Acuña, Kristine

De Leon, Eryn Jade

Donato, Geraldo
Fresnoza, Cheril
Medina, Andrea July 4, 2006
Operations Management – SA1 Mr. Papelleras

Strategy at Regal Marine

I. Company Profile

Regal Marine or Regal Boats is a family-owned and operated company. It has

been involved in the boat making business for over 36 years. They build pleasure boats
from 19” to 44” is made up of the small runabouts to the world class Commodore
express cruisers. The boats are distributed through dealers and distributors in the
business in around 45 countries all around the world. Regal Marine is also a world
leader in innovation. It received the industry’s IMTEC innovation award for its FasTrac
hull design. “FasTrac is credited with providing exceptional performance with less
horsepower, meaning more efficiency and savings for our customers.” Since Regal
Marine is a family-owned company, a family’s safety is also a concern of the company,
which is why they think of the family’s safety in their designs. The boats have features
which help ensure the safety of the family such as transom trailering lights, full
fiberglass liners, deep cockpits and windshield vents.
(http://www.regalboats.com/aboutus.cfm, accessed June 26, 2006)

Regal Marine is a frequent user of computer-aided design (CAD). New designs

are created through its three-dimensional CAD system which the automobile industry
also uses. (Heizer & Render, 2001)

Regal Marine has an ISO 9001:2000 certification. “As a globally accepted model
for quality system standards, ISO 9001:2000 will accentuate Regal Marine’s mission by
continuing to provide exceptional customer satisfaction.” Regal Marine is one of the few
boat companies in the world who has achieved this certification. In addition, Regal
Marine backs up its products with one of the so-called best warranty packages in the
industry. Every Regal boat is backed by a Limited Lifetime Structural Hull Warranty.
(http://www.regalboats.com/aboutus.cfm, accessed June 26, 2006)

II. Industry Background  Boat making

III. Introduction

Regal Marine is one of the largest powerboats in the United States. The mission
of the company is mainly to supply luxury performance boats to customers all over the
world. Its goal is to provide value and quality of product and satisfaction of the
customers. The company aims to do this by using the strategy of differentiation. This
strategy is useful by means of differentiating the products through innovation, high
quality, and distinct features of the product. Based from these, it means that the
company’s sales increased therefore, giving due credit to the stated strategy.

Due to proper product coordination with the parts that are used for the production
of the boat, Regal Marine has created close ties with a large number of its suppliers.
With this, the company is ensured to both flexibility and reliable parts. However, with the
strong economy and the repeal of the boat luxury tax on its side, it has been paving
down debt and increasing market share.

With this, Regal is faced with a dilemma. This dilemma is thus concerned with
the company’s mission. The company’s mission is too stagnant, therefore resulting for
the status of the company to simply stay at a steady state.

IV. Problem

How can Regal Marine maintain its competitive advantage globally when it is
focusing too much on the ever-changing demands of the consumers in relation to their
mission to provide quality boats?

Regal Marine has been competitive in Florida with their strategy in differentiating
their product. This is effective because they do this by delivering constant innovations,
unique features and high quality. Also, technological advances result to a never ending
demands for innovative and new products.

In addition, with its mission to provide the customers worldwide with their
products, Regal Marine wants to ensure that quality is given more importance. The
managers of the company must always have a global view of the operations strategies.
Knowing that the standards of global competitiveness are high (quality, customization,
convenience, variety, timeliness and cost), the company must improve on its operations
(Heizer & Render, 2004). Thus, the group came up with the problem on how the
company can maintain their edge among their competitors using strategy of
differentiation with the ever-changing demands of the consumers in relation to their
mission.

V. Point of View

The case mainly has two points of view, that of the customers and that of Regal
Marine. This case study will present both views.

Regal Marine stated its mission as “providing luxury performance boats to

customers’ world wide.” So the customers would be expecting nothing less than having
both luxury and performance if they buy a boat from Regal Marine. When a company
says that they offer luxury that means that the customers would expect the products to
have high levels of comfort and superb quality. They would also expect their boats to be
of a certain class, setting in their minds standards to which the company must live up to.
Also when they mention performance; customers will require their boats to be fast and
reliable. For example, a customer wants his boat to have strong engines that can reach
a certain speed. Additionally, for consumers’ point of view, they will think of whether or
not buying a boat is worth it since there are other products that can offer entertainment
for the family which are far cheaper.

For Regal Marine’s point of view, they must live up to the standards they have set
for the company, which is “to provide luxury and performance.” They must also gain a
competitive advantage over all their competitors whether it is other boat manufacturing
companies or other companies that offer products that gives entertainment to families.
The company sees that the best way for them to gain this competitive advantage is
through product differentiation. They try to achieve this through never-ending
innovations, “high quality molds, and close tolerances that are controlled through both
defect charts and rigorous visual inspection.” They also believe that in order for their
boats to different and better than other boats every part of the must also be of high
quality. With this, they have created close ties with their suppliers. The challenge for the
company now is to compete in the “fun” business.” Meaning they must compete with
every company that produces something that will give families entertainment.

VI. Relevant Facts

Regal Marine is considered to be one of the most well-known luxury boat

manufacturers in the United States. The company boasts that its boats have constant
innovation, high quality and unique features designed to cater to the consumer’s tastes
and preferences.

• According to the case study, the strategy used by Regal Marine to stay in the
competitive world of boat manufacturing is differentiation.
Since this strategy has maintained its competitive edge from the others, Regal
Marine uses differentiation strategies like ensuring the good quality of materials
and adding more features. This is a very important fact to consider since this
would be the basis for the growth of the company. It is said that the company has
adapted this strategy to one of their bases in Florida and it has been a successful
strategy. There was an increase of sales in luxury boats when the company used
this kind of strategy.

• A system called Computer-Aided Design (CAD) is used for the Regal Marine’s
production.
The company is frequent user of this system. With the use of this system, the
company is able to add more features in the luxury boats that they manufacture.
In addition, “high-quality molds, and close tolerances are controlled through both
defect charts and rigorous visual inspections, (Heizer & Render, 2004).

• Established close tie with the suppliers.

 In order to ensure flexibility and perfect parts, the company established a close
relationship with its suppliers. As mentioned in the case study, the company can
profitably produce a product line of 22 boats, ranging from the $14,000 three
passenger Rush to the $500,000 42-foot Commodore Yacht.

• Also joined with other independent boat makers in the American Boat
Association.
Joining with the other boat makers is an important strategy for the company
especially that they are entering the international market because it can expect
other companies to cooperate with them and share knowledge about their
products.

• Another fact that the group wants to emphasize is the company’s mission.
As mentioned previously, Regal Marine wants to build world-class luxury boats
and at the same time maintain its competitive edge globally. Mission is defined as
the purpose and the goal of the company. This is what the company wants to
accomplish in the end. It is important to stay close with the mission because it
would guide the company to its success.

• Also to be concerned about is the big competitor of Regal Marine, which is

Brunswick.
This important information would help determine how other competitors would
respond to their strategy. It is very relevant to consider how other competitors
strategize their products, which are luxury boats. In this case, Regal Marine
chose the strategy of differentiation to set the company’s product apart from other
luxury boat manufacturers.

These relevant facts would enable the group to understand and learn how the
company tries to sustain its success by the use of its strategy. Because of the potential
and positive opportunities that Regal Marine has seen internationally, it wants to
strengthen itself as a company that will surpass all the global boundaries and difficulties.

VII. Possible Solutions

Having these case facts presented, the group has come up with the two best
solutions for the company’s problem, which are to lower the cost of production and to
maintain its competitive advantage of differentiation and responsiveness to their
product.

Cost Customer Quality

Efficient Satisfaction

Lower the Cost of Production

Maintain its Competitive

Advantage through strategy
 of differentiation

Decision Criteria

Given these solutions, there are many factors that affect the company’s
strategies to improve their growth. The group has summarized it into three decision
criteria. First is the cost efficiency of the product. This means the price or the value
that its customers are paying for. This should guarantee the price that its consumers
give is worth with what they will receive. Meaning, the value of the money that they give
is proportional to what the product is giving.

Second, customer satisfaction is an important factor in these decision criteria

because this is where the demands of the consumers come in. The boat should not just
serve as a means of transportation but it should also give the satisfying effect of
traveling via the company’s luxury boat. This includes the basic needs that the
consumers would want to experience while they are in the boat, like safe and on-time
arrivals. Luxurious trip can be added to this aspect because it would not be a means for
travel but can also be means for entertainment.

Lastly, the quality should not be taken for granted. Quality would ensure better
goods and services that the consumers are always looking for. Quality would include the
reliability and quickness on how Regal Marine can serve its customers. Whether they
lower the cost of not of their production, it should still serve the high quality that they
offer.

To sum it all up, cost efficient, customer satisfaction, and quality are the
influential factors that help the group to come up with their solutions.

VIII. Analysis

The two possible ways for Regal Marine to have a competitive advantage around
the world is to lower the cost of production or to continue their strategy of product
differentiation. This part will analyze both solutions and try to see the advantages in
doing such actions and also the possible down sides for changing strategies or staying
with the old one.

The company is not too concentrated on offering products with very low prices.
Lowering the cost of production can give a slight advantage to the company. The group
assumes that the customers of Regal Marin are in the A class and upper B. Lowering
the cost means lowering the price the company sells the boats, thus attracting more
consumers who normally cannot afford to buy a Regal Marine boat, therefore extending
their market to lower B, and C class. Also with the lowering of the price of boats, the
company can compete with the alternative products that offer families fun and
entertainment like home theaters and others.
 Looking at our decision criteria, the group presented three factors that could
affect this solution, to lower the cost of production. It has been mentioned that the first
factor is being cost-efficient, which means the money that the customers pay is worth
the value that they are going to get. With this, the analysts said that this could be a
positive attribute to the company because Regal Marine could produce more boats for
its consumers. As what the group has learned from their Finance class, in order to
increase sales, one has to increase either the price or the quantity. Then again, with the
given solution they can produce more with the low cost of raw materials and with this
they can sell their boat at a lower price, thus more customers would buy their products.

Another factor is customer satisfaction. This means that the customers would be
fulfilled with the goods and services that the company offers. The group thought that
this solution (lowering the production cost) would be either a positive or a negative
result for the company. It could be positive because the other customers who are
coming from the classes B and C would be able to afford such kind of product. On the
other hand, the upper class would not be contented because the feeling of
sophistication when owning a luxury boat will be diminished.

Although lowering the cost might attract new customers, it might also cause the
company to go off track from its mission, which is to provide luxury and performance.
Lowering the cost might mean looking for new and cheaper suppliers to provide the
parts needed for the boat. Thus the group says that the last factor that would affect low
cost production is it would change the level of quality the boat ensures. It is both
positive and negative again because sometimes cheaper means lower quality. They
also have good ties with their suppliers and looking for new suppliers will break those
ties.

The company also has a choice of continuing their current strategy of product
differentiation. “Differentiation is to distinguish the offerings of the organization in any
way that the customer perceives as adding value” (Heizer & Render, 2004). This
strategy has worked for them through the years, specifically at Orlando, Florida where
the company is based. This has allowed them to increase their market shares and
slowly pay their debts. This strategy is also in tune with the company’s mission of giving
luxury and performance. They have also been given awards and distinction for their
products that offers quality. The company has worked hard to gain such a reputation
and have inspected their products rigorously in more ways than one and it has paid off
for them. The company’s concentration on giving the best quality and performance has
also made the consumers know their products also for giving safety to the family.

Going back to the decision criteria, this solution has also been affected by the
factors, which are cost-efficient, customer satisfaction and quality. Maintaining its
competitive edge through product differentiation would entail a positive or a negative
effect on the cost-efficiency of production. It could be positive because the materials
used are assured to be of best quality. This is because you greatly invest on the raw
materials thus quality of it is well tested. In contrast, this is a negative because its does
not necessarily mean that if the materials used were cheap, it directly corresponds to
lower quality. Sometimes it is just the name that you are buying and not the quality of
the product itself. Then again, this is either positive or negative because one can never
tell if the quality is being compensated with the money.

Next factor is the customer satisfaction. It is important for the company to value
customer satisfaction because knowing what the customers wants and what makes
them satisfy will greatly affect the characteristics of the product. In this case, Regal
Marine has always kept in touch with their customer so as to respond to the people’s
needs and wants. As previously mentioned, one of the solution is to maintain the
differentiation strategy. Customer satisfaction would definitely have a positive effect to
this strategy because making the product unique would satisfy their customers. This
would create satisfaction of the different comforts and luxury that the company’s
products offer. Also, as said in their mission, they provide the strategy by giving
innovations, unique feature and high quality product, which the customers are looking
for.

Lastly, the quality of the product is also taken into great consideration. Through
the strategy of differentiation, the company can enable itself to experiment different
ways in making their boats world-class. Differentiation must be thought of as going
beyond the boat’s characteristics “to encompass everything about the product that
influences the value that the customers derived from it”. This strategy would greatly
improve the quality of these boats.

However, the down side to continuing the strategy of product differentiation is

that the product will only be for the people who could afford the boats. Even though they
offer boats that can be appealing to the consumers, they might not be able to afford the
boats. They would not be able to broaden their target market. Considering that they
wanted to attract new market by going international, the company might face some
challenges in convincing other people to buy such expensive and luxurious boats.

I. Course of Action

(KD, HINDI BA DAPAT RESOLUTION MUNA BAGO MAG COURSE OF ACTION?

RESOLVE THE PROBLEM BEFORE ACTING?  I FORGOT KASI EH)

IX. Resolution

The analysis of both solutions, which are to maintain the company’s strategy of
differentiation and to lower the production cost, shows the group their advantages and
disadvantages. Both solutions in their own are good for companies. They are good for
the companies who want to enter the global market because they provide them benefits
that would help make the companies grow. However, the situation that Regal Marine is
in provided the group with an answer, that is, to maintain the company’s strategy of
differentiation.
 The group thinks that the company’s differentiation strategy is the best solution
for the ever-changing demands of the consumers. As mentioned in the case study,
“With changing consumer tastes, compounded by material changes and ever improving
marine engineering, the design function is under constant pressure. Added to these
pressures is the constant issue of cost competitiveness combined with the need to
provide good value for customers”. Having said this, it is important for the company to
know the challenges when dealing with the demands of the consumers.
Lowering the production cost cannot resolve this challenge. Lowering the cost of
production might hinder the company to develop new products that will suit the
consumers’ tastes. Quality comes with a price and for sure, with their mission, Regal
Marine will put quality first in their mind.
Knowing the fact that this strategy contributed to the success, this would enable
Regal Marine to foresee what the strategy will do for the company’s branches in other
places.

X. Recommendation

For Regal Marine, no ship leaves a harbor without a destination. And like their
boats, the company must be prepared to sail. Although the international market might
seem to be a sea of great opportunities, behind the sea also lie challenges and
opportunities. Regal Marine must have a good strategy in order to determine the
destination so that it can arrive at what it want to be in the future.

XI. References

According to the case study, the company’s operation is based on quality, products,
location, inventory and strategy.
Regal marine based in Orlando florida Family owned business. Goal is to provide value,
quality and satisfaction. Integrity, honesty..a lot more than building boats…character. Its
not just about the money
Differentiation strategy = distinctive and high value
Best in class—the product is distinctive  has products and benefits
Distributors must be at a caliber to distribute their products
Different models are manufactured in different assembly lines in different buildings
Value that consumer gets today are much greater than it was 10 to 20 years ago 
more value
Trying to work to become world class…use alternative products.. all competitors are
trying to do the same thing
Key component to accomplish a goal  people work together
No ship leaves a harbor without a destination…strategy to determine the destination so
that you can arrive at what you want to be in the future.