Strategic Management SKI BOAT INDUSTRY

Strategic Management
Supra Boats and the Competition Ski Boat Industry
Minor Case: 1

Group Members:

Kiran Panjwani
Perwaiz Ali 7241
Shumaila Meer 7583
Urooi Bibi 7218

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Strategic Management SKI BOAT INDUSTRY
STRENGTH:
S1: CAD/CAM techonology..
S2: Highly segmented market was dominated by bata.
S3The batnagar factory was the only indain shoe manufacturing unit to receive the ISO 9001 certification.
S4: Bata india accounted for 78% of the canvas and rubber footwear exported from india.

http://www.sebi.gov.in/dp/bata.pdf
THREAT:
In early 1995 , when Mr. W K Weston took over as a managing director of Bata India Limited, it was not a very cosy situation.
In the past three years , it had been caught in the rough.
The opening up of the india economy was bound to give rise to an aberration in its performance.
The government set up the murthy committee to suggest ways to enhance its prospects. O
International shoe majors such as Addidas, Nike, Reebok and Puma did trigger off an interest in sports shoe in india but had fallen for
short vis a vis their own projections or returns
Puma was launching shoes in india through its licensee Carana ltd.
Carona had plans to launch a product priced around Rs 600 to a popular range from bata’s power.
changing fashion
A major threat came from china who manufactured low cost, low quantity footwear.
The prices of raw material like natural rubber, PVC textiles and raw hides increased by an average of 50% during the year.
Caught unawares, bata increased prices by as much as 20% which resulted in a 10% slump in sales
STRENGTH:
CAD/CAM systems , these laboratories constantly looked for new ideas to keep pace with the changing fashion.
The company had been the undisputed market leader for nearly sixty years.
Bata’s clarity in formulation and implementation of its strategic objectives had put the company in good stead in the past.
India shoe industry was a fourth largest foreign exchange earner, with a minimum import content.
Highly segmented, the market was dominated by bata.
The batnagar factory was the only indain shoe manufacturing unit to receive the ISO 9001 certification.
Bata india accounted for 78% of the canvas and rubber footwear exported from india.
WEAKNESS:
The premium shoe segment had shown lackadaisical growth over the years with hardly 3% share of the market.
Their brand image was not strong enough to attract the required number of consumers.

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OPPORTUNITIES:
In the early 90’s exports boomed and consequently margins shot up for major players.
India has abundant raw material supply and technical competence to process hides and skins from any source.
Despite the onslaught of foreign brands in the domestic market, exports of footwear had shown above average growth.
India foot wear manufacturers had an advantage over the other countries in terms of quality of raw materials which included goat, red
hair sheep and calf skins and also the availability of good tanning skills.
Moreover, the availability of highly trained labour and comparatively lower wages made india a better sourcing base.
With international giants entering the market, the indain shoe industry underwent a major upheaval
The industry could be divided into leather and non-leather segments which in turn could be broken down in to casuals, sports, formals
and specialized ( kids, ladies,etc) shoe segments.
The causal shoe segment which included moccasins, chappals, sandals, women’s footwear and other shoes made with PVC or TRP
soles, was the fastest growing estimated at about Rs, 550 crore.
Adidas launched its shoes in india in November 1996 and was sourcing its products from lakhani indai ltd.

ST or GROWTH POTENTIAL:
But the bugs have been fixed and the company shall continue to grow in the future.
ST:
Bata’s mid 90 strategy to upgrade its product profile and target the premium end market backfired.
Its huge unmanageable workforce and distribution network has added ti iyts misery.

WT:
A number of Indian brands such as Liberty, Phoenix and Action found a market for their own offerings in the segments and were
doing well. Ironically, their success was largerly because of the increased awareness of sports footwear that the global brands created.
OW:
The obvious way out was to cut prices to below Rs 1000 and enter the mass volume segment.
SO:
Their approach was to adopt a dynamic, flexible and market oriented approach in responding to present and future opportunities for
profitable growth.

GROWTH:
In the 90’s the Indian shoe industry growing at a constant rate of more than 20% per annum.
The report was submitted in 1992 and as a result, leather was declared a focus area for growth.
MARKET SHARE:

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Strategic Management SKI BOAT INDUSTRY
The market share of indain manufacturers was only 20% of the total and the rest was covered by the unorganized sector, with most
products coming in from Agra, Kanpur, Jaipur, Patiala, Delhi and Bombay.
BRAND LOYALTY:
Bata was called the family footwear manufacturers and he was a leader controlling 33% of the organized shoe market.
FOLLOWERS:
Phoenix came with its Rucksack brands.
STRATEGIC ALLIANCE:
Nike shoes would be available at selected bata showrooms.
FINANCIAL STRENGTH:
Bata india’s equity was owned by BSO worldwide. Institutions and mutual funds had a share of 24% whereas the rest of equity was
owned by general public.
PARTIALLY BACKWARD INTEGARTION
Bata india has its own tanneries too one at batanagar and the other at Mokamehgnat , Bihar.
JUST IN TIME:
Bata had a quick response programme which was based on controlling flow of information from stores to the factories to get the right
product at the right time.
EXTRA:
The company had a virtual monopoly in the 80’s with an 82% market share of the organized footwear industry. But liberalization
removed the entry barriers for newer players and made the going tough for the company.

Question: 1: What are the industry’s dominant traits?

1. Market Size and Growth Rate

Industry is in its maturity stage as its sales are declining from $17.9bn to $13.7bn and a number of manufacturers
had either been acquired by or merged with another company. In 1984, MasterCraft was bought by the Coleman
Company; in 1989, Ski Supreme was acquired by German Inc in 1989 Malibu Boats purchased FlightCraft, an Australian

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Strategic Management SKI BOAT INDUSTRY
ski boat manufacturer; and in 1991, American Skier was purchased by WESMAR Marine Holdings. Also, in 1990, Supra
Boats merged with Marine sports, Inc. In 1991, Supra/Marine Sports created the Moomba Boat Company as subsidiary.

2. Scope of competitive rivalry

Companies in this industry are competing almost purely nationally. Although sales of competition ski boats in the international
market were negligible, exports of pleasure boats had risen sharply the past few years. To compete globally industry needed
technological advances and manufacturing capabilities, further more industry needed to grow and strengthen their financial
condition to be able to operate efficiently in global market place.

3. Number of rivals:
Concentrated and dominated by a few large companies
The industry is concentrated, dominated by few large companies because it caters to the specific segment of the consumer
population that is competitive skier and recreational boating. Concentrated Industry is particularly effective for small companies with limited
resources because it enables the company to achieve a strong market position in the specific market segment, it serves without mass
production, mass distribution, or mass advertising. The competitors in the industry are:

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Strategic Management SKI BOAT INDUSTRY
Mastercraft
Supra
Correct craft
Malibu
Searay

4. Buyer needs and requirements

Dealers would base their orders on the consumer interest indicated at shows, expos, tournaments. Innovative and differentiated
product were designed with the serious skier’s needs and demands in mind, as user needs and preferences changed.

5. Production capacity
As boats are used as luxury items there prices are high and the industry is manufacturing according to the requirement of buyer.

6. Pace of Technological Changes

Technology changes were replacement of the wooden framework by Glass fiber for the strength and reliability of the boat.
One of the most important and distinctive differences in the construction of ski boats had to do with the hull configuration
in the form of a deep V and a modified V.

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 Strategic Management SKI BOAT INDUSTRY
7. Degree of product differentiation
The product differentiation occurs in hull designs, first were becoming longer and wider. Second hulls were designed to
reduce the amount of spray to little or virtually no spray by placing slim tunnels. Different types of styling and décor were
cropping up for both hulls and interiors of the boat, drivability and ski- ability

8. Product innovation

Question 2: based on the Porter’s five force model how attractive is the industry?

Porter’s Five Forces Model

Threat of New Entrants / Entry Barriers

Factors HUFA (1) MUFA Neutral MFA HFA Comment

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 Strategic Management SKI BOAT INDUSTRY
(2) (3) (4) (5)
Economies of Scale Low X High Economies of
scale of are
critical, easy to
enter.

Capital Required Low X High Manufacturing

cost
Expected Retaliation Low X High HIGH
PROMOTION
NMMA
Differentiation Low X High Differentiation
exists in
product line.
Government Action Low X High NMMA and
government
taxes.
Department of
natural
resource.
International
water ski
federation.
Access to Distribution Ample X Restric Distribution
Channels ted through
dealers expo/
shows
Brand Loyalty Low X High High Loyalty

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 Strategic Management SKI BOAT INDUSTRY
in terms of
Brand, price,
quality. Brand
reputation imp
for skier.
Experience Curve Insigni X Signifi Intense R & D
ficant cant is required.

Total Rating = 4.0 Favorable

Exit Barriers

Factors HUFA MUFA Neutral MFA HFA Comment

Specialized High X Low All Assets
Assets can be used
in boating
industry
Fixed Cost on High X Low Fixed cost is

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Exit high.
Strategic High X Low Alliances
Interrelationship with
supplier and
Boat
Associations
Government High X Low
barrier

Total Rating = 3 Neutral

Competitive Rivalry

Factors HUFA MUFA Neutral MFA HF Comment

A
Composition of Equal X Unequal Strong
Competitors Size Size competition
exists.

Market Growth low X High Sale is declining

Rate
Scope of Global X Domesti Competition is

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 Strategic Management SKI BOAT INDUSTRY
Competition c global,
Fixed Storage High X
Cost
Capacity Large * Small Increase in the
Increase capacity of
technological
advances,
manufacturing
capabilities
Degree of Comm X specializ It is a
Differentiation odity ed specialized
product

Strategic Stake High X Low Most of them

are Singled
owned business

Total Rating = 2.6 Unfavorable

Power of Buyer

Factors HUFA MUFA Neutral MFA HFA Comment

Number of Few X Many Network of
Important dealers/
Buyer retailers/
baby boomers

Threat of High X Low High capital

Backward
Integration
Product Commodity X Specialty Differentiated

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 Strategic Management SKI BOAT INDUSTRY
Supplied Product
Switching Low X High Dealership
Cost contracts/
recession/
easy money/
shifting from
runabout to
special
purpose.
Profit low high
earned by
buyers
Importance high X low
to final
quality of
buyer
product
Total Rating = 3.6 favorable

Power of Supplier

Factors HUFA MUFA Neutral MFA HFA Comment

# of important Few X Many Large of
Supplier suppliers of
engine.
Therefore
entry is
easy/ford, GM
Chrysler/ and
marine
companies.
Switching Cost High X Low Long term
contract (e.g.

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 Strategic Management SKI BOAT INDUSTRY
Master craft
with Indmar)/
recession
Availability of Difficult X Many Many
Substitutes substitutes
recession
Threats of High X Low High Capital
Forward Requirement
Integration
Importance of Buys X Buys Purchases in
Buyer industry small large large quantity
to Suppliers Portion portion
Supplier Highly X Less Engine
Product an Important Important performance
important input
to Buyer’s
business
Total Rating = 3.5 Favorable

Threat of Substitute Products

Factors HUFA MUFA Neutral MFA HFA Comment

Threat of High X Low Few
Obsolescence obsolesces
in the Industry
Product
Aggressiveness High X Low High
of substitute proportion
products in of
promotion Substitutes

Switching Cost Low X High Many

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Strategic Management SKI BOAT INDUSTRY
Recreational
activities/
large can
buy or rent
it, mini
boat.
Perceived High X Low
Price / Value
Total Rating = 2.5 Unfavorable

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Strategic Management SKI BOAT INDUSTRY
Q4: Briefly describe the industry dynamics with in the dominant strategic group(s) (porter five
forces model)?

Strategic Group 1 (consisting of Master Craft and Correct Craft)

 Threats of new entrants:

The threat of new entrant in this strategic group is low because the two competitors in the group are very strong brand names with
major market share and a new entrant cannot compete with them.

 Rivalry among existing firms:

The rivalry among the competitors is high as both the players are of equal size trying to acquire the market share of the other. And
almost same quality products are produced.

 Threat of Substitute Products or Services:

There is a threat of substitutes within industry is low but products are introduced with low prices so people might switch to personal
water craft.

 Bargaining Power of Buyers:

As there are many buyers in the industry so the bargaining power of buyer would be low and it will be a seller’s market.

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Strategic Management SKI BOAT INDUSTRY
 Bargaining Power of Suppliers:

Bargaining power of suppliers is high because they are few and providing specialized products.
Strategic Group 2 (consisting of Malibu and Supra.)

 Threats of new entrants:

Threats of new entrant is low as the two players in this group are established brand names, though they were not very old players in
the ski industry but providing the high quality and product line wide to their customers that’s why it is difficult for the new entrants to
compete in this strategic group.

 Rivalry among existing firms:

It is high because the companies want to take the market share of the other.

 Threat of Substitute Products or Services:

There is a threat of substitute product within the industry but it is low.

 Threat of Substitute Products or Services:

There is a threat of substitutes within industry is low but products are introduced with low prices so people might switch to personal
water craft.

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Strategic Management SKI BOAT INDUSTRY
 Bargaining Power of Buyers:

As there are many buyers in the industry so the bargaining power of buyer would be low and it will be a seller’s market.

 Bargaining Power of Suppliers:

 Bargaining power of suppliers is high because they are few and providing specialized products.

Q5: What are the drivers of change in the industry and what impact they have on the industry?

DRIVERS OF CHANGE

Product Innovation
Industry have product innovation in hull design, interior styling, and design, drivability and product innovation
Impact:
With the product innovation people start to expect more and more from the forth coming products. The players with better R&D in the
industry will have a definite edge over the others.

Technological Change
. With the passage of time the pace of technological advancement was growing and brought major changes in boats before this the
boats were made of wood, now these fiber glass has been used for the manufacturing, and deep v and modified v r used in hull design.
Impact:
With the introduction of new product as the demand for the new product will start and the demand for the old model decreases rapidly.

Marketing Innovation:

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Strategic Management SKI BOAT INDUSTRY
Boat industry have used different promotional activities to promote there products like they advertised through different magazines,
boat shows and tournaments.

Impact:
More funds and specialized efforts were required for the Marketing activities. Before product used for just skiers now it’s become a
pleasure product.

Growing buyer preferences for differentiated product

The industry buyer’s preferences for the differentiated product have been increased.

Impact:
This impacts the increase the product differentiation and product innovation in ski industry.

Regulatory influence and govt. policy

For safety of skiers there were American water ski Association (AWSA) which forces the producers to follow their standard.
Producers also have to follow the rules formed by Government, like noise limit, environmental law, speed limit laws, and pollution.

Impact:
This impacts the quality products by manufacturers to ensure that skiers would be safe.

Changing social concerns attitudes and life styles:

Q6: What is the key success factor for the industry?

KEY SUCCESS FACTORS:

Marketing related:

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Strategic Management SKI BOAT INDUSTRY
1. A well known and well reputed brand name.
2. Breadth of product line.
3. providing limited warranty to buyers
4. clever adverting in boating magazines.

Distribution related:

National wide there are many dealers through which products could be sale.

Technology related:

Introducing new type of Malibu electronic management system and high tech system to control center at the driver’s fingertips and
also introduced some engines, such as PCM, implemented electronic control to improve performance and help prevent damage.

Skilled and capability related:

1. Product innovation capabilities

2. National marketing and distribution capabilities

Manufacturing related KSFs:

1. High utilization of fixed assets.
2. Ability to manufacture products that are customized to buyer specification.

Other KSFs:

Patents protection

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 Strategic Management SKI BOAT INDUSTRY
Key Success Factors weight Master Craft Weighted score Correct Craft Weighted score

Quality 0.17 3 0.51 3 0.51

Price 0.12 4 0.48 4 0.48
Distribution Channels 0.11 3 0.4 3 0.33
Marketing 0.17 4 0.6 0.68 0.6
Brand image & Loyalty 0.14 3 0.4 2 0.42
Product Line 0.15 3 0.6 0.45 0.45
Innovation 0.14 4 0.6 0.56 0.45

1 3.43 2.83

Weighted Weighted
Key Success Factors Weight Malibu Boats score Supra Boats score

Quality 0.17 4 0.68 4 0.68

Price 0.12 3 0.36 4 0.48
Distribution Channels 0.11 4 0.44 4 0.44
Marketing 0.17 3 0.51 3 0.3
Brand image & Loyalty 0.14 4 0.45 4 0.56
Product Line 0.15 3 0.45 4 0.3
Innovation 0.1 3 0.42 4 0.3

1 3.42 3.83

Where:
1 = Weak
2 = Medium Weak
3 = Average

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Strategic Management SKI BOAT INDUSTRY
4 = Above Average

CPM Analysis

Master Craft‘s Rating Reasons:

Quality:
Master craft pro star 209 / X9 awarded power boat magazine tow boat of the year, luxury high quality boats.
Price:
Master craft is number 1 in retail sales because of high quality and price.
Distribution Channel:
Well informed and large network of dealers.
Marketing:
Excellent array of marketing and sales network, they sponsor ESPN, X-games, and gravity games.
Brand Image & Loyalty:
High brand image therefore its product X-star is official tow boat of ESPN games & gravity games, one of the
market leader of sky boat industry.
Product Line:
Large product lines (V-drive, Maristar series, X-star and Prostar series).

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Strategic Management SKI BOAT INDUSTRY
Innovation:
In 1999 Master craft first to make EFI engine, they also introduced blast system. Master craft introduce the new
concept of X-track with marine design resource alliance.
After Sales Services:
Master craft service provides after sales service but there is still lack of some service like warranty.

Correct Craft’s Rating Reasons:

Quality:
Correct Craft has high quality brands like sky nautique and selected tow boat to world championship.
Price:
They are offering high quality at good price.
. Distribution Channel:
They are not well trained that is why therefore sales are decreasing in 2001.
Marketing:
They are sponsoring tournaments like world championship record holder, master championship.
Brand Image & Loyalty:
Correct craft has high quality and brand image because of the good marketing and the oldest ski boat maker in
the industry.
Product Line:

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Strategic Management SKI BOAT INDUSTRY
Increasing in the product line in the existing series like air series, pro air series but still product line is not
sufficient.
Innovation:
They introduced flagship models, flight control tower and flight clips system to reduce the equipment clutter in
boat but no new innovation in technology like EFI.
Services:
Five year warranty, water test on lake before shipment.

Malibu Boat‘s Rating Reasons:

Quality:
Malibu is known for quality, it won 8 times power boat magazine tow boat award boat of the year.
Price:
Due to the price and quality they show growth in domestic and as well as in International market (Australia).
Distribution Channel:
They have a wide range of dealers’ network.
Marketing:

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Strategic Management SKI BOAT INDUSTRY
Malibu only sponsors US open water ski tournament but it should sponsor other tournaments.
Brand Image & Loyalty:
Due to high brand image and loyalty there is rising in demand despite economic condition of 2000.
Product Line:
Malibu has 17 product excellence awards; it shows the large product line.
Innovation:
Malibu is known for innovation and they believe on continuous improvement therefore they have multiple
manufacturing sites.
Services:
It is not providing warranting services.

supra Rating Reasons:

Quality:
Supra has an image of high quality and performance.
Price:

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Strategic Management SKI BOAT INDUSTRY
Supra shows growth in 2001 because of high quality at good price.
Distribution Channel:
They have a wide range of dealers’ network.
Marketing:
No sponsorship, so they have a weak marketing.
Brand Image & Loyalty:
They have a good brand image therefore they continue the previous product line.
Product Line:
They have on narrow product width (only three series)
Innovation:
They are using American ski model since 1979, this shows that they are week in innovation.
Services:
Currently it is not providing well satisfied service but in future it intends to.

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