Strategic issues particular to the enterprise(s) and context described

Question

What will be an ideal response?

Answer 1

? Entrepreneurial foundations: major yacht-building enterprises generally began as start-ups founded
by enthusiasts who were later obliged to operate in a more formal, organised way as their businesses
grew. Some are still quite small and remain privately-owned, others are (part of) public corporations
or consortia (shared corporate ownership).
? Factors critical in the survival and growth process include:
o Sustainability of long-term demand
o Degree of competition to satisfy this demand
o Leadership and strategic management styles and processes.
o Stakeholder issues including ownership and sources of influence. Companies can be owned by
families that pass management succession through the generations, ensuring greater continuity
than is often seen in public companies.
? The market for new super-yachts is only a few thousand sales a year. Individual firms may build
only tens or hundreds a year. Private buyers are relatively or ultra wealthy, although many yachts are
actually financed by loans. Very large yachts are often acquired by corporations rather than
individuals.
? Sales distributors are key intermediaries, cultivating interest with potential buyers and encouraging
repeat business.
? Yachts have long life-spans, creating supply of cheaper pre-owned yachts. To a significant degree
the latter therefore compete with new yachts for buyers’ attention, especially in recessionary times.
? The economic component of the macro environment, notably the current stage of the economic
cycle, is a critical determinant of new and pre-owned demand. Levels of inflation, currency
exchange rates etc also affect demand and the competitiveness of individual suppliers.
? Demand has been rising significantly in the BRIC countries (Brazil, Russia, India, China) whose
large populations are characterised by extreme wealth differences and a rising number of dollar
millionaires and billionaires.
? Yacht-building has tended to remain craft-based and labour-intensive, given the comparatively small
units of output. An enterprise would need to make substantial capital investment to mass produce of
(tens of) thousands of smaller boats a year. Efficiency leads to lower costs and competitive prices. If
successful, such investment could be a very profitable outcome.