Thursday, April 18, 2013

International Trade: Sky Ride

A company in Colorado manufactures a thrill ride used in theme parks, called the Sky Ride. Until a few years ago, they sold only to theme parks in the United States. During the cold winter months sales declined, and the company laid off a major portion of their staff every October, and asked them to come back again the following March.

While this winter break appeared great for the employees that could afford to go skiing every day, most had to find other employment and they did not return the following March. Consequently, each March, the company faced the challenge of hiring new staff for the summer months ahead. This high turnover of staff became very expensive, as they had to train new employees every March.One day, in the course of discussing business strategies, an employee asked, “Why aren’t we selling our rides to countries in the southern hemisphere? Their seasons are opposite of ours and we could stay busy year-round instead of only during the summer.”

Senior management accepted the suggestion and developed a plan for marketing into South America and Australia, enabling the company to increase sales and keep the workforce employed year-round.

In my classes at the universities, we use the first class to discuss the question, What motivates a company to go global? Of course, many reasons exist including: (a) the product does well domestically, (b) management is committed, (c) they have adequate cash flow, and (d) they have excess capacity.

In the case of the Sky Ride manufacturer, going global allowed them to use existing capacity to its fullest potential, keep good employees year-round, and enjoy increased revenues without incurring extra expenditures.

Taken from: "More Banker’s Insights on International Trade - 101 Lessons Based on Practical Experience," Published by Roy Becker Seminars,