Coral Divers Resort Case Analysis Essay

Strategic Recommendation What do you give the axe Coral opposite to do? Core divers restore (CDR) should focus on making their electric current descent ope balancen more efficient by keeping an eye on operating be and partnering with adventure repeats for customers who wants adventure diving. The keep gild financials can non support any expansion for family oriented asylum with the ac caller-up organism over leveraged with little cash and liquidity. Secondly, this strategy has ease of implementation and nominates a profit increase of 10% with little capital expenditureAlso, Greywell has built a lifestyle around the Coral Divers Resort short letter and enjoys it with his family. Selling the remedy with his little faithfulness in the business will not provide enough money for him to take off a new business in another location. Focusing on being more efficient is more profitable for the company as the industry is in its maturity date phase with stiffer competition and readily available substitutes.What do you think Coral Divers would like to attain over the next 5 long time? Coral Divers is experiencing declining revenues and un profitableness for the past three years. other(a) recidivates that have been able to specialize in original segments of the diving industry, Coral Divers have been unable(p) to distinguish themselves from other fixtures. Coral Divers Resort (CDR) is looking to contrastingiate itself from other resorts in the bracing Providence, Bahamas region. The company is looking for opportunities in the diving industry to find a unique ceding back and give a warring edge that will postulate to an increase its revenues.StrengthsThe resort has a beachfront location, the rich pick of the ocean is within termination proximity and have developed a well(p) reputation as a quiet and golosh resort which appeals to vacationers looking to get away from busy tourist resort hotels. The diving instructors in the resort are certifi ed by PADI and NAUI.WeaknessIt is a family- run one-service business that is inefficiently operated. It is heavily leveraged making it difficult to get funding for further expansion while lining stiff competition.OpportunitiesThere are opportunities in the diving industry to find a unique niche market (adventure diving, family oriented resort) for Coral Divers and gain a competitive edge that will lead to an increase in its revenues like providing surplus service to customers eg picking and taking clients to the airport and other educational services about scuba diving which requires less capital expenditure. nemesissThe bleaching impact of climate change on coral reefs makes them to lose their beauty, making diving less attractive for divers. The recent surge in airfares and the changing demographics are potential could cringe the customer base of diving resorts.Current RatioThe current ratio of CDR shows that the company is not able to service its current obligations. The reso rts short term assets cannot round top its current obligations of $88,476. However quick ratio range of CDR will provide a clearer indication of the companys liquidity and success in meeting its obligations.Quick RatioCDR quick ration of 0.1875 suggests that the company has a very low ability to service its maturing short- term obligations. This ratio is a morerock-steady variation of the current ratio because inventory, prepaid expenses, and other less liquid current assets are take away from the calculation. In other words, it shows how CDR can quickly convert its assets to cash without a loss in value if necessary to meet its short-term obligations? The resorts low quick ratio makes it difficult for the resort to meet creditors requirement and obtain further funds for future business expansion since they operate a business that does not provide a steady and predictable cash flow. Favorable liquidity ratios are critical to creditors within the resorts industry.Return on AssetsT he negative return on CDRs asset shows that the companys asset is not used effectively to generate profit and shows the business is not profitable. However, the assets in the resort are mettlesomely depreciated which is unusual and it is affecting the return on assets. CDR should reduce its depreciation expense since the resort is not fully booked in the low rental seasons of the year. The resorts return on assets of -5.75% indicates there is a need for improvement in this area to checker the company can remain competitive and stretch out to operate successfully.Return on EquityThe percentage rate of return on equity for Coral Divers Resort is -87.04%, which indicates that there is absolutely no profits earned based on the owners investment in the resort and it would be harder getting a positive return when extra capital is added to the resort.Debt to Total AssetsCDR debt to asset ratio of 0.934 indicates that the company can barely meet its long-term obligations, remain solvent , and avoid bankruptcy. This shows that the company can barely take for more losses without harming creditor interests making it really difficult to obtain additional financing for expansion.Debt to EquityThe debt to equity ratio for CDR is 14.12 show which that the company isheavily leveraged and that most assets the resort has is financed by debt. This creates issues around controlling impale in the company when more debt is added to the company.On what basis do customers choose Coral Divers or competitors? Scuba diving trips to Bahamas tend to be luxury items and therefore it is more likely people would pop off during good economic conditions, the amounts of disposable income people have and the weather condition.Are the driving forces causing necessitate for this service likely to increase or decrease? The driving forces are likely to increase in the future, there has been increase in the population of scuba divers in the last 20 years and the economy is recovering from the last meltdown.Are the driving forces acting to make competition more or less intense? The driving forces are making competition more intense. There are 26 officials diving operators in Bahamas with different program offerings. Most of the resorts are well known for their high part services and the brand sensory faculty and recognition is present between the groups of tourists who choose to dive in the Bahamas. The capability and additional services offered by the hotels for additional revenues makes the competition even harder.Will the driving forces lead to high or lower industry profitability? The driving forces has the potential of wind to greater industry profitability due to the increase in the number of active high paying divers.Does this industry offer good prospects for attractive profits? The profits of the industry is limited, there is higher competition, and the scuba diving industry ledger entry into the maturity phase. Although there is some industry growth, the c urrent marketing appeal of a diving resort is facing high competitions from other leisure alternatives.Sustainable Competitive Advantage TestsDoes this business have a resource that is valuable/rare?The resort has a beachfront location, the rich resource of the ocean that is within close proximity and have developed a good reputation as a quiet and safe resort which appeals to vacationers looking to get away from busy tourist resort hotels. The diving instructors in the resort are certified by PADI and NAUI.Is the resource competitively superior?The resource of Coral Divers is not competitively superior when compared to its competition.Do they have a resource that is hard to copy?Coral Divers resource is easy to copy as anybody with a good location, boats and the necessary certification from PADI can start a resort.Can the resource be made obsolete by the different capabilities of competitors? With the emergence of different types of diving, CDRs resource is been made obsolete due to non-distinguishing brand, adventure diving and family oriented resortsIs the firm organised to exploit its valuable, rare, costly to imitate resource? Coral Divers has failed to exploit its resource due to change magnitude cost, negative return on equity and three years of lossDo you think this company has a sustainable competitive advantage? The company does not have a sustainable competitive advantage and would face stiffer competition in the future. Other resorts that have been able to specialize in certain segments of the diving industry (adventure diving, family resort) and have been successful over the past years as the industry continue to grow.How intense is the rivalry of existing competitors for consumer dollars? The rivalry is really intense the additional services offered by the hotels for additional revenues makes the competition even harder.How likely/easy would it be for new competitors to enter this market? Anybodywith a nice location, and the necessary certific ation from PADI can start a leisure resort.Do customers have a split up of competitors to choose from or very few? There are 26 officials diving operators in Bahamas with different program offerings. Most of the resorts are well known for their high quality services and the brand awareness and recognition is present between the groups of touristsAre there any firms in other industries offering sufficient substitutes? There are several(prenominal) firms and industries offering substitute e.g. movie, sports, game etc.Porter Five Forces synopsisSupplier PowerThe supplier power is minimal, the business is service based and is vertically integrated.Degree of rivalThere is high degree of rivalry and cost of competition in the diving industry leading to lower profitabilityBuyer PowerBuyer power is high, there is low cost in comparing price and services of resorts. Service and amenities provision to customers is really important.Threats Of SubstitutesThere are several substitutes ranging vacation elsewhere to other leisure activities like sports, golfing, boating, skiing and other technology products e.g. video games, and movies.Threat Of New EntrantsAlthough it is easy to open a resort, there is medium threat of new entrants due to high competition and the industry being in maturity phase.