Country evaluation................................................................................................................................................3
Mode of Entry.......................................................................................................................................................5
Risk Analysis and Mitigation..................................................................................................................................7
Public Opinion...............................................................................................................................................8
Executive SummaryBali Sharks is a privately owned tourism company looking to expand internationally. The values of conservation through education provide the necessary competitive advantage when entering the new market. After careful evaluation the Northern Territory of Australia provides the best opportunity given the political and economic stability, as well as the booming tourism of the region. Given there are no existing comparable companies, Bali Sharks would be best fitted to enter Australia through a Greenfield operation. Partnering with the city of Darwin would offer the most affordable and safest long term opportunity, while mitigating the risk of choosing an unreliable partner. This venture offers not only a new source of income for the company, but also a valuable contribution to environmental awareness in Australia.
Product DescriptionThe main concept of the company product is education on sharks, with an emphasis on shark finning. (1) Given the importance of sharks to the world’s oceans, the sharks would be raised to a given length before being released back into the ocean. This would be an effort to fight the damage shark finning is having on their populations. With that frame of mind, the company will stock mostly shark species used in shark finning. However, to avoid only having a few species, special circumstances will also be in place for housing other species in order to retain customer interest.
With regard to the other species, there are several that would be considered too high of a liability for customers to swim with. These species would be contained in a separate enclosure, not attached to the swimming area. This will allow for customers to view the more dangerous species safely, while allowing the company to help a species it otherwise couldn’t. Also, should those species be rare or of potential greater interest to customers, it could be used in a marketing campaign to boost sales. The company will also maintain some larger sharks for breeding purposes; customers will not be swimming with these sharks.
As for a typical customer visit, there would be an educated staff member showing small groups around. This person would explain what sharks we have, why sharks are important, and what the mission of the company is. The main area, where customers will be swimming, will consist of a large netted area with a beach style entrance. This will allow customers to walk through shallow water, should they not wish to fully immerse themselves with the sharks. However the maximum depth of the area will be around 3-4 meters, for those who wish to truly dive in. The enclosure will also contain real coral and other small fish in order to create as realistic an environment as possible.
In terms of releasing the sharks, this too would be used as a revenue stream. The release location would be dependent on local shark populations, as they grow in one area we can relocate the drop off zone as needed. When taking the sharks out for release the company will make an event of it. This will allow customers to come along for a SCUBA diving trip, and to help us with the safe release of the shark. Helping the company release the shark will create greater customer involvement, and further the educational aspect of the product offering.
Over time, and with proof of concept, the company could expand its offering. The expansion would lead into other endangered marine species, such as sea turtles, and transplanting coral to help with the restoration of the oceans reefs. All expansions would have the same educational aspect as the other products, so as to keep with the company mission.
Strategic planWhen consumers are traveling to an area they have a certain number of days to explore and experience. The closest competitors are companies with similar experiences, swim with the dolphins for example. These companies are typically strictly out for profits, with little regard for conservation or educating the consumer. Inversely, the current focus of Bali Sharks is education and conservation, with little regard for revenue.
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However, having the education and conservation orientation is key to the strategy going forward. The educational aspect, and concept of releasing the sharks, acts as our competitive advantage against commercialized organizations. When developing the marketing campaigns, the conservation aspect will be ever present to differentiate our product from the competition. This should sway the customer into spending what little time they have swimming with sharks, as opposed to dolphins.
An added competitive advantage of this educational approach is the ability to bring in nearby schools for field trips, universities for shark research, and create other events built on the educational platform. To aid the company along the way companies such as Stop Australia's Shark Fin Trade, the WWF, and even the Australian Government's Department of the Environment can be partnered with. These organizations are not available to companies without the education/conservation approach we will have. The company can leverage the backing and support of those organizations to lessen the burden of startup costs, and boost product promotion. Also, consumers will recognize the names and logos of our partners, further legitimizing the company’s product and values. As for the Australian Government, there is currently a push for tourism in Darwin and the state government is offering incentives for new companies. This will be used as a tool in financing the company to get it built and running.
A measurement the progress of the company’s will be in relation to similar organizations in the area; as well as the growth of the area. An expectation of matching the local tourism growth, in terms of percentage, is expected for all long term calculations. However, given the values of the company, measuring success along the way will be based heavily on conservation goals. An example being the number of sharks raised and released, or the impact on slowing/stopping shark finning. Setting and achieving these types of goals will not show financial progress, however it will show progress towards the company’s mission. While simultaneously serving as marketing tools that convey our product and attract customers.
Country evaluationThe possible locations for Bali sharks to expand to are naturally limited to the tropical climate zone. Only at these locations is it possible to raise sharks with having to invest heavily in indoor facilities. Furthermore it has the advantage that operations can be maintained all year round and are not subject to seasons. We have further restricted the location search to the wider region surrounding Indonesia, which will make cooperation in much easier. Although places in the Caribbean or Africa could potentially fulfil some requirements, they have been excluded due to the long distance from the original location. It would make logistics more costly and communications across multiple time zones more complicated.
We have focussed our detailed analysis on 3 major tourist destinations in the region, which are Singapore, Australia and Fiji, whereby it was distinguished between the two states of Australia: Queensland and the Northern territory. The business model of Bali sharks requires a property with sea access, which will make up a major part of the starting capital. Thus affordable property prices are an important factor when considering a country for expansion. Another significant contributor to costs are employee wages. The level of these is best reflected beforehand in the average wage for workers in the tourist business in the respective country. Other important factors that were considered in the evaluation of suitable locations are political risk in the country, competitors on site, existing infrastructure, applicable tax rate, level of corruption, available government funding and the number of potential local customers. Table 1 summarizes the country evaluation based on these factors.
FijiFiji is the major tourist destination in the south pacific region with 660,000 tourists visiting the little country with 880,000 inhabitants in 2013 (2). The average wage in tourism is about AUD 10,000 p.a., which is comparatively low on an international scale, but it is the business which offers the highest salaries in Fiji. Thus there is sufficient supply of labour. Furthermore the Fijian government offers incentives in the form of tax-free regions for foreign investors. This includes 13 years of corporate tax holiday and import duty exemption (3) (4).These advantages make the country very attractive for investment from a financial perspective. On the other hand an expansion to Fiji would also come with significant risk. The political turmoil in the 1980s, the 1990s and 2000 had a severe impact on the economy and it is uncertain when the next coup will take place. Furthermore property rights in Fiji are very complicated and unsafe. Only a very minor part of the country is freehold land, which can bough out right. Some portion is Crown lease land, which can be leased from the government. The largest portion is owned by indigenous people and can only be leased from them (4). Corruption is very common in Fiji. Transparency international has determined a transparency factor of -0.9, which put the country in the lower 20% of the world (5).
SingaporeSingapore welcomes about 15 million tourists every year, which is about 3 times its population (2). This is the foundation of the countries tourist industry which accounts for AUD 30 billion of the country’s GDP (6) and offers a fair chance for Bali sharks to earn its share. According to the Corruption Perceptions Index (5), Singapore is consistently ranked as one of the least corrupt countries in the world. The World Bank has named Singapore as the easiest place in the world to do business (2). It does not have a minimum wage, believing that it would lower its competitiveness. Singaporean employees work an average of around 45 hours weekly, relatively long compared to many other nations. Three in four Singaporean employees surveyed stated that they take pride in doing their work well, and that doing so helps their self-confidence (2). A major obstacle for Bali sharks to go to Singapore is the cost of real estate, which is some of the most expensive in the world due to the scarcity of land (7). Furthermore there are several companies that could be a competition to Bali sharks. S.E.A Aquarium offers a shark tank for viewing and a dolphin island for interactive viewing and Under Water World offers scuba diving with sharks in open water.
AustraliaSetting up a business in Australia is easier than in most other countries. It is ranked third in the world in the index of economic freedom and 10th for the ease of doing business (2). Corruption is very low and Transparency International ranks it at the 11th place worldwide (5). It is one of the few developed countries in the tropics and thus offers a low risk location for an investment. But this comes at a price. The average wage in tourism is about AUD 60,000 p.a. (8) and the company tax rate is at 30%. This makes running a business relatively expensive.
Spanning 7.7m km2, Australia is extremely large in size (6) and only parts of it are situated in a tropical climate zone suitable for raising sharks. The 2 major tourist destinations that region are Cairns in Queensland and Darwin in the Northern Territory. Both cities offer similar conditions for Bali sharks. Cairns welcomes on average 700,000 visitors per year (9) and Darwin is not far behind with about 605,000 tourists per year (10). The advantage of Darwin that tips the scale in its favour is the availability of government funding (11):
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The Tourism Infrastructure Development Fund provides AUD 4.75 million to support new and improved tourism products across the Territory. The Harbour Foreshore project addresses the development of an over-arching strategy to attract investment in economic infrastructure around Darwin harbour and the industrial foreshore. It will also include long term planning for industrial and residential land use. Furthermore the Northern Territory Government has developed an Asian Engagement, Trade and Investment Strategy to drive its engagement with priority partners, recognising the important of maintaining strong relationships while delivering greater economic returns through increased trade and investment (11).
Mode of EntryGreenfield Operation
No current business similar to Bali Sharks in Darwin. Business plan would require starting a new operation and building a facility from scratch.
Partnership
Choosing a suitable partner with a prominent waterfront location.
Most attractive options would likely come from either a waterfront restaurant/tourism office or the municipality.
Partnering with the municipality would present the lowest risk. Agreement with the municipality would require a review by the City’s solicitors as well as Council approval. This option may require higher regulatory standards as the municipality may take on some liability for accommodating a shark facility.
Partnering with a local waterfront business may present risk in the form of an unreliable partner. The most viable option for Bali Sharks is that it has a long-term partner to form a lease. If the other business does not have strong finances, it could be an issue for both business in the future.
A business that is not as financially unstable may present the opportunity for a cheaper lease, a strong business may result in a more expensive lease, but also a safer long-term partnership.
Recommended Option
Bali Sharks applies for a long-term waterfront lease with the Darwin Waterfront Corporation. Using the educational and conservation aspects of Bali Sharks to partner with the government to enter a concession rate lease under Part 3, Section 57, Subsection 1 of the Darwin Waterfront Corporation Act.
Section 3
57 Public benefit
(1) The Corporation may grant a rate concession to advance one or more of the following purposes:
(a) securing the proper development of the Precinct;
(b) preserving buildings or places of historical interest;
(c) protecting the environment;
(d) encouraging cultural activities;
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Jonathan Francetic, 29/07/15,
Add to appendix… comments are gay
(e) promoting community health or welfare;
(f) providing recreation or amusement for the public.
ImplementationBali sharks should hire a local lobbying firm in Darwin to begin closed door discussions with the Chief Minister of the Northern Territory, members of City Council, as well as the board members of Darwin Waterfront Corporation.
This should be used as gage to understand whether or not the territory and municipality is open to partnering with a tourist attraction that would generate a lot of attention for Darwin.
After initial discussions, Bali Sharks should formally submit an application and business plan to the Darwin Waterfront Corporation seeking a lease of a section of the waterfront currently undergoing revitalisation.
Bali Sharks should asses the idea of hiring a public relations organisation to handle initial concerns from the people of Darwin. Given recent shark attacks in Australia, a strong PR campaign should be used to set a good example for aquatic environmental sustainability as well as understanding sharks. This may distract from the negative connotations while also creating some positive news stories.
This PR campaign promoting environmentalism and education should be used all the way up until the time that the matter is voted on by the municipality. There will naturally be dissenters so Bali Sharks should arrange to hold pro-shark rallies as well as public consultation meetings to begin the process of educating the public.
Missing: what they need to build, how to import, follow instructions from “Links Australia/Darwin” on importing endangered species
Risk Analysis and MitigationTaking Bali Sharks international certainly faces several risks. Some risks may occur in the process of building up the business, others may also appear whilst actually running the business, after everything is already set up. Therefore, to be able to tackle risks effectively, it is helpful to divide them into two categories:
1. Risks occurring whilst going international and entering the new market, and2. Risks facing whilst having the running business.
Focused on the process of going international, the first category is discussed with priority.
Table 1: Risk Mitigation and categorized Action
Incident probability severity acc. risk risk mitigation action (cat.)
tourism declines due to economy 0.2 0.6 0.12
payback plans on investments and reduce fixed costs where possible (1,2)
fail certification 0.2 0.3 0.06find clarifications and follow regulations (1,2)
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Talk about the city of Darwin being a good mitigating option
Jonathan Francetic, 29/07/15,
Do your job Cathy!!!
find no partner 0.1 0.9 0.09proactive, early contact with several institutions (1)
unreliable partner 0.5 0.6 0.30 due diligence (1)crocodile attacks or animal loss 0.6 0.6 0.36
infrastructure maintenance (2), fences to keep off crocodiles (1,2)
Based on analysing the risk by taking probability and severity into account, the following risks are considered to be the highest and therefore are discussed separately. In order to eliminate these risks as much as possible, the recommended actions are discussed as well.
Public OpinionThe analysis shows that the risk of a turn in the public opinion is considered to be one of the highests for the success of this project. During the entering and building phase of the business a turn in the public opinion can turn out to be obstructive when it comes to finding a location and “close the deal”. As a running business on the other hand, Darwin Sharks revenues are dependant on how positive the public opinion is and therefore how many visitors will come to experience the shark diving based on their believe in the project as an important sanctuary for endangered species. Generally, the public has a good opinion about outdoor sports and adventure experiences and therefore shows its support to such institutions and providers, especially when combined with the conservative and educational approach. Unfortunately, this can change easily and very quickly. Every incident happening in the world and spread by the media endangers the opinion and therefore has a direct impact on revenues. The latest, “live on tv shark attack” on Mick Fanning, for example, is likely to cause the opinion to change. → Risk mitigationTo actively gain the public support it is recommended to strongly focus on and promote the educational and conservative approach. Emphasising the partnerships with possible supporters such as WWF, City of Darwin and Northern Territory Tourism1, for example, can help increase reliability and therefore is heavily recommended.
Storm Damage The Northern Territory region is quite exposed to strong weather conditions and therefore a challenging location to built up an outdoors adventure installation. Darwin Sharks will basically work with nets in the sea, merely attached to the docks. It will be a demanding test to built the construction stormproof to make sure that fisty no one gets insured and secondly they don’t get destroyed too easily by every little disturbance. → Risk mitigationTo minimize the risk of damages, research in infrastructure maintenance and improvement has to take place from the beginning. Experiences from other parts2 in the world with exposed outdoor equipment should be gathered in order to build up knowledge about best practices and reliable standards. Cost for regularly maintained infrastructure must be counted in. Furthermore, a strong insurance partner has to be found.
Find no Partner / Unreliable Partner (1)The recommended way to build up Darwin Sharks is by partnering up with at least one established institution within the region. If no partner can be gained for the project, the whole business expansion might be put at risk, since a solid partnership is a core component of the business model. Bali Sharks is in need of a local cooperation and therefore runs the risk of taking what comes along and ending up with an unsatisfying conjunction.
1 The Northern Territory is heavily investing in tourism and has a strong vision of the future. Especially (Paper) shows the potential strength lying within this partnership. Add Link:....
2 Need to deliver an example here...
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→ Risk mitigationTo increase the likelihood of finding a suitable business partner it is essential to contact several potential institutions and partners3 in an early stage and start building up relationships. As preparation to go into negotiations it is essential to have a business plan prepared to help convince the parties of the importance of the project and increase the chances. Furthermore, due diligence has to be done thoroughly prior to signing contracts.
