In 2003, William Aldo found an opportunity to enter the skateboard business. Prior to becoming a Canadian chartered accountant (CA) and specialist in mergers and acquisitions, Aldo was an avid skateboarder, winning numerous competitions in his teens and early twenties. Through his Cancon Group of companies, he dealt with a base of clients who had businesses that they were looking to sell or expand. As a result, Aldo was on a first-name basis with numerous entrepreneurs. That year, a friend called Aldo with a proposition. One of his clients had died suddenly, leaving behind a chain of skateboard shops located around British Columbia, but mainly in smaller cities and suburbs around Vancouver. The individual had not planned for any successors to carry on the business. There were 13 stores with sales of about $4 million (CDN) per year. Although Aldo was making a good living as a consultant, he decided to combine his business expertise with his skateboarding passion. Aldo could see the potential for profits. Skateboard shops in smaller cities did not face the same amount of competition as did stores in Montreal, Toronto, and Vancouver. Also, some of the 13 stores were exclusive sites in smaller shopping malls; these generated higher profit margins. But more importantly, Aldo recognized the need to provide experienced boarding technicians to tune and maintain the increasingly technical boards and components. He hired only accomplished boarders as technicians and sales associates. Once Aldo acquired the board shops, numerous opportunities popped up. With Working Ventures as an equity partner, and cash flow generated from his existing stores, Aldo began a West Coast buying spree, acquiring first KickFlip, a skateboard chain in Seattle that went bankrupt. When the owner of SoCalBoards in Los Angeles died, Aldo purchased the chain of 22 stores, along with its wholesale division, warehouse, and experienced technicians and administrative staff. He purchased a chain of 17 stores owned by SFSkate in Northern California, and then 80 stores run by Rokers in Oregon. Aldo recognized that technology was changing rapidly. He believed that web-based skateboard sites soon would be his primary competition for boards, components, and accessories. Although his own company, BoardingXtreme, did not have the necessary expertise or experience to enter that market, Aldo knew of two young entrepreneurs, Daniel Cohen and Steve Birch, who did. In 2003, Cohen and Birch had started a mailorder skate boarding catalogue business in the basement of a suburban home. With their mail-order marketing, they had brought a huge selection and competitive pricing of board accessories, clothing, shoes, and protective gear, usually reserved for urban centers, to rural communities. Their next step was to launch a website in 2009, under their name SkateBDS.com. This website enabled them to put their 2,500 item catalogue online.
Through a share swap, Aldo acquired the website and the ‘SkateBDS.com’ domain name. In the summer of 2011, Aldo brought in Sally Lane, a veteran of the food distribution business, as president and chief operating officer of SkateBDS.com. Lane and Aldo then renamed all their skateboard shops in British Columbia, Oregon, Seattle, and California ‘SkateBDS.com.’ The bricks-and-mortar locations provided millions of dollars of inventory to online shoppers, with a quick turnaround time. In addition, a decade of experience in providing technical skateboard equipment and maintenance was transferred to the online market. SkateBDS.com’s strategy was to add value to the customer through a large selection, competitive pricing, and access to skilled professional technicians. Anyone buying over $50 (CDN) of merchandise online at SkateBDS.com could live chat with a technician about tuning their board. The Internet opened up global markets to the initially 100 percent Canadian company. By 2012, SkateBDS.com Inc. had 110 stores across North America, a global online presence, generated over $150 million (CDN) in sales per year, and was a publicly traded company. In 2013, SkateBDS.com was acquired by a billion-dollar private equity company that owns similar specialty sporting goods retailers with both physical and online stores, catering for skiing, snowboarding, tennis, skating, and running.
a. Refer to the framework for organizational change in Figure 1.1. Using this analytical framework, outline why and how SkateBDS.com adapted to its environment, and its strategies to achieve customer value.
b. What is the role of management accounting in supporting the firm’s strategy to create organizational value? In discussing this question, consider both the financial and non-financial information that SkateBDS.com would find useful. Sources: http://www.warehouseskateboards.com/ (accessed May 28, 2015); http://theskateboardstore.com/ (accessed May 28, 2015).
