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Refit business

The case study focuses on the start-up and growth strategy of an online broker for parts and services required for maintenance and improvements on mega-yachts (those over 45 meters in length). Task 1- 20 Marks Using the details in the case study, construct a view of the mega-yacht industry’s economic features, using the structure of Table 3. 1 p. 49 (Thompson et al. 2005) Mega Yacht Industry is a specific and highly specialized business segment. It can be termed as luxury product which is affordable by the top most strata of the society only.

The economic features of this industry are as follows: Market size and growth rate: The estimated size of the industry was $1,035 million worldwide in the year 2001. The industry is divided into the following sectors: ? New builds This sector was accounted $383 million. New builds requirements of Yacht is limited but growing with a steady pace. This product is required by the top most class of the economic stratus of the society. Maintenance, repair and refit business This sector was the large part of the mega yacht industry. It accounted for $652 million.

The maintenance, repair and refit business requirements range from small parts of the

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fittings and furnishing to highly complex and technical components of the engine. The need arises when the system is down or the product becomes obsolete. The challenging aspect of this segment is that the need usually comes as urgency. Crew member browse the catalogue available to them for the unidentifiable component or contact the suppliers for the same. This is a time taking process. The estimated growth rate for the industry in year 2002 was six percent.

It was expected that it may grow more than six percent in the coming years. The economic impacts of mega yachts are high. The local marines and boatyards charge fees on couple of activities of mega yachts on the per day basis. These includes fee docking fees. The other charges are maintenance charges, repairs and fittings, purchase of goods and services. The South Florida alone claimed to have $9 billion per annum of recreational marine industry. It employed 39,000 people directly and indirect employment for 109,000 people.

South Florida has been organizing different activities in order to attract visitors and support community like Fort Lauderdale Boat Show where it displayed $1. 6 billion of boats, mega-yachts and accessories. The average annual impact of the show was worth $500 million. This business is in the rapid growth phase in USA, particularly for the parts and accessories of the mega yachts industry is growing at rapidly. This is attracting the transnational players to the US market. The rental industry is also booming. Scope of competitive rivalry: The competition of mega yacht builders is international.

The number of mega yacht builders was around 482 in year 2003. In the same year industry experienced a drop in the number of builders of 4. 7 percent. The yacht builders focused on construction related services to the full service shipyard and shipbuilding. The repairs and refits business is very lucrative. As stated in the case the Florida based company Rybovich Spencer had additional sale of $5 million during six month period between 2001 to 2001 for the repairs and refits. Number of Rivals: The competition in the industry is national and international.

There are 56% of mega yachts build in Europe, 35% in United States and remaining in Africa and Asia. US market has been attracting yacht builders from across the world. The long term competitive success in yacht industry requires servicing different markets across the world as the demand of mega yacht is increasing at different parts of the world. As mentioned in the case Germany is leading with 26 percent market share followed by UK and Netherlands with 18 percent each, US with 14 percent, Norway with 9 percent, France with 6 percent and Finland with 3 percent of parts and equipment market of the mega yacht industry.

There are four types of suppliers of mega yacht industry. The first are the commercial and industrial suppliers who supply the engines, laundry, kitchen and electrical supplies. The second is consumer products suppliers. They supply entertainment systems, bathroom fixtures, furniture and others. The third are small yacht product suppliers who supply rope handling equipments, navigation equipment, and electronic system suppliers. The dedicated suppliers are the forth category of the suppliers. These consist of small number of manufacturers that cater to mega yacht market. Buyers’ needs and requirements:

The new mega yacht requirements vary from the buyer to the buyer. However for the repair, refits and maintenance, it depends upon the type of mega yacht. In most of the cases, as mentioned in the case the need comes at eleventh hour. The maintenance service, parts or repair services are required within short period. It becomes important for the yacht management companies to make them available and accessible for the customer so that they can reach them when they need. The repair and refitting requirements of the mega yachts are usually specific to the yacht type and expensive.

These products are categorized into the following: ? Spare parts ? Consumables and stock spares ? Upgrades and refits Spare parts are more urgent than products of other categories for example replacement pumps of toilet, hydraulic seal for the steering system, safety valves and others. Consumables and stock spares are less necessary and less urgent but required for the condition of break down or replacement like bulbs, filters, crockery and others. The upgrades and refits include the products from fire and safety to entertainment and communication.

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