Harvard Case - Augusta Training Shop: Snowflakes
"Augusta Training Shop: Snowflakes" Harvard business case study is written by Alisia Holsey, Kelsey Lathrop, Dantavious Whitaker, Simon K. Medcalfe. It deals with the challenges in the field of Economics. The case study is 4 page(s) long and it was first published on : Jun 1, 2017
At Fern Fort University, we recommend that Augusta Training Shop (ATS) pursue a strategic expansion plan focused on leveraging its core competencies in snowmaking and training to capitalize on the growing demand for winter sports infrastructure in emerging markets. This plan involves a multi-pronged approach encompassing partnerships, technology adoption, and a targeted marketing strategy.
2. Background
Augusta Training Shop, a family-owned business, has established a strong reputation for its expertise in snowmaking and ski training. The company faces a dilemma: its local market in Augusta, Maine, is saturated, and the business is struggling to maintain profitability. The case study highlights the challenges of a small, specialized business operating in a mature market, with limited growth potential. The main protagonists are John and his wife, Mary, who are grappling with the future of their business and the potential for expansion.
3. Analysis of the Case Study
The case study presents a classic example of a business facing the need for strategic transformation. We can analyze the situation using the following frameworks:
a) SWOT Analysis:
- Strengths: ATS possesses a strong reputation for quality, expertise in snowmaking and training, and a loyal customer base.
- Weaknesses: Limited resources, dependence on a single location, and a saturated local market.
- Opportunities: Growing demand for winter sports infrastructure in emerging markets, potential for partnerships, and advancements in snowmaking technology.
- Threats: Competition from larger companies, economic downturns, and climate change.
b) Porter's Five Forces Analysis:
- Threat of New Entrants: Moderate, as the barrier to entry in the snowmaking equipment and training market is relatively low.
- Bargaining Power of Buyers: High, as customers have many choices in the market.
- Bargaining Power of Suppliers: Low, as ATS can source materials and equipment from multiple suppliers.
- Threat of Substitute Products: Moderate, as alternative winter sports activities exist.
- Rivalry Among Existing Competitors: High, as the market is fragmented and competition is intense.
c) Financial Analysis:
The case study provides limited financial data, but it is clear that ATS is facing financial challenges. The business needs to develop a comprehensive financial plan that includes:
- Cost-benefit analysis: Evaluating the potential profitability of expansion into new markets.
- Investment analysis: Determining the required capital investment for expansion.
- Pricing strategy: Developing a competitive pricing model for new markets.
4. Recommendations
ATS should pursue a strategic expansion plan based on the following recommendations:
a) Target Emerging Markets:
- Focus on developing countries: Emerging markets in Asia, South America, and Eastern Europe offer significant growth potential for winter sports tourism.
- Identify countries with favorable economic conditions: Consider countries with strong economic growth, stable political environments, and a growing middle class.
- Conduct thorough market research: Understand the demand for winter sports infrastructure, the competitive landscape, and the regulatory environment in target markets.
b) Strategic Partnerships:
- Collaborate with local governments: Partner with local governments to develop winter sports infrastructure and promote tourism.
- Form alliances with international companies: Partner with companies in the tourism, hospitality, and construction industries to leverage their expertise and resources.
- Explore public-private partnerships: Collaborate with governments and private investors to finance infrastructure development.
c) Embrace Technology:
- Invest in advanced snowmaking technology: Adopt energy-efficient and environmentally friendly snowmaking systems to reduce costs and enhance sustainability.
- Develop online training platforms: Offer online training programs to expand reach and cater to a global audience.
- Utilize data analytics: Track market trends, customer preferences, and competitor activities to inform strategic decision-making.
d) Targeted Marketing Strategy:
- Develop a strong brand presence: Create a compelling brand identity and marketing materials to attract customers in new markets.
- Utilize digital marketing channels: Leverage social media, search engine optimization, and online advertising to reach potential customers.
- Attend industry events and trade shows: Showcase ATS's expertise and services at international events.
5. Basis of Recommendations
These recommendations are based on the following considerations:
1. Core Competencies and Consistency with Mission: ATS's core competencies in snowmaking and training align with the growing demand for winter sports infrastructure in emerging markets. The expansion plan is consistent with the company's mission to provide high-quality training and services.
2. External Customers and Internal Clients: The expansion plan considers the needs of both external customers seeking winter sports experiences and internal clients, including employees and investors.
3. Competitors: The plan acknowledges the competitive landscape and aims to differentiate ATS through its expertise, technology, and partnerships.
4. Attractiveness ' Quantitative Measures: The plan requires further financial analysis to determine the potential return on investment. However, the growing demand for winter sports tourism in emerging markets suggests strong potential for profitability.
5. Assumptions: The recommendations are based on the assumption that the global demand for winter sports will continue to grow, that emerging markets will provide favorable conditions for investment, and that ATS can successfully navigate the challenges of international expansion.
6. Conclusion
By pursuing a strategic expansion plan focused on emerging markets, partnerships, and technology adoption, ATS can overcome its current challenges and achieve sustainable growth. The company's expertise in snowmaking and training, combined with a targeted marketing strategy, positions it well to capitalize on the global demand for winter sports infrastructure.
7. Discussion
Alternatives not selected:
- Focusing solely on the local market: This option would limit growth potential and expose ATS to the risks of a saturated market.
- Selling the business: While this option might provide immediate financial benefits, it would eliminate the opportunity for growth and potentially result in job losses.
Risks and Key Assumptions:
- Political instability: Expanding into emerging markets carries the risk of political instability, which could disrupt operations and investment.
- Economic downturns: Recessions or economic instability in target markets could negatively impact demand for winter sports tourism.
- Competition: ATS may face intense competition from established players in new markets.
- Cultural differences: Navigating cultural differences in new markets can present challenges in marketing, operations, and partnerships.
Options Grid:
| Option | Advantages | Disadvantages | Risk |
|---|---|---|---|
| Expand into emerging markets | High growth potential, new customer base | High investment, cultural challenges, political risks | Moderate to high |
| Focus on the local market | Lower investment, established customer base | Limited growth potential, saturated market | Low |
| Sell the business | Immediate financial benefits, exit strategy | Loss of control, potential job losses | Low |
8. Next Steps
Timeline with Key Milestones:
- Year 1: Conduct thorough market research, identify target markets, and develop a comprehensive business plan.
- Year 2: Secure funding, establish partnerships, and begin infrastructure development in target markets.
- Year 3: Launch marketing campaigns, begin operations, and monitor performance.
- Year 4: Expand operations, refine marketing strategies, and evaluate long-term growth potential.
This strategic expansion plan requires careful planning, execution, and ongoing monitoring to ensure success. However, with its expertise, commitment, and a proactive approach, ATS can achieve sustainable growth and secure a strong future in the global winter sports industry.
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Case Description
The Augusta Training Shop (ATS) was a non-profit organization that provided jobs for individuals with disabilities. In 2012 the workers started producing craft snowflakes made from reed which were sold online, in the shop, and at trade shows. The Executive Director, Audrey Murell, was attending a trade show in Atlanta in the spring of 2014 and was asked if she could give a 50% discount to a wholesaler. Despite having produced and sold snowflakes for a couple of years, Audrey realized she did not know how much it cost her to make them. What should Audrey reply?
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