Elan And The Competition In The Ski Boat Industry

2112 words - 8 pages

Question 1.What are the chief economic characteristics of the boating industry?Answer1.The major characteristic of the boat industry is the overall economy.2.When the economy is booming then the sales of boats will increase. These types of boats are considered a luxury item and when the economy is failing, so are the sales.3.The market size is relatively small with only 17 major skis and recreational wakeboard boat manufactures nation wide, including Australia.4.Rivalry among the boat manufacturers is spread out from the west coast to the east coast.5.Distribution is very small; boat owners represent such a minute number of the total population of the country.6.Product characteristics:1.Ski boat/ competition.2.Wakeboard boats, and3.Recreational boats.·Growth opportunitiesThe growth opportunities of the boat industry are not as large as they use to be. According to the case, the growth in the number of recreational boats in use has stalled over the past ten years, and the established number of participants has recently declined. The geographic area in which the products are purchased is another factor that affects the sales. There will obviously not be a demand for these boats in a cold state like Alaska. The areas that have lakes, and open waters will have more of a demand for these recreational boats, therefore growth opportunities in these areas are greater.Question 2What competitive forces are currently at the work in this industry? Construct a five forces model to support your answer.AnswerIndustry competition stageThe competition boat industry is still growing but not rapidly. It is not yet declining except in economic hard times for example. The industry is in the growth and the maturity stage of the industry. There is always innovations in this industry, there always has to be a boat better than the last one. The industry's profits are slowly falling because of the occasional period of overcapacity.Five forces model for the industry1. Rivalry·Rivalry among these major sellers is moderate because of the number of competitors. There are only about five major competitors in this industry·The demand for these products is continuing to grow slowly.·The customer's cost of switching is low; the consumer could go buy another boat at about the same price.·There are large capital requirements in order to start a boat company.·The buyers are often attached to a certain brand, which is considered to be brand loyalty and/or a brand preference.2. Suppliers bargaining power·The competitive pressure from suppliers bargaining power is moderate to strong.·The boat manufacturers use certain suppliers for different types of parts for their boats. The engine is an example because some industry leaders only use three different engine suppliers.·There are only three major engine suppliers and because there are so, few they are able to compete on prices.·The suppliers have an advantage with...

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