In order for The Rotary Cove Beach to succeed, they must address the following: The Cove will need to find a consistent source of revenue so they can stop losing money and be financially profitable for the future. The Cove will need to present a strategic plan to the City Council so that it can secure financial funding from the town for the future. The Cove must complete a proper competitive analysis to clearly define their direct and indirect competitors in order to gain a competitive advantage.
Analysis: The Rotary Cove Beach has no revenue streams, which has resulted in steady losses for the last 3 years. While conducting a SWOT analysis, The Cove has an abundance of opportunities and options for turning their beach into a profitable enterprise. They just need to identify all options and evaluate which would be best suited for the YMCA, The Cove and the public.
The upcoming election poses a credible threat to the beach, as it will likely result in a decrease of funding or at worst, no funding at all. With heavy losses in recent history, both the government and the YMCA are very concerned with The Cove. The government is growing reluctant of continually spending taxpayers money on a beach that has no revenue. The funding The Cove receives from the government appeared on both SWOT and PEST analysis as playing a vital role in the beach’s operations.
The YMCA branch itself is reluctant to allocate any of its marketing budget to The Cove because there is no incentive of any revenue. The case states that the Council will most likely cut $5,000 from their grant for the coming year and the upcoming election may result in no funding at all. Thomson and The Cove needs to show the Council that there is a potential for the beach to make a stable and consistent profit stream in order to secure funding for the future.
If The Cove can not clearly identify who their direct competition is in Goderich then there is no way they can differentiate themselves from the rest and ultimately will not succeed. Around Goderich and even including Lake Huron, there is an abundance of both public beach spaces but also private beaches as well. The Cove Beach has a lot of internal strengths when compared to the other public beaches in the vicinity. Their greatest strength is the lifeguards they have on staff. They are all well-known local people that the public know and trust. By keeping high hiring standards of the best and most experienced lifeguards is a major attraction of tourists and locals alike. The other beaches cater towards the adult crowd and relies more on a rich nightlife, which ultimately leaves The Cove to monopolize the family friendly market segment.
Decision Criteria:
Does it align with the YMCA Mission Statement? Does it stop The Cove from losing money? How will it affect the attendance at the beach? How will it differentiate The Cove from its competitors?
Options: 1) To start charging admissions. With such a high annual attendance at the beach, charging a small amount of money to each guest is a very viable option for the company. Using the estimated attendance number from Exhibit 2, the beach would see an increase of revenue by $60,000 (as outlined in Exhibit 3). The break even of this project is 6,417 guests and by looking at previous years, this occurs during the third week of the summer (Exhibit 5).
There will be a risk of missing charges from some people because of the numerous accessibility points along the vast beach coastline. Despite that risk, the estimated attendance of 25,000 is a very conservative number, which is on the low end and will provide a substantial net income at the end of the year of over $24,500 (Exhibit 3). Looking at the entire operational costs, the Cove will cover all of its costs after its 14,778th admission (Exhibit 6). The biggest pitfall of this option is that it does not agree with YMCA’s values and mission statement (Exhibit 1) and charging patrons a fee breaches these values.
2) To Install Volleyball Courts. Offering amenities such as beach volleyball courts at beaches is a major attraction for the public and its benefits far out-weigh its costs. At a cost of $2,282 it is cheap to construct and can be completed in 2 days. It will be quite easy to fill the summer camps as families in town live active lifestyles especially during the summer when the kids are not in school. Kids only want to do things that their friends are doing so they will ultimately sign up for the camps in groups. To cover the costs of constructing the project, The Cove will breakeven at basically 10 kids each camp (Exhibit 7).
Exhibit 8 illustrates the level of profit The Cove will receive at each of the 3 volumes of enrolment outlined in the case. A recommendation could be made for using extra volunteers for the bigger camp sizes instead of hiring 2 extra councillors, as it will save $2,520. Looking at the entire operations, the volleyball summer camps at full capacity of 150 kids only provide a net income of $4,133. This is considerably more income than they earned in 2009 (difference of over $28,000). This option however better aligns itself to the YMCA mission statement and values. While the camps are not using the courts, The Cove could set up a summer league to bring in extra revenue. This is further explained in Exhibit 9 and will bring more net income. The nets will require little upkeep and will likely only be replaced every other year. The replacement of volleyballs will have to be more frequent but it is an unknown variable.
3) To sell The Cove. If the YMCA is unable to find an option for funds, they should consider selling the operations. Maintaining the YMCA mission statement is of upmost importance for The Cove and given their current situation, it is very difficult to find a source of revenue that does not violate the mission statement. The current instability illustrates that the YMCA might not be fit for running The Cove. Especially surrounding the actions the Council will do in the short-term around the cut in funding and the upcoming election is leading to a high degree of uncertainty that might result in The Cove losing more money than it has in the last couple years.
Recommendations & Action Plan:
Looking at all the information above, the construction and installation of the volleyball courts is most financially viable option while operating in accordance with the YMCA’s mission statement and organizational values. It also remains in line with the family friendly atmosphere that The Cove prides itself on being compared to its competitors. It will bring The Cove out of the red to which it has been in for at least the last 3 years and into the black. The profit of $4,133 made from the camps and possible summer volleyball league will show the Council that The Cove can be a financially stable operation and will guarantee the Council’s funding for the foreseeable future.
The Cove should contact the contractor to begin excavation immediately so the courts will be finished in 2 days. Organizing the summer camps should begin immediately as well. A list of councillors and volunteers should be drawn up and the candidates contacted.Exhibits
