Chapter 2
~
Strategy at Regat Marine Regal Marine, one of the U.S.'s 10 hlrgest power-boat m<l nufactllr­
'ers, achieves it s mi ~.~ i on - prov iding luxury performance boals to
. customers worldwide- usi ng the strategy of differentiatio n. It dif­
ferenliates its prod uc t'S through constant inn ovation. unique fea­
tures, and high quality. Increns in g sa les al the O rl ando, Flo rida,
fami ly-owned [ !Tm ~lI gges t thaLthe s trategy is working.
As a quality boat manufacturer, Regal Marine sLam w ith con­
.tinuous innovalio n, as re Oected in computer-aided des ign (CA D).
high-qual ity mo ld s. and close tolerances that are con troll ed through
bothdefeclehart s find rigorolls visual inspection. In -house q uality is
oot enough, however. Becfluse a product is only as good as the pans
put into it, Regal has es tahli !; hed close ties with a large num ber of its
suppliers to ensure both fl ex ibility and perfect parts. Wilh the help
of these supplier ~, Regal can profi tabl y produ ce i.I produc i line o f
22 boalS, rangin g from the $ 14,000 19-foo t boa t [ 0 the $500,000
44·foot Commodore yaC ht.
''We build bOJ ls." says V P T im Kuck , " bul we 're rc~dl y in the
'tun' busine-ss. O ur competitio n incl udes no t o nl y 300 other boat,
canoe. and yacht manufac turers in our $17 billion industry,
rut home theaters, th e Int ernet. and all kinds of alternati ve frllnily
~ Hard
The Global Environmenl and Ope rations Strategy
__________________ ll_
Video Case
_J
i I\
entert ainment ." FOt1Unately Regal has been poying down
debt ,lOd increas ing market share.
Rega l has <l lso jo ined with scores uf" ot her independe nr
boat makers in the America n Boal l3uilders Association . Throu gh
econo mies o f sca le in procurement, Rega l is able to navigate against
billio n-do ll ar compelit or Brunswick (ma f.. er~ of th e Sea Ray and
Ba y li ne r brands). T he Global Company Profile femuring Regal
Marine (w hi ch opens Chapter 5) provides further background on
RegaJ and it s slrategy.
Discussion Questions'
1. Stale Reg;).l Mnrine's mission in your ow n words.
2. Identify (he suengths. wea knesses, opportunities, and threats that
are relevnllt 10 Ihe straregy o f Rega l Marine .
3. How would you defin e Regal 's strategy?
4. How would eac h of the 10 operation s managemen t deeisions
apply to operat ions decision makin g at Reg;).1 Marine?
ryou 111f1)' wi sh to view the video that accompnni e~ the case berore adiJressing
lhe::.e
que~ li on s.
Rock Cafe's Globat Strategy
Hard Rock brings the conce pl o f the "experie nce econo my" ro its
cafe operation . The strategy incorpo rares a uni que "experience" inro
its operations. This inn OViltioll is somew hat akin to mass custOm iza­
tion in manufacturing. A ( Hard Rock, the experience cO llcept is to
provide not only ,1 custom meal from the menu but a dining event
that includes a uniqu e vi s\H'I1 <l nd so und experi ence not dLJplicated
anywhere else in th e world . T hi s strategy is succeeding. O th e r
theme res taurants have come and gone while Han.l Roc k conrinues
to grow. As Professor C. M<lrkides o f (he Londo n Bus iness Sehoo l
says, "The trick is not 10 play the ga me beLler Lhan the competiti on .
but 10 develo p a nd pl<.l y .10 ahogethe r different ga me :·... At H ard
Rock. [he different game i:-;. the experi ence game.
From (he opening of it ~ first cafe in London in 197 1, during the
Briti sh rock music explosion . Hard Roc k has been serving food and
rock music with equal e nthll ~ ia s m. Hard Rock Cafe has 40 U.S. loca­
LIons, about a dozen in E urope, Jnd the remainder sca ttered through­
OUt lhe world , from Bangkok and Beij ing to Beirut. New
conslruct!On, leases. and in vestment in remode.ling are long te rlJ1 ~ so a
global stralegy meanS spec ial consideration of political ri sk. currency
risk.. and social nOlTns in <.I contex t o f a brand fit. A !though Hard Rock
is one ofrhe most recognized brJ nds in the world , lhi::; <.J oe... not m!!Dn
its c..1fe is [l narural everywhere. Special co nsiiJerali on mu st he g iven
to the suppl y chain for the restaura nt and its accompanying reta il
store. About 48% of a typic<ll cafe's sa les are hom merch<lnlii se.
The Hard Roc k Cafe bu s iness model is well de fin ed, but
becnuse of various ri sk factors ami differences in bu s iness praclices
and employment IClw, Hard Roc k e lects to franchi se about half of its
cafes. Social norms and prefe rences often suggest some twea king of
83
Video Case ".
.11.\ .
menus fo r 10ci,1 taste. For instance. Hard Roc k focuses less
on hamburgers :-lnd beef and more on fi sh ~Hld lobs ter in it~
British cafe~.
l3eca use 70% of Hard Rock's guest ~ are tOllris rs, recent yea rs
have found it expanding to "dest ina rion" ciLies. Wh ile thi s has bee n
a winning stralegy fo r decades. allow in g (he finn lO g row from I
Londo ll ca fe to 157 fac ilities in 57 countrie<; , it has made Hard Rock
suscept ib le to eco no mic flu ctuati ons thJt hit the tour ist business
hardest. So Hard Rock is signi ng a long-term lease for a new loca­
t io n in Nottingham. Eng land, to join recen tl y ope ned cafes in
Manchester and Birmi ng ham-cities that are nOl standard tourist
destinati ons. A t the srl me time, menu s a re be ing upgraded.
Hopefully, repea t business from local s in thcse c itie s will smooth
demand and m ake Hard R oc k less dependen t 0 11 tOUJi s[s.
Discussion Questions t
.I. Ide ntify the strJ lcgy changes that have mken place at Hartl Rock
Cafe since its fou nd in g in 197 1.
2. As Hard Rock Cafe hCl s changed it .'> ~ trategy. how has iL.'>
responses [0 so me of (he 10 decisions of OM changed?
3. Where does Hard Roc k fit in the fo ur inte rnati o nal operation s
strategies outlined in Figu re 2.9? Expl ain your anSwe r.
*Conslantinos Markide<;, "S trategic Innovalion .'· MIT Sloan
Revit'w 38. no. 3 (spring 1997): 9.
M{llla~emen f
tyou Illay wish to view the video Ihat accomp;mie<; I hj ~ C,15e before aiJiJres~­
ing these que!'liolls .
....Addilional Case Study: Visi t www.pearsonglobaJedHions.comlrnyomlab or www.pearson globaleditions,com!heizer for Ihi s free
case study: Motorola's G loba l Strategy: Focu~es on Motorola's internarional strategy.