Silver Ships

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1. What are the key elements of Silver Ships’ strategy? Which of the five generic strategies is the company pursuing?

The first key element of Silver Ship’s strategy is multiple growth opportunities. R&D, technology, and product design are also key elements of Silver Ship’s strategy. McCarty adhered to the highest possible quality and performance standards and made taking care of his employees a high priority. The generic strategy that Silver Ships is using is planned proactive moves to attract customers and out compete rivals via improved product design, better features, higher quality, wider selection, lower prices, etc.

2. Explain the competitive pressures facing the aluminum military and workboat industry. What can a five-force analysis tell us about the nature and strength of the competitive pressures facing Silver Ships? Which of the five-forces is the strongest?

Pricing remains an integral success factor in this industry. Price variances have been challenging, ranging between as low as .65 cents per pound to as high as $1.40 a pound from 2003 to present. Strategically Silver Ships implemented a program to maximize the scrap cost. Cost of logistics has likewise presented a challenge to the military and work boat industry, resulting from transportation costs to deliver to distant locations (versus local delivery), together with transportation limitations such as road/lane width and bridge and overpass height. Lastly, competition exists in the areas of performance, reliability, and the ability to make timely delivery. Rivalry among competing sellers is the strongest of the five forces.

3. What are the key success factors for competing in the aluminum boatbuilding industry?

One of the key success factors for competing in the aluminum boat building industry is key product attributes; producing high quality and performance boats. It is frequently mention throughout the case. McCarty built the company focusing on this key success factor along with taking care of his employees.

Technological skills is another key success factor that is imbedded in the McCarty company mission statement, “Silver Ships/Ambar Marine exists to design and manufacture the most advanced, life-sustaining, and mission-capable 20- to 65-foot aluminum boats in the world.”

Success in keeping cost down in both labor and materials is another success factor. Most of the variance in cost is due to production costs: aluminum, labor, and logistics. McCarty dealt with the affects of price fluctuations of aluminum by hedging, inventory management, and waste control. The Gulf Coast area fosters a large maritime industry. A good supply of well-trained and experienced labor was not a problem. McCarty paid competitive wages keeping in line with global companies who are setting the pay scale in the industry, like Austal USA and Northrop Grumman. McCarty’s company location lead to low logistics cost. Silver Ships is located near several U.S. Navy, Air Force, and Coast Guard facilities, not to mention being near many municipalities and states that needed seagoing boats. Since the majority of the company’s customers are nearby, logistics cost are kept to a low level.

4. What does a SWOT analysis reveal about Silver Ships’ attractiveness? How attractive is the company’s situation and position?

We can identify McCarty’s resources by dividing them into the two categories: tangible and intangible resources. It leading strengths in tangible resource are (1) it’s Ambar collar modular design that reduces repair and shipping costs, (2) the location has 32 acres for room to expansion and at 45 feet above mean tide level allowed for protection from flooding, (3) it new facilities were built with top technology, including using CAD and environmentally friendly attributes. Leading strengths in intangible recourses are (1) the Ambar Marine name that was kept upon the acquisition of this company because of its well recognition and...
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