Non Stop Yacht S L Case Solution

1. What are the defining characteristics of the recreational mega-yacht industry? What are the industry standout features?

The industry grew despite the global recession. Its revenues stood at $1035 million, out of which, $652 million came from repairs and maintenance. By 2002, the industry began to consolidate as a wave of mergers and acquisitions occurred. Mega-yachts accounted for a major portion of the 9-billion maritime entertainment industry. 

2. What are the driving forces in the supplies and equipment segment of the mega-yacht industry? 

Yacht-building is a lengthy process, lasting anywhere between 1 to 3 years. Due to the nature of usage, yachts consist of very expensive and high-end equipment. Three categories of parts are consumables, spare parts and upgrades. Majority of suppliers exist in the west (UK, Germany and France). Procurement is primarily done by the crew. Yacht-management companies also help in procurement, but they also deduct a certain fee for their services. Yacht builders often specialize in certain components, especially the ones they use most often or the ones which are most expensive. 

3. What key factors determine the success of companies competing in the supplies and equipment segment of the mega-yacht industry?

Supply companies should have strong distribution links as this is their way of reaching the market. A strong sales network would yield higher revenues. Developing links with yacht management companies or purchasing agents will also lead to greater sales opportunities. Specializing in spare parts can be profitable as these are urgent and necessary parts. Furthermore, getting certain mega-yachts on board as their full time suppliers can also help with profitability by ensuring a steady stream of revenue. Another factor determining the success would be the ability to deliver quality consistently. The product quality must be of the highest standard as a part breaking down during a cruise would be a major hassle for any yacht crew. Since most suppliers are in the western hemisphere, is located in the east can provide a cost advantage provided that the quality control measures are not compromised.

4. How has Non Stop Yacht, S.L. (NSY) positioned itself in the marketplace for supplies and equipment for mega-yachts? What is its basic business model? How does its business model compare to those of other competitors? 

NSY sold to the crews on behalf of suppliers, thus earning the dealers' margin. In cases where a supplier did not have a distributor, NSY acted as a distributor and earned the distributors' margin as well. It sold on behalf of over 900 suppliers initially and this is what made it different from other dealers. While most dealers had only a handful of suppliers, NSY had hundreds. Its competitors did business in an outdated manner and often had to guess the parts their clients wanted if the ship was on a cruise. To tackle this issue, NSY posted its catalogue online and thus created a lot of ease for potential clients and also was able to tap into a wider market. Any ship crew in any part of the world could access the website and identify the product it wanted and obtain it easily through NSY.  

5. What does a SWOT analysis reveal about NSY position in the mega-yacht industry? 

NSY’s core strength is the diversity of its portfolio. It has made the previously complex task of identifying the correct parts very easy and thus hits the right note with the yacht crews. Furthermore, it has been able to earn dealer margins from a large number of suppliers and thus maintained a steady stream of cash flows. Its weakness is that it has been unable to meet investor expectations about profitability. It still has not been able to completely oust the dealers from the markets.