Technology/innovation: Firms do innovate
Product characteristics: Customized. Different firms tend to differentiate than other competing firms.
Scale Economies: Leaders have large dealer networks and able to achieve greater scale economies.
Learning & Experience Curve: Learning curves are not easier compared to 1990 when there was lower course and equipment requirement.
Strength of competitive forces confronting the companies in the competition ski boat industry with five-force analysis:
Rivalry among the producers of ski boats
Primary weapons of competitive rivalry among the ski boat manufacturers include
- Innovative performance features
- Styling and design
- Breadth of product line
- Strength of dealer network
- Endorsements and promotional programs
Strength of the competitive rivalry
Rivalry is intensifying because it is becoming harder and harder to differentiate one’s boat models on the basis of product innovation and appealing performance features (rivals are quick to copy popular features) and any first-mover advantages are short lived.
Competitive pressures from substitutes
Competitive pressures from substitute are strong because there are many good and readily available substitutes for competition ski boats.
The competitive threat of new entry
Relatively weak. There are relatively high entry barriers into the manufacture of competition ski boats, thus making the threat of additional entry rather unlikely.
The bargaining power and leverage of suppliers and the influence of supplier-seller collaboration
Moderate. Suppliers of engines are relatively powerful because a good engine is essential and there are relatively few engine makers.
The bargaining power of distributors/retailers and the influence of seller-buyer collaboration
Moderate. Boat retailers have considerable bargaining power because it is so important for a boat manufacturer to have a strong and geographically diverse network of dealers handling and promoting its boat models.
Conclusions concerning the strength of competitive pressures confronting the makers of competition ski boat manufacturers:
Strong—producing competition ski boats is not a good business to be in because tough competitive conditions and pressures from most all sides impair a company’s ability to enjoy sustained and attractively high profits.
Strategic group map of the competition ski boat segment
- 10
Targeted Consumers
Most attractive positioning for a competition ski boat manufacturer
Somewhere in between—a fairly sizable number of models for several (but not all) different types of boat buyers
Competitive moves Élan’s competitors—MasterCraft, Correct Craft/Ski Nautique, Infinity, and Malibu—are likely to make next
- One or more of them is likely to cut costs and begin to compete more aggressively on price.
- One or more of them is likely to reduce the number of models offered (to economize on costs).
Key success factors in the competition ski boat segment
- Achieve AWSA certification
- Secure endorsements from highly regarded professional skiers
- Achieve low production costs
Factors making the tournament skier niche of the ski boat industry attractive or unattractive to a small new company like Élan
- The segment is growing at an attractive rate.
- Demand is not as subject to ups and downs in the economy, because buyers are in the higher end of the economic spectrum.
Key elements of Élan’s strategy for competing in the tournament niche of the competition ski boat industry
- Stream line activity cost chain to achieve cost advantage
- Our is better than others approach
- Low price
- Offensive
- Win disenchanted customers of leaders by being service oriented company
- Concentrate facilities and marketing activities in limited territory
- Achieve saturation advertising
- By pass retailers
Resource strengths of Elan:
- A strong brand name
- Good industry connections
- A good production facility acquired at what appears to be a bargain price
- Ability to sell to end-users at a lower negotiated price than they can get by buying rival brands form boat dealers
Élan’s Resource Weaknesses:
- No AWSA certification of its products/models
- Lack of professional endorsements
- No proven marketing capabilities
- No dealer network
Élan’s Market Opportunities:
- Water skiing recognized as an Olympic event
- Recruit a strong pro-skier team to endorse and promote Elan’s boat models
- Threats to Élan’s Well Being:
- Rivals copy Élan’s boat designs fairly quickly
- Rivals come up with significant product innovations that are hard for Élan to imitate or duplicate
Conclusion
Élan is a high risk company, with many challenges to overcome