Exotic Adventures

Exotic Adventures Inc.: The Amazon River Voyage

Case Synopsis

Exotic Adventures Inc. offers scenic, adventurous, and informative voyages. The voyages are primarily conducted in the Arctic and Antarctica; however, during the offseason they also provide voyages in the South Pacific, Atlantic, and the Amazon River basin to help offset the company’s fixed costs. Unfortunately, due to low water levels, a planned voyage through the Amazon River basin is at risk of cancellation. If canceled, Exotic Adventures Inc. would incur significant unbudgeted costs.

State the Assignment Question

If the primary purpose for the Amazon River voyage is to help offset Exotic Adventure Inc.’s fixed costs, can the company afford the additional costs associated with cancelling the Amazon River voyage?

Case Analysis

The first season for the Amazon River voyage, which extended from Belem, Brazil to Iquitos, Peru, was in March of 1997. The season went very well but it was suggested that they consider conducting voyages in October. The reasoning for the suggestion is that March is the high water season for the Amazon River and October is the low water season. During the high water season the wildlife travels further inland and the low water season attracts the wildlife closer to the river, allowing better views for the tourists.

Exotic Adventures Inc. took the idea into consideration and had their Operations department evaluate the option in further detail. The main concern was that the water level would be too low for the vessel to make the journey. The vessels, which were previously used for research purposes, are great at navigating the waters but the water level must be able to accommodate a 14 foot draft. After thorough research, the company was assured that the water level had never gone below 18 feet, even during the low level season. Since that was plenty deep for the vessels to successfully navigate the river, they decided to offer the Amazon River beginning the...