Brief Summary of the Case
The case that we are supposed to analyze is devoted to the experience of one diving resort that suddenly became less popular among tourists. In 2008, the owner of the Coral Divers Resort found out that the number of divers using their services was gradually decreasing. Due to declined revenues, it was decided to make changes to the strategy of the resort. Thus, there were a few potential strategies aimed at strengthening the positions of the resort in the area.
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Among the initiatives proposed by various travel agencies, there were decisions to focus more on family diving, adventure diving, and more unusual services such as dives with sharks. Greywell who was the owner of the Coral Divers Resort understood that increasing revenues would include strengthening the identity of the resort. One of his primary aims was to increase the number of bookings for both low and high season.
In general, three primary options are described in the case together with potential strengths and weaknesses of Greywell’s decisions. In terms of the first option (with the focus on services for families), the resort could establish business relationships with the well-known operator – the Rascals in Paradise. The use of this strategy was expected to enlarge revenues as the number of guests per room would increase. At the same time, new services would require substantial costs. Thus, the property would need to be renovated. Importantly, this option would also involve the necessity to build new objects to meet the needs of the new category of clients – children.
The next option available for the company involved an increased focus on adventure diving. According to the case, almost everyone in the company considered such changes to be the easiest way to do because the most common locations where different types of adventure diving (shark diving, in particular) were available were located nearby. At the same time, almost all specialists who were working in Greywell’s company expressed their concerns about additional threats for staff and tourists related to shark diving. Despite these potential threats, Greywell did not think that this alternative would entail numerous problems.
It was quite easy for him to replace the unnecessary staff and hire new divemasters who would know how to work with sharks to mitigate the threats. When it comes to the third option available for Greywell, it was quite different from the previous ones. According to the third alternative decision, it was not necessary to add any options and new services. Instead, Greywell was supposed to improve the cost efficiency of business operations conducted by his company.
Among the ways that were expected to be helpful, there were staff reduction, the introduction of new standards for drivers and boats, and improving worker productivity. Despite the seeming simplicity of this method and reduced risks for the company, Greywell acknowledged that such a strategy could not make his diver resort unique and, therefore, improve its competitive advantage.
The Company and the Context of the Case
Speaking about the firm and the context of the discussed case, it is necessary to mention that the Coral Divers Resort could be listed among the key resorts for divers in the Bahamas. At the same time, it would be rather precipitate to say that this very company was more successful than its key business rivals in terms of initial internal resources. As is clear from the case, there was a range of services associated with various types of diving that were provided by the Coral Divers Resort or their competitors.
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The services used by companies to become unique and increase their competitive advantage included shark diving, wall diving, wreck diving, reef diving, and special offers for families. The internal resources of the company are rather rich as is clear from the case. The resort is located at an attractive place for tourists as it has access to the beach. Also, clients are provided with an opportunity to live in comfort during their vacation as there are a lot of cottages with small kitchens, comfortable bedrooms, and living rooms. Some living units have been renovated, and they can be used for couples and families with children.
Also, the resort has enough boats and the opportunity to repair equipment and check its working capacity regularly. As for human resources, the number of employees working for Greywell is eleven, and the staff includes four professional driving instructors who have different backgrounds. According to the case, there were no significant problems with Greywell’s employees and clients. Unfortunately, despite these lean business processes, clients’ interest in the services of the resort has decreased which caused the need for innovation. Core competencies of the organization could easily be used to increase the popularity of the resort again.
When it comes to the context of the case and the connections between the Coral Divers Resort and the key business rivals of the company, it is clear that the location can be regarded as one of the key factors ensuring the stable consumer traffic. The Island of New Providence is known as one of the most populous places in the Bahamas. The location was turned into a popular destination for foreign tourists (especially those from the United States) at the beginning of the twentieth century (Ilves et al., 2013).
Using the outstanding beauty of the location to attract foreigners with high incomes, people living in the Bahamas have managed to significantly improve their financial situation and create more working positions for native inhabitants. Nassau, one of the population centers of the Island of New Providence has the most developed tourist infrastructure that can fulfill the needs of people with different economic situations. For example, there is a wide range of hotels (both luxurious and more affordable), banks, sightseeing attractions, casinos, night clubs, and cruise ports providing their services to people from different countries.
With time, Nassau has become one of the most popular tourist destinations due to a wide range of opportunities for tourists that it provides. This place has become a paradise for tourists from different parts of the world who want to take diving courses or become better swimmers. Therefore, the location attracts both experienced divers who would like to polish up their skills and open up new places and those who have never tried diving and need an experienced instructor to assist them.
Analysis of the Case
The case of the Coral Divers Resort and the most relevant problem that encouraged Greywell to start searching for new options indicates that the influence of business competition has been neglected. It seems that the resort’s business strategy has not been updated about the changing situation in the market of services for divers. As is clear from the case, the business strategy of the resort was quite successful before 2008 due to numerous advantages that were available to clients.
For instance, in addition to the effective use of internal resources (such as the location, the professional staff, and the equipment), the resort was able to accommodate all guests so that they would not feel that it was overcrowded. To some extent, the lack of crowds was one of the reasons why many tourists preferred the resort to other places in the region. The most popular services tend to change according to the unstable preferences of target customers. Gradually, the resort has become less popular among foreign divers due to the growing demand for specialized diving services such as adventure diving.
As for the most important problems that the company faced, the section of the case study reporting the industry demographics contains a few facts about an average consumer of services for divers that can help to identify weaknesses of the resort’s business strategy. As of 2007, the majority of certified divers were from 18 to 34 years old, had higher education, and their wage level was above the average for their countries. The particular feeling that they were seeking was excitement and peacefulness.
Many people who belong to the discussed age group already have children, and this is why the focus on family friendliness needed to be increased to ensure a steady flow of new customers and standing clients. The critical issues faced by the resort include the growing popularity of family diving resorts operating in the area and the lack of facilities to provide services for families. When adult divers travel with their children, there is always the need for additional equipment for children. Moreover, safety measures should be improved in such cases as well.
Among the tools that can be used to analyze the resort’s situation, there is PEST analysis helping to assess external factors influencing companies (Gupta, 2013). The first component is presented by political factors. In 2008, the political situation in the Bahamas was rather stable, but the increasing concerns about the safety of shark diving both for people and sharks influenced the industry as is clear from the case. In terms of the important economic factors related to the strategy of the resort, 2008 is believed to be the year of the worst financial crisis (Rodrigues, Moura, Santos, & Sobreiro, 2017).
In particular, the situation was bad in the United States, and it could have a significant impact on the financial solvency of American clients. Worse still, the Bahamas have always been one of the most expensive holiday destinations; therefore, global financial problems and decreasing wage levels could be detrimental to the size of the consumer flow. Also, there are important factors related to the social component. For instance, decreasing wages had an impact on the number of people traveling by plane. Among the most important social tendencies influencing the best strategy for the resort, there is the growth of family tourism.
People traveling with their children are unlikely to visit places for shark diving due to numerous accidents. Considering that diving is unsafe for children younger than ten, companies specializing in family diving should also provide babysitting services and special facilities for small children. When it comes to technological factors influencing the Coral Divers Resort, it needs to be said that the growing demand for family services would require the resort to buy new equipment to ensure a safe environment for children. For instance, new swimming pools for children would need to be equipped with special covers, security fences, and gates (Wallis et al., 2015). The same is true for other facilities as the importance of safety measures would increase with the appearance of clients from different age groups.
The academic theory could have a significant impact on the case because the role of the positive traveling experience for children is widely discussed by modern researchers. For instance, numerous studies indicate that the importance of family services for the future of the travel industry cannot be overstated. Children who often travel with their families are likely to “become attached to a destination and they tend to return to it as adults” (Prebensen, Chen, & Uysal, 2014, p. 74).
The given source states that children who travel with their parents or other relatives begin to associate a particular destination with their happy childhood. At the same time, considering that people often make decisions concerning the preferred travel destinations based on the experience of their children, the decision to focus on services for families would be a good choice approved by modern researchers.
The Course of Action
If I were the owner of the Coral Divers Resort in the current business environment, I would address the issue of decreasing customer flow using the results of the industry analysis. Considering the current business environment, the demand for family services for travelers is still high, but the preferences of children have changed since 2008. The number of amusement services for children has significantly increased since that time resulting in the growing “pamperedness” of clients. The tendency is obvious when it comes to children living in families with high incomes. Therefore, to satisfy clients with children in 2017, it would be necessary to introduce changes to facilities for children to provide the equipment for interactive games and safe boat excursions for the youngest clients.
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Continuing on the topic of the situation of the Coral Divers Resort nine years ago, I would prefer the first option proposed by Rascals – to focus on services for diving families. According to the discussed option, it was necessary to create special menus for children. Personally, I would also pay focused attention to safety concerns and the search for professional tourist entertainers for children. Also, it could be important to introduce a discount system for large families with average incomes to make more clients satisfied.
The firm that is studied within the frame of the assignment is rather successful due to its internal resources and a great number of activities available. The situation that was discussed in the case seems to be a temporary failure related to financial instability during the year for the most part. Also, diving, in general, is a sphere connected with numerous threats and difficulties such as the seasonal nature of the business, safety problems, high costs, and possible negative precedents having an impact on the social images of companies. As for the learning experience related to the assignment, the case encourages students to consider a range of factors to define the factors causing customer attrition. Thus, it makes them better understand the cause-and-effect linkage in connection with the travel industry.
Gupta, A. (2013). Environmental and pest analysis: An approach to external business environment. Merit Research Journal of Art, Social Science and Humanities, 1(2), 13-17.
Ilves, K. L., Quattrini, A. M., Westneat, M. W., Eytan, R. I., Chaplin, G. W., Hertler, H., & Lundberg, J. G. (2013). Detection of shifts in coral reef fish assemblage structure over 50 years at reefs of New Providence Island, the Bahamas highlight the value of the Academy of Natural Sciences’ collections in a changing world. Proceedings of the Academy of Natural Sciences of Philadelphia, 162, 61-87.
Prebensen, N. K., Chen, J. S., & Uysal, M. (Eds.). (2014). Creating experience value in tourism. Boston, MA: Cabi.
Rodrigues, S. V., Moura, H. J. D., Santos, D. F. L., & Sobreiro, V. A. (2017). Capital structure management differences in Latin American and US firms after 2008 crisis. Journal of Economics, Finance and Administrative Science, 22(42), 51-74.
Wallis, B. A., Watt, K., Franklin, R. C., Taylor, M., Nixon, J. W., & Kimble, R. M. (2015). Interventions associated with drowning prevention in children and adolescents: Systematic literature review. Injury Prevention, 21(3), 195-204.