Generic Competitive Strategy - Sample Essay

The yacht industry is a big industry with approximately 5, 000 mega-yacht and 5, 000 super –yacht in 2003. Each mega-yacht ranges from an average cost of $10 million to $50 million and higher. The economic activity in this industry was estimated at $1,035 million worldwide, wherein $383 of this is accounted for new builds. The maintenance, refit and repair business sector have the remaining share of $652 million. Consultants estimated that the demand in the worldwide market would continue to increase by 6 % per year.

The economic activity in the mega-yacht industry was estimated at $ 1,035 million worldwide, wherein new builds have a share of $ 383 million and the maintenance (including refit and repair business sector) have a share of $652 million. It is also expected that anytime there is a possibility that 1,600 mega-yachts will be docked for service. Consultants have in estimated September 2002 that the demand in the worldwide market will continue to increase by 6 percent per year and even more in the near term outlook.

Forty five percent of all the super yachts and mega-yachts are purchased by the Americans. Analyst indicated that Germany had a 26 percent share of the market followed by United Kingdom and Netherlands each with 18 percent share, the United States with 14 percent, France with 6 percent and Finland with 3 percent. Companies serving the mega-yacht industry are competing for the needs of the yachts. Yachts are transient sea craft that sailed frequently from port to port and most of the time, supplies and equipment were often needed on the last minute basis.

There is a great range of products required to maintain and use mega-yacht that is why suppliers were located all over the world. Major suppliers of mega-yacht were located in eight countries namely: United States, United Kingdom, Japan Australia, Holland, France and Scandinavia. The market is maturing continuously that more standardization and consolidation of suppliers were expected to take place. Key competitors of include major traditional procurement agents, yacht builders and parts-related websites.

There are also small private companies and freelance agents acts as purchasing agents for mega-yacht industry The three major procurement agents: (1) National Marine, Florida, United States; (2) Alex Spares, United Kingdom; (3) Versillias Supplies, Viareregio Italy. These three traditional procurement agents worked on their respective regions or areas. National Marine concentrates its market on the United States, Alex Spares is catering to the European market and the Versailles Supplies are mainly dealing with the suppliers and mega-yacht owners in Mediterranean.

Ship Builders Palmer Johnson Inc. and Lurssen are considered emerging competitors of the business because of their plan to extend their business in the service department. They are known worldwide because of their long history and good reputation in the mega-yacht industry. Consolidations in this industry was also starting to take place as a transitional player began moving into lucrative US market to other parts of the world. One example of this is the Rodriguez Group, a French yachting service company that purchased Bob Saxon Association Inc.

, , a yacht management and charter company that is based in Fort Lauderdale The yacht crews are always looking for parts and supplies that fit their shipping needs. However, they encounter problems because of there are thousands of manufacturing company worldwide. Since mega-yachts are transient sea craft, yacht crews are looking for parts that is available in the local manufacturer or local distributors where their mega-yachts are docking. They are also concerned with the right measurements, specifications, shipping details and arrangement of payments.

The money involved in purchasing these parts and supplies is not a small amount of money that is why the owners and crews of mega-yachts wanted to be sure that they pick the right parts that they need. Ofcourse, there is a big risk when making transaction via phone and fax and complicated problems may arise in these transactions because they are not sure that they are ordering the right specifications of parts that they need for their boat because there is no standard part in for each and every mega-yacht.

A mega-yacht needs machine engines, propulsion units, generators, air conditioning units, refrigeration, water maker, shore power conversion units, sewage system, stabilization system, bow thrusters, fuel purifications, oil purifications, fresh water system, hot water system, communication system, navigation electronics, compressed air system, entertainment system, fire fighting equipment, safety equipment, hydraulics, sail and rigging, kitchen equipment, cranes, tenders, jet skis, diving equipment alarm system, helicopters, charts and other sea crafts. Each equipment have several manufacturers competing on that product line.

Combining them all, there are thousands of manufacturing companies worldwide. The boat parts alone can be divided into three categories. They are the spare parts, consumables and stocks and upgrades and refits. Spare parts are items that urgently needed by the mega-yachts these are vital parts that might be broken unexpectedly and needed to be replaced immediately to ensure the good condition of the yacht. Consumable and stocks spares are less urgent needs but are necessary to have in stock in case of breakdown or replacements. Upgrades and refits includes items that enhance and protect the yachts.

These includes entertainment and communication system. The industry is flooded with so many manufacturers, producing the same product type. It is now up to the owners and yacht crews to choose wisely in buying the product for their yachts. After all, the money involved in yacht building, purchasing and maintenance is not a small amount of money that is why customers should be intelligent buyers. The advent of computer and internet changes all the way transaction are made. Traditional procurement or purchasing agencies (can be a company or an individual) can now be replaced by a more efficient procurement method using the internet.

There is now online procurement agents that serves the customers more efficiently. The advancement in computer technology and communication plays an important role in this industry. It maybe viewed as an evolutionary technology that offers an alternate, often efficient method for achieving the companies goals. More and more organizations realized the full potential of electronic environment in cost cutting and re-shaping the very dynamic space and time. Through this advancement, there is a huge advantage to company’s e-commerce website. Increase in revenue is not the only reason online business is good for the mega-yacht industry.

Information about the latest gadget and parts needed by mega yacht can reach owners, captains and crews faster. They just have to check the website to check on what’s the latest in the mega-yacht industry and in just one click their can place an order and they just have to sit and wait for their orders. The product differentiation is becoming stiffer causing heightened price competition. Some of the suppliers make the service more personalized to attract customers. Meaning they concentrate more on how they serve and present the product to the customers in order to attract them to buy to them.