Harvard Case - Leisure Gardens: Expanding a Tourism Business in Ghana
"Leisure Gardens: Expanding a Tourism Business in Ghana" Harvard business case study is written by Nicole R.D. Haggerty, Jenny Min, Gena Zheng, Christine Ward. It deals with the challenges in the field of Strategy. The case study is 8 page(s) long and it was first published on : Sep 10, 2018
At Fern Fort University, we recommend Leisure Gardens pursue a multi-pronged growth strategy focused on strategic alliances, product diversification, and digital transformation to capitalize on the burgeoning tourism industry in Ghana. This approach will leverage the company's existing core competencies in hospitality, local knowledge, and environmental sustainability while adapting to the evolving demands of the modern traveler.
2. Background
Leisure Gardens is a successful tourism business in Ghana, operating a resort and offering various activities. The company faces a significant opportunity to expand its operations, driven by Ghana's growing tourism sector and the increasing demand for unique, sustainable travel experiences. However, Leisure Gardens must navigate a competitive landscape and adapt to the changing preferences of tourists.
The case study focuses on the challenges and opportunities facing the company's founder, Kwame, as he considers various expansion options. The main protagonists are Kwame, his family, and the company's employees.
3. Analysis of the Case Study
SWOT Analysis:
- Strengths: Strong brand reputation, experienced management team, unique location, focus on sustainability, strong local connections.
- Weaknesses: Limited marketing reach, reliance on a single location, lack of diversification, potential for capacity constraints.
- Opportunities: Growing tourism sector in Ghana, increasing demand for sustainable travel, potential for new product offerings, expansion into new markets.
- Threats: Competition from established players, economic instability, seasonality, dependence on external factors (e.g., weather).
Porter's Five Forces:
- Threat of New Entrants: Moderate, due to the need for significant investment and local knowledge.
- Bargaining Power of Buyers: High, as tourists have many options and can easily switch providers.
- Bargaining Power of Suppliers: Moderate, as Leisure Gardens depends on local suppliers for some services.
- Threat of Substitutes: Moderate, as alternative tourism experiences exist within Ghana and abroad.
- Competitive Rivalry: High, as several players compete for the same market share.
Value Chain Analysis:
Leisure Gardens' value chain includes:
- Inbound Logistics: Managing supplies and resources for the resort.
- Operations: Providing accommodation, activities, and services.
- Outbound Logistics: Transporting guests to and from the resort.
- Marketing & Sales: Promoting the resort and attracting customers.
- Service: Delivering exceptional customer experiences.
Business Model Innovation:
Leisure Gardens can innovate its business model by:
- Developing niche offerings: Catering to specific segments, such as eco-tourists, adventure seekers, or families.
- Leveraging technology: Implementing online booking systems, digital marketing campaigns, and virtual tours.
- Creating strategic partnerships: Collaborating with local businesses and tour operators to offer bundled packages.
Corporate Governance:
Leisure Gardens needs to strengthen its corporate governance by:
- Formalizing decision-making processes: Defining clear roles and responsibilities for management.
- Implementing financial controls: Ensuring transparency and accountability in financial reporting.
- Developing a succession plan: Preparing for the future leadership of the company.
Mergers and Acquisitions:
Leisure Gardens could consider acquiring smaller tourism businesses to expand its reach and diversify its portfolio. This would require careful due diligence and integration planning.
Strategic Planning:
Leisure Gardens needs a comprehensive strategic plan that outlines its vision, mission, objectives, and strategies for achieving its goals. This plan should be reviewed and updated regularly.
Market Segmentation:
Leisure Gardens can segment its target market based on demographics, psychographics, and travel preferences. This will allow for more targeted marketing and product development.
Blue Ocean Strategy:
Leisure Gardens can create a blue ocean by offering a unique combination of sustainability, local experiences, and personalized service. This will differentiate it from competitors and attract a new customer base.
Disruptive Innovation:
Leisure Gardens can explore disruptive innovation by introducing new technologies or business models that disrupt the existing tourism industry. For example, it could develop a mobile app that connects tourists with local communities and experiences.
Balanced Scorecard:
Leisure Gardens can use a balanced scorecard to monitor its performance across key areas, including financial, customer, internal processes, and learning and growth.
Core Competencies:
Leisure Gardens' core competencies include:
- Hospitality: Providing excellent customer service and creating a welcoming atmosphere.
- Local Knowledge: Understanding the cultural and historical significance of the region.
- Environmental Sustainability: Operating in an environmentally responsible manner.
Diversification:
Leisure Gardens can diversify its portfolio by:
- Expanding into new locations: Opening resorts in other parts of Ghana or neighboring countries.
- Developing new product offerings: Adding activities, tours, or experiences to its portfolio.
- Entering new markets: Targeting different customer segments or travel niches.
Vertical Integration:
Leisure Gardens could consider vertical integration by acquiring or partnering with businesses in its value chain, such as transportation providers or tour operators.
Horizontal Integration:
Leisure Gardens could pursue horizontal integration by acquiring or partnering with competitors to gain market share and expand its reach.
Strategic Alliances:
Leisure Gardens can form strategic alliances with:
- Local businesses: Collaborating with restaurants, shops, and other attractions.
- Tour operators: Offering bundled packages to tourists.
- International travel agencies: Reaching a wider audience.
Outsourcing:
Leisure Gardens can outsource non-core functions, such as marketing or IT, to focus on its core competencies.
Globalization Strategies:
Leisure Gardens can adopt globalization strategies to expand into international markets, such as:
- Exporting: Selling its services to tourists from other countries.
- Foreign direct investment: Opening resorts in other countries.
- Joint ventures: Partnering with local companies in other countries.
Product Differentiation:
Leisure Gardens can differentiate its products by:
- Offering unique experiences: Providing authentic local experiences and activities.
- Focusing on sustainability: Emphasizing its commitment to environmental protection.
- Personalizing services: Providing tailored experiences for individual guests.
Cost Leadership:
Leisure Gardens can achieve cost leadership by:
- Optimizing operations: Streamlining processes and reducing costs.
- Negotiating favorable contracts: Securing competitive prices from suppliers.
- Investing in technology: Automating tasks and improving efficiency.
Market Penetration:
Leisure Gardens can increase market penetration by:
- Expanding its marketing reach: Reaching new customer segments through online and offline channels.
- Offering promotions and discounts: Attracting price-sensitive customers.
- Improving customer loyalty: Encouraging repeat business through rewards programs and personalized services.
Market Development:
Leisure Gardens can develop new markets by:
- Targeting new customer segments: Attracting different demographics or travel niches.
- Expanding into new geographic areas: Opening resorts in other parts of Ghana or neighboring countries.
- Developing new product offerings: Catering to the needs of specific market segments.
Product Development:
Leisure Gardens can develop new products by:
- Adding new activities: Offering a wider range of experiences for tourists.
- Creating unique packages: Bundling services and activities to appeal to specific interests.
- Developing new accommodation options: Offering different types of rooms or villas to cater to varying budgets and preferences.
Resource-Based View:
Leisure Gardens should leverage its valuable, rare, inimitable, and non-substitutable resources, such as its location, brand reputation, and experienced team, to create a sustainable competitive advantage.
Dynamic Capabilities:
Leisure Gardens needs to develop dynamic capabilities, such as its ability to adapt to changing market conditions, innovate its products and services, and manage its resources effectively, to maintain its competitive edge.
Scenario Planning:
Leisure Gardens should engage in scenario planning to anticipate future trends and develop contingency plans for different scenarios, such as economic downturns, political instability, or changes in customer preferences.
Stakeholder Analysis:
Leisure Gardens should identify and analyze its stakeholders, including customers, employees, suppliers, investors, and the local community, to understand their interests and expectations.
Strategic Positioning:
Leisure Gardens should develop a clear strategic positioning that differentiates it from competitors and communicates its value proposition to its target market.
Business Ecosystem:
Leisure Gardens should consider its role within the broader tourism ecosystem in Ghana and develop relationships with other businesses to create value for all stakeholders.
Game Theory in Strategy:
Leisure Gardens can use game theory to understand the competitive dynamics within the tourism industry and develop strategies that anticipate the actions of its competitors.
Strategic Leadership:
Leisure Gardens needs strong strategic leadership that can set a clear vision, inspire employees, and guide the company through strategic challenges.
Change Management:
Leisure Gardens should implement effective change management processes to ensure smooth transitions during its growth and expansion.
Organizational Culture:
Leisure Gardens should cultivate a culture of innovation, customer focus, and sustainability to support its strategic goals.
Strategic Implementation:
Leisure Gardens needs to develop a detailed implementation plan that outlines the steps, resources, and timelines for achieving its strategic objectives.
Benchmarking:
Leisure Gardens should benchmark its performance against industry best practices to identify areas for improvement and innovation.
Strategic Control:
Leisure Gardens should establish mechanisms for monitoring and controlling its progress toward its strategic goals, including regular performance reviews and financial reporting.
PESTEL Analysis:
- Political: Government policies and regulations related to tourism.
- Economic: Economic growth, inflation, and exchange rates.
- Social: Changing travel preferences and demographics.
- Technological: Advancements in technology and digital marketing.
- Environmental: Sustainability concerns and climate change.
- Legal: Laws and regulations governing tourism businesses.
Industry Lifecycle:
The tourism industry in Ghana is in a growth stage, presenting opportunities for expansion and innovation.
Strategic Groups:
Leisure Gardens should identify its strategic groups within the tourism industry to understand its competitive landscape and target its marketing efforts.
Value Proposition:
Leisure Gardens' value proposition should clearly communicate its unique selling points, such as its commitment to sustainability, its focus on local experiences, and its personalized service.
Business Portfolio Analysis:
Leisure Gardens can use a business portfolio analysis, such as the BCG matrix or the Ansoff matrix, to assess the attractiveness of different growth opportunities and allocate resources accordingly.
BCG Matrix:
Leisure Gardens can use the BCG matrix to classify its existing products and services based on their market share and market growth rate.
Ansoff Matrix:
Leisure Gardens can use the Ansoff matrix to identify different growth strategies, such as market penetration, market development, product development, and diversification.
Strategic Intent:
Leisure Gardens should develop a clear strategic intent that outlines its long-term aspirations and its commitment to achieving its goals.
Sustainable Competitive Advantage:
Leisure Gardens should strive to create a sustainable competitive advantage by leveraging its core competencies, differentiating its products and services, and adapting to changing market conditions.
Strategic Flexibility:
Leisure Gardens should maintain strategic flexibility by developing contingency plans and adapting its strategies to unexpected events.
Corporate Social Responsibility:
Leisure Gardens should embrace corporate social responsibility by integrating ethical and sustainable practices into its operations and contributing to the well-being of its stakeholders.
Digital Transformation Strategy:
Leisure Gardens should develop a comprehensive digital transformation strategy that leverages technology to improve its operations, enhance customer experiences, and expand its reach.
Strategic Foresight:
Leisure Gardens should engage in strategic foresight to anticipate future trends and develop strategies that prepare it for the challenges and opportunities of the future.
4. Recommendations
1. Strategic Alliances:
- Form partnerships with local tour operators: Offer bundled packages that combine Leisure Gardens' accommodation and activities with tours and experiences from local operators.
- Collaborate with international travel agencies: Partner with agencies specializing in sustainable tourism or African travel to reach a wider audience.
- Develop joint ventures with other tourism businesses: Explore opportunities to invest in or collaborate with complementary businesses, such as restaurants, transportation providers, or adventure activity companies.
2. Product Diversification:
- Expand into new accommodation options: Offer a range of accommodation choices, including luxury villas, eco-lodges, or budget-friendly options, to attract a wider range of travelers.
- Develop new activities and experiences: Introduce unique experiences that cater to specific interests, such as birdwatching tours, cultural immersion programs, or adventure activities.
- Create niche offerings: Focus on specific market segments, such as eco-tourists, families, or adventure seekers, to develop tailored products and services.
3. Digital Transformation:
- Invest in a robust online booking system: Implement an online booking platform that allows customers to book accommodation, activities, and packages directly.
- Develop a mobile app: Create a mobile app that provides information about the resort, activities, and local attractions, and allows for online booking and communication.
- Leverage social media marketing: Utilize social media platforms to promote Leisure Gardens' offerings, engage with potential customers, and share user-generated content.
- Implement a digital marketing strategy: Utilize search engine optimization (SEO), pay-per-click (PPC) advertising, and content marketing to reach a wider audience online.
5. Basis of Recommendations
These recommendations are based on the following considerations:
- Core competencies and consistency with mission: The recommendations leverage Leisure Gardens' existing strengths in hospitality, local knowledge, and sustainability, aligning with its mission to provide authentic and responsible travel experiences.
- External customers and internal clients: The recommendations address the evolving needs of modern travelers, seeking unique experiences, sustainability, and convenience. They also consider the needs of employees by providing opportunities for growth and development.
- Competitors: The recommendations differentiate Leisure Gardens from competitors by focusing on niche offerings, leveraging technology, and building strategic alliances.
- Attractiveness ' quantitative measures if applicable (e.g., NPV, ROI, break-even, payback): The recommendations are expected to generate a positive return on investment (ROI) by increasing revenue, expanding market share, and improving operational efficiency. The specific financial metrics will depend on the details of each investment decision.
- Assumptions: The recommendations are based on the assumption that the tourism sector in Ghana will continue to grow, that Leisure Gardens can successfully implement its strategic initiatives, and that the company can secure the necessary resources and partnerships.
6. Conclusion
By pursuing a multi-pronged growth strategy focused on strategic alliances, product diversification, and digital transformation, Leisure Gardens can capitalize on the burgeoning tourism industry in Ghana and achieve sustainable growth. This approach will leverage the company's existing core competencies while adapting to the evolving demands of the modern traveler.
7. Discussion
Alternatives not selected:
- Mergers and Acquisitions: While M&A could be a viable option, it carries significant risks and requires careful due diligence and integration planning.
- Vertical Integration: Vertical integration could lead to increased control over the value chain but could also increase costs and complexity.
- Horizontal Integration: Horizontal integration could lead to market dominance but could also face regulatory scrutiny and antitrust concerns.
Risks and key assumptions:
- Economic instability: Ghana's economy could experience fluctuations, impacting tourism demand.
- Competition: New entrants or existing players could intensify competition.
- Technology disruption: Advancements in technology could disrupt the tourism industry.
- Government policy and regulation: Changes in government policies could impact the tourism sector.
Options Grid:
| Option | Advantages | Disadvantages | Risks | Assumptions |
|---|---|---|---|---|
| Strategic Alliances | Access to new markets, shared resources, reduced risk | Dependence on partners, potential conflicts | Partner performance, regulatory changes | Tourism sector growth, successful partnership management |
| Product Diversification | Increased revenue streams, reduced reliance on single product | Increased complexity, potential for cannibalization | Market acceptance, resource availability | Customer demand for new products, successful product development |
| Digital Transformation | Increased efficiency, improved customer experience, expanded reach | High initial investment, potential for technological challenges | Technological obsolescence, security risks | Customer adoption of digital channels, successful technology implementation |
8. Next Steps
- Develop a detailed implementation plan: Outline the specific steps, resources, and timelines for each strategic initiative.
- Secure funding: Identify and secure the necessary financial resources to support the growth strategy.
- Build partnerships: Establish strong relationships with key partners, including local tour operators, international travel agencies, and technology providers.
- Develop new products and services: Invest in research and development to create innovative products and experiences.
- Implement digital transformation: Invest in technology and develop a digital marketing strategy to reach a wider audience.
- Monitor progress and make adjustments: Track the progress of the strategic initiatives and make adjustments as needed based on market conditions and performance data.
By taking these steps, Leisure Gardens can position itself for continued success in the growing tourism industry in Ghana.
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Case Description
The owner of Leisure Gardens, a restaurant and accommodation business in a small town in Ghana, faced problems with his business. Approximately 40 per cent of his restaurant customers were paying on credit and not paying on time, causing cash flow problems. His sole employee was unreliable, often absent when the restaurant was busy. This two-part problem hindered the restaurant's success and owner's ability to expand the business. Moreover, the owner faced external pressures from competitors in the restaurant market. The owner was considering three options to sustainably reduce bad-debt accounts and ensure profitability in the future: implementing an employee contract, changing the payment options, and expanding the business to generate more revenue. Which option would be the best course of action for the future of Leisure Gardens?
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