Academic journal article Journal of the International Academy for Case Studies

Tahitian Black Pearls: A Family Business Strategy case.(Instructor's Note)

Academic journal article Journal of the International Academy for Case Studies

Tahitian Black Pearls: A Family Business Strategy case.(Instructor's Note)

Article excerpt

CASE DESCRIPTION

The primary subject matter of this case concerns the decision of a small, Pacific Island entrepreneur on how to enter the black pearl market. The issues examined are largely strategic and include Porter's five forces model, value chain analysis, distribution channels, and SWOT analysis. Secondary issues include analysis of the cultural and regulatory environment in which business operates. The case is appropriate for levels three and four. It is designed to be taught in either 1 class hour or 1.5 class hours. Student preparation should take between 2 and 3 hours

CASE SYNOPSIS

Imagine yourself on a beautiful, isolated atoll in French Polynesia. The crystal blue water laps at your toes while you drink milk fresh from the coconut. Children laugh with joy as they play in the warm, tropical waters. Sound nice? Now, imagine that you live on this small island, population 600 and need to make a living.

This case is set in the black pearl industry of French Polynesia. It presents the entrepreneurial choices made by a small pearl producer on the island of Takaroa. Here is the situation. Manea Tuahu has not produced a saleable crop of pearls for two years. Prior to that time, the Tuahu family had cultivated black pearls with revenues of roughly $200,000. Unfortunately, the division of the proceeds among the various family members had created hard feelings. This disruption of family harmony combined with a disease that entered the lagoon convinced Manea to stop pearl farming and tend to his small general store. Two years later, he is again considering pearl cultivation to enhance his $6,000 annual income.

As he considers changes in the industry and his own strengths and weaknesses in pearl farming, Manea faces a difficult decision. Should he start producing again? Should he shift to being an industry supplier? Should he use family labor or more skilled, hired labor? How will he sell his pearls in an increasingly competitive market? These and other questions cloud his mind as he goes fishing with his friend, Tehina.

Careful discussion of this case will provide students with insights into the analytical tools entrepreneurs use in their strategic decision making. If used in the winter, it will also make your students think about quitting school for adventure in warmer climes.

INSTRUCTORS' NOTES

The Immediate Issue

Manea Tuahu must decide whether he will begin to produce black pearls in the family's traditional waters after a two year break.

Possible Student Assignments

1. What are the key issues Manea Tuahu faces? (lease lagoon, produce with a hired grafter or with Tiare, distribution channel, do nothing). What does a financial analysis of the case tell you about the alternatives available to Manea Tuahu?

Manea faces several key issues. The most obvious of these is whether he should begin to produce pearls again, lease his lagoon rights, or simply do nothing with regards to the black pearl industry. If the student indicates that Manea should again begin production, at least two follow-up issues come into play. These include the issue of whether to use Tiare as the grafter or to hire a professional and, which distribution channel will be most effective.

With regards to the first decision, the data indicate that Manea currently derives an income of approximately $3,000 per year from his store. This income is most likely supplemented by approximately $3,000 from family members living abroad based on average figures for the islands. This yields an overall income of roughly $6,000 per year. When combined with subsistence fishing and farming activities, and the support of the French government, Manea and his family will have no problem surviving and will have a great amount of free time to enjoy their island life.

Data for the leasing of the lagoon are not available in the case. There is some suggestion that the lagoon rights might be leased for somewhere around 5% of the value of the pearls produced. …

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