Mr. Jonathan Greywell is contemplating a business decision in which there are four realistic options. He is the owner of Coral Divers Resort, located in the Bahamas on the island of New Providence. He caters to customers looking for a resort package that includes diving. This case discusses a decline in revenues for the three-year period of 2005-2007. His options include: selling the resort, partnering with another business, focusing on higher margin business, or improve his current business to be more competitive. Selling Coral Divers Resort
The most significant reason to sell the business is the declining revenues. However, Greywell would need to find another means of income such as another business venture or a new location for a similar business. Greywell could have a business valuation done, but since his equity in the business is low, he would not have much left over to start another business venture. Greywell has built a lifestyle around the Coral Divers Resort business and enjoys it. At this time, I recommend that he focus on his other options and keep the business. Partnering with Rascals in Paradise
Entering into a business agreement with Rascals in Paradise would change the direction of Greywell’s business to a more family-oriented business. In addition to rebranding Coral Reef Resort to target families, there would be additional capital improvement expenses. Cottage renovations would be nearly $50,000. The addition of a playground is estimated at $15,000. The wages expense to hire a chef could vary based on the quality and experience of the chef. However, making use of an existing facility such as the kitchen and dining room would add an additional stream of revenue and would help to offset the additional costs. In my opinion is it unrealistic for the resort to be at 100% capacity on a regular basis. Therefore, if we look at realistic numbers using historical Coral Reef Resort data, we can...