Spikes Indoor Beach Volleyball and Rock Climbing Inc. Harvard Case Solution & Analysis

Issues and Objectives

Spike’s Indoor Beach Volleyball and Rock Climbing Inc. wants to expand the business by adding the facility of an additional volleyball court located outside and a rooftop patio. The issue with this plan was the permission for opening a new facility. The permission was difficult to be granted because the original facility is surrounded by a residential area. Secondly, the strong opposition of the new facility is likely to occur from the people living nearby as they will not tolerate the noise and sound. On the other hand, the location is not owned by Spike's, but is under a lease, and the owner can terminate the lease at any point. In this situation, the company was under real consideration about investing in this new expansion plan. Some other questions that were under consideration of Misener included the chances of achieving the projected sales and whether the new expansion will be able to attract new audiences or not.


  • Business Size up

The business was located in London, Ontario, where the people were attracted towards volleyball, providing the company best geographical location for the business. Spike’s was targeting a niche in the industry and was facing almost no competition as there are not many courts available for indoor beach volleyball. Besides this facility, Spike’s introduced some new facilities in the court to add the value which included the introduction of a rock climbing wall, a television screen in the lounge and a restaurant with a bar at the top. Besides these facilities lightening and heating systems along with computer servers were also upgraded. With the addition of the climbing wall and the restaurant, Spike’s added new sources of generating revenue along with the original operation of the business volleyball.

Although, in the climbing wall category, the company was facing a little competition, but the overall performance of the business was impressive and grew with a rapid pace. With no environmental or external threats the company was moving smoothly, but the only threat hindering in the way was the issue of leasing and the threat of losing the place if the owner wants to sell the property. The damage that will occur financially will be hard to quantify. Spike’s was of the view that since no objection has been raised by the neighborhood so expanding the business is not an issue. The business has its customer base and will face encouraging growth in the future as well, but the issue of not having the ownership of the property will affect the company's ongoing expansion plan.

  • Qualitative Analysis

The new expansion strategy was aimed to attract and encourage new audiences, thus increasing the consumer base for the company. The additional facility will provide an extra source of revenue for the company. The new volleyball court located outside will be supported with a sitting facility for the spectators in the shape of the rooftop patio. This sitting facility will also provide refreshments for the audiences along with food and will help them enjoy the matches. These planned assumptions will eventually increase the popularity of the company besides increasing the revenue. Depending on the weather conditions, the rooftop patio will operate 95 days out of 120 days per season thus the estimated efficiency of the patio is calculated to be 80%. With an additional court, the company will be able to increase its operating revenues as an additional court will eventually increase the number of matches per day. More matches mean more teams thus increasing the consumer base, the popularity of the company and eventually increasing the revenues. The drawbacks that are likely to occur due to this expansion are very critical for the business of Spike’s.

Strong opposition from the neighborhood is likely to occur due to increase in noise with the addition of these new facilities. The company did not face any opposition from the people living around that is why this issue has not been taken into account yet. But any opposition will result in termination of the leasing contract and the company will lose the geographical advantage. This situation will drastically affect the business of the company and might stop operations for the period. Besides that targeting a new audience and attracting the current the audience to a new location, will also be a challenging task. Secondly. Misener adapted a very optimistic approach while calculating the feasibility of the expansion strategy and therefore it needs a more descriptive analysis from any every angle of the projected assumptions......................

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Owner indoor beach volleyball and climbing recreational facilities in London, Ontario, is considering expanding by adding a rooftop patio and an outdoor beach volleyball. Students were asked to execute the business size and analyze the extension of quality. Students are required to list all the cash flows associated with the expansion and classify them as appropriate (cash, future and different), periodic or one-time costs. Once this is completed, students must perform a differential analysis on the sensitivity analysis, if necessary, to determine the return on investment and payback period set. Finally, students should decide to go forward with.
This is part of a set of cases Ivey and technical notes written for the introductory-level courses. "Hide
by Elizabeth M. Grasby, Lindsay Brock Source: Richard Ivey School of Business Foundation 13 pages. Publication Date: January 21, 2009. Prod. #: 909B05-PDF-ENG

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