please read this case, and then write a case study(Use case study format) I need 2 pages.

ARTICLE
HBR CASE STUDY
Did We Expand
Too Quickly?
The CEO of a climbing-gym chain rethinks its
international growth plan.
by Simon Greathead

REPRINT R1906X
PUBLISHED IN HBR
NOVEMBER–DECEMBER 2019

For the exclusive use of M. Hu, 2020.

This document is authorized for use only by Meiyi Hu in International Business Strategy Winter Semester 2020 taught by ERIC HUTCHINS, California State Polytechnic University – Pomona
from Jan 2020 to May 2020.

http://hbr.org/search/R1906X

RICARDO RUIZ COULDN’ T fall
asleep. It was his third trip to
Singapore—he’d initially come
to scout locations for the first
Asian outpost of his climbing-gym
chain, Ascendancy; had returned
for the grand opening a year ago;
and was there now to check on
operations. But the 23-hour flight
from Raleigh, North Carolina, via
San Francisco hadn’t gotten any
easier, and the founder and CEO
still found the jet lag brutal.

He had just given up and
gotten dressed when his phone
rang. It was Margo Little, Ascen-
dancy’s COO.

“You remember I’m in Singa-
pore, right? And it’s the middle of
the night here?” Ricardo said in
a teasing tone. The two were not
only colleagues but old friends
and climbing partners.

HBR’s fictionalized case studies present problems
faced by leaders in real companies and offer solutions
from experts. This one is based on the Ivey Publishing
Case Study “CircusTrix: The Ups and Downs of
International Expansion” (case no. W16832-PDF-ENG),
by Simon Greathead, Case Lawrence, and Jonathan
Richards, which is available at HBR.org.

CASE STUDY
Did We Expand
Too Quickly?
by Simon Greathead

Illustrations by RYAN GARCIA

“I wouldn’t have called if it
weren’t serious.”

Ricardo snapped out of his
fog. “What’s wrong?” he asked,
his heart racing. Had something
happened to his family? Was there
a company crisis?

“It’s Ascendancy Liverpool,”
Margo said, referring to the
company’s second UK location,
which had opened three months
earlier. “A novice climber didn’t
tie in correctly, fell from 15 feet,
hurt his back, and is suing us for
£4 million.”

“Didn’t he sign the waiver?”
“Of course he did. Our

lawyers say it’s a ridiculous claim
and will be thrown out. But it’s
all over the press. He says we
didn’t adequately warn him of
the danger or give him enough
instruction.”

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2 Harvard Business ReviewNovember–December 2019

For the exclusive use of M. Hu, 2020.
This document is authorized for use only by Meiyi Hu in International Business Strategy Winter Semester 2020 taught by ERIC HUTCHINS, California State Polytechnic University – Pomona
from Jan 2020 to May 2020.

“But we follow the exact same
procedures in every gym”—after
10 years, Ascendancy had 35
thriving ones in the United
States, plus three international
locations1—“and we’ve never had
a problem before.”

“I know. We’re highlighting
that fact with reporters and on
social media. I called to get you
to sign off on a statement. But I’m
worried that Liverpool will take a
big hit. Maybe Cardiff too. Given
how slow out of the gate those
gyms have been, we can’t afford a
PR crisis.” She hesitated, and then
spoke again. “Honestly, Ric, I’m
starting to think maybe we came
at the UK too fast.”

“What do you mean?” the CEO
asked. “This is one incident.”

“Yes. But it’s another warn-
ing sign. Why haven’t our UK

marketing campaigns worked as
well as the U.S. ones? Why aren’t
sales doubling month to month
like they’re doing in Singapore?
Why aren’t we getting the same
influencer traction we have every-
where else?2 And why on earth
would any reporter think that a
guy who fell because of his own
carelessness deserves a story?
I don’t understand this market.”

Ricardo ran a callused hand
through his hair. He’d been wor-
ried about the UK gyms too. That’s
why he hadn’t slept on the plane:
P&L review.

“Let’s focus on the problem at
hand—damage control,” he said.
“Send me the statement, and I’ll
review it ASAP. I’ll also book a
flight to Liverpool. It sounds like
I should be on the ground there.
You too. We’ll discuss the bigger
picture then.”

Ricardo ended the call. He felt
sick, and it had nothing to do with
jet lag. After all of Ascendancy’s
domestic success and the recent
win in Singapore, had the team
grown overconfident about its
ability to conquer new markets?

A HEATED DISAGREEMENT
Ricardo was still in Liverpool
a week later. The climber had
withdrawn his lawsuit following
reports that he had previously
injured his back in a nightclub
brawl and had tried to sue on that
occasion, too. But the gym still
wasn’t attracting the crowds the
team had counted on.

Ricardo had called a meeting
at the gym with Margo, who
was also still on-site; Charlie
Saperstein, the head of business
development, who was Skyping
in between visits to potential
locations in Amsterdam; and Kian
Chambers, whom they’d hired to
oversee Ascendancy Liverpool.

Ricardo turned to the local
manager first. “Kian, you know
this market best. What do you
think is going on?” He sensed the
young man’s hesitation and gave
him an encouraging nod. “Please
speak frankly.”

“Well, like I said when we
started, climbing is just catching
on here.3 My mates and I have
been doing it for years, but most
lads my age do footie or rugby or
cricket for sport, and the fitness
people are used to just treadmills
and machines. We’ve got to edu-
cate them, right? Plus, it’s winter;
when it’s dark by afternoon,
people don’t get out as much.
Even the athletic ones settle
down for a pint at home or at the
pub. And I know the lawsuit is
over, but I think it created a bit of
a scare and maybe some worries
that this big American company
was more interested in making a
few quid than providing a quality
experience. We get lots more
questions about safety now,
especially from mums. It’s gotten
even harder to fill the youth
classes.”

Ricardo grimaced. Young
adults, teenagers, kids—they were
Ascendancy’s bread and butter.

Case
Study
Classroom
Notes

1. The U.S.
commercial
climbing-gym
industry grew
by nearly 12%
in 2018, with
the launch of
50 new venues,
according
to Climbing
Business
Journal. Should
Ascendancy try
to match that
pace?

2. How might
business tactics
need to shift
for different
geographic
areas?

3. England now
has over 75
climbing gyms
in more than
60 cities.

Experience

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Harvard Business Review
November–December 2019  3

For the exclusive use of M. Hu, 2020.
This document is authorized for use only by Meiyi Hu in International Business Strategy Winter Semester 2020 taught by ERIC HUTCHINS, California State Polytechnic University – Pomona
from Jan 2020 to May 2020.

http://hbr.org

Charlie jumped in. “We knew
there would be challenges. But
we picked Liverpool precisely
because climbing gyms are new
there, because it’s not saturated
with competitors, because we
could start and lead the trend just
like we did in our U.S. cities.”

When the executive team had
begun its international push,
the criteria for site selection
had been simple: The company
looked for markets with English
as the primary or the dominant
secondary language and with
city-plus-suburb populations of
more than 2 million and two or
fewer existing climbing gyms;
populations of more than 1 million
and just one existing gym; or
more than 400,000 people and no
gyms.4 Liverpool, with more than
2 million residents in the metro-
politan area and only two small
climbing centers, had fit the bill.

“That strategy is working in
Singapore,” Charlie continued.

“We can’t open another gym there
soon enough. I’ve also found two
amazing sites in Amsterdam.
There’s a huge advantage to
being a first mover5—making
sure people get to know climbing
through our walls and equipment
and classes. We just need to give
Liverpool more time.”

“Cardiff too?” Margo chimed
in. “The numbers there are just
as bad.”

“They’re not bad—they’re just
not quite as good as we typically
see,” Charlie replied.

Ricardo frowned. “Not quite as
good” was unlikely to satisfy the
chain’s private equity investors.

“With the growth we’re
seeing in Singapore, and with the
success of the new Providence
and Nashville gyms—and maybe
Amsterdam, Manchester, and
Dublin next year—we can make
up for the slow start in Liverpool
and Cardiff,” Charlie said, his
enthusiasm undimmed.

“That’s not how we operate,”
Margo said, bristling. “Each gym
needs to recoup 20% of its initial
capital investment within a year
and cover its operating costs
within two.6 We’re not on pace
to do that here.” She gestured
at the three-story expanse of
undulating gray across from
the table where the group sat.
Only two climbers were on it,
gripping Ascendancy’s signature
neon holds.

“That’s how we’ve done it in
the past,” Charlie answered. “But
we’ve gotten some bad press here.
When you’re working in new
countries, different issues crop
up. Maybe we need to be more
flexible with our overseas oper-
ations—shift the goals and the
model to a portfolio approach.”7

“Or maybe we should hit
pause on our international
expansion—take a little more
time to understand the markets
we’re entering,” Margo retorted.

4. Are these
criteria
adequate? What
other data might
Ascendancy take
into account?

5. Some studies
have shown that
a company can
gain a significant
advantage by
being the first
big player in its
sector or geog-
raphy, through
technology
leadership or
the acquisi-
tion of prime
resources. But
experts note that
first movers have
a mixed track
record, and often
it is followers
who succeed in
the long term.

Experience

4 Harvard Business ReviewNovember–December 2019

For the exclusive use of M. Hu, 2020.
This document is authorized for use only by Meiyi Hu in International Business Strategy Winter Semester 2020 taught by ERIC HUTCHINS, California State Polytechnic University – Pomona
from Jan 2020 to May 2020.

“Perhaps consider more factors
than language, population, and
competitors, and start way earlier
on the education and outreach
that Kian talked about. This is a
$50 million company now. Why
would we change the model that’s
gotten us to this point? It’s the
aggressive growth plan we should
be rethinking.”

“And let rivals like Kilimanjaro
and Triple Peaks pass us?8 They’re
looking at Europe too.”

“I get the urgency, Charlie,”
Margo said. “But I don’t think
we need to move quite as fast as
you’re suggesting.”

Ricardo had never minded
having his team engage in heated
debates, but he saw that Kian was
starting to look uncomfortable.

“OK, you two,” he said. “It’s
clear where you stand. Charlie,
go ahead to your next meeting.
Margo, we have a plane to catch.
And Kian, let’s get you back out
on the floor.”

As Margo took calls from vari-
ous local managers on the way to
the airport, Ricardo replayed the
earlier discussion. He couldn’t
imagine telling the board that he
wanted to change the company’s
accounting practices to allow for
more-modest single-gym targets,
nor could he see suggesting that
the global strategy they’d approved
the previous year needed to be
completely revamped. Neither
was a good option.

KIDS ON THE WALL
What Ricardo loved most about
climbing was that it required so
much focus you couldn’t think
about anything else. Toe on this
foothold, hand on that jug, find
another hold, stretch for the next
grip. He was on one of the tough-
est routes at Ascendancy Raleigh
and was almost to the top. If it
was a choice between climbing
and lunch, he always chose the

former and ate a few energy bars
at his desk.

Suddenly he heard cheering
from below. It was the first day of
his kids’ December school break,
and his wife, Emily—who was also
Ascendancy’s head of program-
ming9—had brought them in for
an afternoon of climbing.

“Just in time!” he shouted
as he grasped the final hold and
slapped the top of the wall. The
kids continued cheering as he
rappelled down and high-fived
him on the ground.

“Can you stay and watch for a
bit?” Emily asked.

“Sure.” Ricardo smiled; his
enthusiasm for the sport had
rubbed off on the family long ago.
“Fifteen minutes here, a quick
shower, then on to my next call.”

Once the kids were tied in and
climbing, Emily turned to busi-
ness. She had taken the day off,
but the company’s UK challenges
were worrying her, too.

6. Is this a
reasonable
per-location
hurdle rate?

7. What are the
pros and cons
of changing
the individual-
location ROI
requirements?

8. How
much should
Ascendancy
worry about
competitors?

9. With his
wife as head of
programming
and an old friend
as COO—both
also enthusiastic
climbers—does
Ricardo have
enough diversity
on his executive
team?

FOR ARTICLE REPRINTS CALL 800-988-0886 OR 617-783-7500, OR VISIT HBR.ORG

Harvard Business Review
November–December 2019  5

For the exclusive use of M. Hu, 2020.
This document is authorized for use only by Meiyi Hu in International Business Strategy Winter Semester 2020 taught by ERIC HUTCHINS, California State Polytechnic University – Pomona
from Jan 2020 to May 2020.

http://hbr.org

“What’s the latest on Liver-
pool? The last I heard from Kian,
classes were still at 50% capacity.”

“It’s slow,” Ricardo answered.
“Is it fallout from the lawsuit?

Or are the English less into climb-
ing than we thought?”

Ricardo hesitated. “I’m really
not sure. We’ve upped the market-
ing. Kian is working his connec-
tions. But it’s just not picking up.”

“And Cardiff?”
“Slightly stronger. But not like

here or Singapore.”
“What’s going on with

Amsterdam?”
“Charlie just emailed. He’s

negotiated two potential con-
tracts. He wants me to visit this
week, sign one this month, prep
the site this winter, and start
construction in the spring.”

“Are you comfortable moving
that quickly?”

Ricardo looked at his seven-
year-old son, who was already
high up on the wall. Mateo was
a risk-taker, trusting his gut and
usually ascending in record time.
Maya, 10, was more cautious. She
climbed at about half Mateo’s pace
but never slipped or fell.

In climbing and in business,
Ricardo had always been like
Mateo. But he was starting to won-
der if under Ascendancy’s current
circumstances, Maya’s strategy
made more sense.

Reprint Case only R1906X

SIMON GREATHEAD is a professor at Brigham Young
University’s Marriott School of
Business.

Should Ricardo press on with or pull back
from his international expansion plans?

Experience

6 Harvard Business ReviewNovember–December 2019

For the exclusive use of M. Hu, 2020.
This document is authorized for use only by Meiyi Hu in International Business Strategy Winter Semester 2020 taught by ERIC HUTCHINS, California State Polytechnic University – Pomona
from Jan 2020 to May 2020.

http://hbr.org/search/R1906X