Shearwaters_Adventures_Ltd

Introduction: The Problem: Shearwater Adventures Ltd. is contemplating on where the company should go in the future. Due to the economic and political instability of Zimbabwe, the inflation rate is rising dramatically, doubling every 22 days. With this happening, many companies have shut down in the last few years. Companies were forced to sell their new buildings due to this instability. Even with the high inflation rates and lowering tourist numbers, Shearwater has been able to increase sales by an average of 30.5% in the last two years and obtain an 80% market share in the industry. After stating the main problem and thinking about the economy, we have decided that we must answer a few questions. 1) Do we intend to stay in Zimbabwe' 2) What’s our main reason for staying or leaving' 3) How are we going accomplish our choice and increase sales' 4) Is there a way to acquire more cash from each customer' Since we hold such a large share of the market and are located next to one of the Seven Wonders of the World, Victoria Falls, it seems that there will always be tourists in the area to experience its beauty. Target Market: We believe we should expand and try to focus on a broader area attracting younger, more athletic types. Currently, our customers average ages are: women age 46 and men age 50. We believe that trying to attract a younger market could increase our sales dramatically. We should also increase marketing to families wanting to take vacations together. With the wide array of activities we offer, we believe that we could help families reconnect and experience new thrills. Current Position: We are the market leader in Zimbabwe with an 80% market share. Our staff is younger and more athletic than competitors, offering us a more attractive look to customers. Even with the high inflation rate and other companies going under, we have remained strong growing on average of 30.5% in the last two years. We are also located near one of the Seven Wonders of the World, which allows us to always expect tourist. This last year has been our best on financial record in the last three years, showing great prospects for the future. We also offer some of the widest array of activities with complete packages that allow customers to book more than one at a time and save money. Options: • Relocate to a more stable economic and political area. This option would entail us to sell our current stake in the area and try to find another area that would meet our expectations to continue all of our activities offered. • Stay and continue current operations. We would continue to market locally and try to attract tourists as they arrive in the area. This would probably be the easiest of all the options since it wouldn’t require any additional capital. • Expand our sales and attract a wider array of customers. This option would require us to use global marketing. The time and effort we put forth in this activity would give us greater capital and more recognition globally. We could utilize Internet advertising to reach a global crowd. This would help us get people to come here to do our adventures rather than people that are already coming here to just see the sights. • Use recording of personal expeditions as a marketing tool. In doing this we would record groups, offering them memorabilia of their trip. In providing a DVD of their vacation and adventures, we hope they would share the film with friends and family showing what is offered in Zimbabwe. We believe that by selling them the expedition, next time they will bring more people or encourage their friends and family to take their own vacation to Zimbabwe to visit Shearwater Adventures Ltd. • Become a resort. We could build or acquire a building to house our guests so they could spend longer time doing our great adventures and tour more sites. This could increase sales drastically and also increase the average amount we redeem from each individual customer. This adds to us bringing in our own guest and thus providing more tourists for Zimbabwe as well. • Provide own shuttle bus service. Rather than paying other companies for transporting our customers and recommending our services, we could have our own drivers to accommodate the needs of our guests. • Offer memberships and discounts to loyal customers. This would increase our returning customers and help keep a stable level of returning customers. Recommendations: Instead of relocating, we chose to stay and increase our market size by expanding globally. We chose this based on being located near a Wonder of the World. Its beauty and natural landscape provide a great atmosphere for all of the activities that we offer. Relocation would be too costly, and we could in fact lose our customer base. Fear of the ability to maintain our current offering of activities is another reason we chose not to relocate. With our current location being a destination of cruise lines, this offers a chance to join them in a joint venture. For example, Royal Caribbean allows companies that provide on-shore Tours to marketing their packages and provide discounts to travelers. A fee of $1,500 is required, and a percentage of profits from those guests go to the cruise line. This would provide a way for us to gain name recognition and more global presence. Each cruise line is different but we would target Royal Caribbean because they visit Zimbabwe more often. In line with marketing campaigns, Expedia offers a free partnership with them allowing us to utilize their award-winning Expedia technology, customer service, user interface, and even their unparalleled product inventory. Expedia’s services allow us to utilize advertising for free, hitting every age bracket in the market. Utilizing Expedia, we would offer packages to attract every age. For college age students, spring break packages would work for them to come and try some new exciting adventures. Also, we would offer packages tailored to couples and families of all sizes. In effort to attract more college students, we could advertise on both Facebook and MySpace. Either of these sites allow for video and picture list, so we could provide potential customers an opportunity to see in advance what we offer. With this we hope to increase our prebooking rate from 30% to a possible 70%. While not only increasing our prebooking rates we hope to book more activities for each group traveling rather than just one or two activities. As an additional marketing piece, we would expand the use of recording adventures. This will allow for customers to take home a memorabilia to show friends and family. It would not only highlight their experiences, but provide a way to market our services. In reaching these new groups and trying to increase our prebooking on packages, we would like to offer customers a place to stay. We will use current retained earnings to purchase the property. Since we made the exchange rate from Zimbabwean Dollars (Z$) to us dollars, the price seems very reasonable. Since we list all our prices and deal mostly in U.S. dollars, the current stability and high inflation rates really don’t affect our sales and prices. The price is only $100,000 for this property. The building offers 5 bedrooms and a total occupancy of 20 people, with full kitchen and living quarters. Also, enclosed is a detailed description of the property. Having this new property would allow us to do as we talked about and attract families for a full vacation. Since they will be staying with us we hope to increase sales of all our activities throughout their stay. Hopefully, we could entice them to try a different activity on each day of their stay, reaching our goal of acquiring a larger amount of money from each customer. This average could go from the ninety some dollars we are averaging per person to a couple hundred. Providing transportation from either ports of call or airports to our resort provides us a greater opportunity to market our services as well as provide a greater sense of responsibility as a company. Hiring additional staff may be necessary for this; depending on how often transportation services are needed. However, ideally we would like to discontinue our current outsourcing of transportation. We feel that this would add value to our business. The final recommendation we had was to set up a membership program with customers. Just like the cruise lines who offer better discounts each time you travel, we will offer the same better discounts and points each time you do business with us. We will also set up a program, and every time a customer refers someone to our company we will give them reward points back to use. This will allow us to maintain a stable growth and sale levels since we will be trying to attract loyal members. view all images ref number: 20841 bedrooms: 5 Description: outstanding opportunity at Victoria falls. Commercial lodge completed in April 2001, commenced trading in June 2001.prestigious lodge located in the Victoria falls village on the Zimbabwe side of one of the 7 wonders of the world. The Victoria falls. inclusive, is the stand comprising of 2000 sq met, eloquently designed buildings totaling app 650 sq meters have been erected on the property, which accommodates 20 people per night. Main building comprises of three wings: each wing has its own separate entrance with 2 spacious bedrooms and en suite bathrooms, floors are finished in a honey colored quarry tile. A large central living area furnished with designer buffalo and zebra hide lounge suites, and zebra paneled bar and a teak dining room suite which seats 20 people. This area can quite easily be re-arranged to accommodate a conference venue. A spacious well designed and equipped kitchen, pantry and scullery located in the main building. More details on ad 20813. phone 023 810 809 Financials from 2004-2006 with future prospects 2004 2005 2006 2007 Income Statement Data Revenue $2,246,680.64 $3,386,586.27 $3,926,063.10 10,736,720.11 Cost of Sales ($673,059.05) ($1,066,122.08) ($1,127,835.02) ($1,291,047.96) Gross Profit $1,573,621.59 $2,320,464.19 $2,798,228.08 $9,445,672.15 Other income(rents helicopter charters, disposal of old equipment) $158,967.96 $820,139.74 $352,561.20 $352,561.20 Total Gross Profit $1,732,589.55 $3,140,603.93 $3,150,789.28 $9,798,233.35 Variable Costs ($248,938.18) ($688,884.06) ($741,124.77) ($793,365.48) Contribution $1,483,651.37 $2,451,719.87 $2,409,664.51 $9,004,867.87 Staff Overheads ($871,918.83) ($1,737,485.86) ($927,162.87) ($1,234,099.89) Corporate Overheads ($971,329.69) ($1,146,931.73) ($1,167,647.94) ($1,291,621.37) Net Profit (loss) ($359,597.15) ($432,697.72) $314,853.70 $6,479,146.61 Other Data Customers 26,351 30,056 41,868 53,680 Average Revenue Per Customer $85.26 $112.68 $93.77 $200.01 With the current increase in global recognition, it is accurate to assume that we will continue to grow on a customer base to around 53,680. When we take our expected number of new customers and average it out to around $200 per person it brings us to revenue of $10,736,720.11. We continued the cost of sales with the previous years adding to it our cost of acquiring the building at $100,000 and the cost to join Royal Caribbean at $1500.