CRITICAL ISSUES
Black Water Rafting has outgrown their original business plan, goals, and partnership setup; to ensure growth, protect itself from impeding competition, and to ensure future financing Black Water Rafting must establish a strategic plan for the next two years.
Because of external pressures from both competition and uncertainty about their primary tour, which accounts for 66.7% of their income, Black Water Rafting must diversify their offerings to customers to ensure future growth and a competitive advantage.
As external market conditions and the environment change, such as the land rights of the native tribes of New Zealand, private landowners and a new hotel proposal, Black Water Rafting's profitability and ability to react in the market is affected.
Increasing competition in the Waitomo area is slowly eroding market share from Black Water Rafting, through increasing rafting tours, tourist attractions, and the construction of a new restaurant and gift shop.
ANALYSIS
Originally Black Water Rafting was setup as a partnership, which handicaps their ability to take advantage of investment options. By incorporating Black Water Rafting will be able to sell a minority stake in the company to The Helicopter Line raising funds for future capital expenditures. Furthermore, Black Water Rafting would have funds for future use but also retain decision-making power. Also, another benefit of incorporating is that Mr. Ash and Mr. Chandler will have the ability to issue shares to specific long-term employees, giving them a sense of ownership in the business staving off defections and possibly the creation of additional competition. Moreover, Mr. Ash and Mr. Chandler would limit their personal and vicarious liability should anything go wrong dur ...