Explore the Alps - Ski Resorts in Switzerland - Research Paper

Introduction

Switzerland is a mountainous region in the central European country that is home to numerous lakes, villages, and the high peaks of the Alps. The country is also known or its ski resorts and hiking trails. The top-rated ski resorts in the country include Zermatt, St. Moritz, Davos-Klosters and Parsenn, Verbier, Grindelwald, Wengen, and the Jungfrau, Saas-Fee, and Arosa Lenzerheide among others. Stockli is also a ski company in the region. However, the company has to engage in various practices to improve their company and outdo its competition. This is possible by understanding the industry trends and its key success factors and having more insights in the ski business.

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Back in time, Switzerland was home to a number of ski manufactures. However, Stockli is among the few or if not the only one still in operation currently. The company established in 1935 in canton Lucerne still operates on a small scale ("Stockli.com," 2016). While the foreign counterparts are flourishing, the Swiss ski makers are evidently falling by the wayside. Skiers flock to the Alps to glide down the slopes during winter while using Austrian, German, French, American or Slovenian skis. Even the Swiss themselves do not appear to prefer their locally-made skis with only one in ten buying Stockli products. However, Switzerland is Stockli's largest market, generating two-thirds of sales for the company, and the remainder sold in the United States.

Horizontal development is the appropriate strategy to improve the performance of Stockli. This can be argued based on the industry and the skiing business at large. Generally, mountain resorts have made significant capital investments in developing alternative activities to downhill skiing and snowboarding. These activities may range from high-energy (fat biking, ice-skating or snow-tuning) to the more passive (hot air ballooning or snowshoeing). A horizontal development strategy would allow for expansion of the company's product or services to new markets, geographies, or business domains among others. Stockli can do this by:

Bringing their product/service to new markets by developing the new markets of penetrating the existing ones while trying to outcompete any existing local providers.

Using the existing assets for new business domains, i.e., movement from product to SaaS model.

Bringing all the business processes in-house, i.e., by building their own supply line or delivery service other than depending on third-party providers.

Three main factors generally drive the horizontal growth of the company include changes in market trends that suggest a decrease in the percentage of those taking winter sports holidays and skiing; less skiing among avid skiers, i.e., the existence of new high-speed lifts that enhance the physical stamina quotient of a skier more quickly and lastly climate change that negatively impacts snowfall for many resorts.

Stockli can use horizontal development strategies to expand its operations by adding markets, products, and services in its various stages of production to the existing business. The strategy will enable the company to get into lines of business that are different from its current operations. This may include the application of both concentric and conglomerate diversification processes. Various reasons ranging from the ski business to the industry back-up Stockli's use of diversification as a business expansion strategy.

The company can implement the strategy using the organic growth process. In this case, it will be able to expand its own capacity by utilizing all of its resources, without borrowing, to expand its operations. This will be marked by an increase in its output, greater efficiency and production speed, increase in revenue and improved cash flows, all of which are critical for the success of a company. Stockli can implement three primary stages to facilitate organic growth. These include:

Continual optimization of its commercial activities which involve the pricing, marketing, and selling of its goods and services.

Relocating its funds into activities that will fuel its earnings and growth.

Developing new models for operations, new goods to sell and services to offer.

While most companies focus on one of the core strategies to fuel their organic growth, the application of more than one would make it clearer on what actions within the strategy are working and which ones aren't. The reason behind the choice of a horizontal expansion strategy lies in the market trend and performance.

Switzerland has always been a nation or skiers. However, a large section of society is not encouraged to take part in it. Most of them would spend the winter holidays at the beach than on a mountain slope. As a result, fewer people are currently skiing in Switzerland.

The Swiss Tourism Industry report of 2018 shows that ski days have gone down by 23 % between the 2008/9 season and the 2017/18 season (Hunt & Reusser, 2019). According to the study, the global Western skier market is flattening. Moreover, a report by the Swiss Mountains Railways and the association of ski-lift operators indicates that approximately two-thirds of the skiers on the Swiss slopes are locals who are mainly younger people aged up to the age of 30, and baby boomers, above the age of 50. This indicates less participation by those aged between 30 and 50 years with decreasing participation over time. According to the Tourism Monitor Switzerland, the number of skiers between the ages of 30 and 50 years has fallen by 6% (Hunt & Reusser, 2019). This is a major problem in the Alpine regions which provides two-thirds of Stocklie's market. Stockli can implement horizontal development strategies by:

Controlling Its Product Prices

Stockli has put more emphasis on product quality over quantity which has led to increased product prices and reduced volumes of sales. On the other hand, globalization has come along with reduced costs or travel, causing people to easily fly to the beach during winter, or visit New York as opposed to being far-flung in the freezing cold mountain. In most cases, a week-long stay in the sunspot would work out as a cheaper option than a family ski holiday.

According to the Swiss Mountain Railways, a one-day ski pass for adults cost an average of $62.53 in the 2017/18 season, which is more than a fifth of the 2004/5 season (Hunt & Reusser, 2019). As a result, only higher earners are likely to ski. Therefore, if Stockli controls or reduces its product prices by implementing the organic growth processes accordingly, it would help to reduce the costs of skiing in the region. The organic growth processes can be implemented to lower the prices, without compromising on the product quality, materials, and performance. A reduction in the cost of skiing would help to encourage those with the skiing bug and with less money to splash out in the activity as they usually prefer going further in the neighboring alpine countries such as France, Austria or Italy. It would also encourage the Swiss citizens to prefer skiing to sunbathe at the beach. A reduction in product prices would result in an increase in their adoption and engagement in the sport, hence an increase in Stockli's revenues.

Providing Ski Products Like Learning Sessions, i.e., Learn to Ski in 3 Days

Despite the cliches concerning Swiss people about being born on skis, most of them have never had the opportunity to learn the sport. By the age of 30, they start considering themselves as too old to start. This in time affects Stockli, since the culture is not passed down from parents to children, resulting in a considerable reduction in the number of people taking part in the sport, given that most of its customers are from the Swiss region. The company can, therefore, incorporate a skiing product, i.e., an opportunity to provide its customers to be and the community a chance to learn and take part in the sport. While it is mainly focused on manufacturing skiing products, Stockli can implement the horizontal strategy of bringing the ultimate skiing process in-house. It can also get into joint ventures with the other skiing resorts to deliver the product to the community and establish a strong skiing culture among the Swiss people. In the end, an increase in the demand for skiing products, irrespective of the resort, would result in an increase in the sales and revenues of Stockli, given that it's the top manufacturer of skiing products in the region.

The product may be packed in packages such as the 'First Ski Experience" where a ski instructor would pick a client from the hotel, help him/her hire skis and provide a one-hour lesson. Stockli can also support the project by providing the service at a negligible price while availing the resources required to make the process a success. It can also customize the product to involve the least involved market age bracket in the sport, i.e., those between 30 and 50 years from the research to increase their participation. Moreover, most in this age group are parents, who would easily pass down the sport to their children.

Updating the Skiing Facilities

This is another key to attract skiers to the sport. The process may involve providing the state of the art facilities such as snowmachines, that will enable visitors to ski even if it fails to snow for long periods. This will ensure that skiing takes place all year round irrespective of the availability of snow or not, thus ensuring a continuous flow of revenue all year round. The largest ski resorts in the region are already investing in the new infrastructure, i.e., Andermantt "SkiArena Andermatt-Sedrun," which is termed as the largest and most modern ski resort in central Switzerland, has approximately 200 snow-making machines allowing for the slopes of SkiArena to be covered with artificial snow (Hunt & Reusser, 2019).

Stockli can capitalize on such opportunities by designing the machines that would be used in other resorts and the required systems to design and establish artificial snow. The company can apply its existing business model used to design the skis to the design of snowmaking machines and artificial skiing grounds for other resorts. The advancement would also help to prevent future losses while maintaining the resort's revenues. The future will likely experience winters and heavy snow, but climate change would cause them to happen less frequently. Therefore, man-made snow will help the resort to survive and remain in business.

Providing Free Products, i.e., Free Skiing for Children

Stockli can design such products with the thought that getting children to ski would cause them to ski as adults. It can do this by designing ski products for children while partnering with resorts that are already offering the service. While such a process may be costly at the onset, the outcome may be worthwhile in the long-run. It can provide free ski passes for the domestic market for children up to age 12 to support the sport.

In implementing the strategy, stockli will have to put into consideration some of the key success factors to warrant an increase in its profits and overall business expansion. These include:

Correct sizing of the resort by analyzing its potential demand and marching it to its accommodation capacity, and parking capacities ("PGI Management," 2016). It can also help to determine the number of lifts, slopes, and other infrastructure for skiing. This would enable Stockli to minimize their operational costs and maximize their output, thereby increase their revenues.

Proper selection of the optimal locations for its services, i.e., the artificial skiing grounds and subsequent resorts ("PGI Management," 2016). They can select the optimal location that ensures accessibility of the centers and their closeness to the target market in light of the required temperatu...