A Strategic Analysis of a Tourism Company
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A STRATEGIC ANALYSIS OF A TOURISM COMPANY Edwin Siu Heem Fok Diploma of Technology, British Columbia Institute of Technology, 1990 Bachelor of Administration, Lakehead University, 1994 Certified General Accountant, 1999 PROJECT SUBMlTTED IN PARTIAL FULFILLMENT OF THE REQUIREMENTS FOR THE DEGREE OF Master of Business Administration EMBA Program in the Faculty Business Administration OEdwin Siu Heem Fok 2004 SIMON FRASER UNIVERSITY August 2004 All rights reserved. This work may not be reproduced in whole or in part, by photocopy or other means, without permission of the author. APPROVAL Name: Edwin Siu Heem Fok Degree: Master of Business Administration Title of Project: A Strategic Analysis of a Tourism Company Supervisory Committee: Dr. Neil Abrarnson Senior Supervisor Faculty of Business Administration - - -< .. e ---.-- Faculty of Business Administration Date Approved: Executive MBA Program Partial Copyright License I hereby grant to Simon Fraser University the right to lend my thesis, project or extended essay (the title of which is shown below) to users of the Simon Fraser University Library, and to make partial or single copies only for such users or in response to a request from the library of any other university, or other educational institution, on its own behalf or for one of its users. I further agree that permission for multiple copying of this work for scholarly purposes may be granted by me or the Dean of Graduate Studies. It is understood that copying or publication of this work for financial gain shall not be allowed without my written permission. Title of Thesis/Project/Extended Essay A Strategic Analysis of a Tourism Company Author: L " Edwin Fok ABSTRACT This project develops a strategic analysis for a tourism company operating in Western Canada. The company and its management have been extremely successful in the last fifteen years but now have come to a cross roads on where to dedicate resources. The company is faced with stagnate growth due to a combination of the competitive environment and world events such as September I 1th and SARS. Porter's five forces are used to analyze the industry and examine opportunities and threats. Strategic alternatives are developed from the external analysis. Following the strategic alternatives is an internal analysis of the company's strengths and weaknesses. Finally a recommendation and implementation plan is discussed. Because the company is private and majority owned by a single shareholder, management preferences play a huge part in the strategic direction of the firm. Three alternatives are developed: Multiple tour products Expand value chain and differentiate Grow new markets The project recommends which alternative provides the greatest growth potential. DEDICATION I would like to dedicate my project to my late Father, Henry and my Mother, Ying Wah. Without their dream for a better education for their children, I would have never been blessed with the opportunities I have had. I would also like to dedicate this work to my wife, Anne, for her undying support. If it were not for her visit to Whistler I would have never had the strength to continue and shine. ACKNOWLEDGMENTS This project marks a significant chapter in my life as this signals the fulfillment of a dream. For the last two years I have gone through many challenging times in which I have persevered through. I would like to thank my team the Matrix for all their support through many late nights and Sunday mornings. They have now become great friends. I would also like to acknowledge Blair Baxter who started me down this path and Doug Cucheron who ended it with me. Finally, I would like to thank Dr. Neil Abramson who's humour and guidance made it that much easier. TABLE OF CONTENTS .. Approval ........................................................................................................................................11 ... Abstract ....................................................................................................................................... 111 Dedication ....................................................................................................................................iv Acknowledgments ........................................................................................................................v Table of Contents ........................................................................................................................ vi ... List of Tables ............................................................................................................................ VIII LIST OF FIGURES .................................................................................................................... ix 1 INTRODUCTION ............................................................................................................. 1 1.1 Company Background ....................................................................................................1 1.2 Problem ...........................................................................................................................2 2 EXTERNAL ANALYSIS .................................................................................................. 3 2.1 Industry Analysis ............................................................................................................3 2.1 .1 Threat of Entry ....................................................................................................-4 2.1.2 Bargaining power of suppliers .............................................................................6 2.1.3 Bargaining Power of Customers .........................................................................7 2.1.4 Threat of Substitutes ............................................................................................9 2.1.5 Rivalry Among Existing Competitors ................................................................10 2.1.6 Attractiveness of Industry ..................................................................................18 2.2 Value Chain Analysis ...................................................................................................20 2.2.1 RMR background ...............................................................................................20 2.2.2 Industry Value Chain .........................................................................................20 2.2.3 Firm Value Chain ...............................................................................................24 2.2.3.1 Primary Activities .........................................................................................24 2.2.3.2 Support Activities ........................................................................................ -34 2.2.3.3 Firm Value Chain Summary ........................................................................-36 2.3 Key Success Factors .....................................................................................................37 2.4 Strategic Alternatives ...................................................................................................38 2.4.1 Multiple Railtour Products................................................................................. 38 2.4.2 Expand Value chain & differentiation .............................................................39 2.4.3 Acquire and grow new markets ..........................................................................42 3 INTERNAL ANALYSIS ................................................................................................. 45 3.1 Resources...................................................................................................................... 45 3.1 .1 Finance ..............................................................................................................-45 3.1.2 Human resources ................................................................................................50 3.1.3 Marketing ..........................................................................................................52 3.1.4 Procurement ......................................................................................................-55 3.1.5 Operations .........................................................................................................57 3.2 Management Preferences............................................................................................. 61 3.3 Organization ................................................................................................................64 4 RECOMMENDATION ................................................................................................... 68 4.1 Expand value chain & differentiation ..........................................................................69 4.1.1 Onboard differentiation...................................................................................... 69 4.1.2 Off board differentiation and expand value chain ........................................71 4.2 Grow new markets ........................................................................................................73 4.2.1 Japanese sales and marketing plan .....................................................................73 4.2.2 Other geographic segments ................................................................................76 4.2.2.1 Chinese ..........................................................................................................76