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
* Integrating vertically not likely
* Service based
Degree of Rivalry
* High Competitive industry = Low returns because the cost of competition is high * Tough economy = bad
* Amenities and service important
* Low cost in comparing resorts
Threat Of Substitutes
* Vacations elsewhere doing other activities is likely
Threat Of New Entrants
* 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. 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 dives 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
* Rascals in Paradise
* Adventure Diving
* Cost control
* Growing Margins
* Focused on diving resort, moving slowly to family and/or adventure Differentiators
* Safe & Knowledgeable
We can determine whether Coral Divers current situation is positive or negative by viewing a SWOT Analysis shown in exhibit 1.3.
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 available, and with success in opportunities combat threats.
Coral Divers performance to date is steady. Based on...
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