Londolozi 2023

Abstract

This case considers investment choices to be made by the owners of Londolozi, a family-owned luxury safari resort located in South Africa. The case outlines the political and economic instability facing South Africa, and the risk that this creates for Londolozi, and presents possible solutions to overcome this risk. The owners are faced with three options: sell the business, expand to another more stable country, or diversify within South Africa to a less risky market. Students are required to assess these options using financial calculations as well as consideration of numerous non-financial elements of the decision. They should use both the discounted cash flows method and the price to earnings method to calculate the present value of each investment opportunity. While forecasted income statements are provided, along with information regarding growth rates, students are expected to do their own independent research to arrive at appropriate growth and discount rates. Depending on the rates they choose, students will arrive at different valuations and answers. Students are expected to justify and defend their choices. In addition to financial assessment, students are required to consider various non-financial factors including the challenges associated with international expansion, the owners’ ethical obligations to the communities and causes that the business supports, and their priorities as family business owners. The CAGE Framework and PEST Analysis should be used to assess the non-financial elements of these options, considering the risks and benefits of expanding to another country or diversifying within in an economically risky country. Students should also consider the personal and sentimental attachments facing the owners, as founders of the business with deep personal attachments to the land upon which it operates. Students should put themselves in the positions of the owners and be prepared to debate the various options. The case demonstrates how 2nd STREET's business could survive amidst the Covid-19 pandemic and how the business operations and supply chain system changed. The case also discusses how the company's adaptability and agility played important roles to keep good performance. The company successfully shifted its operations from physical store focused to online-based and later combined both channels when the pandemic situation improved. In addition, the case shows that collaboration with customers became critical for business expansion in domestic and overseas markets. In this case writing, the author used public sources to collect information and data as well as added the author's perspective based on her personal experience using the service of the company.

Detailed information