Introduction
The 1st Entertainment Company is a small scale service-based company that specializes in providing venues and equipment for paintball matches. Aptly named “the 1st Paintball”, the facilities are located in Riyadh Saudi Arabia and are the first of their kind in their current location and as such have been drawing considerable attention due to the novelty that the sport provides for individuals 12 and up. The business itself is not an LLC (Limited Liability Company) but rather was formed as a result of a partnership agreement between several young Saudi Entrepreneurs.
What must be understood is that one of the ongoing trends in Middle East society today has been to send high school graduates of the Middle East educational system to various colleges and universities located in other countries to further their education. As a result, many international influences and cultural traditions tend to be brought back by such individuals resulting in new local trends within countries such as Saudi Arabia.
The creation of a company that focuses on paintball within a normally conservative state is one of the results of the sharing of international culture with residents and as such it has gained a considerable following within the country resulting in the creation of an official paintball club. As for why the owners entered into this specific type of business, this can be explained by the growing popularity of American culture (as referred to earlier regarding cultural sharing) and how the sport of paintball is generally well accepted in virtually all locations where it is established.
In the case of the 1st Entertainment company, it is rather ironic that their name coincides with the first mover principle wherein they were the first paintball company to establish itself within Riyadh (capital of Saudi Arabia). This in effect allowed the company to gain a dominant market share and considerable profits due to the effect of being the first mover into what could potentially be a growing type of entertainment genre within Riyadh.
- Cost = amount paid per month for maintaining the business
- Profit = revenue for the month minus cost for the month
- Example: Average revenue for 2010 is 60,000 while the average cost is 40,000. Profit, in this case, is revenue minus cost which is equivalent to 20,000
Further investigation reveals that there have been no other companies within Riyadh that have attempted this sort of venture in the past or the present and as such this further solidifies the dominant position of the company in what could become a decade long monopoly. On the other hand, it must be noted that Saudi Arabia does have a well-deserved reputation for conservatism and this presented itself during the company’s initial development phase.
What must be understood is that while Western culture has indeed been slowly integrating itself into the local Saudi Arabian culture the fact remains that various aspects of it are still largely unknown to large swaths of Saudi society. As such the initial establishment of a business venture that utilized guns to shoot at each other for the sport was initially met with a great deal of skepticism and little local support in the beginning.
Fortunately enough the entrepreneurs that began the venture utilized effective marketing campaigns in the form of print ads, television advertisements, online reviews, a company website as well as a general word of mouth to generate local interest for the venue. The result was booming business venture that today is one of the most visited venues in Riyadh resulting in the necessity for reservations due to the sheer scale of local demand.
Financial Performance of the 1st Entertainment
Presently, the 1st Paintball averages roughly 120 people within a given day (more on weekends) with an average of roughly $40 per customer. On a given day that is equivalent to $4,800 and within a month is equivalent to $144,000. Because the company doesn’t pay as many overhead costs on electricity since most of the facilities are located outside this results in a large percentage of the profits going directly to the owners of the company. It must also be noted that such numbers have been steadily increasing as seen in its performance in 2010 which averaged around 50 to 60 on a given day.
This is indicative of the fact that as the popularity of the sport of paintball continues to grow within Riyadh the more likely it is that the number of customers on average that patronize the 1st Paintball will increase over the next couple of years. Another factor that should be taken into consideration is the fact that the 1st Paintball has a considerable dominating position in the market today due to its location in Riyadh and the fact that it has marketed itself more prolifically as compared to other sporting companies within the country.
When examining the sheer amount of positive user rated views of the company online it can be seen that the financial performance of the company will certainly get better and increase over time as the number of its patrons continues to grow. It must be noted though that the 1st Entertainment Company does have plans to diversify its services beyond paintball to encapsulate other activities such as bungee jumping which it plans to include into its list of offerings. This is to prevent problems related to marginal utility and decreased consumer interest in the services of the company.
Examining the Business
As mentioned earlier, the 1st Entertainment is the first business of its kind in Riyadh and as such it came as a direct result of the entrepreneurial activity and wasn’t inherited or bought from a previous owner. One of the advantages of inheriting or purchasing an already established business is the fact that methods of supply, procurement, production as well as sales and customer service have already been established by the previous owner and as such entrepreneurs won’t have to worry about having to establish such systems themselves which can take considerable time and effort.
Another factor to take into consideration is the fact that established businesses already have a well-known reputation within a local community and as such results in constant customer patronage by long time customers of the business. It is usually the case that new businesses have to work hard to ingrain themselves into the awareness of members of the local community through various marketing campaigns which can cost considerable sums with the possibility of such activities having little impact on consumer brand awareness.
Another factor that should be noted is an institutional theory which states that consumers tend to patronize institutions that have been around for a long time as compared to new companies that have better services. This is due to the feeling of stability they gain from knowing that a particular company has been around for so long that it will probably continue to exist well into the future. Such a situation similarly impacts individuals who are part of a local community and as such shows how the perceived brand image of an old and well-established company helps to increase consumer patronage.
To resolve this issue some entrepreneurs buy an old established business and then subsequently change various aspects related to operations, marketing and production to better suit their needs. This enables them to create the processes they want to establish while at the same time take advantage of the brand image established by the previous owner. On the other hand, establishing a new business comes with several distinct advantages that a well-established business cannot necessarily obtain. One of these advantages is a distinct degree of flexibility and innovation regarding processes used for operations, production or even inspiration behind the business itself.
As can be seen in the case of the 1st Entertainment, which is a relatively new business, it was able to establish a unique and one of a kind service that most well-established businesses would not have been able to create themselves due to inherent limits in operational design. Not only that new businesses do not suffer from the inherent problem of reductions in marginal utility as seen in the theory of consumer behavior due to the uniqueness and the fact that such businesses are still viewed by the public as interesting services instead of boring establishments that they had visited several times in the past and are already tired of visiting in the present.
Not only that, but Meyvis and Cooke (2007) also explains that in case of several old businesses instances of tarnished reputations or negative consumer feedback regarding products or services associated with the brand image of that particular company often continue to “haunt” the new owners so to speak despite saying that a company is under new management and thus would put significant effort into improving products and services (Meyvis and Cooke, 200 – 207). Overall though, the choice as to purchase an existing business or to establish one on your own comes down to what an entrepreneur wants to be accomplished.
If they see an existing business and know of innovative methods and processes that can be utilized to improve the inherent operational capacity of the company then buying one that is already existing would be the best possible choice. On the other hand, if an entrepreneur is more inclined towards establishing a new type of business venture that isn’t present within the local area then it would be best to establish a new business. All of this hinges on what an entrepreneur perceives as the best and most profitable method of accomplishing their goals within their chosen market.
One of the unique aspects of markets in various international locations is that each has its advantages and disadvantages and as such influences the type of businesses that can be established in such locations (Lin and Juan, 1257 – 1268). For example, in the case of the Middle East, the sale of various types of air conditioners has and will continue to be a booming business due to the high temperatures within the region. On the other hand, selling heaters in the same market would result in few if any sales and as such show how the unique aspects of particular markets influence product sales and business decisions.
One of the main challenges in establishing a business within Saudi Arabia isn’t a lack of money (since banks in that particular region of the world are quite generous when it comes to loans) but rather in properly configuring new types of businesses with the old world conservatism that is prevalent within the country. It can be stated that while various aspects of western culture have been adapted into Saudi Arabia over the past couple of years in the form of western products and entertainment (i.e. movies, T.V. shows, etc.) there is still a certain degree of resistance over what is perceived as “intrusions” into the local Islamic culture.
Taking this into consideration establishing a business venture such as paintball which is both a western innovation and a sport that is relatively unknown within Saudi Arabia does present numerous challenges in the form of conservative ideas as well as skepticism regarding markets for such a business. It must also be noted that while paintball is a decidedly unisex sport in other countries around the world the fact remains that due to a certain degree of conservatism within Saudi Arabia women are not particularly permitted to be part of such activities with men. This not only limits the potent market for the 1st Entertainment Company but for other companies that enjoy a unisex consumer base in other countries but have a limited market share within Saud Arabia.
Strategies Employed to Overcome Business Challenges
As mentioned earlier one of the initial problems faced by the 1st Entertainment Company when establishing its business in Riyadh was a lack of local support as well as general skepticism from the local populace regarding the viability of the business which was relatively unknown at the time. To resolve this, the business utilized numerous print ads, TV advertisements, flyers and word of mouth to encourage people to try out the facilities. Prices were lowered during the opening weeks to entice customers. Another ploy utilize by the company was to depict paintball as a method in which friends could compete with each other in a controlled environment utilizing non-lethal guns.
Over time, their method of advertising and the company objective they focused on which was to establish a first-class venue for paintball eventually came to draw considerable local attention. What must be understood is that Saudi Arabia does have a prevalent and widely dispersed upper class who have quite literally exhausted all marginal utility that could be derived from local entertainment sources. The result is that such individuals often go to other countries and regions to experience new forms of entertainment. It was based on this predilection that the 1st Entertainment Company was able to capitalize on since it was able to establish a new form of entertainment in the heart of Saudi Arabia that various members of the upper class could enjoy without having to leave the country for extended periods.
This resulted in the creation of various competitive paintball teams and even a paintball club within the country which further increased the overall hype connected to the 1st Entertainment Company and its paintball venue. Over time the company became a well-established venue for paintball tournaments resulting in a considerable monopoly over the paintball business in Riyadh. It must be noted though that this examination of the strategies employed by the 1st Entertainment Company does not take into consideration strategies that resolve issues related to marginal utility and as such should not be considered a complete examination of all potential strategies that the company has pursued at the present.
Guiding Principles in Improving Business Performance
Brand Image
As Taute (2010) explains, a company’s brand image helps to enamor it to customers in that through a distinctive way of presenting the company’s products and services this enables it to distinguish itself from its competitors (Taute, 79 – 85). On the other hand, Weston (2002) explains that a brand image can also be utilized to popularize a company among a particular consumer demographic in that through the uniqueness of the brand image a consumer continues to remember the company and its brand long after the initial consumption of a product or use of a service from that company (Weston, 2002).
Examples of this can be seen in the brand image utilized by U.S. based Apple Inc. which has quite literally developed a cult following among millions of international consumers today. They did this by facilitating a brand image of distinctiveness and quality and further enhanced this by providing innovative products that subsequently created a whole new trend in ergonomic design, stylish looks and above all advanced technological capability. Within the Middle East, the telecommunication company Du which is based in the U.A.E has challenged the monopoly of Etisalat (a major internet and telephone provider which has been based in the U.A.E for decades) by providing cheaper services, better phones and above all as a new and “hip” brand image which has greatly facilitated greater consumer demand for Du’s services.
Another example can be seen in the case of the Philippines within South East Asia where the outsourcing company Convergys has in effect popularized jobs related to the customer service sector by presenting them in such a way that they appeal to new graduates of local colleges within the country. These and other examples, too numerous to mention, show the importance of developing a particular brand image to entice consumers, win over potential employees or stay ahead of the competition. As such, it is recommended for any company, newly established or not, to develop a brand image that appeals to the market segment they are targeting to facilitate a greater market share for the company.
Make it into an experience
In a documented interview, entrepreneurs Rob and Pablo, creators of “Snog”, a U.K. based chain of yogurt outlets, state the following regarding what it takes to become a successful entrepreneur “now we are in a recession and we see businesses that are successful I think the one thing you see that they all have is the experience which is the most important part in everything so we made sure that there was an experience”.
The “experience” that Rob and Pablo refer to is not just the quality of the product itself but what customers feel when they enter into a particular establishment. In the case of Snog, all their outlets have a warm and friendly ambiance which is not the only family-friendly but promotes, in their words, “a happy feeling” for customers.
Going back to the example of Apple Inc., it can be seen that all their stores, no matter what country they are present in, have a stylish and ergonomic design that looks “clean, modern and cutting edge” which has come to exemplify the experience of buying products at an Apple store. Based on the popularity of not only Snog but of Apple itself, it can be seen that by making their store into an “experience” rather than just a store; this helps to encourage buying behavior among their clientele and even repeat visits. As such, for any business that wants to increase its customer base, it is important to develop the experience, its venue provides to appeal better to consumers and create repeat business.
Customers of the 1st Entertainment
Customers of the 1st Entertainment range from 12 to 40 years of age yet on average, the age demographic that patronizes the venue consists of customers aged from 14 to 28. This is because playing paintball has always appealed to a young physically active demographic, and as such, it is not surprising that the age demographics for playing paintball in Riyadh match those in other global locations. It must be noted though that the one major difference between paintball in Riyadh and other countries is the fact that it is gender-specific and class-specific. As mentioned earlier, Saudi Arabia has a distinctly conservative society based on Islamic law.
That is why Arabic women are not expected to participate in certain activities involving a primarily male demographic. This results in mostly male customers coming to the paintball fields of the 1st entertainment with women usually standing on the sidelines acting as the caretakers of children or just coming along since they are bored at home. Aside from this, playing paintball at the 1st Entertainment can be also considered class-specific due to the high prices that the company charges. On average, prices for equipment rental, paintballs, and other miscellaneous costs can run-up to an average of $40 to $80 per person per session and as such is not within the price range for a large percentage of the population in Riyadh.
As such, most customers who go to the 1st Paintball are usually male and well off in terms of the specific social class they belong to. To promote itself with the local community in Riyadh, the 1st Entertainment utilizes a combination of print ads, TV advertisements, flyers and word of mouth to entice people to try paintball as a recreational activity. Aside from traditional methods of brand promotion, the company also utilizes out-of-the-box techniques, such as holding tournaments for local teams in Riyadh to increase the popularity of the venue as the “go-to-place” for young individuals to enjoy a unique form of entertainment in Saudi Arabia.
Customers and the Product
The main reason why people go to the 1st Paintball is that it is a novel form of entertainment in what is usually a highly conservative society. The level of competitive play, camaraderie, and competition does tend to attract a decent following in various paintball fields located in various international locations with the same sort of occurrence happening within the facilities of the1st Entertainment in Riyadh.
As mentioned earlier, the 1st entertainment was one of the original founding companies of paintball in Riyadh and as such has helped to grow the popularity of paintball within the past few years. As a result, more and more customers tend to garner significant levels of interest in the company and the sport continues to grow within Saudi Arabia. It must be noted though that some of the benefits that customers of 1st Entertainment expect out of the company is that the rented equipment works properly and that the company continues providing ever more challenging terrain to introduce a certain degree of variability in the field scenarios that they play in.
Negative Aspects Related to the Business
One of the things I dislike about 1st Entertainment is that it neglects to take advantage of what could be an excellent money-making opportunity by having several restaurants within its premises. The company merely provides customers with a venue where they can play paintball yet it is seen in most cases where customers exert some form of physical activity over an extended period they tend to get hungry.
By either renting out spaces within the company’s location or creating their restaurants, the company could have catered to these hungry clients and thus increase the level of profit they gain per visit. For me, this is a wasted opportunity that the company should find some way to resolve to better improve their services. Another noticeable problem is the fact that there are a limited number of area scenarios within the venue despite the large lot where the paintball fields are located. Area scenarios come in the form of a diverse number of obstacles that can be placed to make a game of paintball more challenging.
This can come in the form of either ditches, tunnels, buildings or an assortment of other constructs that can be placed in the environment. While the paintball areas of the 1st Entertainment are first rated, they tend to be repetitive, and over an extended period, this may cause boredom amongst its clientele due to the effects of marginal utility. Taking this into consideration, it is advised that the company expands its current area scenarios to include a certain degree of diversity to provide more challenges and thus more excitement for its clientele. The third problem that limits the number of customers that come to the 1st Paintball is the fact that the prices are well above the norm for the sport of paintball. With prices ranging from $40 to $80 per person per session, the prices are way too high to entice a much wider consumer demographic.
(This chart shows that on average during promotional periods where rates are below $10 a person the result is a far higher ratio of Middle and Poor class customers that utilize the facilities as compared to instances where normal prices are evident.)
What the company must realize is that to ensure continued profitability that must expand its current consumer base to include a diverse array of consumers from different economic classes. The high price limits the company’s ability to do and thus should be changed to resolve this issue. The last problem with the company is inherent problems with its team registration system. There have been several complaints over the past few months regarding the system used for registration and as such should be fixed to create a far smoother and less troublesome method of registration for consumers. Should such problems be fixed it can be assumed that the 1st Entertainment Company will be able to create a profitable business that should exist for many years to come.
Source of Business
One potential source of business that I could pursue is to create an import company that specializes in shipping into Riyadh various delicacies from South East Asian countries such as the Philippines, Malaysia and Indonesia. This could come in the form of fresh fruits, dried fish, bottled native products and an assortment of other edible food stuffs that can be legally imported into country. The reasoning behind this particular type of business is based on the fact that many citizens within Saudi Arabia tend to get tired of continuously consuming the same type of food day in and day out. As such by importing new types of Asian foreign delicacies this would address the need for different kinds of food products to satisfy the palates of the local consumer market.
Key Factors in a Successful Business
Focus on Quality
One of the most important factors in creating and maintaining a successful business is a focus on quality and ensuring that any product bought by a customer is not the result of inferior production or workmanship. What must be understood is that customers tend to patronize businesses that shows that they care about their customer by ensuring that the strictest measures are followed in product quality (Philip, 118 – 136). In instances where a company has failed to live up to the expectations of consumers regarding the overall quality of a product, it is often seen that such companies tend to lose customers in droves (Philip, 118 – 136).
This was seen in various technology companies such as Dell that neglected to implement proper quality control measures on its motherboards resulting in several computers being sold whose motherboards leaked chemicals when overheated. Such a fiasco was a nightmare for Dell and ruined its reputation with several of its customers in effect sending them to other companies as a result. It is based on this that it can be seen that a focus on quality is an important aspect for any company to follow to grow and maintain its consumer base.
Adapting to Changes in Business Environments
Another factor that businesses should take into consideration is adapting to changes within local business environments. What must be understood is that businesses do not operate within a vacuum, and as such, it becomes necessary to observe that it occurs within local business environments and responds accordingly (Philip, 118 – 136). This can come in the form of expanding during times of economic prosperity or cutting back and outsourcing specific aspects of the company’s operations during lean economic times.
Not only that, companies should be prepared to respond to changing consumer trends to stay relevant lest they fall into obscurity and stagnation (Philip, 118 – 136). Such a situation occurred in the U.S. between Netflix and Blockbuster wherein Blockbuster continued to stick to its original business model despite changing consumer habits regarding using the internet. The result was that Blockbuster in effect lost its dominant market position to Netflix and has been plummeting in value ever since. It is based on this and other similar instances that the necessity of observing and responding to change shows its importance for any company that wishes to stay relevant in its chosen market.
Works Cited
Lin, Chin-Tsai, and Pin-Ju Juan. “measuring location selection factors for international resort parks.” Quality & Quantity 44.6 (2010): 1257-1270. Web.
Meyvis, Tom, and Alan D. J. Cooke. “Learning from mixed feedback: anticipation of the future reduces appreciation of the present.” Journal Of Consumer Research 34.2 (2007): 200-211. Web.
Philip, Mathew. “Factors Affecting Business Success Of Small & Medium Enterprises (Smes).” Amity Global Business Review 6.1 (2011): 118-136. Web.
Taute, Harry. “Consumer Racial Profiling In Retail Environments: A Longitudinal Analysis Of The Impact On Brand Image.” Journal Of Brand Management 18.1 (2010): 79-96. Web.
Weston, Sue. “Tackling Your Image.” NZ Business 16.1 (2002): 30. Web.