David Waters intended Honolulu-based Centaur Zone Cafe to be the prototype of an international franchise of coffee houses. He opened his first coffeehouse right next to Hawaii Pacific University in October. After a slow beginning, college students found the coffeehouse, and Waters made enough to pay the coffeehouse bills, but then came summer and his customers went home. But by the time students returned, Hawaii’s poor economy was entering its seventh year of decline and the coffeehouse was running at a net loss. Waters failed to see that a year-round business could not depend on college students nor did he take into account the Hawaiian economy. He was in which stage of organizational decline?