t
os
4222
JUNE 28, 2010
rP
TEACHING NOTE
W. EARL SASSER
BRENT KAZAN
yo
Playa Dorada Tennis Club: Expansion Strategy
op
Case Synopsis
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In February 2007, Douglas Hall, recently appointed tennis director at Florida-based Playa Dorada
Beach & Resort (PD Resort) is facing a growing but seasonal demand for tennis courts. With the
number of guests expected to double soon, the popularity of tennis growing rapidly, and the space
for additional courts limited, Hall needs to quickly formulate an expansion strategy for the tennis
operations. Hall undertakes a systematic analysis of the past usage of tennis facilities at the PD Resort
and tackles two issues: court capacity and pricing structure. Based on the results, he must develop a
No
growth strategy to transform PD Tennis into a legitimate profit center, not just an incentive for people
to rent vacation homes or buy property from the Resort.
Use of the Case
The Playa Dorada case is ideal for use in either a course on Service Management or in the first-
year core MBA-level course on Operations Management. Students will gain valuable experience in
performing a quantitative analysis of a multifaceted problem, and will benefit from exposure to the
challenges of managing a facility in a high-growth environment in which corporate leadership is
________________________________________________________________________________________________________________
, 4222 | Teaching Note—Playa Dorada Tennis Club: Expansion Strategy
t
os
demanding sustained profitability. An additional aspect of the case derives from its setting in early
2007, when the national economy appeared relatively robust and many businesses assumed that
consumer demand for leisure and entertainment outlets in the United States could only grow. A
student reading the case in the aftermath of the economic downturn that began in 2008, a downturn
that proved especially devastating to the southern Florida real estate market, including developments
like Playa Dorada, will view the case through a different lens, recognizing enormous risk as well as
rP
possible opportunity; this change in perspective can only enrich class discussion.
Learning Objectives
The primary learning objective of the case is to explore key elements of aggregate capacity
planning in a service organization. From an Operations Management perspective, an important part
of the case is noting the characteristics of aggregate planning and the difference between capacity
yo
planning in a service organization and in a manufacturing firm. While the nature of the products and
the firms differ, the approach to capacity planning is the same. The manufacturing firm produces a
tangible good that is held in storage until delivered to the consumer; the service organization builds
additional service capacity to facilitate peak loads. Both deter shortages and both are costly to carry
until actually used. At PD Resort, the demand for tennis facilities varies widely on a monthly and
hourly basis, accentuating the uncertainty of demand and the difficulty of an aggregate planning
process.
op
The secondary learning objective of this case is to highlight the complexity of Service Management
and the interrelations among business functions: Operations Management, Marketing, Human
Resources, Finances; and obviously, the intimate relation between Operations Management and
Corporate Strategy.
In general, the case hopes to touch upon the following topics: (i) service characteristics [notably,
tC
perishability, heterogeneity, and simultaneity]; (ii) the service concept [core services and peripherals];
(iii) service production and delivery system; (iv) planning and capacity management; and (v) service
strategy formulation [focus, value-added services, strategy formulation process and implementation].
Suggested Assignment Questions
1. What is the dilemma facing Douglas Hall? What are his options?
No
2. How many tennis courts will be needed in March 2007 and April 2007? How about March
2008 and April 2008? (Assume the growth rate stays the same) How does that requirement
compare to present capacity?
3. What should Douglas Hall do for the coming season? For the next year?
4. What are the implications for the future of tennis at PD Resort?
Quantitative Analysis
Do
Capacity Planning
In forecasting the demand for tennis facilities at the PD Resort, it is obvious that the peak months
of March and April will define the total capacity requirements. Before determining court capacity,
however, it is important to define the concept of “guest-nights” and who counts as a guest.
2 BRIEFCASES | HARVARD BUSINESS SCHOOL
os
4222
JUNE 28, 2010
rP
TEACHING NOTE
W. EARL SASSER
BRENT KAZAN
yo
Playa Dorada Tennis Club: Expansion Strategy
op
Case Synopsis
tC
In February 2007, Douglas Hall, recently appointed tennis director at Florida-based Playa Dorada
Beach & Resort (PD Resort) is facing a growing but seasonal demand for tennis courts. With the
number of guests expected to double soon, the popularity of tennis growing rapidly, and the space
for additional courts limited, Hall needs to quickly formulate an expansion strategy for the tennis
operations. Hall undertakes a systematic analysis of the past usage of tennis facilities at the PD Resort
and tackles two issues: court capacity and pricing structure. Based on the results, he must develop a
No
growth strategy to transform PD Tennis into a legitimate profit center, not just an incentive for people
to rent vacation homes or buy property from the Resort.
Use of the Case
The Playa Dorada case is ideal for use in either a course on Service Management or in the first-
year core MBA-level course on Operations Management. Students will gain valuable experience in
performing a quantitative analysis of a multifaceted problem, and will benefit from exposure to the
challenges of managing a facility in a high-growth environment in which corporate leadership is
________________________________________________________________________________________________________________
, 4222 | Teaching Note—Playa Dorada Tennis Club: Expansion Strategy
t
os
demanding sustained profitability. An additional aspect of the case derives from its setting in early
2007, when the national economy appeared relatively robust and many businesses assumed that
consumer demand for leisure and entertainment outlets in the United States could only grow. A
student reading the case in the aftermath of the economic downturn that began in 2008, a downturn
that proved especially devastating to the southern Florida real estate market, including developments
like Playa Dorada, will view the case through a different lens, recognizing enormous risk as well as
rP
possible opportunity; this change in perspective can only enrich class discussion.
Learning Objectives
The primary learning objective of the case is to explore key elements of aggregate capacity
planning in a service organization. From an Operations Management perspective, an important part
of the case is noting the characteristics of aggregate planning and the difference between capacity
yo
planning in a service organization and in a manufacturing firm. While the nature of the products and
the firms differ, the approach to capacity planning is the same. The manufacturing firm produces a
tangible good that is held in storage until delivered to the consumer; the service organization builds
additional service capacity to facilitate peak loads. Both deter shortages and both are costly to carry
until actually used. At PD Resort, the demand for tennis facilities varies widely on a monthly and
hourly basis, accentuating the uncertainty of demand and the difficulty of an aggregate planning
process.
op
The secondary learning objective of this case is to highlight the complexity of Service Management
and the interrelations among business functions: Operations Management, Marketing, Human
Resources, Finances; and obviously, the intimate relation between Operations Management and
Corporate Strategy.
In general, the case hopes to touch upon the following topics: (i) service characteristics [notably,
tC
perishability, heterogeneity, and simultaneity]; (ii) the service concept [core services and peripherals];
(iii) service production and delivery system; (iv) planning and capacity management; and (v) service
strategy formulation [focus, value-added services, strategy formulation process and implementation].
Suggested Assignment Questions
1. What is the dilemma facing Douglas Hall? What are his options?
No
2. How many tennis courts will be needed in March 2007 and April 2007? How about March
2008 and April 2008? (Assume the growth rate stays the same) How does that requirement
compare to present capacity?
3. What should Douglas Hall do for the coming season? For the next year?
4. What are the implications for the future of tennis at PD Resort?
Quantitative Analysis
Do
Capacity Planning
In forecasting the demand for tennis facilities at the PD Resort, it is obvious that the peak months
of March and April will define the total capacity requirements. Before determining court capacity,
however, it is important to define the concept of “guest-nights” and who counts as a guest.
2 BRIEFCASES | HARVARD BUSINESS SCHOOL
