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April 22, 2011 Esteemed GBA490 Students Your Benevolent Professors 4-Hour Case
As a new hire of Silver Ships, you have been asked to prepare an industry and company analysis for Mr. Mike McCarty, owner of Silver Ships. Your report should also provide specific recommendations with brilliant justifications based on your industry and competitive analysis.
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Silver Ships’ Strategy in the Military and Workboat Industry
David L. Turnipseed
University of South Alabama
s Mike McCarty walked through the Silver Ships shipyard monitoring the production of several aluminum hull boats in various stages of production, he began to think “What now?” He had seen his shipyard grow from a boatbuilding operation in the garage of his home in 1985 to a large, state-of-the-art company manufacturing 26- to 60-foot aluminumhull boats in 2010. During its 25 years in business, McCarty’s company had sold more than 1,500 boats to the U.S. military, various federal agencies, law enforcement agencies, shipping companies, and others needing custom-designed small to medium-size vessels. Exhibit 1 presents a sample of typical military and workboats produced by Silver Ships. McCarty built his business by focusing on the highest possible quality and performance and taking care of his employees. His commitment to quality had allowed the company to increase revenues from $5.7 million in 2006 to nearly $11 million in 2009. In addition, the company had a strong balance sheet and had never been forced to lay off a single employee in its 25-year history. An income statement for 2006 through 2009 is presented in Exhibit 2. The company’s balance sheets for 2006 through 2009 are presented in Exhibit 3. As 2011 approached, McCarty was at an age where he could consider retirement and begin shopping the business to potential buyers or continue to drive Silver Ships’ growth through various expansion opportunities. The company’s most immediate opportunities for growth involved bidding on contracts to produce vessels needed by the U.S. Navy and U.S. Coast Guard that could be used to thwart terrorist activities
near shore and in ports and the opportunity to work with General Dynamics–European Land Systems to pursue a contract with the U.S. Army to build a new fleet of bridge erection boats. However, the poor state of the U.S. economy had created a difficult environment for many of Silver Ships’ private-sector workboat customers, and the threat of a double-dip recession and a looming tax increase on small businesses had frozen many shipping firms’ plans for expansion and further investment. Mike McCarty also understood that economic uncertainty amplified the risk associated with any expansion plans he might have and required that he avoid any miscalculations in forecasting additional demand resulting from new business opportunities he might choose to pursue.
A bad day fishing is better than a great day at the office. Mike McCarty believed this old adage and transitioned his love of fishing into a career as a commercial fisherman. McCarty began fishing commercially after graduating from high school in Knoxville, Tennessee. Fishing the rivers and lakes around Knoxville provided a good living, and eventually McCarty began buying other fishermen’s catch and became “the market.” He expanded from wholesale to retail and began buying and reselling ocean fish from the Atlantic and Gulf of Mexico. Copyright © 2010 by David L. Turnipseed. All rights reserved.
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Cases in Crafting and Executing Strategy
Typical Military and Workboats Produced by Silver Ships
In 1971, McCarty got out of the wholesale and retail seafood business and moved to coastal Mobile, Alabama, to start up a commercial saltwater fishing enterprise. Always looking for a way to...
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