Supercat Powerboats Case Study Analysis Essay
Given Ryan Kratz’s motivation to start new companies and his educational background in entrepreneurship and finance, I believe he should remain in the real estate business for at least one year, then focus on building his collection of businesses at various life-cycle stages. Ryan should use that year to work on maintaining the business relationship he has with Gary Wells and his father David Kratz, continue to build the backlog of SuperCat sales and concentrate on marketing, and work in real estate to build financial equity and professional relationships within the real estate industry.Ryan’s father is a serial entrepreneur and has the unique experience of vetting start-ups and building them to a particular exit strategy. In working with his father, Ryan does not need to quit real estate and immediately rush into purchasing his portfolio of companies.
In “Never Bet the Farm,” Iaquinto and Spinelli recommend keeping your day job and finding a way to fit the new business venture into your work schedule by becoming a weekend entrepreneur. David Kratz supports this idea by recommending his son to work on the SuperCat business at night.Properly building businesses will take much time, research, and capital. After one year, Ryan will have more contacts through working in real estate and will have the bank loan paid off, allowing him more flexibility and greater financial stability to start the next venture. Timing is truly a factor to consider when looking for the next opportunity, and Ryan is sure to meet more people who may present another business opportunity in the real estate company where he works. Real estate offers the chance to learn intimately about clients and their financial and professional backgrounds.This network-building may lead to potential business opportunities that Ryan would not have been exposed to if he quit real estate right away.
Also considering, he already accepted the position from his fellow Harvard Business School alum and he should not be too quick to burn that bridge by rescinding his job acceptance. While working in real estate, Ryan should focus on growing his relationship with Gary, seeing that it is a new business and Gary is the key to training new shop workers in order to institutionalize operations.Ryan can also get a feel for how he works with his father and decide if he wants to invest with him in future opportunities. Being a good business partner takes much work put into the company, and work put into building relationships between partners. Ryan shouldn’t be too quick to leave real estate and lose touch of the SuperCat business that has just been freshly inked. Question 2: According to Amar Bhide’s article “How Entrepreneurs Craft Strategies That Work,” all ventures merit some analysis and planning, but a comprehensive analytical approach doesn’t suit most start-ups.
A number of criteria must be considered in order to evaluate the potential of the business, however many business relationships and investment opportunities may be time sensitive and don’t lend to a drawn-out and time-consuming assessment. I believe Ryan made a cogent analysis of the SuperCat opportunity in time to keep Gary’s interest and not pass on a good prospect. Ryan’s 3 M approach gives a decent opportunity assessment and also lends to quick evaluation of other ventures in the future by looking at market size and structure, market growth, and margin analysis.In Ryan’s breakdown of criteria for choosing an investment opportunity, he lists his preferred market size as being bigger than $200 million worldwide but less than $25 billion. Ryan said a market greater than $25 billion might attract larger players which creates difficult competition. With the worldwide market for all powerboats being approximately $20. 5 billion at the time this case study was written, he is sitting in his ideal market.
He also prefers growth of 10% or more per year, but Ryan’s research shows this market is currently growing at 2. % to 3% annually. The specific breakdown of powerboats similar to what he will be selling does not have enough market information to report fragmented growth rates, so SuperCat will be relying on Gary’s previous customers to maintain market share, and will apply a multi-pronged marketing strategy to increase their footprint in the market. Preferring a fragmented competitive structure, Ryan foresees SuperCat carving itself into a niche area.In the Business Opportunity Plan presented, Ryan lists Skater, Marine Technologies, Inc. and NOR-TECH as competitors who also build 42 foot custom catamarans. Lending to a competitive advantage, none of them blend performance boating with recreational boating by specifically building a bow in the cabin of each boat. This may allow for SuperCat to carve out the perfect competitive niche and Ryan to maintain growth of the market share he is looking for.
Ryan wants to create margins that are over 15% net profit because that provides enough cushion if mistakes are made in the company. I agree with using net profit margin as a metric to determine how healthy and profitable he company is, but I disagree with his percentage. I would suggest a healthier margin to maintain is closer to 25% because that would give the company a larger cushion to protect itself during potentially difficult times. Gary has sold smaller boats to a French buyer who is interested in purchasing two SuperCat catamarans, and Ryan feels there is a market for these boats in Spain, but none of those deals are finalized yet.
If they don’t sell any boats right away, they will need the extra margin of security so the company does not run out of money.Question 3:With the information Ryan provides in the case study, SuperCat provides a good potential return on investment of 87% after the first year of operation. Please see the attached Excel spreadsheet for the formula breakdown of calculations below. Ryan’s original estimate used an average sale price of $675,000 per boat (which would have given 124% return), but Gary mentions a retail boat price of $600,000 on page 6.
In order to remain conservative, I calculated the return on investment using the smaller retail price. Both calculation breakdowns are attached.Question 4: Today’s consumer demands their products to be better, faster, and cheaper. This is not only due to the economic decline from the recent recession, but this has trended for quite some time now. Businesses cannot give merely a combination of quality and price anymore, but they need to strive to provide three value disciplines: product leadership, customer intimacy, and operational excellence. In “The Discipline of Market Leaders,” Tracy and Wiersema explain that a company cannot be everything to everyone. It needs to instead find the unique value it can deliver to its chosen market.SuperCat possesses value disciplines in product leadership and customer intimacy, sacrificing operational excellence in order to create a superior speedboat tailored to its very select target customers.
Gary Wells defines SuperCat’s product leadership by being an industry icon and consistently creating high quality, top performing, safe powerboats for 25 years of his career. SuperCat’s track record for product leadership relies solely on his ability to design and build super-premium boats using the finest materials.According to Ryan, Gary had devoted customers repeatedly coming back to him asking for different types of boats, their loyalty reaching as far as France.
It seems their relationships were cultivated and maintained through the years, as this was likely not a one-time transaction. However today, there is a higher chance that same customer base might be purchasing a used boat instead of a custom new powerboat, or even not buying a boat at all due to stock market losses and economic anguish.At the time the case study was written, SuperCat’s competitive advantage was listed as blending performance and recreational boating by using an exclusive (but not patented) design. SuperCat is the “low cost, most unique, highest quality producer with a truly personalized sales touch. ” Ryan lists the typical customer’s annual income as exceeding $1 million with net worth exceeding $10 million, noting increases in wealth within baby boomer and younger generations thanks to massive global wealth.Clearly, today’s evaluation of the global economy would reflect how both American and international markets’ overall growth rate and rise of affluence have been affected. If the millionaires Ryan originally targeted are still in the market to buy a powerboat, he would expect them to scrutinize their investments more intensely than ever before.
Boats are recreational vehicles, and such purchases typically decline in recessions.
