Dexter Holman October 16, 2011 CBAD 478 Rotary Cove Beach: Practice Case Analysis Rotary Cove Beach, of Goderich, Ontario, is troubled due to not having direct revenue streams, which in turn causes the beach to lose money on a yearly basis. The YMCA acquired the Cove’s operations in 2003. More recent, the Goderich Town Council gave a $20,000 donation for operations, but the unprofitability of the Cove has caused the Council to reevaluate whether they should spend taxpayers money on a tanking beach.
The branch manager, for the area YMCA, was forced into a mandating of a $370,000 net loss allowance. This mandate resulted in the YMCA trying to come up with ways the Cove could become profitable based on its’ present situation. Internally, there is much positive strength the company can build off of. I have found that the beach is very nice, which would bring tourists and locals for scenery reasons. The beach is also a low cost option for tourists coming on vacation.
The trained staff is often accredited for the beach’s high safety regards which make the beach more family friendly. The beach also differentiates itself from other beach by allowing for equipment rental, creating a slightly different product to beachgoers. Along with these and a value committed approach the company can leverage these strengths to make the profitability problem go away in years to come. Also there are things internally that are considered weaknesses. The main weakness the company possesses is the unprofitability of operations.
This lack of profit is most attributed to not having a beach that is vertically integrated. No vertical integration means that outside of beach activities the Cove has no influence on where money is spent. This lack of profit has also created a crutch system on the community to cover this gap in revenue and costs. When any entity relies almost solely on someone or group, they hold the risk of being affected by that other group’s emotions and feelings, which makes the stability of the Cove to be very low.
Externally, the Cove faces some troubles and also opportunities. First, the competitors’ audience seems to be the adult crowd, which provides as an opportunity and suffering for the Cove. They are more family oriented and therefore less directly affected, but the adult night life seems to be more of a profitable success factor in the industry. This establishes there next threat which is the competition’s high vertical integration. The competition brings in a direct revenue stream from the nightlife around the beach. Also for the future of he industry, if the economy gets better tourists may want to go outside of public beaches and go to the private beaches in the industry. These external factors show the industry norms and how well the Cove is doing in the industry. My first recommendation would be for YMCA to try and sell the company. My first reasoning behind this statement is that YMCA’s strategy is not aligned with what the task provides. YMCA has aims for providing recreation for lower class families, which would be impossible if the Cove expects to gain any profits.
YMCA is not the correct organization for the profit success of that beach. Another reason for my reasoning was the low industry attractiveness. The growth potential for the industry is very low and the degrees of risk and uncertainty are high. This in itself is reasons to leave the industry but overall the profitability is low. Both reasons provide a solid motive to sell and get out of the industry. My next recommendation would be to raise money in the YMCA’s name to create a family theme park around the grounds of Rotary Cove Beach.
The first reasoning behind this is because the organizations high capabilities of raising money as stated in the case. YMCA has a brand loyalty that people will feel inclined to donate to. These donations could come from local and national projects. My other reasoning is that a theme park would allow the beach to keep the family image but while also creating a more profitable way of maintaining the beach. Families would enjoy the safety of the beach while also enjoying more than one thing to do while at the beach that is just as fun and family oriented.
I learned a lot from this case. Mainly, I learned how to take the narrative of the case and create a picture in my head of what is in the present and then trying to paint the next picture of the beach’s future. With this knowledge I find what to recommend as options to benefit the organization. This also allowed for the critical thinking in the aspect of what goes into finding all the pieces of the puzzle we have, and creating the pieces we don’t have. I really enjoyed this case, because we had to make many assumptions due to the lack of much facts and figures in the case.