IBBusinessandManagement.

com

BusinessOrganisationandEnvironment CHECKYOUR
ORGANISATIONALPLANNINGTOOLS:ExamPracticeQuestion UNDERSTANDING

Readthecasestudybelowandanswerthequestionsthatfollow.

FourSeasonsLeisure
After a period of consolidation in 20112012, when the
Four Seasons Leisure group saw a big contraction in
demand due to the world economic slowdown, the
companyislookingtoincreaseitsshareoftheupmarket,
allinclusive holiday resort market. Thirty years of
providing holidays to high income European and North
American consumers make Four Seasons Leisure one of
themostprestigiousbrandsintheCaribbean.
Despite the recession, the company performed fairly well in 2012. Profits fell 5%, but this
compared favourably with the industry average profit decline of 9%. Four Seasons has
attributedthegroupsrelativesuccesstotheeffectivemanagementofateamofpeoplethat
haveconsiderableknowledgeandexpertiseinthemarket.
The management team is not complacent, however. The chief executive officer, Renee
Sternway, thinks the companys concentration in the Caribbean is a weakness because of
competitionfromnewholidaydestinationsinDubai.Reneebelievesthatthecompanyneeds
toexpandintosomeofthenewdestinationsthatitscustomersareinterestedinvisiting.The
directorsareconsideringthreeoptionsfor2015.
Theconsultancythatproducedtheprojectedcostsandprofitdatabelievethatthereisa20%
chanceoffasteconomicgrowth,50%chanceofnormaleconomicgrowthanda30%chanceof
arecession.


 Projectedprofitsbasedoneconomic
conditions
Initialcost Fast Normal Recession
($m) growth growth
Option1 OpenresortinDubai 120 400 200 100
Option2 OpenresortinThailand 150 500 300 50
Option3 Upgradeexistingresorts 80 150 120 100
inCaribbean

Source:www.IBBusinessandManagement.com

25marks,45minutes

1. PrepareaSWOTanalysisforFourSeasonsLeisurescurrentposition. [8marks]

2. ConstructafullylabelleddecisiontreeshowingFourSeasonsoptions. [5marks]

3. Calculatetheexpectedvaluesforeachoption. [6marks]

4. Onfinancialgrounds,identifywhichoptionFourSeasonsshouldchoose. [2marks]

5. AnalyseoneweaknessforFourSeasonsofusingdecisiontreesasabasisformakingthis
businessdecision. [4marks]