Should the Scuba Business Dive Into the Expansion? Harvard Case Solution & Analysis

Should the Scuba Business Dive Into the Expansion? Case Solution

Introduction

Don Foster’s Dive is located at a place that is considered as the most attractive place not only for the customers as well as for the investors of the business i.e. Cayman Islands. For the business customers it provides the most calm and clean water,as well as a carefree world for outdoor pleasure which includes diving and snorkeling. As far as investors are concerned, to them it is just like a heaven which not only gives them healthy environment for investment through the racial and political stability but it also provides the no tax deductions on the corporate, payroll, capital gains as well as withholding taxes with which they can ensure the maximum return of their investment.Obviously no business in the current environment is operating in isolation since there are so many competitors of the same business which are negatively affecting the revenue of Don Foster’s Dive. Mr. Andy Crowe, the controller and the general manager of the company is focusing on the expansion strategy which could improve the current profitability of the company.

Problem Statement

Cayman Islands as described above are potentially a favorable place for the investment point of view which is also evident from the increased competition. The result of this increased competition is the decline in the revenues of the said company despite of its increased profit. Mr. Andy is, thus, focusing on the expansion strategy with which they could be able to utilize the excess capacity by opening a new dive shop located at the other end of popular 7 Mile Beach, Holiday Inn. With the help of qualitative as well as quantitative analysis, the viability of the proposed investment will be analyzed in this report to come up with any recommendation.

Qualitative Analysis of the Problem

In order to analyze its qualitative factors, the advantages and disadvantages of the proposed Dive shop are taken which are summarized below:

Advantages of the Proposed Dive Shop

Scuba is a fantastic sportto enhance physical and passionate comfort, learn new abilities, make companions, and extend your natural mindfulness and even open up new profession opportunities.

1.     NEW CUSTOMERS

The scuba business is equally attractive for both the investors as well as the customers. Moreover, Mr. Andy Crowe,after analyzing various other alternatives,has proposed to open a new dive shop at a location which is quite beneficial for the company as it attracts younger family oriented clients, who can create more business for the company as youngsters are most likely to participate in such activities.

2.     ECONOMIES OF SCALE

With the increase in thebusiness the owners are expected to spread therisk of non-performance, which can cause damage for the overall business. The overall cost of the company will be spread over the two different locations giving the company economies of scale. On the per customer basis, the cost will be minimal which could improve the potential to generate profit by adding more customers.

3.     INCREASED REVENUE

The prime issue which Mr. Andy is facing is the under utilization of its resources which is causing a decline in the overall revenue of the company. With the help of the below given financial statement, the task seems accomplished with the increased revenue in the future.

4.     BRAND RECOGNITION

With the help of this new project, Mr. Andy Crowe would be able to create brand awareness to a wider range of customers in a location which would ensure the potential favorable customers for the company.

Disadvantages of the Proposed Dive Shop

With the advantages of the given company there are some disadvantages attached with it as well the given proposed dive shop.................

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