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YELLOWTAIL MARINE, Inc.


Communication Art Case 2.1

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Table of Contents
Slide 1. 2. 3. Background Prominent Figures Timeline Slide Name

4.
5. 6. 7. 8.

Case
Explanation Question & Answer Suggestion Conclusion

PROMINENT FIGURE BACKGROUND

The Yellowtail Marine, Inc. case focuses attention on the difficulties of Robyn Gilcrist, which is the newly appointed president, to efficiently managing the companys daily operations while at the same time developing a corporate strategy.
What was the problem ? This case concerns Gilcrists first day as president. Due to the intervention of Gunersons unexpected death, Gilcrist had to join Yellowtail some weeks ahead of the scheduled starting date. Also, she must learn the business in a fast pace and keep it running without the help of Gunerson, which is the former president of Yellowtail.

CASE Yellowtail Marine. Inc

Yellow tail was founded in 1926 by Olaf Gunerson.

It was acquired from White Bay Boatyard.


It produced a two-model line : a cabin cruiser and a game fishing boat. It was one of the firms selected to to produce offshore patrol boat, naval launches, and few other small crafts in Second World War.

BACKGROUND PROMINENT FIGURES


Robyn Gilcrist : a smart woman that had been worked in sportscraft marine division in promotion and marketing. She has increased total sales by 70% in 2 years and win some national event. Lately she was working as assistant of sportscraft president. Charles Boswell : A rich man who had lead CBG. Inc and became a president of American Water Skiing Association. He was involve in alaskan oil department and own West Coast distributorships of a major earth moving equipment company.

Olaf Gunerson (73) : The former owner of Yellowtail Marine. Inc. He was trained as a naval architect and became a legend in San Diego.
Robert McPhail (57) : Operation Manager who had been working for 23 years and lead the production center Mark Lopez (59) : CPA who had been working for 15 years and control financial and personnel aspect. Paul Lees (36) : Sales Manager that had been working for 4 years in Yellowtail Marine. Inc.

Case
Mr. Charles Boswell appointed Ms. Robyn Gilcrist as the president of Yellowtail Marine after the sudden death of Olaf Gunerson (the Yellowtails founder and former owner). Robyn Gilcrist has taken over as CEO a few days after the owner death. Eventough she had no proper hand-over for the company, she had to learn the business to be a credible leader.

Case

Since Yellowtail had been bought by Charles Boswell, He appointed by Gilcrist to work with Gunerson for 12 months before Gunersons retirement, but the death intervened. So, Gilcrist had to learn the business in a fast pace and keep it running without him.
Gilcrist had to get to the plant, deal with everything and fly to san fransisco for a board meeting in the same afternoon and then return with him and his wife to Olafs Funeral on April 15th 1976. At the same time, Mr. Boswell will be leaving to the Middle East after the funeral, in San Diego, and wants Robyns preliminary strategic plan to review before he leaves. The Strategic Plan is scheduled to be presented at the April 29th 1976 in Board meeting. Gilcrist have to managing the companys daily operations while at the same time developing a corporate strategy.

Gunersons death caused her to joined Yellowtail some weeks ahead of the scheduled starting date. Boswell has asked her to deal with whatever needs doing, fly to San Fancisco to a board meeting this afternoon, and then attend Gunersons funeral the following day. By that time Boswell wants a preliminary strategic plan. Boswell challenges Gilcrist with a difficult task, which is only made more so when she arrives at the boatyard. She has no secretary (Gunersons secretary is still in mourn) and it was apparent that there are severe production problem persists in the yard, and an assortment of other tasks. All of these challenges are on top of the list of Boswells assignment to come up with a strategic plan. Its a tough time to start her new job.

SITUATION TIMELINES
Gilcrist agree to start her work in Yellowtail Marine

Boswell Offer COE position to Gilcrist

Gilcrist should have develop a budget planning.

25th March 1976

12th April 1976

14th April 1976

15th April 1976

25th April 1976

4th May 1976

Olaf Died, Gilcrist should start earlier

Gilcrist and Boswell should back to San Diego for Olaf s funeral.

Gilcrist s plan to start work in Yellowtail Marine. Inc.

Boswell had negotiated a deal which left the owner in place for 12 months while he took control of the board by bring a new professional manager in to work with the retiring owner.

Gunnersons Basket
1. Letters from Marketing Manager 2. Notes from Sarah Clarke

3. Letter from Charles Boswell


4. Phone call from Charlie Douglas 5. Letter from Patrick Finch about clean water regulation 6. Letter from production Manager 7. Letter from Occupational Safety and Health

Administration (OSHA) about inspection 8. Letter from Mouton, Lambe and Wolfe Investment Bankers about selling information of Sagittarius Inflatable Boats, Inc.

Internal Problems :
Yellowtail outboard boat, outboard motor and boat trailers sales have been dropping in 1973 and 1975, it led to the amount of inventories. Customer preference was shifting to another type of boats, There is so many imitation, so producer should customize their product with a new and unique design. Maintenance cost increasing The Oil and energy crisis of 1944 did not aid in our cause to try and revive sales. This is something that needs to be addressed but not our current priority.

External Problems :
a. Industry was changing, too many acquisition by a larger b.

c.

d. e. f.

g.
h.

companies. Material prices changes over the period. Government regulation of the Boat Safety Act 1971 that required boat manufacturers to keep records of their compliance records. Motor noise levels should be reduced. The clean water legislation affect sanitation systems. Chemical used in boat manufacturing were found harmful to worker. Shortages of marinas and service center. Original Equipment Manufacturers (OEM) orders were slow and dealer conservatism could have been due to the problems of trade-ins.

Exhibits and Tables:


0 Exhibit 1. Yellowtail Marine Balance Sheet 0 Exhibit 2. Yellowtail Marine Income Statement 0 Exhibit 3. Sales of New Outboard Boats, Motors, and

Inboard/Outboard Boats, 1972-1975 0 Exhibit 4. Expected Boating Industry Investment and Sales, 19651976 0 Exhibit 5 . Why Customers Buy Outboard Boats and Motors, 19701975 0 Exhibit 6. Top Markets for Outboard Boats and Motors, 1970-1975 Table A. Non-independent Boat Manufacturer in the top 40 Sellers Table B. Prices of Chemicals, December 1972-1975 (per pound) Table C. Rental Charges for summer Berthing at surveyed Establishment Table D. Repair Activities at Surveyed Establishment

EXTERNAL ENVIRONMENT TIMELINES

GREAT DEPRESSION

END of GREAT DEPRESSION /END of WORLD WAR II

RECESSION IN UNITED STATES

1930

1939

1940/1945

1973

1974

1975

WORLD WAR II

OIL CRISIS

THE END OF RECESSION

Recession and inflation in US had increased a production cost.

GREAT DEPRESSION started in September 4th 1929 when there was a fall in stock price and became worst in October 29th 1929 when a stock market crash (known as Black Tuesday).

Environmental Analysis
The Pleasure-boat industry : Retail sales increased about $2.6 million in 1964 to almost $4.8 billion in 1975 with 16.000 boating dealers and 6000 marinas, boatyards, and yacht clubs serving the needs of boating families. Inflation made an increase in production cost and used boat sales price increased because of cost of new equipment. High cost of transporting boats overland and the industry was changing because of the development of new materials (aluminum and fiberglass which lent them to semi-automated and automated production processed and larger investment, well capitalized corporations were acquired or merged with larger companies.

The merger and acquisition activity was prompted by the industrys steady growth trough the 1960 until 1970 but the oil crisis and the recession of 1974 and 1975 led to shake out.
Some raw material prices changed over the period every companies were all affected, the small firms would not survive. It was estimated that outboard boat sales fell by almost 40% between 1973 and 1975.

Boat trailer sales fell by about 25% in the same period and outboard motor sales fell by almost 20%. Only sailboat market predicted to be grow in 1976 in rate of 15%-20%.

Sales and Manufacture Problems :


Sales situation : sales are slipping down from 10 Mio in 1973 to 8.4 Mio in 1975. Market for outboard boat and outboard motor has been declining by almost 40% from 1973 to 1975 (recession and raw material prices). 64% of the company product is Outboard boat. Inboard motor shows a rather steady sales in the past two years, but the average price per unit has increased and therefore in terms of value the inboard boat segment shows an increase trend.

Analysis
In the middle of these problems, Gilcrist, who had been agree to the work contract in Yellowtail Marine, Inc, should do many things to keep the sustainability of this company. She have to finish all Gunersons former project and start with a new and brilliant project.

So, What should Gilcrist Do?

Gilcrist Must Do :
Robyn Gilcrist must address problems in marketing, production, finance, employee relations, corporate morale, governmental relations, and her long-term partnership with her superior.
Robyn should start by getting more understanding about the product, afterward she must wrestle with the issue of what directional path the company should take and what changes in the company technology focus would improve its current market position and future prospects.

Beside that, Gilcrist should examine every financial statement and every survey result to determine the condition of Yellowtail and to make a strategic plan and capital budgeting for the board approval in the next term.
She have to deciding and commited the company to one path versus another pushes managers to draw some carefully reasoned conclusions about how to try to modify the company business makeup and the market position it should stake out.

Yellowtail Financial Ratio


Type of Ratio Net Working Capital Current Ratio Quick Ratio Account Receivables Ratio Inventory Ratio Value $ 1,129,000 2,13 0,87 9,90 5,32 Note Fair Fair Not Good Not Good Not Good

Total Asset Turnover


Fixed Asset Ratio Total Debt to Assets Total Debt to Equity Return On Assets Return On Equity

2,20
5,47 0,70 2,34 0,044 0,14

Fair
Fair Good Fair Not Good Not Good

Equity Multiplier
DuPont Analysis

3,34
0,148

Fair
Not Good

So, what goals should she have in mind? Are any of these goals in conflict? Which should be her chief goal(s)? In that light, rank the items in the in-basket into three groups. Which items are (1) most important? What should she do about them and why? Which items are (2) important, but could wait? Which items are of (3) lowest priority? What should she do about these less important items and why?

The Most Important?


I consider that Gilcrist should make the following specific operations: 1.Sending the representative of management to tour the plant with Mr. Arch Towne of OSHA, in order to investigate the case of worker safety immediately. 2.Sending the yard foreman and the representative of trade union go to the workshop to learn the actual situation and give emotional comfort of workers. Moreover, receiving the report of the whole progress in time. In addition, the specific decision-making will be drawn up when Gilcrist return from Gunersons funeral.

3. Let Clarke reply the detailed date of deliberations relating

to job-hopping to Yellowtail to Stewart Marschal. At the same time, notify the Saggitarius Inflatable Boats, Inc. of the aspiration about the acquisition, and told that she would contact them after April 15. 4. After completed above things, Gilcrist has to fully utilize the time on the way to Gunersons funeral to develop the strategies of Yellowtail, and prepared for the discussion with Boswell. 5. After attending Gunersons funeral, Gilcrist ought to convene a meeting to discuss the problem concerning the date of exhibition. 6. Finally, Gilcrist needs to have a meet with their legal advisor, Finch, as soon as possible, for negotiating whether they have necessary to follow the clean water regulations or take other legal actions.

Important, but could wait?


1. Make corporate goals and strategy. 2. Make a capital budgeting. 3. Make a new project and marketing plan. 4. Write the letter she needed to write to

Gunnersons friend and stakeholders. 5. Make notes to herself about this repairing activities. 6. Plan every actions and clarify its purpose. 7. Write the substance of any phone calls.

Less Important Items


1. Make a research of a new design that consumer would like. 2. Hire a boat designer. 3. Change the harmful material. 4. Make a plan to built a new service center and marinas. 5. Make a significant change in maintenance and noise mechanism. 6. Hire a environment Scientist and change the chemicals in boat manufacturing.

1. What are Gilcrists responsibilities to the company? To the employees who might resent her sudden appearance? To Boswell?
Gilcrists position is a walk-in president of the company due to Gunersons death intervened. Now Gilcrist must learn the business in a fast pace and keep it running without Gunersons advice. She can expect some skepticism from her employees because thats what usually happens when change occurs. Her employees will watch her every move to grade if shes capable of handling the task as president. Boswell challenges Gilcrist with a difficult task. She has no secretary and it was apparent that there are severe production problem persists in the yard, and an assortment of other tasks. Its a tough time to start your new job for Gilcrist who has to learn about the company in a fast pace and keep it running smoothly.

2. How would you rank the issues she faces in terms of relative importance? Which are in conflict? Gilcrist is facing a very difficult task and a tough position to face. She did not only have to deal with the fickle state of boat sales, but she also has to develop a marketing strategy that will satisfy the board and on top of that she has to answer to OSHA. After it, she has procured the health and safety issue, she must turn her attention the strategic business model that shes be told to provide. Here are the top priorities :

Robyn Gilcrists Top Priorities


Delegation. 1.Sarah Clarke, an employee, offered to help Robyn in any way she could. Robyn should thank Sarah and accept her assistance. Ask Sarah to reach out to key individuals of the organization that are absent to please report back to work now. 2.OSHA is in the building and Mr. Towne, the inspector, wants a representative of management and the shop steward to tour the plant with him. Robyn should greet Mr. Towne, explain that it is her first day on the job, and assign Mark Lopez, as a trusted member of her management team, to tour the facility. 3.A letter from EPA states that high levels of cyanide and other chemicals were found off Yellowtails boatyard. It also notes that Mr. Andrew Tozallowski will call, on April 19 at 9:00 a.m., to discuss Yellowtails plan for complying.

3. What long-term goals should she set for herself?


The long-term goal is to come up with a strategic plan to stimulate innovation and change. Also, to increase sales since sales have been slipping for the last two years. The company needs to maintain their flexibility, continue to improve their quality, and beat their competition in the boating industry by constantly providing innovated products.

Her long term goal with Yellowtail Marine is to have a controlling interest in 10 years. Robyns short term goal is to restore immediate order.

4. What should she do now?


0 Gilcrist has to fully utilize the time on the way to Gunersons

funeral to develop the strategies of Yellowtail, and prepared for the discussion with Boswell. 0 After attending Gunersons funeral, Gilcrist ought to convene a meeting to discuss the problem concerning the date of exhibition. 0 Gilcrist have to meet with their legal advisor, for negotiating whether they have necessary to follow the clean water regulations or take other legal actions. 0 Finally, The most important thing for her to do is to deal with the environmental compliance immediately due to governmental regulations.

5. How should she communicate her decisions?


0 Sending the representative of management to tour the

plant with Mr. Arch Towne of OSHA 0 Sending the yard foreman and the representative of trade union go to the workshop to learn the actual situation and give emotional comfort of workers 0 Let Clarke reply the detailed date of deliberations relating to job-hopping to Yellowtail to Stewart Marschal. 0 Notify the Saggitarius Inflatable Boats, Inc. of the aspiration about the acquisition, and told that she would contact them after April 15.

6. What Risks does Gilcrist face? What painful decisions should she make?
0 According to Boswells words, the sales of Yellowtail had

slipped from just over $10 million in 1973 to approximately $8.4 million in 1975, as the oil crisis and the Great Depression cut deeply into boat industrys sales. 0 Through the analysis of Yellowtails balance sheet on July 31, 1975, we can recognize that the company's asset-liability ratio was as high as 2.13. 0 It indicated that most of the company's total assets were obtained by borrowing, and that was to mean the repayment capability of Yellowtail was certainly not satisfied, therefore, a great financial risk existed.

0 The most painful decision that she have to make is to buy Sagittarius when Yellowtail have a minimum income. She will face a big risk if she fail and a big return if she is success.
0 Robyn must learn the business to be a credible leader. She brings an impressive track record

in sales and marketing with great results. 0 She have to deal with all environmental issues to avoid the banned of this company. If she doesnt make improvement in production and become an environment-friendly boat eversince, Yellowtail will be a history.

7. Should she immediately move to make the company more market-oriented? How?
Boswell told her that he had already hired a new advertising agency to beef up the companys sales in the summer of 1976, to increase the turnover next year. Gilcrist should make Yellowtail. Inc become more marketoriented, because the demand is shifting based on market trends. Furthermore, if Gilcrist can successfully takeover the Saggitarius Inflatable Boats, Inc. and then enter the inflatable boats market, the turnover of Yellowtail will definitely have an upsurge.

Conclusion
0 Robyn Gilcrist needs to develop a strategic vision of where

Yellowtail needs to head and what its future productcustomer-market-technology focus should be. 0 While she dealing with the matters in hand, setting a longterm goal for herself is very important. It will effectively improve the level of management, and contribute to effective implementation of control activities. 0 In my personal view, the most appropriate long-term goal for Gilcrist is increasing the sales of enterprise, thus the company can enhance the profitability.

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