CLUBWEST CANADA INC.
ClubWest Canada. (CWC) Case Diagnostic
* Jack Trevino, President and CEO of CWC since 2001 and the driving force behind the aggressive growth strategy. CWC has issued shares to private investors but he and his four friends, who founded the company, retain control. Thus, Jack is accountable to the investors and other stakeholders for his decisions, and strategy creation and monitoring.
* Present: shortly after March 2012, CWC has been running for 11 years, so Trevino retains the current vision of providing every member and guest the best possible experience.
* Positive organizational health (Appendix 1) and ...view middle of the document...
However, continuing to leverage its competitive advantage through factors such as branding to sustain future revenue growth may not succeed due to the demographic shift of baby boomers retiring in the near future, who are more concerned with the tee time availability and the golf course’s condition.
* Several questions: (a) Should CWC upgrade the Calgary and Edmonton properties, which are experiencing low membership numbers, if the opportunity cost is the acquisition of GTA golf courses? (b) How can CWC reduce membership terminations rates from recent stronger competition? (c) Should CWC prepare for an IPO to finance additional acquisitions and developments? (d) Should CWC continue to offer private golf clubs? (e) Should CWC acquire the ski resort in Collingwood, and would using the current strategy succeed? (f) Could re-zoning cause regulatory environmental problems in an effort to develop residential and resort properties?
* Other considerations (Appendix 5): (g) Potential conflict between CEO’s risk-taker attitude and the other four founders who are more risk averse (h) Potential conflict between company’s current strategic efforts of delivering an exclusive brand image to its customers and new golfers who prefer the condition of the course and availability of tee times. (i) Potential conflict between creditor’s preference for repayment and the aggressive growth plan of spending on acquisitions and developments
* Key Issues (1) Should CWC continue to acquire and/or upgrade its golf courses? (Y/N) [a,b, c, d, f, g, h, i] (2) Should CWC expand into the ski industry? (Y/N) [e]
* Key decision: Should CWC changes its strategy? (Y/N)
Appendix 1- Organizational Health
Organizational Health – 2011 | |
Criteria | Measure | Assessment | Rating |
Customer Satisfaction | PricingNumber of Members | -Willing to pay “top dollar” for premium memberships-Increased by 0.9% from 2010-2011, with 8.2% increase in new membership sales | Positive |
Employee Satisfaction | Ability to attract new employees | -highly motivated and qualified employees in managing large businesses | Positive |
Key Processes/Resources | Prestigious BrandClusters/Reciprocal-play strategyManagement teamLand Acquisitions | -preferred choice among owners looking to sell golf course properties -however, the brand is deteriorating as new golfers are becoming less attracted to extravagant club houses than in the past-green fees have risen 10% to 15% over the last year; revenue growth sustained-reputable as many are at the management level in corporations-most are successful, except for two or three not performing to expectations | Positive |
Investor Confidence | Supply/DemandFinancing obtained | -increased supply in golf products; investors perceive this to be a long-term condition. However, it is offset by CWC’s market leadership position in operational cost-efficiency -$20M operating line of credit and $175M term loan approved | Positive |