Final Capstone Report

BUSI 4609C March 26th, 2014 Dr. Ian Lee FINAL CAPSTONE REPORT Whistler Blackcomb Holdings Inc. - WB Jessica Lane – 100799095 – [email protected] Julia Lesway – 100792672 – [email protected] Lindsay Crone – 100821607 – [email protected] Whistler Blackcomb Holdings Inc. Page 1 Table of Contents Executive Summary ................................................................................................... 4 Introduction ................................................................................................................ 6 Part I – Macro Environment ....................................................................................10 Technology Environment .....................................................................................10 Economic Environment ........................................................................................22 Socio-Cultural Environment .................................................................................30 Political/Legal Environment .................................................................................42 Summary of Macro Environment .........................................................................47 Part II – Industry Analysis .......................................................................................52 Industry Overview ................................................................................................52 Strategic Group Map .............................................................................................53 Five Forces Analysis .............................................................................................55 Rivalry or direct competitors – 8/10 ..................................................................55 Threat of Entry - 2/10 ........................................................................................60 Substitutes – 3/10 ...............................................................................................65 Power of Suppliers – 8/10..................................................................................68 Power of Buyers: Customers and Consumers – 3/10 ........................................71 Five Forces Summary ...........................................................................................74 Driving Forces ......................................................................................................77 Summary of Industry Analysis .............................................................................79 Part III – Internal Environment ................................................................................84 Note on Competitors Analyzed ............................................................................86 Note on Comparability of Currencies ...................................................................87 Primary Value Chain Activities ............................................................................88 Supply Chain Management (Neutral) ................................................................88 Operations (Strength) .........................................................................................91 Whistler Blackcomb Holdings Inc. Page 2 Distribution (N/A) ...........................................................................................101 Marketing and Sales (Strength) .......................................................................102 Customer Service (Strength) ...........................................................................111 Secondary Value Chain Activities ......................................................................116 Human Resources Management (Strength) .....................................................116 New Product Development (Strength) ............................................................123 Corporate Leadership (Strength) .....................................................................128 Summary of Internal Environment .....................................................................140 Part IV: Corporate Strategy ...................................................................................146 Preliminary Analysis ...........................................................................................146 Vertical Location ................................................................................................150 Horizontal Location ............................................................................................151 Geographic Location ...........................................................................................153 General Strategy – Dividend Policy ...................................................................160 Part V: Business / Functional Strategies ................................................................166 Current Strategies ...............................................................................................166 Problems / Issues ................................................................................................167 Recommendations ...............................................................................................170 Recommendation I: Local and Regional .........................................................170 Recommendation II: Target International Customers .....................................177 Conclusion .............................................................................................................183 Appendices .............................................................................................................186 Statements of Financial Position ........................................................................186 Statements of Comprehensive Income ...............................................................189 Whistler Blackcomb Holdings Inc. Page 3 Executive Summary Within the North American ski resort industry, technology provides many opportunities through the popularity of ski commerce, the emergence of RFID tags, and improvements to snow making machines. Real GDP and disposable incomes have been increasing. Associations provide a platform for a safe environment while the government entry laws allow tourists the ability to travel easily. There are also many threats affecting the industry including the fluctuating exchange rates and increase in gas prices. Although consumers are travelling for longer periods of time, the overall number of skier visits has been declining due to a lack of recreation spending, consumer participation, and the aging population. With a high threat of rivalry, minimal threat of entry, no threat of substitutes, high supplier power, and low buyer power, the ski resort industry is moderately attractive. Whistler has many strengths in regards to its value chain activities. Its marketing and sales, customer service, human resource management, and new product development allow the firm to generate above average returns through a competitive advantage. Although its efficient operations produce high returns, Whistler’s effective ticket price (total revenue per visit) is not at a competitive level. The firm’s experienced top management has financed Whistler adequately in order to be more profitable than competitors; however, due to its generous dividend policy, it is unable to grow significantly in the long term. Whistler Blackcomb Holdings Inc. Page 4 Whistler’s vertical and horizontal positions in the industry have allowed it to focus its efforts and resources into its core business while remaining competitive in the industry; no changes to these strategies have been recommended. The firm is bound to its one geographic location. As its competitors are expanding, Whistler needs to increase its consumer base by acquiring an additional ski area (or resort) to maintain or increase its market share. Additionally, it is predicted that Whistler’s current dividend policy will hinder the firm’s ability to have a competitive advantage in the long run. An adjustment to this policy is suggested to hold a greater amount of cash within the firm for the purpose of generating growth. Whistler’s focused differentiation strategy has allowed the firm to obtain a competitive advantage through its brand awareness and outstanding customer service while offering lift tickets at competitive prices to local, regional, and international visitors. In order to build a larger consumer base, it is recommended that Whistler target local youth to obtain a life-long consumer by establishing partnerships with local schools to offer organized trips to the resort. It is important to meet the demands of international customers, who produce greater revenues per visit, as well. It is suggested that Whistler host a ski/snowboard competition to attract European guests. By continuing its already successful operations and implementing the suggested strategic alterations, Whistler will be able to hold a sustainable competitive advantage in the North American ski industry. Whistler Blackcomb Holdings Inc. Page 5 Introduction This report will analyze the macro environment and overall industry pertaining to the skiing resort Whistler Blackcomb. Whistler Blackcomb is the only publicly traded skiing facility in Canada and one of a handful in North America, located in Whistler, British Columbia. We selected this firm to get a full perspective of how the business and industry operates for one of Canada’s favourite winter activities and how it competes within the

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