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Flevy Management Insights Case Study
Sustainable Growth Strategy for Eco-Tourism Operator in North America

Fortune 500 companies typically bring on global consulting firms, like McKinsey, BCG, Bain, Deloitte, and Accenture, or boutique consulting firms specializing in Governance to thoroughly analyze their unique business challenges and competitive situations. These firms provide strategic recommendations based on consulting frameworks, subject matter expertise, benchmark data, KPIs, best practices, and other tools developed from past client work. We followed this management consulting approach for this case study.

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Consider this scenario: An established eco-tourism operator in North America, well-regarded for its commitment to sustainability and eco-friendly tours, is currently facing challenges with governance and market differentiation.

Despite a strong mission, the organization has seen a 20% decline in year-over-year bookings due to increased competition and a changing regulatory environment that demands higher sustainability standards. Internally, the organization struggles with aligning its operations with these evolving standards, leading to inefficiencies and increased costs. The primary strategic objective is to redefine its market positioning, enhance operational efficiency, and exceed the new sustainability standards to regain its leadership position in the eco-tourism industry.

Strategic Planning

The eco-tourism industry is at a crossroads, with demand for sustainable travel experiences growing by 10% annually , according to the Global Sustainable Travel Alliance. However, the sector is also becoming increasingly crowded and competitive.

Assessing the competitive landscape, we note the following:

  • Internal Rivalry: Competition within the eco-tourism market is intensifying as new and existing operators vie for a share of the growing demand for eco-friendly travel experiences.
  • Supplier Power: Suppliers of eco-tourism experiences hold significant power due to the limited number of ecologically preserved sites and the high standards required for sustainability practices.
  • Buyer Power: Eco-tourists are becoming more discerning, with high expectations for both the sustainability and the uniqueness of their travel experiences, giving them substantial influence over operators.
  • Threat of New Entrants: The barrier to entry is relatively high due to the specialized knowledge and certifications required to operate sustainably, though this does not deter new, niche entrants.
  • Threat of Substitutes: Alternative forms of travel, including virtual reality experiences of exotic locations, pose a growing threat as technology improves and becomes more accessible.

Emerging trends include the rise of digital platforms for eco-tourism bookings and an increasing emphasis on community involvement and local benefits. These shifts present both opportunities and risks:

  • Increased use of digital platforms for bookings offers an opportunity to reach a wider audience but requires significant investment in digital marketing and platform partnerships.
  • Greater emphasis on community involvement enhances brand reputation and customer loyalty but poses the risk of increased operational complexity and cost.

A STEEPLE analysis reveals that socio-cultural shifts towards sustainability, technological advancements in booking platforms, environmental regulations, and legal requirements for sustainability certifications are the most impactful external factors.

Learn more about Customer Loyalty STEEPLE Competitive Landscape Strategic Planning

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Internal Assessment

The organization possesses a strong brand and loyal customer base due to its long-standing commitment to sustainability, but it struggles with operational inefficiencies and adapting to new technological trends.

MOST Analysis indicates that the organization's mission aligns with market demand for sustainable travel, but its strategies, objectives, and tactics need recalibration to address the current challenges effectively.

Gap Analysis reveals discrepancies between the current operational capabilities and what is needed to meet the new sustainability standards and consumer expectations, particularly in digital engagement and community involvement.

Value Chain Analysis highlights strengths in inbound logistics and service but identifies weaknesses in operations, particularly in leveraging technology for efficiency and customer engagement.

Strategic Initiatives

  • Revamp Digital Strategy: Enhance the organization's online presence and booking capabilities to meet the digital-first expectations of modern eco-tourists. This initiative aims to improve customer engagement and streamline booking processes. Value creation comes from increased bookings and customer satisfaction. Resources needed include investment in digital platforms and marketing expertise.
  • Community Engagement Program: Develop partnerships with local communities to create more immersive and unique eco-tourism experiences. This initiative seeks to differentiate the brand and create deeper customer loyalty. Value creation stems from enhanced brand reputation and customer experience. It will require resources for community partnership development and program management.
  • Governance and Sustainability Standards Review: Implement a comprehensive review and update of governance structures and sustainability practices to exceed industry standards. This initiative is designed to future-proof the organization against regulatory changes and enhance operational efficiency. The source of value creation is through reduced operational costs and improved market positioning. Significant resources will be needed for sustainability certification, training, and process updates.

Learn more about Customer Experience Program Management Customer Satisfaction

Governance Implementation KPIs

KPIS are crucial throughout the implementation process. They provide quantifiable checkpoints to validate the alignment of operational activities with our strategic goals, ensuring that execution is not just activity-driven, but results-oriented. Further, these KPIs act as early indicators of progress or deviation, enabling agile decision-making and course correction if needed.

If you cannot measure it, you cannot improve it.
     – Lord Kelvin

  • Online Booking Conversion Rate: Tracks the effectiveness of the revamped digital strategy in converting website visitors to customers.
  • Customer Satisfaction and Loyalty Metrics: Measures the impact of the community engagement program and enhanced sustainability practices on customer satisfaction and repeat bookings.
  • Compliance and Certification Levels: Monitors the organization's adherence to updated governance and sustainability standards, critical for maintaining its market position.

These KPIs provide insights into the strategic initiatives' effectiveness, highlighting areas of success and opportunities for further improvement. They are essential for making data-driven decisions and ensuring the organization's strategic objectives are met.

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Governance Best Practices

To improve the effectiveness of implementation, we can leverage best practice documents in Governance. These resources below were developed by management consulting firms and Governance subject matter experts.

Governance Deliverables

These are a selection of deliverables across all the strategic initiatives.

  • Digital Strategy Revamp Plan (PPT)
  • Community Engagement Framework (PPT)
  • Sustainability Standards Compliance Report (PPT)
  • Operational Efficiency Improvement Roadmap (PPT)

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Revamp Digital Strategy

The organization employed the Resource-Based View (RBV) framework to guide its digital strategy overhaul. The RBV framework, which focuses on leveraging a company's internal resources as a source of competitive advantage, was instrumental in identifying unique digital capabilities that could be developed. It underscored the importance of distinctive, hard-to-imitate digital assets and competencies. Following this realization, the team took several steps:

  • Conducted an internal audit to identify unique digital resources, including proprietary content, customer data, and in-house digital marketing skills.
  • Assessed the potential of these resources to provide sustainable competitive advantages in the digital eco-tourism market.
  • Developed a strategic plan to enhance these digital assets, focusing on areas like SEO, user experience on the booking platform, and personalized marketing.

Additionally, the Diffusion of Innovations (DOI) theory was applied to understand how the new digital features could be adopted by the target market. The DOI theory helped in identifying characteristics of the digital innovations that would influence their adoption rate. The team:

  • Evaluated the relative advantage, compatibility, complexity, trialability, and observability of the new digital booking platform.
  • Implemented features in phases, starting with those most likely to be adopted quickly by eco-tourists based on DOI criteria.
  • Designed a communication plan to highlight the benefits and ease of use of the new digital tools to both new and existing customers.

The results of employing the RBV and DOI frameworks were significant. The organization successfully identified and developed unique digital resources that provided a competitive edge in the eco-tourism market. The phased introduction of new digital features, guided by the DOI theory, resulted in a smoother adoption process, with a notable increase in online bookings and customer engagement within the first six months.

Learn more about Competitive Advantage User Experience

Community Engagement Program

To enhance its community engagement program, the organization utilized the Stakeholder Theory framework. This framework emphasizes the importance of identifying and understanding the needs and interests of all stakeholders involved in or affected by the organization's operations. It proved invaluable for designing a program that was both beneficial to local communities and aligned with the company's sustainability goals. The team:

  • Mapped out key stakeholders, including local communities, NGOs, government bodies, and suppliers, to understand their expectations and concerns.
  • Engaged in dialogue with these stakeholders to co-create community projects that would provide mutual benefits.
  • Implemented feedback mechanisms to continuously assess the impact of the engagement program and make necessary adjustments.

Concurrently, the Social Return on Investment (SROI) framework was applied to measure the social impact of the community engagement program. This approach allowed the organization to:

  • Identify and quantify social outcomes resulting from the community engagement initiatives.
  • Calculate the social return on investment by comparing the program's costs to its social benefits.
  • Communicate the program's impact to stakeholders, enhancing transparency and trust.

The application of Stakeholder Theory and SROI frameworks significantly improved the design and execution of the community engagement program. The organization not only strengthened its relationships with local communities but also demonstrated the tangible social value generated by its initiatives, leading to increased customer loyalty and brand differentiation in the competitive eco-tourism market.

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Governance and Sustainability Standards Review

The organization adopted the Triple Bottom Line (TBL) framework to guide its review and enhancement of governance structures and sustainability practices. The TBL framework, which emphasizes the importance of balancing economic, social, and environmental performance, was crucial in redefining the organization's sustainability standards. The team:

  • Conducted a comprehensive assessment of current practices in relation to their economic viability, social responsibility, and environmental impact.
  • Identified areas for improvement that would allow the organization to not only meet but exceed industry standards in sustainability.
  • Developed and implemented new governance policies and operational procedures that aligned with the TBL principles.

Simultaneously, the organization utilized the Principles for Responsible Investment (PRI) to integrate sustainability considerations into investment decision-making processes. This was particularly relevant for allocating resources towards sustainability improvements. The team:

  • Reviewed current and potential investments through the lens of environmental, social, and governance (ESG) factors.
  • Adjusted the investment strategy to prioritize initiatives with the highest potential for sustainable impact.
  • Established monitoring mechanisms to ensure ongoing alignment with PRI principles.

The adoption of the TBL and PRI frameworks significantly enhanced the organization's approach to governance and sustainability. By embedding economic, social, and environmental considerations into its core operations and investment strategies, the organization not only improved its sustainability performance but also strengthened its position as a leader in the eco-tourism sector.

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Key Findings and Results

Here is a summary of the key results of this case study:

  • Online booking conversion rate increased by 15% following the digital strategy revamp, indicating improved customer engagement and streamlined booking processes.
  • Customer satisfaction scores rose by 20%, and repeat bookings increased by 10% due to the enhanced community engagement program and sustainability practices.
  • Achieved 100% compliance with updated governance and sustainability standards, securing the organization's market position and future-proofing against regulatory changes.
  • Operational costs decreased by 8% through the implementation of new governance policies and operational procedures aligned with the Triple Bottom Line principles.
  • Investment strategy adjustments prioritizing initiatives with high sustainable impact led to a 12% improvement in the organization's environmental, social, and governance (ESG) performance metrics.

The strategic initiatives undertaken by the eco-tourism operator have yielded significant positive outcomes, notably in enhancing digital engagement, customer satisfaction, sustainability compliance, and operational efficiency. The increase in online booking conversion rates and customer loyalty metrics underscores the effectiveness of the digital strategy overhaul and community engagement efforts in differentiating the brand in a competitive market. Achieving full compliance with updated sustainability standards and reducing operational costs through TBL-aligned governance reforms have not only solidified the organization's market position but also contributed to its financial sustainability. However, while these results are commendable, the modest 8% reduction in operational costs suggests there may be untapped opportunities for further efficiency gains. Additionally, the 12% improvement in ESG performance, while significant, indicates room for more aggressive investment in sustainability initiatives to drive stronger outcomes.

Given the successes and areas for improvement identified, the next steps should focus on deepening the organization's commitment to sustainability and operational excellence. It is recommended to explore advanced technologies and innovative practices that could drive further cost reductions and enhance operational efficiency. Additionally, expanding the scope and scale of community engagement programs could further differentiate the brand and strengthen customer loyalty. Finally, increasing investments in high-impact sustainability projects, potentially through partnerships or new funding mechanisms, would not only improve ESG performance but also reinforce the organization's leadership position in the eco-tourism industry.

Source: Sustainable Growth Strategy for Eco-Tourism Operator in North America, Flevy Management Insights, 2024

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