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Elizabeth Arden Final Elizabeth Arden Final Presentation Transcript

    • IB 514
    • Group Project
    • The Maldivian Experience
    • Dalal El Ali
    • Tuangrat Chandrakam
    • Keith R. Dickson
    • Linda Gabbard
    • Meg Gallagher
    • Kathryn Johnston
    • Hefdhallah Al-Sabal
    • Tim Sitkauskas
    • Dr. Andrew Ng
    • Presented November 17, 2007
    • The Maldivian Experience
    • Global Marketing Plan
    • Planning Phase
    • Business Opportunity Identified
  • Maldives
    • Opportunities for exports and investments are primarily found in the tourism
    • sector.
    • Over 40 new luxury resorts
    • are being developed and
    • several hotels are being
    • renovated.
    • All supplies for these projects are being imported.
    • Inexpensive and renewable
    • small-scale power
    • generation equipments.
    • Drinking and waste water
    • management equipment.
    • Infrastructure development.
    • The fisheries sector.
    • Banking, accounting, and management consulting.
    • The Island Spa at the Four Seasons
    • Maldives in Kuda Huraa
    • -the spa has its own island.
    • -over a 100 Asian inspired treatments.
    • -the spa has a garden where treatment ingredients are grown.
    • The Aqumm Spa at Huvafen Fushi Resort, North Male’ atoll
    • -features the world’s first underwater massage treatment rooms.
    • -exclusive packages: Indulgence, Reconnection, Especially for Him..
    • The Away Spa, at the W retreat and Spa, on Fesdu Island
    • Opened July 1 st , 2006.
    • 66 square meters of indoor
    • and outdoor treatment areas.
    • - Skin care products are made in small batches on frequent bases to ensure freshness and efficiency.
    • Economic and Geographic Environment
    • Geographic Influences:
      • Maldives consists of 1,192 coral islands which form of 820 km length and 130 km in width, and set in a territorial of 859,000sq. Km. with coast line of 644 km.
      • Location: southern Asia, group of atolls in the Indian ocean
      • Climate: tropical; hot, humid; dry; the annual mean temperature is 28 °C
      • Terrain: flat, with white sandy beaches
      • Currency: Rufiyaa (MRF). US$1=MRF 12.85
      • Labor Force: agriculture 22%, Industry 18%, services 60%
    • Major Product and Industries:
      • Tourism 28%, fishing, agriculture, clothes,…
      • Import and partners: around $800 million, Maldives imports most of its requirements: Singapore 24.9%, Sri Lanka 13.7%, India 10.1%,…
      • Export and partners: $181 million; fish and clothing; USA 26.5%, Thailand 23.5%, Sri Lanka 12.3%, Japan 11.7, and the UK 10%
      • Tsunami effect: approximately $300 million plus deaths, and displaced.
    • Current Economic Conditions:
      • GDP (PPP) $2.839 billion (2006 est.)
    • Social and Cultural Environment
    • Demographic Trends
      • Ethnic group: South Indians, Sinhalese, and Arabs
      • Population: 369,031
      • Birth rates: 2.7%
      • Literacy rates: 98%, the highest in the region
      • Religion: Predominant Sunni Muslim
      • Language: Dhivehi, and English wide spoken
    • Cultural Analysis
      • Maldivian society is very cohesive, with one language, one culture and one religion
    • Social Institutions
      • Maldives’ legal system is based on Islamic law with admixtures of English common law primarily in commercial law
    • Informal Trade Barriers
      • Specific materials offensive to Islam, explosives, weapons, drugs, pornographic material, pork, idol of worship, and import for commercial use or proselytizing is prohibited.
    • Cultural Dos and Taboos
      • - Shake hands, left hand, gifts, shoes, bathing, dress, nudity, and always ask permission before taking pictures of people.
    • Political and Legal Environment
    • Government and Politics
      • The Government of Maldives has ambitious infrastructure development plans that present new business opportunities for U.S. companies .
        • Transshipment port
        • Male’/Hulhule/ Link Bridge
        • Commercial port for Male/ Urban region
        • Hulhumale’ development project
        • Male/ International Airport Upgrading Project
        • Regional Airport
    • *some of the projects have been slowed as tsunami reconstruction work takes priority
    • Formal Trade Barriers
      • Tariffs
      • Other Non-tariff barriers
      • Foreign exchange control
      • Ownership restrictions
    • Intellectual Property
    • Promoting Global Business
    • “ According to World Bank’s 2006 Investment Climate Assessment, Maldives ranked highest in the region in terms of World Bank’s ease of doing business index”
      • Incentives for foreign investors
        • No income, corporate or property tax
        • Right of 100% ownership
        • Legally backed investment guarantee
        • Provision for overseas arbitration of disputes
        • Long term contractual agreements and lease of land
        • Freedom to use foreign managerial, technical and unskilled workers
        • No foreign exchange restriction
        • No restrictions on the repatriations of earnings or profits
    • Organizing Phase
    • Company Structure
    • “ To enhance the lives of our guests and associates through beauty, harmony and well being”
    • Elizabeth Arden Red Door Spa’s Vision Statement
    • Entry Mode
      • To establish strategic alliances with the Hilton hotels on its Maldives project
        • Benefit from Hilton’s experience and knowledge about Maldives
        • Save some investment fixed costs
        • Bring together complementary skills and assets of both companies
    • Partner Selection: Hilton Hotel
        • help the firm achieve strategic goal such as market access in Maldives
        • have similar vision with the company, enhancing the lives and experiences of guests
        • has reputation for fair play, unlikely to try to opportunistically exploit the alliance for its own ends
    • Organization Structure
      • Centralized organization with some degree of adaptation to meet the Maldives laws and regulations
    • Financing Sources
    • Economic Environment
    • Impact on Red Door Spas Start-up Costs
      • Tourism huge market is on the rebound after 2004 Tsunami
      • Exchange rate holding steady since 2002
      • Inflation up to 6% in 2006
      • Trade deficit as a result of high oil prices and imports
    • Start Up Costs
      • Registrar of Companies Fees ( licensing): $ 1,500
      • Equipment- ( massage tables, computers, etc): $500,000
      • Vehicles – Golf Carts(5): $ 25,000
      • Employee Costs (including training & relocation) : $575,000
      • Travel & Entertainment (includes opening day party) : $175,000
      • Space/Building deposit ( hotel and warehouse): $250,000
      • *Spa Supplies (Initial including transport and import of $1,200 per container ): $450,000
      • Advertising (includes Oprah’s favorite things giveaways): $500,000
      • Consultants: $ 50,000
      • Legal fees: $ 50,000
      • Taxes (including 13.39% GNI/capita+ 5.8%/capita PIC) : $ 5,000
      • Miscellaneous ( utility deposits): $ 17,500
            • Total Start Up Costs: $ 2,600,000
    • Financing Alternatives
    • Fully funded by Elizabeth Arden. Revolving credit facility funded by many banks around the world. “We have historically financed, and we expect to continue to finance, our needs primarily through internally generated funds, our credit facility and external financing.”(3)
    • 20% down 80% venture capitalist loans.
      • Credit market in US down – Could affect availability of funds.
    • Recommendations
    • Finance through Elizabeth Arden based on pre-established revolving credit facility.
    • This facility is funded by many banks around the world and Elizabeth Arden has flexibility of a $250 million credit line.
    • Global Management Information Systems
    • Guests-
      • Wi-Fi
      • TV and Phone
      • ipod
      • Conferencing
    • Spa Business-
      • Reservations
      • Conferencing
      • Inventory Management
      • Accounts
    • Human Resources
    • Training
      • General in house training
      • All massage certifications out of house
    • Staffing
      • Professional, degree preferred
      • Certification
      • Locals
    • Compensation
    • Salary
    • Hourly (plus tips)
    • Financial and Business Risks
    • Economic and Financial Risks
    • • Foreign Exchange Risk
    • • Increase in Taxes – Corporate – VAT/Sales Tax – Lease Rent
    • • Use of Third-Party Manufacturer
    • Social and Cultural Risks
    • • Reputation of spokesperson Catherine Zeta-Jones
    • • Change in consumer preferences
    • Political and Legal Risks
    • • Political Risk Low
    • • Product Liability
    • • Product Compliance
    • Recommended Actions
    • Implementation Phase
    • Product and Target Marketing
    • Product Concept
  •  
    • Product Life Cycle
    • • Yearly Life Cycle – Introduction – Growth – Maturity - Decline
    • Branding and Packaging
    • • Umbrella Branding – RED DOOR SPA
    • • Adherence to the Maldives Ministry of Health – Spa Regulations
  •  
    • Marketing Plan
    • Infrastructure and Distribution Factors
    • Analysis of Infrastructure
    • - Main transportation modes are water taxis, sea planes, and helicopters
    • - Main Commercial Harbors are Male and Addu, trade occurs primarily with Europe and Far Asia
    • - Highways in main Commercial areas of Male and Addu
    • Barriers of Distribution
    • - No railways, limited amount of cars/buses, use mostly bicycles
    • - Transportation to only by sea planes or water taxi, speed boats are fastest and most expensive
    • - The capital, Male is too small to host airport, have to fly in 30 min away to island of Hulhule
    • Proposed Distribution Strategy
    • - Using Elizabeth Arden Global Headquarters in Switzerland for Export of brand products to Spa
    • - Use Maldives National Shipping Ltd. , currently handles 60% of the Maldives importing and
    • exporting, to bring Elizabeth Arden products into Hulhule
    • - Lease a Sea Plane for the spa to pick up goods from port and bring them to Spa Location
    • Promotion Plan
    • Promotional Goals
      • Emphasize Overall Service Differentiation and VALUE
        • Connoisseur Spa
        • Quality of Personal Service
        • Exclusivity of World Renowned Massage Therapists
        • Unique Tropical Paradise Environment
      • Full scale promotion within current Maldives tourism source markets by mid 2008
        • Italy
        • United Kingdom
        • France
        • Japan
        • China
        • Switzerland
        • Russia
        • Korea
        • India
        • Malaysia
      • Introduce promotional activity within new target markets by mid 2008
        • United States
        • Australia
  • `
    • Business Environment
      • Cultural factors affecting Promotional Strategy
        • Sensitivity to Muslim culture of the Maldives
        • Promotional strategy tailored to each target market
          • Use of local languages in advertisements in each target market
          • No offensive cultural references used in global advertisements
      • Legal Factors affecting Promotional Strategy
        • Promotional strategy tailored to each target market
          • Full compliance with local laws of each target market
          • No legal infractions used in global advertisements
    • Media Plan
      • Global Spokesperson
        • Catherine Zeta Jones
      • Print Media
        • Global Spa Finder
        • Luxury Spa Finder
        • Town and Country
        • Town and Country Travel
      • Internet
        • SpaFinder.com
          • United States
          • United Kingdom
          • Japan
          • France
          • Germany
          • Develop Italian Portal
          • Investigate potential impact of China, Switzerland, Russia, Korea, India, Malaysia Portals
    Elizabeth Arden
    • Promotional Strategy
      • Pull Stratregy
        • Media
          • Spa Finder
          • Global Spa Finder
          • Town and Country
          • Travel Town and Country
          • Spafinder.com
        • Networking
          • Promotional Social Events
            • Current Source Markets
            • New Target Markets
            • Catherine Zeta Jones
          • Maldivian Experience by Invitation
            • Select VIP Guests
    • Pricing Plan
    • Economic Environment
    • Economic environment impact on price is minimal because our cliental is primarily from outside the Maldives.
      • Local discounting for employees and government officials considered.
      • Further discounting may be required due to revolving life cycle – Summer months
    • Cost Analysis
    • Set cost structure predetermined by Liz – Some potential price adjustments due to:
      • *Transportation savings offset by “Unique product offering”.
      • Government environmental concerns
    • *Discounted for using “Ryder” – New venture from Business in China class.
  • Estimate of market penetration from US 6.3% or 34,068 and Australia 3.4% or 18,227 Demand Analysis
  •  
    • Recommended Pricing Strategy
    • Initial price would be higher due to the uniqueness of our product (market skimming) .
      • Packaged deals including air, land, hotel, transport and spa offerings.
      • Bundled pricing for products.
      • Full Life Cycle package deals.
    • Competition:
        • Four Seasons
        • Aqumm Spa
        • W Resort and Retreat
        • Chivasom Spas
    • Revenue Projections:
      • Revenue Projects Year 1 = $1,670k
      • Revenue Projection Year 2 = $2,582k
    • Payback in 1.3 years
    • Assumptions:
      • # of rooms in hotel = 200
      • 2 people per room using the spa
      • Spend per person per visit = $500
      • Occupancy at start-up 11/07 - 50% growing to 100% during peak dropping back to 60% during close.
    • Audience Participation