Playa Dorado Tennis Club Case Study
This study case presents Douglas Hall as a new director appointed by Playa Dorado Tennis Club. His appointment was effected in 2007 from whence he primary focused on developing a strategy aimed at increasing tennis courts users in the club, attracting many customers as well as boosting the organization’s profitability levels. The organization is equally faced with low level of some of its guests who also participates in the utilization of its PD Tennis. For instance, while the organization reported a total of 22,222 guest nights in November 2005, it reported a total of only 889 hours that were utilized in the guesthouse. This indicates a need for an organization to adopt measures that will boost the use of its PD tennis courts by its current guests. Douglas Hall thus focused on developing a strategy for the organization that would enable it to attain these goals. In his strategy, he was forced to seek the approval of all the stakeholders significant to the organization. In so doing, he would gain support of such stakeholders and increase his access to the necessary resources, including financial and human capital resources.
In this case, the main issues are that the organization’s tennis facilities that are underutilized and the organization must boost their usage. At the same time, the group is attracting fewer customers especially on the hard tennis court. The percentage of guests using the tennis court in regard to the total number of visitors that the organization receives is increasing.
In this case, a number of strategies have been adopted by the new leader in the organization in an effort to address such challenges. The first strategy that the organization has adopted is that of changing pricing. This will result to the organization reducing price of the hard tennis court, charge less for customers taking two rounds and also charge less to students. The organization equally focuses on shifting demand for the courts to the low season. This will help in creating more evening demand and thus ensure that the courts lack capacity during the high seasons and peak hours when there is a lack of demand. There is thus a need for an organization to change these aspects if it is to turn successfully round the company.
The organization is faced by a number of threats in pursuit of this strategy. An organization is faced with the threat of competition. Other organizations offer the same services and hence, it may not be able to win more customers. The organization is equally faced by seasonality of demand of its services. This resulted to uneven cash flows reported by the organization within a year. In spite of this, the organization is also capitalizing on several opportunities that are available to it in the market. The organization has high potential of attracting students due to increased rates. By enhancing demand of its services during low season and off peak hours, the organization will equally boost the overall level of revenues that it will be generating. At the same time, the organization has the opportunity of exploiting the rise in demand for tennis games in the region as indicated in the case study.
In the case, it is estimated that by February 2007, the projected guest nights will amount in 59950 as compared to 83,773 that the organization will record in 2008. This will not doubt enhance the successful performance of the organization in the market. On the contrary, it will boost the level of revenues and profits reported by the organization. It is worth noting that the organization is benefiting more from revenues generated from its courts as opposed to the revenues generating from the shop. For example, in 2006, the organization made an equivalent of $28,600 through its shops’ contributions compared to $177,800 generated through its operations in same year. Extending demand for its courts will thus significantly improve the organization’s overall profitability level in the market. By exploiting these opportunities, the organization will be in a position to mitigate the underlying threats.
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There are many weaknesses and strengths in the organization, which form either a threat or an opportunity in future. For instance, the organization has enormous financial resources that will enable it to implement the identified strategy. It equally has a high number of existing customers. These customers act as a source of referrals to the organization. Despite this, there are several weaknesses that the organization needs to mitigate. The organization has low tennis court capacity. This has the potential of significantly increasing dissatisfaction among the clients. To address this issue, there is a need for an organization to even the demand for such tennis courts between the peak and off-peak hours as well as during in-seasons and off-seasons. Such actions will significantly boost its customer satisfaction and revenues. On the same note, there is a need for an organization to increase the number of tennis courts if the challenges it faces are to be effectively addressed.
Particularly in this case, it is clear that purchasing of new courts is rather expensive undertaking. Thus, there is a need for an organization to identify ways of increasing demand for its already existing courts, instead of focusing on building new ones, if it is to address the effectively faced issues. Hence, there is a need for an organization to focus on improving its marketing strategy. In terms of pricing, a discriminating pricing strategy will be the most effective. This will involve the organization charging less in periods of low demand and charging high in periods of low demand. While this will reduce the gross profit margin, it will also enable the organization to enjoy economies of scale. It will also result to improved customers satisfaction, as there is no time that such customers will lack access to the court.
The second strategic option is for the organization to develop a subsidiary. Through such growth strategy, the organization will bypass its current space-related challenges. This will enable the organization to establish its services in a different location. It will increase access to its services by customers in those regions. More so, it will play an important role in the distribution of the organization’s services. It will also result in some of the demands for its current court, being transferred to one, as a new court will not be established far from the current. This will significantly boost the ability of the organization to serve its customers better and increase its profitability and sustainability. It is worth noting that from its court layout, the organization may not find sufficient space for a new court. This indicates a need by the organization to seek new courts where it can initiate its operations.
From the two given options, it is evident that the most viable one for the organization is to carry out a turnaround strategy through improved space demand management differential pricing. There are several advantages this strategy can offer as opposed to starting a new subsidiary. The approach will not cost the organization a lot as compared to building a new strategy. All what the organization is required to do is alter the prices and invest in advertising, in order to increase awareness in the market of its current adjustments. Reducing prices at off peak and low seasons will increase demand for its services in the market without change of facilities. At the same time, increasing marketing communication will not only create awareness among consumers as to what the organization is offering, but will also persuade them to undertake such services. This will boost the overall level of profitability in the organization.
From this study, it is evident that to revive the operations of the organization, there is a need for the top management to undertake a strategy that is easy to implement using the available resources. It is equally clear that the organization will benefit significantly from equaling its demand through price discrimination. This will ensure that the demand for the organization’s services is well catered, as individuals will not concentrate services in peak hours but in other times. The organization will end up enjoying economies of success from its operations.