Proposed Business Expansion of the Tennis Club - Case Study Example

& Case Study, Company Analysis: Analysis and Memo of Playa Dorada Tennis Club Memorandum Date: Friday, June 05, 2015 Subject: Proposed Business Expansion of the Tennis Club To: Board of Directors, Playa Doranda Inc. From: Tennis Director Introduction Ladies and gentlemen of the board, it is with great delight and gratitude that I take this opportunity to present our proposal for the expansion of the Playa Dorada Tennis Club. I am honored to present the proposal to you. I hope that I will be able to highlight the potential feasibility, profitability and suitability of the proposed expansion, in such a way that enhances our investment returns. Welcome. Background To begin with, you are aware that the Playa Doranda Beach & Resort in Florida has been doing very well in setting up a residential center alongside highly esteemed hotels. The residents and guests in these two units are expected to reach maximal capacity soon, thus increasing the number of people using our facilities. Further, the usage of tennis facilities has been on the increase and is likely to push us above our current capacity in the next few months. Based on vocation and tourist arrivals, there is a likelihood that our tennis facilitates will soon be inadequate. Our marketers and strategic business planners have already guaranteed increased growth of tennis demand in the location. Considering that our 18-hole golf course and Olympic sized swimming pool were also essential future investments that are now legendary in returns, it is strategically logical to conclude that we now need to extend our tennis infrastructure. Between 2004 and 2007, our court usage increased from 18.4% (by 2,789) players, to reach 47.3% (by 32,816 players). This was a nearly 30% increase of tennis court usage within three years. This rate or growth predicts when our tennis facilities as they are now, will be inadequate. With that kind of growth rate, our tennis courts face maximal over use in less than five years from 2007. Proposal My proposal for the next financial year is to amend the current pricing structure, and make it more competitive. Our tennis facilitates are impeccable in quality and the best in these regions. As such, since we have and we will sustain a maximal demand among players and visitors, we can optimize our profitability by increasing our prices, and being more expensive in our tennis programs. Further, even with increased prices, our tennis facilities are likely to register extreme numbers of potential players, as we are now, if not more when occupation increases. As such, I propose that we need to increase our tennis facilities and infrastructure, by building new courts and extending those that are currently operational. This will continue to optimize our revenue generation, not only because of new facilities, but also with the increased pricing structure. It is a highly expensive investment proposal, but the potential optimal returns are as gigantic. Conclusion Building a hotel and residential infrastructure have been central to tradition, our history and the consequent success as was demonstrated by our lucrative villa sales a few years ago. In this understanding, investing in better facilities and preparing our company with an essential expansion of our tennis club is essential. That is my proposal, hoping to maximize on the future returns on our investment, within a market that is most likely going to grow extremely huge in the near future. Thank you. SWOT Analysis The SWOT matrix can be used to analyze the potential benefits of the proposed expansion. SWOT helps profile the Strengths, Weaknesses, Opportunities and Threats of a business proposal. This will help justify the essence of the proposal, based on strategic analysis of future market of tennis courts and tennis facilities. As such, the following is a brief SWOT analysis of the proposal: A) Strengths (Potential returns for the business proposal over possible alternatives). The expansion proposes the construction of infrastructure rather than usage of the investment, meaning that, even if the tennis demand declines among players, the infrastructure will still be a valuable long-term investment for the asset for the company Improved provision of quality sports amenities such as golf, swimming and tennis, will market many other company services and products as the most ideal destination Additional tennis courts and facilities will be in-line with expected rise and increase in guest numbers and residential units , both of which have been on the rise in the last 10 years B) Weaknesses (Disadvantage of the proposal compared to feasible alternatives) Construction of ideal tennis courts and facilities will take time and concerted supervision effort, at the expense of maximizing on the use of the available facilities Increase in the number of tennis courts and facilities will occupy some additional areas of expansion that could otherwise have been designed for other services and offers, thus exploiting the space we already have Additional tennis courts and facilities will require the hiring of additional staff to manage and facilitate these facilities for players, translating to increased expenditure for the company C) Opportunities (The advantages of the proposed business project if exploited) With increased prices and maximal usage, tennis facilities could generate more revenue than any other sports facility in the company Historical incline in the rate of tennis court usage since 2003 predisposes a critical usage of proposed expansion in a few years Better tennis courts and facilities may be hired by competitions and teams during vital occasions, thus increasing the arrivals at the hotels run by the company as well as the optimal usage of guest offers for a greater income The country and the region are a powerhouse of tennis sports even at the professional level, thus guaranteeing a constant source, and even increase of tennis players D) Threats (The environmental and contextual risks of the proposal are adopted) Application and approval of additional tennis facilities to the government agency will demand a closer review and supervision of this and other services ate the company The tennis investment will be subject to advance the influence of climatic conditions, and some climatic circumstances might reduce the arrival of guests, vacationers and tourists, as well as outdoor activities of residents Analysis and Strategic Choices In business decision-making, strategic analysis and choice denote two essential components and processes that accrue during the initial stages of any implementation of an investment initiative, and through which a proposed investment implementation is determined as ideal, appropriate and optimal (Child 43). Strategic management planning may be at the corporate level (such as shareholder empowerment and the divided reward system), investment level (such as determining ideal investments to attain additional profits), and operational level (overseeing the actual implementation and running of all business front (Child 43). Presently, the Playa Dorada Tennis Club requires consideration at the investment level (as a strategic business investment), wherein it is determined whether an ideal investment for the shareholders, and ideally feasible for the operational level. Therefore, the long term goals of the proposed expansion of the tennis courts and facilities include; a) Increased capacity demand increased amenity services, and thus provides for a hotel and residential goal already pursued by the company b) Historical rates have indicated that current tennis court usage will not be adequately served by the facilities already provided, without expansion c) Increased infrastructural investment in tennis courts will expand the net worth of the company on fixed assets (maximize firm valuation) d) The mission and goal of the company is to provide the most requisite facilities for recreation and residential needs, one of which is an increasing demand for tennis courts Based on the foregoing, therefore, it would be advisable for the Playa Dorada Tennis Club to invest in building its amenities in a more proficient manner for the current and potential market, and in so doing establish its sustainability as well as additional competitive advantage (Child 44). The key factors to be considered in the strategic analysis and choice include: Key Internal Factors a) Research and development department have proposed a potentials incline in the demand for tennis courts and facilities b) The marketing arm of the Playa Dorada Tennis Club and Playa Dorada in general has performed incredibly well in the past, recording over 15% annual growth of the facilities while the expansion will also be a great marketing tool for other services such as residential units and the hotel business c) While from an accounting perspective the proposed investment will require huge capital resources, increased tennis pricing and growth in the use of these facilities will guarantee and infinite return for the investment d) The management arm of the company has been committed to progress in the numbers of guests, people on vocation, residents and tourists we receive at the company. As such, expanding our tennis capacities only increases and emphasizes on this management goal towards the future e) On the operational front, after the initial investment, tennis courts and facilities are able to generate their running costs besides making high profits for the company, meaning that these assets require very minimal management and operational costs Key External Factors a) As we always do, a few years ago we predicted a rise in the number of residential units required and thus invested in them. That business strategy has earned incredible return. This same ability to invest for a potential future demand is the very essence of this company, one that must also embrace the potential of tennis courts and facilities b) Based on our history, it is predictable that the tennis expansion will be approval by requisite government agency will demand a closer review and supervision of this and other services ate the company c) The country and the region are a powerhouse of tennis sports even at the professional level, thus guaranteeing a constant source, and even increase of tennis players, judged on a social, cultural and demographic front Works Cited Child, John. Strategic Choice in the Analysis of Action, Structure, Organizations and Environment: Retrospect and Prospect. Organization Studies, 18.1 (1997) 43 – 76. Read More