SnowSports Interactive — A Global Startup?s Challenge – A Case Study
SnowSports Interactive was founded by Steve Kenny as the CEO, Michael Brett as Vice-President for Engineering, and Shubber Ali as Chairman on May 2005 at Brisbane, Australia. The main concept of the company is to provide tracking and Internet services to skiers and snowboarders using Global Positioning System (GPS) and 802.11 wireless technologies that would provide the skier’s or snowboarder’s location and actual information for speed, runs and distance. The company is a member of I.Lab, Queensland’s State-wide Technology Incubation Strategy which allows the company to work with the most brilliant people in the country. Later on, the company recruited more competitive executives with vast technical business skills and experiences.
The company was originally funded by Steve Kenny, Shubber Ali and their friends, families and some investors who were willing to take the risk. In 2006, the company was positioned in 1$1.5 million mark at $3.50 a share while facing a drawback on funding and capitalizing on global expansion. It was a golden opportunity for the company since there was a scarcity of ski tracking companies which lead to the recruitment of Mike Wallas, CEO of Enterprise Growth Solutions, who was expected to stabilize the investors of the company. Government fundings through COMET (Commercializing Emerging Technologies), Commercial Ready QLD Innovation Start-up Scheme, and the Federal Government’s Export Market Development Grant were secured by the company to somewhat sustain the need for financing.
Steve Kenny led the company in promoting its tracking technology and wireless Internet in system in ski resorts. In March 31, 2006, the company signed an agreement with Buller Ski Lifts Pty Ltd and Mt. Buller ; Mt. Stirling Alpine Resort Management Board Pty Ltd to provide wireless Internet connection to the ski customers in the resort which was called “whispar”. The agreement required the company to set up its own office in the resort to monitor the operations and after a month, an increase in the usage of Internet was noticed.
The company aims to intensify skiing and snowboarding experience of people around the world so they developed innovative product which integrated GPS, Wi-Fi, RFID technologies with tracking and analysis software. They introduced their base product, the Flaik, a small-sized arm band powered by Global Positioning System (GPS) that can record the position and time of the users and transmit the information to a network. The Flaik can be appealing to ski and snowboarding customers because it can keep performance statistics for comparison. It offers convenience because of its tracking characteristic.
SnowSports experiences difficulties in finding investors for their global start up because of the complexity of the business nature they have. They know that they have to package their business offer entrancingly in order to attract investors. In their quest to expand globally, they tentatively decided to raise their capital needs through partnerships with ski resorts in other countries. The partnership will be set up as a limited liability company comprised of SnowSports employees and the local team. Each SnowSport ski resort partner, the company offers two options for the infrastructure; lease or purchase of the license and services.
Complementary services are attached with the service like upselling of performance statistics, wireless Internet access or whispar and rental of the devices for the non-members which can generate more revenue. SnowSports people are keen on innovating their products through research and development in order to maintain their competitive adage. Patents, copyrights and their trade secrets will help in protecting their intellectual property. However, the company is aware of their disadvantages as compared to other companies which include limited track record, forecasted losses, intellectual property, national and international regulations, specific country laws, dependence on third party suppliers, schedule delays, seasonal market fluctuations, and competition and this dilemma is being addressed by the company by coming up with contingency plans and actions.
The Snow Sports industry was vast. Its success is dependent on factors like the environmental conditions of each country. Moreover, as the technology grows, innovations on sports are also on the way. Companies formulated and manufactured different kinds of items to satisfy the growing needs which open the gates of opportunities. There are several competitors like NASTAR, Slope Tracker, Suunto, and NAVMAN who offer similar products but SnowSports can differentiate itself by providing low-cost and user-friendly service.
Opportunities are numerous specifically in North America where 493 ski resorts exist with a total annual revenue of USD $2 billion and Canada where 244 ski areas operated in Ontario alone.
The challenge for the SnowSports executives is how to device an effective global start up plan that would attract investors. Another crucial point is what type of global strategy will they adapt and where will they implement it.
SnowSports is going through the process of birth pains and in this phase, it is a “make it or break it” scenario so to start up their global expansion, effective business strategies and model should be followed religiously. Financially, the company is not capable of expanding on its own and forming partnerships with ski resorts is the best way to expand. Tactical alliance can be built by the company and a ski resort partner where in the business venture will mutually benefit both parties in terms of cost and revenue. However, negotiations should be polished in order to ensure that the partnership will perform. The outcome of a negotiation should be a win-win situation for both parties. The company should also study to the culture of the country where they will set up partnerships in order to prevent communication conflicts that might hinder partnerships to be formed. Moreover, cultures differ in each location and an in depth study on the cultural models and distinct management styles of each location can stipulate better strategies and models to adopt.
In terms of determining market targets, the company’s aim to provide differentiated service to its customer at low cost may not help in increasing their revenue. Since they have competitive advantage among their competitors in terms of quality and features of the product, a better pricing strategy like differentiation where customers pay higher premium for higher quality can be implemented. This would boost their sales and revenues.
When it comes to global strategy or model, the transnational strategy is more appropriate for the company since it is more cost efficient while providing emphasis on the unique needs and cultures of each market. It is more flexible because the company can set the limits for each nation. However, this is a bit complicated and hard to implement but with good relationship with a ski resort partner, it would be easier than it should be.
Opportunities are vast for SnowSports in Canada and US and the good about it is the fact that Australians, Canadians and North Americans are very similar when it comes to culture. They all have informal cultures and this would be another advantage in forming alliances and partnerships. Putting up relationship with Japan would be a bit risky because of the language and culture barrier that would somehow increase the cost for such expansion.
I therefore recommend that SnowSport’s global start up should take-off with international alliances with ski resorts since there is a scarcity in funding for such expansion. A study on the culture and management style of each location will help in generally getting a bird’s eye view of the partner’s norms and practices that would help in negotiation and forming alliances. The pricing strategy that should be implemented by the company is the differentiation strategy that would emphasize the competitive advantage of their product. This can also be a form of launching their brand and their image. Moreover, this will help in increasing their revenue and sales thereby making funds available for more expansion and research and development of products. A transnational form of business strategy will help them in forming alliances globally. This is cost effective and more needs-focused. US is the best way to start off a global expansion with all the opportunities and few number of competitors. Lastly, the company should also give ample attention to protecting their intellectual properties via patents and copyrights in all countries where they will operate.