J Boats 5 Forces Porter Analysis_pd

UNIVERSITAS INDONESIA

J BOATS – CASE STUDY ANALYSIS

MAKALAH KELOMPOK

Sistem Pengendalian Manajemen

Nama

NPM

Andika Chairunnisa

1606039406

Kartika Aisyah Rahman

1606852090

FAKULTAS EKONOMI DAN BISNIS PROGRAM STUDI MAGISTER AKUNTANSI 2017

Statement of Authorship Kami yang bertandatangan di bawah ini menyatakan bahwa tugas terlampir adalah murni hasil pekerjaan kami sendiri. Tidak ada pekerjaan orang lain yang kami gunakan tanpa menyebutkan sumbernya. Materi ini tidak/belum pernah disajikan/digunakan sebagai bahan untuk tugas lain kecuali kami menyatakan dengan jelas bahwa kami menyatakan menggunakannya. Kami memahami bahwa tugas yang kami kumpulkan ini dapat diperbanyak dan atau dikomunikasikan untuk tujuan mendeteksi adanya plagiarisme. Mata Ajaran

: Sistem Pengendalian Manajemen

Judul Makalah

: J Boats – Case Study Analysis

Dosen

: Prof. Dr. Lindawati Gani, Ak.,CA.,FCMA.,CGMA

Kelas

: AKM1-16p

No

Nama

NPM

1

Andika Chairunnisa

1606039406

2

Kartika Aisyah Rahman

1606852090

Tanda Tangan

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A. Company Background J Boats is one of the most successful and famous ship builders in United States. In its history, J Boats had won many prestigious awards. Not many know that J Boats is currently managed by only five individuals from one family. Rod who was the founder of J Boats and made his first ship "Ragtime" in 1974. Bob is the founder of Rod's company and brother and he makes business strategy. Jeffery, Rod's son became president of the company in 1987. Stuart and Bob's son Drake became vice president and sales manager in the same year 1987. Alan, Rod's son became product development manager. In 1993 Drake left his position and Jim (nephew Rod and Bob) became the sales coordinator. J Boats runs its business in eight countries: Argentina, Australia, Italy, France, England, Japan, Brazil and South Africa. Every year, more than 100,000 people around the world sail with one of their boats. J Boats works with Tillotson Pearson International (TPI) as the company's main supplier. Their cooperation is based on trust. J Boats has a network of 65 independent from dealers around the world. Having succeeded in maintaining its success for twenty years, the future looks bright, but all five members are aware of a successful management succession wish as it is submitted to the next generation. Some issues need to be considered for Jboat's future success: 1. How could J Boats create additional value by leveraging its brand franchise? 2. Should the successful working relationship with TPI be formalized? If so, how? 3. Would an infusion of capital by new investors allow J Boats to create dealer franchises modeled on the success of J Boats Chesapeake? 4. How could J Boats’ rudimentary financial planning and reporting be recast to fully reflect and capture the value of the brand franchise that the Johnstones had built over twenty years? 5. What critical performance indicators should the Johnstone monitor to ensure the success of their strategy?

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B. J Boats 5 Forces Porter Analysis: 1. Threat of new entrants: a. J Boats has set their market positioning clearly. They thrive for boats with performance, meanwhile most boat-builders are placing their positioning in between model and price-wise. Customers already know where to look if they want boats with performance-guaranteed, and boats with performance are costly to build, require time in the design planning and process. We think it wouldn’t be easy for newcomers to keep up with J Boats, so threat of new entrants is relatively low. b. J Boats has strong brand franchise since it has been actively participating in numerous regattas, has 65 independent dealers (45 based in U.S and 20 are from overseas), consistently make boats that meet the demand of their customers and we think because of they consistently challenged their own designs, they’ve managed to secure a lot of loyal customers and potential customers. 2. Suppliers: a. J Boats only has 1 main subcontractor to build their boats, it is TPI. J Boats and TPI have informal agreement from 1977 to the present. They’ve maintained their relationship over the years by agreeing to 22% raised after manufacturing cost for each boat that TPI produced for J Boats. b. Important supply factors for J Boats are quality and price. J Boats constantly managed to design high-performance boats eventhough the price are 15-20% more expensive than their rivals, but J Boats will make sure that their boats meets the expectation of their customers. c. J Boats currently has no option to switch suppliers or sources, eventhough they have options, the switch-cost would be quite high since they have to settle everything with their new suppliers from the beginning. 3. Buyers: a. In average, J Boats customers are those with sailing skills, thus they know that boats with performance and quality-wise will priced more expensive than boats with model-wise only. b. J Boats customers is not really sensitive to price, but J Boats is currently worry that they will have to compete with their own used boats in the market. Universitas Indonesia



4. Subtitutes: a. Subtitutes identified here is J Boats own boats that are being sold in the used market, for the after sales services, so far J Boats managed to handle them by referencing the customers claim directly to TPI as the builder. b. It is unlikely that J Boats customers will switch to their competitor’s product since J Boats played within the niche market. 5. Industry Rivalry a. Boat building was inherently a cyclical business. There will be good times and lean times. In good times, the market was typically strong, but in lean times, potential customers usually postponed discretionary leisure purchases. b. Not exactly overcapacity in J Boats, but their only subcontractor, TPI, currently complained that J Boats needs to stop producing few models in order to maintain the manufacturing cost. c. Boat building industry is an industry with small number of players. Discussions: 1. How could J Boats create additional value by leveraging its brand franchise? J Boats can charge a premium price and earn its customer loyalty should J Boats managed to achieved a certain level of branding. Once it has achieved the desired level, the brand franchise would be able to provide additional value to the company. A strong brand will be an important part of a business. The well-known J Boats as a company that designs ships with excellent performance and quality make the purchasers willing to pay more to get the quality of boats produced by J Boats. With the image as a producer of the best quality boats available, J boats can create additional value by utilizing franchise brands, franchise can generate long-term revenue stream and profitability. But to apply the leverage of its brand franchises, J Boat must have a control system that capable to ensure that with the franchise, others who use J Boat brand franchise will also run their business in line with the mission of J Boat as a producer of ships that prioritize performance and quality.

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2. Should the successful working relationship with TPI be formalized? If so, how? The cooperation relationship between J Boats and TPI should be formalized. Due to the view of the five forces analysis, TPI as the only subcontract of J Boats in ship building, makes J Boats highly dependent on TPI in shipbuilding production process matter. To strengthen the cooperative relationships of J Boats and TPI, it can establish cooperative relationships such as joint ventures where TPI and J Boats can forge collaboration with same goals and share the benefits and risks so that it appears the responsibility of both parties to achieve the predetermined goals. In J Boats and TPI cooperation, J Boats must create a supervisory system, capable of resolving tension-related issues between the personal interests of TPI with the joint goal of J Boat and TPI. Where so far J Boats and TPI have cooperated on the basis of mutual trust. J Boats should follow to ascertain whether TPI's production process has running as effectively as possible to achieve the most economical price while maintaining quality. 3. Would an infusion of capital by new investors allow J Boats to create dealer franchises modeled on the success of J Boats Chesapeake? Not really. J Boats Chesapeake is deemed successful not only because of the infusion of capital by new investors, J Boats Chesapeake earned the hard work because the dealers there are more aggressive and more focused. Also, they offered potential boat owners a time-share program where they could feel the sensation of sailing even before owning a boat. We suggest that if J Boats wants to create dealer franchises like J Boats Chesapeake, they need to start gathering more active-aggressive and more focused dealers on deck. Once they managed to do that, then an infusion of capital by new investors will come in hand. The infusion of capital should gives the new dealer franchises better preparation and better marketing thus will attract new boat owners and their repeated buyer.

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4. How could J Boats’s rudimentary financial planning and reporting be recast to fully reflect and capture the value of the brand franchise that the Johnstones had built over 20 years? J Boats needs to identify their resources first, and this can be done by looking at their balance sheet. J Boats must determine which one is their current assets, productive assets and how much intangible assets they have managed to acquired over 20 years. In J Boats’ case, intangible assets are their most valuable assets. There are 3 kinds of intangible assets according to Simons; a. Distinctive internal capabilities b. Market franchises c. Networks and relationships with suppliers and customers We are going to discuss more about market and brand franchises; and this is where the limitations of reporting came, a balance sheet is based on historical cost transactions and it can not help in determining the value of a company’s brand franchise, and Paragraph 14 to FRS 10 permits the recognition of internally-developed intangible assets provided such assets have a readily ascertainable market value. J Boats has a few options in order withstanding the limitations, J Boats needs to implement effective performance measurement and control system to monitor the effective use of all their significant business assets to ensure their profit goals achieved. 5. What critical performance indicators should the Johnstones monitor to ensure the success of their strategy? Critical Performance Indicators or Key Performance Indicators (KPI) is a tool to measure performance on any organizations to indicate the success rate or level of the organizations. J Boats must do these steps: a. J Boats must plan for 4 P’s (Strategy as perspective, position, plan and patterns) b. J Boats must establishes their goals and objectives that they will achieve based on the 4 P’s strategy (ie: their goals are maintaining manufacturing costs as low as possible and increasing sales on certain models) c. J Boats needs to establish Critical Success Factor from their goals and objectives (ie: J Boats sales will increase for 6% for year 20XX) d. J Boats must establish KPI from its CSF and finally collect the measures.

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As for the conclusion, the critical performance indicators that J Boats need to monitor will come from what are their planned strategy in order to achieved their goals and objectives.

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