1a Competencia Interna de Casos de Negocios BUAP 2018

lnformaci6n y lineamientos

8:50 hrs. FASE 1.

^ Presentaci6n del jurado

❖ Explicacibn de los lineamientos para la competencia
■ Todos los equipos resolveran de manera simultanea el caso de aprendizaje que se les
entregarb.
■ Los equipos tendrbn un lapso de 2 horas y 30 minutos para: resolver el caso, hacer una
presentacibn concisa en Power Point y tin breve documento en Word, en el que expliquen de
manera concreta, precisa y clara el anblisis del caso de aprendizaje, determinaci6n de la
problembtica y la propuesta de solucibn que disenen.
■ Todos los equipos resolveran el mismo caso.
■ Los equipos deberbn grabar con sus celulares o dispositivos electronicos un breve video,
mbximo de minuto y medio, de presentacibn donde cada miembro del equipo diga: nombre
completo, licenciatura y el por que decidieron participar en esta competencia.
e El video lo deberbn subir a www.voutube.com v ponerle #1aCompetenciaCasosBUAP 2018 y
enviar la liga al correo formaci6n.docente@correo.buap.mx

LINEAMIENTOS

1. Iniciado el concurso los equipos solo podrbn tener contacto entre los miembros del mismo equipo, en
ningiin momenta podrbn compartir ideas y/o dudas con otros equipos, profesores o personas externas al
concurso.
2. Esta prohibido, y es causa de descalificacibn, estar en contacto por algun medio ya sea correo electrbnico,
red social u otro con profesores, miembros de otros equipos, companeros de escuela y personas ajenas a
si propio equipo de competencias.
3. En los archivos que generan si consultan y/o utilizan fuentes de informacibn deberan realizar las citas y
referencias necesarias apegbndose al formato APA, tanto en el texto y presentacion, como en la relacion
al final de ambos materiales: power point y Word.
4. El documento de Word no deberb exceder la cuartilla y media en su extensibn, el cuerpo del texto debe
estar en arial 11 y los tftulos o subtltulos en arial 14 negrita.
5. El archivo de Word y la presentacibn de PowerPoint serbn enviados a mbs tardar 11:25 horas al correo:
formacibn.docente@correo.buaD.mx

11:35 hrs. FASE 2

*> En punto de las 11:30hrs. se les notificarb a los equipos en qub mesa de evaluacibn les toca presenter su
resolucibn de caso.
*> Cada equipo tendrb 10 minutos de exposicibn y 5 minutos para preguntas y respuestas
❖ El equipo completo deberb estar 5 minutos antes de la hora que se le asigne para exposicibn.
*> El equipo debe presentarse completo para la exposicibn de la propuesta de resolucibn.
*1* Unicamente pasarb el equipo en turno, los asesores no pueden pasar ni a la exposicibn de su equipo ni a
la de otros equipos.

13:00 FASE 3.

El mejor equipo de cada mesa de evaluacibn se presentaran en una ronda final.

 Richard Ivey School of Business
The University of Western Ontario Ivey
9B05A011

LA HACIENDA DEL SOL

Neeta Khera prepared this case under the supervision of Elizabeth M.A. Grasby solely to provide ^material for
class discussion. The authors do not intend to illustrate either effective or ineffective handling ^of a managerial
situation. The authors may have disguised certain names and other identifying information to protect
confidentiality.

Ivey Management Services prohibits any form of reproduction, storage/ or^mnSmifiai'/withdut its writterfc
permission. This material is not covered under authorization from CanCopy or'%hy-reproduction rights
organization. To order copies or request permission to reproduce materials/contact) Ivey Publishing, Ivey
Management Services, c/o Richard Ivey School of Business, Th& Universityof Western Ontario, London,
Ontario, Canada, N6A 3K7; phone (519) 661-3208; fax (519) 6^1 z3882/e-mail cases^ivey.uwo.ca.

Copyright © 2005, Ivey Management Services____________ k ' , Version: (A) 2005-05-12

It was the morning of January 7, '2004,' and Juanita Garcia^wice-president of

administration of La Hacienda ;delxSol, kxesort hotel in .SakFjelipe, Mexico, was
reviewing the fiscal 2003 .financial^ records. The hotelkatered primarily to
American tourists during the country’s hot summer months, but it had experienced
another winter of low sales leyels. Garcia had this problem each winter season and
wondered how to better/promote the hotel;. C. Garcia considered targeting the
Mexican market ,to improvesales levels in the off-season.1

SAN FELIPE

La Hacienda del Sol (Hacienda) was located in San Felipe, Baja California. San
Felipe was approximately; .230 miles2 from the United States/Mexican border
(between San Diego and. Tijuana). See Exhibit 1 for a map of Baja California.
Due to its location in the northern part of the California Gulf, San Felipe attracted
tourists who sought and enjoyed a beach vacation of two to four days in length.
The city was known for its green-blue waters, clean beaches and comfortable
climate and, as a result, was the most popular tourism spot, offering 1,600 hotel
rooms, in Baja California. With a population of 25,000, the city attracted

'The months when travel activity was at its lowest.

2 One mile is equivalent to 1.609 kilometres.
Page 2 9B05A011

approximately 250,000 tourists each year.3 4 See Exhibit 2 for a breakdown of the
resort accommodations available in San Felipe.

LA HACIENDA DEL SOL

Activities and Events

Hacienda offered a wide range of activities to tourists of all ages including

swimming, surfing, jet-skiing, parasailing, jogging and whale-watching. On the
beach itself, there were many independent vendors who sold hair braiding_services,
horseback rides, ATv rentals and souvenirs. The hotel’s premises included two.
outdoor swimming pools, children’s playgrounds, pool tables, table tennis,"
racquetball courts, gardens and shopping facilities. Additional a6tiyities during the
summer months included bingo games, contests and arts and crafts, to.name a few.

Dining Facilities

There were two restaurants and three dining halls-located on-site. One of the
restaurants offered both American and Mexican fdodVwith the focus: mainly on
traditional Mexican meals. This restaurant served/ood in two locationsiN'a full-
service sit-down room and a buffet-styldsrobm with both rooms prpviding a wide
variety of foods. The sit-down'location had-a" casual atmosphere, and customers
could come in and out of the-restaurant at their convenience.!. The buffet-style
location had specified hours for breakfast, lunch anidinner. ../During the summer
months, there were . often regular] performances . onca^stage during dinner (e.g.
traditional Mexican dances) .and,,on some nights of the-week, the room served as a
nightclub after dinner. Consequently, it,characteristically exhibited a fun and
energetic atmosphere!

The ^second restaurant, adjacent^tQCtne hotel’s main building, focused on a fine-

dining, experience and served French and Continental cuisine for lunch and dinner
only^The restaurant was. located in the founder’s original mansion, with most of
the mansion’s original drapery; carpets, floors, lighting and furniture originating
from the 1920s. Occasionally, a pianist would play on a grand piano to create a
mellow ambiance.

In addition to the three restaurants, the hotel had three bars. The bars were the
second largest source of income, representing 25 per cent of revenue.5

3State Government of Baja CalifomfekWww baiacalifomia. aob.mx/enalish/home.htm. July 19, 2004.

4All-terrain
vehicles.
Rooms represented 60 per cent of revenue with remaining revenues derived from restaurant and spa
sales.
Page 3 9B05A011

The Spa

The hotel’s European-style spa offered a variety of services, which were growing
in popularity even though many customers were unaware of the hotel’s spa prior to
arrival. Garcia recently introduced a promotional offering that included a room
and spa deal which helped encourage the growth in spa sales. The spa, located in
the second half of the founder’s mansion, offered hairstyling, waxing, over 10
different types of body treatments, reflexology, manicures, pedicures and facials.
The pleasant service, pastel-colored walls and furniture, and soft music playing in
the background added to the spa’s relaxing atmosphere and sophisticated
ambiance.

Many wedding packages were made available by the > hotel t^suit eukdmers^
needs. For example, a package that included a three-course meal for,50.guests,
champagne, a reception site by the garden or ocean, soft,drinks,; linens and seat
covers, waiters, and flower arrangements for the receptlon^tabies^cost $1,260.6
Between the months of July and October, the hotel held' on averagef one wedding
per week. Many brides and their bridal parties took advanfage,of the spa before
their wedding ceremony at the hotel.

The price of the rooms changed each season depending on title* expected demand.
See Exhibits 3 and 4 for- a breakdown"and prices of^tifte^fooms Each room
included a full bath, telephone;*cable television and bottled water. The price of the
room also included one margaritaper person and dmnerTor two from the hotel’s
Special Getaways^menu. Families with up. ‘t^Jwcr children were given free
accommodations in addition to three meals-each day from the children’s menu.
Rates were also lowered for seniors. Parking-was .available on-site to customers at
$3 per car per night-

The hotel operated at a 90 per cent to 100 per cent occupancy rate from the last
"week'of June to the first week of September. The weekends were generally fully
booked, while some rooms, were available during the weekdays.: Due to the
seasonality of the business, the hotel depended on its success in July and August to
carry it through the rest of the year. After Labor Day weekend,7 occupancy levels
dropped dramatically, reaching 30 per cent on weekdays and between 60 per cent
to 80 per cent on some weekends. From November to March, occupancy averaged
20 per cent all week. The hotel would reach 90 per cent occupancy only during
the weeks that college students had their spring break holiday (typically in late
February); the hotel continued to average an occupancy rate of 20 per cent
between the end of spring break and the last week of June. U.S. holidays typically

6 All prices in the case are in U.S. dollars.

1 The weekend prior to the first Monday in September of each year.
Page 4 9B05A011

put the resort at full capacity regardless of the time of year. To increase occupancy
during the off-season, lower rates were offered in addition to a free upgrade from a
garden view room8 to an ocean front room when available.

JUANITA GARCIA

The hotel had been a private, family-run business for over 75 years. Juanita Garcia
was the third generation family member to operate the business, with her father
holding the position of chief executive officer (CEO) for over 20 years. Garcia’s
father,’ his two daughters and his three -sons were the only shareholders^ dR the
business.

Garcia and her siblings were approached by their father to taice^ove^thev family
business in the summer of 1999. Juanita Garcia was the only^6n,& interested "since
, the other children knew how difficult the task wouid^be. JromlWitnessing the
number of hours worked by their fatherlf - •She;steppfed\mt©''r me* role of vice-
president of administration and was initially responsible for'promoting the hotel,
creating new marketing strategies and managing^dommumcations between the
company and its shareholders. Juanita knewihat if She was going to take over the
business one day, she needed to unders^ndTh^company and what wquld'make it
successful.

Running a family business <ppoyided-,the flexibility nqededfto:5 make quick

operational decisions; however^ alf recdmmendations^had:- to-be approved by
Garcia’s father. If her/atherNwas'riot convinced initially, or^as remotely skeptical,
he completely disrpissed>^5^ebommendations./^Rprdpbsed recommendations
had to be well supportM./^

7 -/ V !\ OV
HOTEL GUESTS
J'
From kte .,Junq- to early Septeniber, , Hacienda targeted families who spent, on
■average, $500 during their sky at the hotel (typically three days and two nights).
During the off-season, the hqteKattracted seniors and couples who were looking
for a peaceful getawayVTLe highest spending consumers were between the ages of
28 and 49, primarilyMueJoTheir liquor purchases.

At one time, the hotel attracted a large number of college students during the
spring break season. Garcia wondered if this market was suitable given the hotel’s
reputation.

Ninety-five per cent of the hotel’s customers were from the United States, half
from Los Angeles and the other half from San Diego. See Exhibit 5 for selected

* The least expensive room with the fewest amenities.

Page 5 9B05A011

information on the two cities. Of the remaining five per cent, two per cent were
from the state of Baja California with the remaining three per cent from the other
parts of the United States.

THE MEXICAN MARKET

Garcia was hopeful that targeting the Mexican market during the off-season would
help boost sales. Hotel management had never considered entering this market
since it was believed that Hacienda’s rates would be too high. Furthermore, if was
well known that Hacienda catered to the American market, leaving Mexicans with
the perception that they were not welcome. Garcia knew that if the hotel Were to
enter this market, she would have to address this perception.

Mexicali

Mexicali, the capital of Baja California, was 124-miles fronr Hacienda and was
well known for its agriculture and Maquiladoras;9 however, half the working
population was employed in the tourism industry with -44 per cent employed by
hotels and restaurants. Of Mexicali’s 813,,853>population, 14 per cent'lived in
rural areas. See Exhibits 6 and 7^-for additional-information on the-.Mexicali
population.

Mexicali was also known for its'extreme climate. See Exhibit 8-for typical annual
temperatures. Residents were'dlways Jdoking to get-away during the hot months.
Those who could afford it generally owned a second hpme where the climate was
not as uncomfortable. m

Hotel Rates
I ... J* \\
Mexicans^ viewed the hotel fis .q^etpnQed, so Garcia knew that she needed to come
up with a package deal<40 attracUthOse customers to the hotel; nevertheless, she
was uncertain whether a-lower rate should be offered just to Mexicali residents. A
marketing manager , who used a similar strategy in another hotel suggested
advertising at a rate-,dqual to half of each day’s temperature (in Fahrenheit) for a
garden view room. y^The rates of all other rooms would have to be priced
accordingly. Garcia wanted to consider this pricing strategy due to the hotel’s
vacancy rates. She did not want to limit her analysis to this pricing strategy and
was open to any alternatives.

|Maquiladoras are assembly plants in Mexico that import raw materials from a foreign country, namely
the United States, and export the finished goods to the same foreign country.
Page 6 9B05A011

Promotion Timing

Garcia also needed to decide when to offer such a promotion. She wanted to focus
only on one of the seasons initially: summer (June to August), autumn (September
to November), winter (December to February), or spring (March to May).
Consideration would need to be given to the $20 daily cost to maintain each room,
regardless of size, which included employee wages, linens, electricity, water and
sewage costs.

PROMOTION

The hotel spent, on average, $150,000 to $200,000 on advertising during its off­
season each year. Currently, Hacienda promoted through newspaper, press
releases, radio and on its Web site. The hotel could not afford the expensive
television advertising in the United States.

The hotel’s Web site was the first of its kind to be..listed on theTntemet in Mexico.
Although the site was not aesthetically appealing, it was known as being user-
friendly and received approximately 1,000 hits per'day. It had been the most up-
to-date hotel Web site in Mexico until De'cemBer2003 when one of its competitors
had upgraded its site. Garcia suggested tojiei* father on numerous^ occasions that
the Web site should be upgraded, JBut He;remained unconvinced.- He thou that
since the hotel reached 100 per cent capacitydiiring the summen months, the Web
site upgrade could not be justified from a financial perspective^:^

Approximately five percent bf..the.'Mexicali population'had access to a computer,

reflecting similar,use of the, Internet as had been the'case in the United States 10
years earlier.. Irrespective'of the proximity fo the United States, Garcia estimated
that onlv one per cent of the population in Mexicali had access to the Internet and,
of those who had access to the Internet,c(£S per cent would visit the hotel by
viewingvthe hotelj s Web site. .

Television was very common in Mexicali, regardless of the income level of the
household. Garcia estimated that 85 per cent of Mexicali residents had access to a
television and watched regularly. She predicted that 15 per cent of television
viewers would visit the B'ofel in the summer months and three per cent would visit
during the off-season.^ There were two local television stations in Mexicali. If
Hacienda were to advertise on television, Garcia thought it would be best to pay
for airtime during the peak times of the day: 7 a.m. to 8 a.m. and 7 p.m. to 9 p.m.
During these time periods, the cost was at its highest: $41.2510 for each 30-second
advertisement.

10All costs converted to U.S. dollars as at January 7, 2004.

Page 7 9B05A011

There were also two popular radio stations to consider. Each 30-second ad cost
$10.50. Statistics indicated that 45 per cent of the population listened to the radio.
Garcia predicted six per cent to 8.5 per cent of those listening would visit the hotel
in the summer, and one per cent would visit the hotel in the off-season.

Although newspaper was a popular form of advertising to Americans, Garcia

believed distributing flyers in a local mall would be a more viable option. Since
there was only one air-conditioned mall in Mexicali, a large portion of the
population shopped at this mall during the hot months. The cost to produce 1,000
flyers would be $2.30. For every 1,000 flyers, there was an additional distribution
cost of $27.50. Between 20,000 and 30,000 flyers would be distributed ifThis
promotional option was chosen. A response rate between two per cent to .three per'
cent of the target market was expected:

Garcia needed to estimate a reasonable budget in order to promote to this* market

segment, and she wanted to use one type of promotional medium initially to test
the new market. She knew that her father would not agree to spend more than
$50,000 on additional promotions. She had to assess how best to spend the budget
— all on radio ads, all on television ads, or $10^000:ph flyers.

DECISION

Garcia knew that the hotel needed absolution to its low salesin tlie'pff-season. She
wondered whether it was viablelo target the Mexicali market and whether it was a
good fit with the company’s marketing strategy. If so; she. needed to decide on the
room rates, the type of promotional media to use and When to start advertising.
She knew she had to give some incentives to the Mexicans to entice them to come
to the hotel in addition to heavily promoting 'speqific services that would cater to
this new market. She had to have a convincing argument to give to her father if
some positive changes were to be made to the company’s current financial
position^
 9B05A011
Page 8

Exhibit 1

MAP OF BAJA CALIFORNIA

® Los Angeles

CALIFORNIA
San Diego ARIZQl
Tijuana Mexicali $

Millfj

Pacific
ific '»<?• ri
Ocean
Page 9 9B05A011

Exhibit 2

ACCOMMODATIONS AVAILABLE IN SAN FELIPE

Type of Accommodation Number of Facilities

Resorts 4
Hotels/motels 8
Condominiums and Apartments 15
Bed and Breakfasts 1
RV and Campgrounds 2
Total 30 Hi
Source: Company files.

Exhibit 3

BREAKDOWN OF HOTEL ROOMS

Number Rooms Number of

Type of Room
Available People/Rpom

Garden view rooms \ 40 XU 1

Ocean front rooms/ ,134 HI
Junior suites 26v> I2
One bedroom suites/ 42 - r 2
Apartments.'' 4 #CS 4
Two .bedroom; suites ^ mm 4
Master suite- ' v48 4
-Presidential suite •1 4
Total 276

Sourcer Company files.

Page 10 9B05A011

Exhibit 4

2003 HOTEL RATES1

Summer Rates
Type of Room
Sunday to Thursday Friday and Saturday
Garden view rooms $ 97.30 $ 125.30
Ocean front rooms $ 111.30 $160.30
Junior suites $ 125.30 $ 174.30 .
One bedroom suites $ 132.30 $ 188.30.
Apartments $ 139.30 ,$-209.30 )
Hr*YVKJ ,
r/-\ 0” fpc 1 cc\ on
c*1UU.JU
tp _/ <Tu/n S7SSW \
g> z/J o/ .Su
j JL 1/WUlUUlli aUHWJ t
I Master suite $ 174.30 ^$'244.30 "
| Presidential suite $ 300.30 , $ 370.30

Autumn, Winter,"Spring Rates (off-season)

Type of Room
Sunday to Thursday Friday and Saturday
Garden view rooms $.. 69:30/ . $118.30
Ocean front rooms H .90:30 $139.30
Junior suites | $111.30 $ 153.30
One bedroom suites £ -;$ 125.30 | $ 174.30
Apartments $ 139.30," $ 195.30
Two bedroom suites'- $ 160.30 $ 209.30
Master.suite1 ,$ 174/30- j $ 230.30
Presidential suite" $ 307:30 - $ 349.30

Source: Company files,

1 All prices are in U.S. dollars per couple, per night.

 Page 11 9B05A011

Exhibit 5

LOS ANGELES AND SAN DIEGO DEMOGRAPHICS

Los Angeles

Total Population (2003) 3*819,951

Average Personal Income per Capita $26,773
Unemployment Rate 6.8%
% of Family Households 16.4%.;,
% of Families with Children under the age of 18 53.5%&
% of People 65 years and older ,9.7.%
Distance from San Felipe 6.5.driving/hours

Source: City of Los Angeles: www.ci.ia.ca.us. February Jr 2005 and U. Si Census 'Bureau: wWwjeensus.gov/statcib/www.
February 7, 2005.

San Diego

Total Population (2003) 1,266;7.53

Average Personal Income per Capita B S27.657
Unemployment Rate /\3^0G/o;
% of Family Households / 164%
% of Families withChildrenuridefthe age of 18 f < I '53.4%
% of People 65 years,arid older 10.5%
Distance from San Felipe 4.5 driving hours

Source: City of San Diego: "Www. saridieao. aov. February 7, 20P5^andXJ.S. Census Bureau: www. census, aov/statab/www.
February 7, 2005. H jj|r \

Exhibit 6

AGE DISTRIBUTION OF MEXICALI RESIDENTS

Age Bracket Percent of

Population

Oto 14 32
15 to 24 20
25 to 54 38
55 and over 10
Source: California Center for Border and Regional Economic Studies: www. ccbres. sdsu. edu. July 19, 2004.
 Page 12

Exhibit 7

ANNUAL HOUSEHOLD INCOME OF MEXICALI FAMILIES

Annual Household Percent of

Income Population
Less than $1,174 1.4
$1,174 to $1,388 2.3
$1,389 to $2,669 7.1
$2,670 to $3,949 7.7
$3,950 to $5,337 14.8
$5,338 to $10,674 25.1
» 4/ X V j U / ^nv j j$1J L U£j Voi
/ 1 1i
■ 99 % .I * >
wmammAA---'
$16,012 to $21,349 9.7”“
More than $21,350 —B

Note: Converted from pesos to U.S. dollars on December 31, 2002'at i rate of $0.08895/peso.

Source: California Center for Border and Regional Economie-Siudies:<.wwwiccbres. sdsu. edu. July l9,2004.

Exhibits
A"

ANNUAL WEATHER IN MEXICALi 2003

Month Temperature
January 0\Z5°F
February . c73°F
March ' 84°F
pi 80°F
-May-; 93 °F
June; 105°F
July 116°F
-August 96°F
September 105°F
October 98°F
November 69°F
December 64°F

Note: The maximum temperature on the 15th of each month.