Business Modeling Case Study: CHL Golf Resort Investment Analysis

This case study analyzes the investment options for Cunningham Holdings Limited (CHL), a diversified family-owned business, concerning a proposed golf resort. As the senior business analyst, the student was tasked with evaluating investment options using Microsoft Excel 2016 solver, considering factors like clubhouse size, construction costs, and land usage. Five models were created, including suggestions from shareholders and managers. The analysis revealed that the "standard clubhouse" model, costing $19.05 million and occupying 40.75 hectares, was the most viable option, aligning with the $20 million budget and providing a balance between cost-effectiveness and potential revenue generation. The report also discusses the implications of other feasible models, such as the "2nd option" and "3rd option," and ultimately recommends the standard clubhouse model for its sustainability and efficiency, aligning with CHL's vision of creating sustainable products and services.

1
Business modelling
Case Study of the Cunningham Holdings Limited
Student name
Institution
Date

2
Introduction
In the past research it has been realised that corporate sustainability is not only a
strategic plan for an organization but can also be an avenue of strengthening the firm’s brand
name (University of Winsconsin, 2019). Creating value via sustainable business management
cannot be realised within the short run neither is it a simple process, firms have to seek
professional services that are able to thoughtfully develop and implement sustainable initiatives.
By definition sustainable management can be referred to as the intersection of business and
sustainability, it is the initiatives of the firm’s management that impact on the three areas;
people, planet and profit in away that all the three ar able to prosper in future. Sustainable
management entails supporting the business’ long-term viability as a preventive rather than
reactive measure (Adminisation University of Nevada, 2019) (Starik & Kanashiro, 2013). This
type of management takes many forms including investing in fair trade items, availing a humane
working condition as well as minimising the packaging materials (Corley & Gioia, 2011).
Several forms from diverse industries are striving to pursue the sustainable business management
goals.
In this report will look deeply into the activities of Cunningham Holdings Limited (CHL)
as a way of evaluating how sustainable initiatives can be implemented in a business. CHL is a
diversified family owned business that is run by Oscar Cunningham as the current company
CEO. The firm operates many hospitality venues which are spread across the states of Australia.
The services provided by the firm include, catering, accommodation as well as leisure activities.
As away of improving its band name the firm needs to take up a new investment in a golf course
resort. Being the senior business analyst of the firm, I was requested by the CEO to undertake
analysis of the available investment options and provide a recommendation of the preferable
investment option the company should undertake.
Description of the implementation of the five models
To arrive at the most viable option five models were created to analyse the various golf
resort investment options. The modelling was done using the Microsoft Excel 2016 solver add in
(Goh, 2019). The five models generated did include the shareholders suggestion, the managers
request, and three different options for the shareholders request.
In the managers suggestion, we did model an investment on an international standard golf
resort that possess a standard clubhouse to be constructed at a cost of $3.5 million and occupying

3
2 hectares. On the other hand, the shareholders request did entail constructing an international
standard golf resort with an exclusive clubhouse included in it. The clubhouse was to be
constructed at a cost of $6 million and was to occupy 4 hectares of land. Since the shareholders
request was found not to be feasible due to the limited company resources three other options
were availed that could replace it. In the 1st option, the size of the clubhouse was adjusted to 3.2
ha. For the second option we did adjust the construction cost of the clubhouse to $ 5.1 million. In
the third option, the shareholders’ suggestion was retained but the total budget increased to $
21.5 million. The options were analysed and the feasible ones discussed below.
Analysis of the feasible models
From the attached excel file it can be observed that the two models, (exclusive clubhouse
and 1st option) do not have a feasible solution. This is caused by the unlimited business resources
that are not able to develop the projects to the standards demanded by the international golf
course. The two are thus irrelevant and can’t be put in place by the firm. The other three models
(the standard clubhouse, 2nd option and 3rd option) do have feasible solution which mean they can
be implemented using the available business resources. The three will be discussed in details to
evaluate the preferable model.
Standard clubhouse model
Under the standard clubhouse the golf holes configuration will be as displayed in the table
below.
Type of golf hole
Straight
par 5
Dogleg
par 5
Straight
par 4
Dogleg
par 4
Long
par 3
Short
par 3
No. of holes 1 1 2 10 1 3
From the golf holes configuration, the golfers will be able to derive a total enjoyment index of
35. The total cost needed to construct the resort will be $ 19.05 million while the land space
occupied by the project is 40.75 hectares. This are within the $ 20 million project budget and the
42 hectares available for the construction. The idea is thus viable and should be considered by
the management and shareholders of CHL. Finally, the golf holes do total 18 and are configured
in line with the international standards, this will enhance quality of services and has the
potentiality of generating more revenue for the firm in future.
2nd Option

4
This option offers an alternative investment venture to the proposal made by the shareholders. In
this option the construction cost of the exclusive clubhouse will be reduced to $ 5.1 million so as
to make the shareholders idea feasible. By doing this the total construction cost of the project
will be $ 20 million which is available in the current budgetary allocation. In addition, the project
will occupy an area of 41hectares which leave a hectare available from the 42 set aside for the
project. By putting in place this idea the golf holes will be constructed in line with the
configuration displayed by the table below.
Type of golf hole
Straight
par 5
Dogleg
par 5
Straight
par 4
Dogleg
par 4
Long
par 3
Short
par 3
No. of holes 1 1 6 6 2 2
This yields a total enjoyment index of 36.5 which is better than what is derived under the
managers plan. The golf holes do total 18 as required by the internationally set standards and are
configured in the recommended manner.
3rd option
The final feasible model is the 3rd option, in this option, the shareholders ideas are retained but
so as to make the project practicable the budget allocation have to be increased to $ 21.5 million.
Putting the model in place will consume a total of $ 21.25 million and an area of 41.75 hectares.
This will yield a total enjoyment index of 38 that is the highest among the three feasible models.
The golf holes will be configured in a manner described in the table below.
Type of golf hole
Straight
par 5
Dogleg
par 5
Straight
par 4
Dogleg
par 4
Long
par 3
Short
par 3
No. of holes 1 1 4 8 1 3
This gives a total of 18 holes that are distributed in, line with the international standards. The
project is thus a viable idea that warrant attention of the stakeholders.
Implication on the feasible models
Out of the three feasible options discussed above only 2nd and 3rd options are in line with
the shareholders initial request. In the 2nd option, the construction cost of the clubhouse will have
to be minimised though efficient management of resources but in general the clubhouse remains
of the same size. On the other hand, the 3rd option does suggest sourcing for extra financial
resource to meet the additional cost of constructing exclusive clubhouse. It retains all the features

5
as per the suggestion of the shareholders. The managers plan which entails constructing a
standard clubhouse though is not in line with the investors wishes. First it suggests a smaller
clubhouse that only occupies 2 hectares and second it only allocates $ 3.5 million to the
clubhouse which may not give arise to the quality expected by the shareholders.
Recommendation
From the analysis above the managers suggestion to construct an international golf resort
with a standard clubhouse is the recommended project. This project needs just $ 19.05 million to
put in place and occupies a land area of 40.75 hectares. This leaves the firm with 1.25 hectares to
use in future investment and $ 950,000. The 2nd option is dependent on cutting down the cost of
constructing the exclusive clubhouse which might not be possible and if possible, have the risk
of lowering the quality of the construction beyond what was expected by the shareholders. In
addition, the option is much more expensive and takes up more land space. On the other hand, 3rd
option do give the best enjoyment index of 38. This though comes with a bigger sacrifice, first
the managers will have to source for additional capital that my mean a lower dividend to the
shareholders or even seeking options that may affect the firm’s liquidity ratio. The managers
plan is thus the best option as it is economical and efficient. The option is generally sustainable.

6
References
Adminisation University of Nevada, 2019. Sustainable Management in Emerging Economy Contexts. [Online]
Available at:
https://www.instituteforsupplymanagement.org/files/SR/SustainableMgmtEmergingEcon.pdf
[Accessed 3 October 2019].
Corley, K. G. & Gioia, D. A., 2011. Building theory about theory building: What constitutes a theoretical
contribution?. Academy of Management Review, Volume 36, pp. 12-32..
Goh, C., 2019. Solve problems with linear programming and Excel. [Online]
Available at: https://www.fm-magazine.com/issues/2019/feb/linear-programming-microsoft-excel.html
[Accessed 4 October 2019].
Starik, M. & Kanashiro, P., 2013. Toward a Theory of Sustainability Management: Uncovering and Integrating the
Nearly Obvious. Organization & Environment, 26(1), pp. 7-30.
University of Winsconsin, 2019. Sustainable Management. [Online]
Available at: https://sustain.wisconsin.edu/sustainability/sustainable-management/
[Accessed 3 October 2019].