Ski-Boats Industry

Ski-Boats Industry

Ski-Boats IndustryPresented to, Mr. Ahsan Durrani

Presented by,M. Aurangzeb Siddiqui (26949)Mohommad AliQ1. What are the industrys dominant features?

Market Size and Growth: The skiboat industry is a very big industry estimating sales of $25.6 billion in 2000, an increase of 15% from 1999, the industry had face steady growth since it was emerged and the position of this industry in life cycle lies in early maturity, because they still have to be in state of mature.

Scope of Competitive Rivalry: There are number of rivals and competitors in this industry. Some rivals compete on the innovation they bring to the industry and some compete on fewer prices

Number of Rivals: This industry is dominated by few firms as this industry provides expensive and luxury item so their target audience is niche.

Buyer Needs and Requirements: Buyers of this industry are specific, not everyone will buy skyboat. Whole seller plays an important role, they sometimes educate buyers as well, buyer want innovative products, high on technology and low on consumption.

Degree of Product Differentiation: Rivals are consistently coming up with differentiated products, new ideas and some firms have made price their differentiated competency to attract more buyers.

Product Innovation: R & D and Product innovation is the most important part of this industry and there is an opportunity for first movers to grab the big share in the market over their competitors.

Pace of Technological Change: Technology is another important major factor in this industry, upgraded equipment has been the core competency in this industry. To survive in this industry you have to be ready for technological challenges that come across your way.

Economies of Scale: In this industry Organizations with high volume have significant cost advantage over small scale firms.

Learning and Experience Curve Effect: Master Craft and Correct Craft being pioneer of the industry have significant edge over other competitors because of their experience in the industry

Q2. Porters Forces acting on the industry. Draw your conclusion about the industryThreats from buyers:-Backward integration.There are substitute available in the market.Product differentiation and product innovation.Brand identity is another very important factor.

Threats from suppliers:-Suppliers are concentrated.Presence of substitute seller in the market.Impact of inputs on costs in big way and also differentiation.Threats from substitute:-Switching cost.Price performance trade off of substitutes.Innovative and high on technology are appreciated by customer immediately.

Threats from Competitors:-Difference in products attributes.Fixed cost or Value added features or services.Brand identity.Intermittent over capacity.

Threat of New Entrants/ Entry Barriers

FactorsHUFAMUFANeutralMFAHFAcommentEconomies of scaleCapital require redAccess to distribution channelsExpected retaliationDifferentiationBrand LoyaltyExperience CurveGovt. Action

small

Low

Ample

LowLow

Low

InsignificantLow34

45

55

55large

High

Restricted

High High

High

SignificantHighExit BarriersExit BarriersFactorsHUAMUANeutralMAHACommentsSpecialized AssetsFixed Cost of ExitStrategic interrelationshipGovernment BarriersHi

Hi

Hi

Hi52

3

5LOW

Low

Low

LowCompetitive Rivalry

FactorsHUFAMUFANeutralMFAHFACommentComposition of CompetitorsMkt. Growth rateScope of competitionFixed storage CostCapacity Increase

Degree of differentiation

Strategic StakeEqual Size SlowGlobal

High

Large

Commodity

High4444

45Unequal SizeHighDomesticLow

Small

High

Low

Threat Of Substitute Product

FactorsHUFAMUFANMFAHFACommentThreat of Obsolescence of Industrys productAggressiveness of substitute products in promotionSwitching CostPerceived price/ value Hi

Hi

Low

Hi4

445Low

Low

High

LowPower of Supplier

FactorsHUFAMUFANMFAHFAcomment# of important SuppliersSwitching cost

Availability of substitutesThreat of forward integrationImportance of Buyer industry to suppliers profitQuantity purchased by the industry of suppliers product Suppliers product an important input to the buyers businessFew

High

low High

small

low

Highly Important13

44

4

4

Many

Low

high Low

large

High

Less important Power Of Buyer

FactorsHUFAMUFANMFAHFACommentNumber of Important buyersThreat of Backward integrationProduct suppliedSwitching cost% of buyers costProfit earned by buyerImportance to final quality of buyers Pr.

Few

High

Commodity

lowHigh

Low

High124

45

5

Many

Low

Specialty

highLow

High

lowOverall Industry attractiveness FactorsUnfavorableNeutralFavorableEntry BarriersExit BarriersRivalry among existing firmsPower of buyersPower of SuppliersThreat of substitutes4.53.754.153.53.34.25Conclusion.The Industry is highly favorable as,There are high capital requirements, strong brand loyalty and differentiation and restrictive government policies.The product of rival sellers are strongly differentiated and sales are concentrated among a few large sellers.Substitutes exist in a variety but due to prices substitute wont affect the actual product.Industry members account for a big fraction of suppliers sales.Buyers are small and numerous relative to sellers.

Q3. What are the three or four major drivers of change?

Technological change and manufacturing process Innovation: Major driver for change.Advance method of techniques for manufacturing.For survival, updated products needed.V-engine and EFI engine.Entry or Exit of a Major Firm: Few sellers.First-mover enjoys the share.Entry or exit of any competitor effects the profit of every other competitor.Regulatory Influences and Government policy changes:

Safety, courtesy and environmental issues become more prevalent and regulatory authorities start taking it serious.In 1991, Floridas Department of Natural Resources proposed legislation to establish a speed limit of 30 mph.In response to this, USA water ski created a Water ways education committee to educate people about boating, legislation and teaching them how to organize them and how to follow the regulation in this industryProduct and Market Innovation:The most important factor in water ski boat industry.Malibu is known for its innovation and quality.Correct Craft and Master Craft has been the innovator and pioneer in the industry.Master Craft has somehow maintain there number one position but Correct Craft faces huge loss in 200 because of its poor marketing strategies.Product innovation and market innovation is the most important factor as new ways and technology is consistently coming in this area.Few ModelsMany ModelsHigh PricesLow PricesMaster CraftsMalibu BoatsCorrect CraftSkier ChoiceTige BoatsCenturionInfinityAmerican Skier (Elan)Q4. What are strategic groups within the industry?

17The strategic groups within industry two industry are now competing on high prices and many models. Mastercraft the oldest and innovator and Malibu who just cross the correct craft and now competing with top most ski company. They both are making 15 models in the industry. Dealing in wholesale and retail. However Correct craft are now emphasizing on better product line to compete with top 2. Correct craft is now a chart of high prices and few models. Ski industry there are many companies but these are the most top companies including infinity and American Skier which are part of strategic group

Q5. What are the major Key success factors in the industry?

Product Innovation: Correct craft became the innovator of tow-boats and Ski Nautique and enjoy the second position for almost a decade.Malibu boats over take Correct craft position by their consistent image of being innovative.As this is a luxury product, its expensive in fuel consumption and maintenance, buyer needs low consumption and high on technology products.EFI and V-drive engine is the latest innovation which gives speed boats one of innovation that customer go for.

Price and Quality:Price and Quality is also one of important factor that leads to success, in this industry Malibu boats have managed to prove that.Because there are very mechanics of skiboats and prices are very high, so customer wants a quality product.Many competitor competes on low prices and thus cutting edge of major manufacturersSuccessful product positioning:The market is concentrated, only successful positioning gives you profit.These products should be positioned in cold areas where there are more seas.Should be targeted those regions, where this sport is being supported.Target audience of this industry mainly lies in America, Canada, Australia, West India and some part of Africa.Successful promotional programs:People are not well aware of the products.People need to be educated about water ski industry.More than 60% of customers are attracted by boat shows.Giants like Correct craft face loss due its poor promotional programs.Ability to manufacture/assemble or customized to buyer specification:Buyer requires customization.Malibu boats have been keen in customizing for their customer specifications.Advance methods of manufacturing according to customers perception is the key success factor in this industry.Strategic FactorsWeightMaster Craft(rates)Weighted ScoreMalibu Boats(rates)Weighted ScoreAmerican Skier Elan(rates)Weighted ScoreProduct Innovation0.330.941.220.6Price & Quality0.1540.630.4530.45Successful product positioning0.240.830.610.2Successful promotional programs0.2530.7520.530.75Ability of customization0.120.230.310.1Total13.253.052.1Competitive Profile Matrix