strategy modeling approaches, there are no questions provided at the end of the student case.
The length of time for the student to read this case is 30 to 40 minutes. The total time necessary
to complete this assignment will vary with the time spent in library research (At the University
of Akron, many of my students have been to our zoo) and in group discussion. My students
inform me that they spent several hours on this case.