The Boat Industry Case Study
The industry would be classified as having a medium to relatively high level of competition.
This is a negative force that would cause the industry to be unattractive. There are many reasons that lead to this reasoning including, the price competition, the differentiation and technology, and the life cycle the market is in. First, we have the price. Value-priced boats have risen in popularity amongst consumers which indicates an industry that is highly price competitive. Competitive pricing like this can cause the smaller manufacturers within the industry to constantly undercut each other to gain market share at the expensive of marginal revenue. Highly competitive pricing also could imply …show more content…
Once again, this is a negative force that would cause the industry to be unattractive. Almost any substitute form of leisure activity chips away at the industry’s sales. Boat builders compete with any company within or outside the industry that sells camping equipment, snow skiing equipment, hiking equipment, and tennis …show more content…
The used-boat industry offers products that are virtually identical to those in the boat building industry, therefore the two industries compete directly with one another. Not only do companies in the boat building industry worry about other companies within, but they also need to worry about almost any outdoor leisure company from any other industry. The main target consumer for the boat building industry is households earning more than $100,000 a year, and according to IBISWorld, when the number of households earning that type of income declined throughout the recession, more consumers were encouraged to look for an affordable alternative. For many, acquiring a preowned boat was that alternative.
One of the products of the boat building industry is a boat built for transportation. These boats compete directly with other forms of transportation creating a threat of substitutes in the form of automobiles, RVs, and to a lesser extent airplanes. Fortunately, transportation boats only account for a small percentage of total industry revenue.
II. Threat of New