1. VIDEO CASE: STRATEGY AT REGAL MARINE
This video case examines the operations strategy at Regal Marine, one of the US’s
largest manufacturers of powerboats. We suggest you follow these 4 steps:
1. Read the case study that follows.
2. View the video tour of Regal and its strategy decisions, then view the video clip
containing the authors’ observations.
3. If you wish to have further background, reread the material on strategy in Chapter 2.
4. Answer the questions about the case, and if your instructor wishes, email your
answers to him or her.
Chapter 2 deals with operations management strategy. Strategy is the action plan to
achieve a company’s mission. The firm’s mission is then supported by each activity.
Each activity, including the production activity has a strategy for achieving its mission
and for helping the organization reach the overall mission. These strategies exploit
opportunities and strengths, neutralize threats, and avoid weaknesses. In this case we
explore how strategies are developed and implemented at Regal Marine.
Firms achieve missions in three ways: (1) differentiation, (2) cost leadership, and (3)
quick response. This means operations managers are called on to deliver goods and
services that are (1) better, or at least different, (2) cheaper, and (3) more responsive.
Regal Marine, one of the US’s ten largest powerboat 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 suggests that the strategy is working.
Differentiation goes beyond physical characteristics to encompass everything about
the boat that influences the value that the customers derive from it. Operations
managers at Regal assist in defining everything about their boats that will influence the
potential value to the customer. This may be the convenience of a broad product line,
product features, or product service. Product service can manifest itself through
convenience (location of boat distributors or stores), training, boat delivery, or
maintenance services.
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 $11,000 3-passenger Rush to the
$250,000 40-foot Commodore Yacht.
2. "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
entertainment." Fortunately for Regal, with the strong economy and the repeal of the
boat luxury tax on its side, it 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 economics of sale in procurement, Regal is able to
navigate against billion-dollar competitor Brunswick (makers of Sea Ray and Bayliner
brands). The Global Company Profile featuring Regal Marine (which opens Chapter 6)
provides further background on Regal and its strategy.
Discussion Questions
1. State Regal Marine’s mission in your own words.
2. Identify the strengths, weaknesses, opportunities, and threats that are relevant to
the strategy of Regal Marine.
3. How would you define Regal’s strategy?
Extra Credit:
There are 10 decisions that operation managers at Regal Marine must make to support
the firm’s mission and implement its strategy:
1. Boat design, which defines much of the transformation process.
2. Quality. Customers’ quality expectations must be determined and policies and
procedures established to identify and achieve that quality.
3. Process design, which commits management to specific technology, quality, human
resource use, and maintenance.
4. Location selection, which for a boat builder may determine ultimate success.
5. Layout design, processes and materials must be sensibly located in relation to each
other.
6. Human resources and job design. People are an integral and expensive part of the
total system design at Regal. The quality-of-work life provided, the talent and skills
required, and their costs must be determined.
7. Supply-chain management. These decisions determine what parts of the boat are to
be made and what parts are to be purchased.
8. Inventory. Inventory decisions are tied to customer satisfaction, suppliers,
production schedules, and human resource planning.
3. 9. Scheduling. Feasible and efficient schedules of production have to be developed.
10. Maintenance. Regal has to make decisions regarding desired levels of reliability and
stability.
Extra Credit:
Briefly, pick three of the above operations management decisions and discuss how
each would apply to operations decision making at Regal Marine.
