Chapter 2, Problem 1.1VC

Strategy at Regal Marine ☆

Video Case

Regal Marine, one of the U.S.’s 10 largest power-boat manufacturers, achieves its mission—providing luxury performance boats to customers worldwide—using the strategy of differentiation. It differentiates its products through constant innovation, unique features, and high quality. Increasing sales at the Orlando, Florida, family-owned firm suggest that the strategy is working.

As a quality boat manufacturer, Regal Marine starts with continuous innovation, as reflected in computer-aided design (CAD), high-quality molds, and close tolerances that are controlled through both defect charts and rigorous visual inspection. In-house quality is not enough, however. Because a product is only as good as the parts put into it, Regal has established close ties with a large number of its suppliers to ensure both flexibility and perfect parts. With the help of these suppliers, Regal can profitably produce a product line of 22 boats, ranging from the $14,000 19-foot boat to the $500,000 44-foot Commodore yacht.

“We build boats,” says VP Tim Kuck, “but we’re really in the ‘fun’ business. Our competition includes not only 300 other boat, canoe, and yacht manufacturers in our $17 billion industry, but home theaters, the Internet, and all kinds of alternative family entertainments.” Fortunately Regal has been paying down debt and increasing market share.

Regal has also joined with scores of other independent boat makers in the American Boat Builders Association. Through economies of scale in procurement, Regal is able to navigate against billion-dollar competitor Brunswick (makers of the Sea Ray and Bayliner brands). The Global Company Profile featuring Regal Marine (which opens Chapter 5) provides further background on Regal and its strategy.

Discussion Questions^*

* You may wish to view the video that accompanies the case before addressing these questions.

1. State Regal Marine's mission in your own words.