Coral Divers Case Study Essay Example

Coral Divers Case Study Paper After investigating Coral Divers diligently, I am delighted to be hired as a consultant to evaluate Coral Divers strategic situation. Based on my findings, I believe Coral Divers is in a decreasing state of financials and diminishing competitive position. Their net income is negative and increasing in 2005 through 2007. In addition, there is a lack of differentiators at Coral Divers, hindering them from their competition. The issue at hand is whether Coral Divers should take on a potential growth strategy, which consists of adding a family vacation portion to their resort, and an adventure diving aspect. This would enable them to cater to a greater variety of people and allow increased competition. Exhibit 1. 1 Supplier Power * Minimal * Integrating vertically not likely * Service based Degree of Rivalry * High Competitive industry = Low returns because the cost of competition is high * Tough economy = bad * Buyer Power * High * Amenities and service important * Low cost in comparing resorts Threat Of Substitutes * Vacations elsewhere doing other activities is likely Threat Of New Entrants * High * Easy to open resort To analyze the industry I will start with a 5-forces analysis on the Scuba Diving Resort industry, shown in exhibit 1. 1. Based on the Five Forces Analysis, we can determine that the scuba diver resort industry exists in an intensely competitive market. It is a growing market in popularity over the years and is continuing to grow. Most divers range in age from 10 to 39. 80% of divers are educated and have families. Diving Resorts earn revenue from individual divers, family divers, accommodation and amenities, as well as types of vacations and dives offered. We will write a custom essay sample on Coral Divers Case Study specifically for you for only $16.38 $13.9/page Order now We will write a custom essay sample on Coral Divers Case Study specifically for you FOR ONLY $16.38 $13.9/page Hire Writer We will write a custom essay sample on Coral Divers Case Study specifically for you FOR ONLY $16.38 $13.9/page Hire Writer In this case, accommodation, amenities, and quality diving excursions is means in combating threat of new entrants, and the degree of rivalry. Keeping a close eye on costs for vacationers in the resort is also essential. Because of the threat of substitutes and new entrants it is essential to keep costs low for potential customers. It is important Coral Divers keeps monitoring prices, such as keeping amenities to a minimum, not under booking dives, and keeping on-time flight operations. Major elements in Coral Divers current competitive strategy include: * Small, non – crowded tourist resort Well regarded * Safe and knowledgeable scuba diving resort * Beachfront location While Coral Divers is still running 90% capacity during the high season, this strategy is not very apparent, as Coral Divers simply operates basic business functions to stay afloat. Strategy Coral Divers could work on include: * Focus on Family Vacations utilizing Rascals in Paradise * Emphasizing in family di ves and resort activities * Adventure Diving * Shark Dives * Reef Dives * Wall Dives * Wreck Dives * Both Adventure and Family Vacations Neither Adventure or Family Vacations, continuing current strategy Also view Coral Divers’ business strategy diamond in exhibit 1. 2. Arenas * Bahamas * Vacations Vehicles * Rascals in Paradise * Adventure Diving Exhibit 1. 2 Economic Logic * Cost control * Growing Margins Staging * Focused on diving resort, moving slowly to family and/or adventure Differentiators * Small * Non-Crowded * Beachfront * Safe Knowledgeable Exhibit 1. 3 We can determine whether Coral Divers current situation is positive or negative by viewing a SWOT Analysis shown in exhibit 1. . Based on the SWOT analysis, Coral Divers has a fairly attractive position, as it has some strength. However, weaknesses and opportunities available provide a great deal of potential for Coral Divers to gain market share. In this case, many of the weaknesses are the opportunities availab le, and with success in opportunities combat threats. Coral Divers performance to date is steady. Based on balance sheets provided, Coral Divers assets are slowly declining, and liabilities are increasing. This is assumingly due to inflation in the market and no increased market share. Coral Divers revenues are also declining since 2005, I believe due to increasingly competitive markets and no strong differentiators. After analyzing the company, it is clear that Coral Divers needs to use opportunities and strengthen their differentiators. However, it is essential to analyze costs involved with new opportunities compared to potential revenues. The alternatives for Coral Divers includes: Alternative| Cost| Revenue Potential| Family Vacations / Rascals in Paradise| * $40,000 in renovations on rooms * Children’s play structure = $15,000 * Babysitter = $7/hr @ 5 hrs/week = ~$2000/yr| * Return client base * 90% annually * Higher prices for families * ~$1600 per family vacation * 90% rooms booked per week @ $3500 per special family week= $18,900/week = $982,800/yr| Adventure Diving| * $10 per dive = shark dive * Employee discouraged * $15,000 Chain mail suit| * Extra $50 per dive per person| Both| * Large upfront cost| * Good long term investment| Neither| * Differentiators in market| * None * Current operations| Exhibit 1. 4 As a consultant to help assess Coral Divers strategy, I recommend that Coral Divers add the family vacation element to their business and utilize Rascals in Paradise. By adding the Rascals Paradise, Coral Divers will be able to service families more efficiently and easily. In addition, Coral Divers should add adventure diving once family vacations is established. This will create more buzz, activity, and reason for families to stay at Coral Divers. I recommend this due to the lack of success Coral Divers has had in the past. Since they have established themselves, people will be able to trust and want to use Coral Divers for family vacations and know there is knowledge for adventure diving. We can create a new market for family vacations and adventure diving by looking at exhibit 1. 4. Creating New Markets Reduce * High costs * Inconveniences Create/Add * Adventure Diving * Family Vacation friendly Raise * Low cost * Good Service * Convenience for customers and families * More activity enjoyment * Eliminate Distasteful service * Average resort The plan of action I would suggest Coral Divers to take is to first implement Rascals in Paradise’s consulting service and bookings program. Coral Divers should take on packaged and prepaid vacations to provide convenience to customers. In addition, with Rascals experience, Coral Divers can utilize the specialty service and return client base. Higher revenues for the resort because of prepayment and packaged vacations are essential to the success. After about a half year to a year of implementing family vacations would suggest Coral Divers to take a look at how family vacationing impacted their revenue. Based on this result, I would suggest starting to implement adventure diving. I would start with one type of adventure per month. Perhaps offer only certain adventures at certain times until each excursion is mastered with no flaws. After each excursion is tested and analyzed, determine which adventures make the most money and offer them more often. Incorporate adventure diving into family packages.