PREMIER’S TEACHER SCHOLARSHIP REPORTS
Premier’s ABN AMRO Business Studies, Economics
Scholarship
Businesses that students can both study
and implement: A look at businesses
involved in surfing and/or leisure
Greg Hannelly
St Edwards College, Gosford
Sponsored by
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PREMIER’S TEACHER SCHOLARSHIP REPORTS
Introduction
The purpose of this study was to highlight the many surf and leisure businesses that are available
to students who exhibit a passion or interest in these areas. Students should be able to learn
about the business world within the context of their own experiences and with the idea that one
day they indeed might be managing their own venture. This is why I selected surf and leisure as it
is one area that students both understand but more importantly have skill, knowledge and
passion. Additionally I have attempted to explore the differences in culture and if a business can
still operate successfully yet maintain their value and or act ethically. Once I commenced this
study it soon became very apparent how the internet is such a vital component of small business
and as teachers we need to be aware of this and include this aspect where possible into our
business units.
The surf business is now a billion dollar industry that has until recently been a typical cottage
industry comprised of many small differentiated businesses. In many ways this industry
represents a monopolistic market. There are many small operators involved in things such as surf
board manufacturers and shapers, clothing businesses, surf trip safaris, travel operators, wet suit
makers and surf schools. The entry point is relatively easy, requiring minimum start up capital
and is labour intensive.
My trip commenced in Queensland to get a first hand examination of Billabong, a surfing based
small business and a student based business before travelling to the United States to experience
the growth in their markets. In New York I attended the New York Stock Exchange (NYSE),
GAP and SA8000 - a group encouraging social entrepreneurship. After interviewing a student I
realised the importance of the internet so I completed online marketing courses at LMU
University, Los Angeles and the University of Hawaii. I had to look at the whole culture so I
visited Hawaii to experience a culture and local business course and learn about the latest
developments in environmental surf products.
Business Recognition
My first Australian interview places the whole surfing business into perspective; it is now a part
of tertiary studies or academia. In recognition of the business potential of surfing, the Southern
Cross University (Tweed Heads campus) in 2004 introduced surfing studies as part of its existing
Sports Management Diploma. I was able to visit the Tweed Heads campus, the class and discuss
the course with the Co-ordinator who incidentally is a non-surfer. This course operates from a
business perspective. Students are drawn from around the world and ages range from first year
out of school to 51. Subjects covered include event management, small business management,
business plans, culture and, of course, surfing (teaching accreditation) at the famous Bryon Bay.
On completion of the diploma students can pursue more traditional business degrees and many
will seek employment within the expanding big surf companies. The ethical issues of
environmentally damaging materials in surfboard design, market share of the four large
companies and offshore labour production were rigorously discussed.
Small Developing Surf/Leisure Business
To link my study to our Stage 5/6 students I wanted to investigate small embryonic businesses
that were owner occupied and either in the establishment or growth stage that were associated
with surf and leisure. This would provide an example of the pathways available before I looked at
the large global operations.
My first small business study was from a Year 11 business student. His story shows how young
people exhibit both energy and entrepreneurial skills, however are not always aware of the legal
ramifications involved in a business. The 16 year old from the Sunshine Coast in Queensland,
had a dream to commence his own business venture while still at school. The business idea came
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as a result of research conducted on e-Bay and other clothing websites. He sourced
supplies of hats and t-shirts from suppliers in the United States and placed orders online.
Dan was inexperienced and has made many mistakes along the way. Some of these have
been:
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One shipment was lost and was only found two hours before the markets,
meaning he had no time to check and sort out the stock
Sales at markets are very sporadic with some rushes which makes it very difficult
to keep up with how specific stock is selling
Customs became aware of the sales and Dan was in breach of various regulations
and had to pay duties, the company from the US thought he may have been a big
dealer. Dan had to consult a lawyer to clear up this matter. Additionally he had
difficulty with selling on the My Space site
Noosa Longboards
This retail outlet opened in 1994 and operates within the heart of Noosa a well known
and historical surfing spot in Queensland Sunshine Coast. The Noosa Longboards retail
store operates a number of surfing functions such as:
 sale of traditional surf boards (one timber)
 hire of surf equipment
 Noosa Longboard brand clothes and accessories
 surfing memorabilia
 surf lessons.
Noosa Longboards does not rely on volumes but through their own brands (clothing,
surfboards and accessories) and unique product range encourages repeat business from
their customers. It is an example of relationship marketing. They have only recently
stocked (small percentage) mainstream brands like Quiksilver to increase their customer
base amongst the youth. Hence, the Noosa Longboards brand is marketed as an iconic
and increasingly famous surf brand. In fact, they do receive internet orders for their
products from around the world. This marketing tool is offering potential for
tremendous growth for this business in the years to come. This successful business has
allowed the owners to continue a passion and interest and make it part of their lifestyle.
Solace, Surf Art and Life
This surf business has been going for only two years but appears to be a true surfing
experience business. The two owners behind the concept share a love of surfing and art
and have gathered a number of local suppliers/networks who support the business
through their products. In store promotions are used by Solace by organising artists
visiting to offer advice and tuition. The business is still in its infancy, although the
internet is assisting the business to communicate with their small band of very supportive
customers. Customers are increasingly geographically widely based and the use of
newsletters and promotions keep them close to this business.
I was now ready to turn my attention to the already established global surf business.
Billabong was a very obliging partner and gave me interviews in both Australia and at
their US headquarters in Irvine.
Billabong Ltd
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Billabong Ltd has grown its operation both domestically and abroad since 2001. From all
of the companies in the S&P/ASX200 index Billabong is one of only four who have
delivered reported basic growth of 12 percent or more each year. Sales in the United
States market grew by 22.3 percent, although the earnings were down slightly from the
previous year due to a softer early summer sales (element dropped sales). Sales of
Billabong stock in the US account for 40 percent of their worldwide sales according to
Citi Investment.
Herein lies the contradiction of the extraordinary business. The Billabong Group is an
extremely successful international company that delivers returns to their share holders,
complies with all Australian Securities Exchange amongst their corporate governance
procedures, continues to expand internationally and still enjoys a unique relationship with
their target market (under 25) that support the brand almost unanimously. Billabong
Australia deliberately operates within their target markets parameter. All images and
Australian designs are locally produced and a tour of the plant will see a predominantly
youthful staff, dressed very casually and energetic (Luke Egan was there on my visit).
New York Stock Exchange
An examination of the global market would not be complete without a visit to the New
York Stock Exchange (NYSE), exchange to over 2800 stocks and just under 1000
brokers (down from 1300). Since September 11 public access is prohibited and I had to
arrange a time with the education unit to attend lectures. In this case I joined business
students from the Texas Ag and Engineering University. The presentation was high
powered covering topics from History, listing of NYSE, crash of 1987, GAP, stock
specialists, September 11 and global expansion. The highlight was pairing up and talking
to brokers of the floor. The experience was mind blowing as my broker shared some of
his trading secrets whilst at the same time observing Belmont Racing Club ring the
opening bell to the days trading.
The US Market
The primary motivation for any Australian business entering the US market (flat) is its
size and potential for growth. It is seen as a “cash cow”, and as a further bonus,
Australian brands are very popular and perceived as unique. Credit for this aspect has
been celebrities such as Kylie Minogue and Steve Irwin, and Australia’s reputation for
surfing and water activities. The recent changes to the Visa allocation (raffle) have also
encouraged greater numbers of Australians to seek promotional positions in the US.
However the US is also very difficult to pick, the market is culturally very diverse and
established businesses command enormous market power and marketing budgets.
Despite this, Quiksilver in particular has been very successful. It is now rated the forth
largest company in terms of brand definition the US by Force behind power brands such
as Nike.
The New York retail experience is something every Business/Retail/Commerce teacher
should experience, and highlights the point of the US market being very different. I was
fortunate enough to gain permission from both Billabong and Quiksilver to spend time
in their stores and observe sales promotions, staff performances, retail operations and
culture. The stores in Times Square NY are more a retail theatre than a surf leisure store.
The stores are more like a huge time zone entertainment venue than a surf shop. There
are films and surf stars on huge digital screens on roofs, walls and the exterior. In the
Quiksilver stores there are computer games (play stations) and customers are able to play
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PREMIER’S TEACHER SCHOLARSHIP REPORTS
while they shop. The New York market is the busiest and competitive retail market in the
world.
Staffing
The first thing noticeable is the cultural makeup of staff compared to Australia in
traditional surf shops. In the Quiksilver store staff was from a variety of cultures
(Philippines, African American and Latino), while in Billabong Times Square none of the
staff actually surfed. What became evident were the energy and sales techniques applied.
Staff would personally greet the customer as soon as they entered the store and engage
them. There was an expectation to engage the customer and build a sale quickly.
Culture
The NY market is certainly not a surf market. It is comprised of US tourists, overseas
tourists and locals. They shop differently to Australians. They can be very demanding
and are very quick to express their views and approach staff for assistance. Their
shopping habits are also very different. I was warned to expect a spike in demand at
around 5pm and wasn’t prepared for this. The store was absolutely packed; it was
nothing for staff to be serving six customers concurrently and queued out the door to
make payment. This lasted on the night I was there to 8.30pm, and some nights this goes
much later and it wasn’t even summer.
Surf and leisure clothes differ considerably in the United States to Australia. American
Billabong and Quiksilver design their own clothes. The American youth wear baggy and
bigger clothes than in Australia and darker clothing range. However Quiksilver have
adopted greater Australian influence and have noticed a slight change in the American
market towards the Australian fashion.
I was fortunate to visit two surf museums to gather historical data on the importance and
influence surf has had on many businesses such as music. The two museums were
located at Huntington and Haliewa (Hawaii). Interestingly both places were towns and
their associated businesses were completely built on surfing.
Huntington is the spiritual home of surfing in the United States. The museum had music,
surf equipment, photos and various pieces of memorabilia and history of surfing. The
manager was a historian of some note and was able to refer to how Hawaiian surfers
introduced surfing to the region at the turn of the century. There was one request from
the manager next time I visit I have to bring some sand from Australia. The Haliewa
museum focused more on water craft and the significance of the early Hawaiian surfing
pioneers. These people are revered as part of mainstream culture.
Today Huntington Beach is a thriving surfing and business community. The town centre
has memorials to Duke Kahanamoku; there are Hollywood type stars in the pavement of
famous surfers, and the business community works together in many promotions such as
weekly concerts and celebrities. In July for the Association of Surfing Professionals or
ASP competition, there are an estimated 500,000 visitors. Surf provides an economic
boost for this region; indeed many small businesses were employing extra staff for the
busy summer period.
The Haliewa surf community is a historic town that embraces business, surf culture and
increasingly strong environmentally ethical behaviour. During two days I was able to
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PREMIER’S TEACHER SCHOLARSHIP REPORTS
attend the local business conference, meet with a variety of business people, attend
meetings, discuss their culture, business experiences and spend time in their particular
enterprises. Some aspects that I learned (which are crucial to any student commencing a
business) from this conference were:
 surfing dominated all their businesses
 to establish a business in this region you HAD to engage in the local community
 there was an extremely strong relationship marketing with all the businesses
involved in cross promotions and community information
 events were organised and funded by all businesses
 local surfing businesses had a social responsibility to provide leadership in the
community to maintain the environment and promote the brand on Haliewa and
the North shore
Hawaiian Market
Surfing originated in Hawaii, the legend Duke Kahanamoku being the most famous
surfer and swimmer of all time. There is no other state or country where surfing is such
an integral part of their culture and lifestyle. In fact, at the turn of the century surfing was
banned by the visiting missionaries. Everyone surfs and most people are involved in a
variety of water sports. It is completely different to the mainland US market. The
Hawaiian market is divided into the famous tourist strip of Waikiki and the surfing
capital on the other side of the island, its the north shore.
Throughout the experience of Waikiki business there was an awareness that the real
surfing business was in fact on the north shore. The business conference I attended at
the Hilton was very disappointing and not of any benefit to business education in
Australia and hence I cancelled days two and three and was directed to the Haliewa
Business community and through plantation surf was able to attend their workshop and
meetings.
Education in the US
Whilst in Los Angeles (LMU University) I was able to make contact with teachers from
the Pacifica Region in San Francisco. In the US teachers are under pressure from
authorities to lift standards. Interestingly, in the Pacifica region schools were still below
the national average. Schools were also under funding pressures with government grants
reducing given the federal finance crisis. Schools through parent groups were raising
funds to make up the financial short fall; this will create further inequality in the future
particularly for schools in the East Los Angeles region.
Having successfully completed the marketing online course (see Economic and Business
Educators magazine for the article) I enrolled in a course the inclusive classroom. This
course is aimed at developing skills to engage students of all abilities and disabilities in
my classroom.
In Hawaii I visited the Damian Memorial High School, named after Father Damian from
Molokai. In this visit I met the Principal who gave an overview and tour of the facilities.
As in the mainland, schools sit for the SATs, have continual testing and are underfunded, requiring fundraising for updated technology. I spoke to both the remedial and
at the other end the high academic Math students who were attending Summer School.
They were aware of Australia and the indigenous people.
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Ethical Behaviour by surfing businesses
One would expect surfing companies heavily promoting their social behaviour. In fact,
Billabong’s commitment to social awareness and corporate governance is only found in
the corporate section and not in the retail marketing. Their view is that the youth market
can be turned off very quickly by businesses making a fuss about their commitment to
the environment. Outsourcing is a major component of all global surf companies. Issues
such as sweatshops, child labour, harmful labour practices and environmental damaging
manufacturing processes can not only threaten a business ethics but also can result in
loss of consumer support. In order to ensure standards were complied Billabong
approached SA8000 Human Rights at Work, an organisation promoting social
accountability.
I was fortunate to visit their headquarters in New York and not only examined how they
worked with Billabong but also their work with GAP. SA8000 promoted co-operation
amongst all stakeholders, highlighted the benefits of the concept of social
entrepreneurship and were self funding charging fees for their services. There is now a
data base of some 8000 suppliers who are accredited as being responsible by SA8000.
For companies such as Billabong they can be confident there will not be stories that
cause major damage to their branding. SA8000 focus on a positive and co-operative
approach and originated from lobbying from various consumer and labour groups.
The issue of social responsibility that continues to arise is the environmental harming
products used in the production of surf boards. The modern petroleum based polyester
boards are certainly not environmentally friendly. I was very fortunate to visit the
business Country Feeling Surfboards on the North Shore. This business produces surf
boards using foams made from sugar and soy, hemp, organic cotton, silk and bamboo
cloth and plant based and solar cure resin. The owners have marketed the boards by
giving boards to surf shop team riders and promoting the eco friendly products in the
surfing town of Haliewa. It is a perfect opportunity to the surfing industry to become
social entrepreneurs.
Conclusion
In all business based courses there must be an emphasis placed on practical field studies
to enhance the theoretical approach. The business world is just so dynamic and
challenging that ignoring this aspect would be neglecting the true value of education.
Students should be able to learn from the various practical experiences unique to our
subject area. I believe in this point even more fully after my study.
Students should be willing to see how the business world is changing and often at the
forefront of change in society. This is the primary aim of my study, to encourage
students to undertake studies and plan their own business operations on what they know,
enjoy and have a passion in. In this case I looked at surfing and leisure and these areas I
believe will certainly expand rapidly over the next decade.
Some new aspects arising from my study that I was not aware of include:
 Students can have a career in the surfing world.
 All businesses regardless of their size can compete given the internet.
 Young people can certainly (with guidance) operate very successful businesses.
 Australian businesses can compete successfully in all global markets.
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The surfing and leisure industries provide opportunity, revenue and the chance
for young people to enjoy the challenge of the business world.
Established Australian businesses virtually have to start from establishment stage
when entering a new market.
The concept of social entrepreneurship is increasing and offers great hope for the
future.
In many small businesses the owners MUST become a part of the community.
The developing world can be protected from breaches of Human Rights with the
aid of consumer and lobby groups.
Above all I love teaching Business Studies because it allows an investigation into current
and challenging economic, cultural and social issues. The use and evaluation of case
studies that are of interest to students will create educated, informed and more socially
aware future leaders.
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