PARADISE VACATIONS COMPANY Harvard Case Solution & Analysis

PARADISE VACATIONS COMPANY Case Solution

CASE OVERVIEW

The case is about the paradise vacation company who was a Quebec's market leader in the tour operating industry. The purpose of this document is to give a detailed company and industry-wide analysis to ascertain the key problems, secondly, it also includes the alternatives Paradise vacations can pursue in these difficult times when competition is becoming strong in the market and there is price war currently going on in the market. The document also includes the recommendation on alternatives, apart from the main objective of this document which is to give a recommendation after performing the detailed analysis is to cover internal and external factors which are affecting the company and the industry at the same time. The document also includes the analysis of the factors which are somehow affecting the strategies of the companies in the tour operating industry of Quebec.  In short the report will consist of detailed analysis, issues, alternatives, recommendations and implementation of best alternatives.

GENERAL ENIRONMENT AND CHANGING TRENDS

As it quite clear that the demand in the tour operating industry is heavily dependent on geopolitical, economic and meteorological factors, the analysis or any strategy in the tourist business have to consider the general environment and the changing trends in the industry for successful operations. The tour operating industry is generally considered to be the growth industry.

The tour operating industry is pretty straight forward four operators in the market they have a very simple supply chain they have distributors in the form of travel agents and internet distributors which buy plans and sell tour packages to general public, the 2003 and 2004 was the best year in the industry because of suddenly favorable changes in the weather and the worst year for the industry was the 2001 terrorist attacks the tourists traffic was almost none, these events suggests that the tour operating industry is vulnerable to such adverse factors that may act unfavorably.

Currently the trends are changing in the industry because of the new technologies and the way the different tour operates and eat in the same bowl for example during the early days particularly 1940's  when very few operators offered the packages outside the United States but now the situation is very different the operators are working together and industry is moving at very fast pace the way of doing work in this industry has changed significantly since its inception in the early 19th century. And this change the technology, global weather and political factors are playing a very crucial role.

ECONOMY AND CAPITAL MARKETS

According to conference board of Canada leisure travels expenditures were expected to grow 4.6% this forecast is valid if we look at the gap growth rate the overall economy of the country the tax rates are stable from last year which means the country is not changing its policies the inflation rates are down as compared to previous year the unemployment rate is falling down the stock market is working fine.

 Table -1 economy overview

OverviewLastPreviousFrequency
GDP Growth Rate0.6 %0.2Quarterly
Unemployment Rate6.9 %7.1Monthly
Inflation Rate1.7 %1.3Monthly
Interest Rate0.5 %0.5Daily
Balance of Trade-2937 CAD Million-3176Monthly
Government Debt to GDP91.5 %86.2Yearly
MarketsLastPreviousFrequency
Currency1.31.29Daily
Stock Market13923 points13884Daily
Government Bond 10Y1.1 %1.12Daily

 

Table – 2 consumer spending and behavior

ConsumerLastPrevious
Consumer Confidence84.481.2
Retail Sales MoM-1 %0.4
Retail Sales Ex Autos-0.3 %0.2
Retail Sales YoY3.2 %5.6
Consumer Spending1011970 CAD Million1006141
Disposable Personal Income1132856 CAD Million1131400
Personal Savings3.9 %4
Private Sector Credit3680746 CAD Million3669664
Gasoline Prices0.83 USD/Liter0.82
Households Debt To Gdp97.6 % of GDP96
Households Debt To Income167 %168

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