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Élan And The Competition Ski Boat Industry. How To Improve Efficiency.

1854 words - 7 pages

Élan, formerly known as American Skier, was a small ailing company in an unattractive ski boat industry before two enthusiastic friends, Ben Favret, and Jay Blossman bought it. Since the 1990’s, Élan had become unfocused, poorly managed and undercapitalized before it filed for bankruptcy in 2001. Favret and Blossman hope to shed the bad reputation of American Skier in exchange for the vigor and enthusiasm of a young upstart company willing to go head to head with industry market leaders. However, in order to penetrate and succeed in a competitive industry with powerful market leaders, Élan will need more than Favret and Blossman’s positive aspirations. Fortunately, by purchasing Élan at a bargain-basement price, excessive debt was shed from the list of problems that previously ailed American Skier. Low debt and positive future sales will improve credit rating and thus increase capitalization. On the other hand, without the shield of debt, the potential for hostile takeover increases. The fact that there are no public shares and only treasury stock will make it hard for competitors to acquire Élan through the purchase of stock (see appendix).The Ski Boat Industry is still an unattractive, mature industry in a very competitive market with large barriers to entry and intense rivalry among the existing firms. The industry has large competition based on differentiation, innovation and brand loyalty. Capital expenditure is the largest barrier to entry in the Ski Boat Industry due to its large research and development costs. Shaping and the designing of a new boat mold can cost in excess of $400,000 per mold or $100,000 for an existing mold. Furthermore, many of these large companies such as MasterCraft, Malibu, and Correct Craft have well-established company names and excellent customer loyalty.Élan is a small company in a mature industry dominated by a few large competitors. Since it is smaller, it allows Élan to have greater flexibility and can adjust to changing market trends easier. By revamping and streamlining its manufacturing process, Élan has been able to keep its production costs down to achieve a cost advantage and then pursuing an “ours-is-better-than-theirs” approach. Ben Favert and Jay Blossman have been in the boating industry for many years, which allows them to have the necessary innovation skills needed in order to be successful in the ski boating industry. With negotiated cross-marketing ventures with many water-ski and wakeboard retailers and manufactures, Élan has been able to give boat owners discounts on ski equipment.Although Élan has unique capabilities in public relations, they lack financial needs to expand and succeed in the competitive ski boat industry. Further, Élan’s brand image is low due to a small market share and an inability to focus on customer needs. Élan’s under utilized facilities have made it...

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