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University of Central Florida

10-K Integration Project: MarineMax Inc.

Dasha Karpovtsev
MAN 4720, Section: 0017
Professor Boettcher
September 29th, 2015
PESTLE

1. Political
Changes in federal and state tax laws, such as an imposition of luxury taxes on new boat
purchases, increases in prevailing tax rates, and removal of certain interest deductions, also
influence consumers decisions to purchase products we offer and could have a negative effect
on our sales. Pg. 28
It became evident how the implementation of luxury taxes can heavily influence the sales of the
company, illustrating a price sensitivity notion within the customer market. Due to the political
nature of fluctuating luxury taxes, tax rates, and interest deductions, the customer may find him
or herself contemplating on whether to spend the extra money, further alluding to boat prices
being both elastic and prone to adverse federal tax policies. A direct example of this predicament
occurred during 1991 and 1992, when the federal government enforced a luxury tax on
recreational boats with costs over $100,000, causing a noticeable negative change in the
consumers buying habits and sales (pg. 28). This foreshadowed how an increase of taxes on the
boats was able to make such an impact on the customers perception of products need and
purchase, influencing their overall consumer decision buying process.

2. Economic
General economic conditions and consumer spending patterns can negatively impact our
operating results. Unfavorable local, regional, national, or global economic developments or
uncertainties regarding future economic prospects could reduce consumer spending in the
markets we serve and adversely affect our business. Pg. 24
As previously mentioned in the luxury tax example on page 28, there seems to be a high price
elasticity for boats, exemplifying how even the smallest increments of economical change can
impact the consumers purchasing power. Whether it may be due to a recession, an increase in
prices, or general shifts within market trends or demand, a consumer may be less likely to
purchase the companys products if their spending habits are influenced by economical

predicaments. Its the notion how one possible economical uncertainty or condition could create
a negative chain reaction within the company, creating a strong link between the consumers
confidence within the market environment in relation to their overall spending habits.

3. Sociocultural
This strategy also recognizes that many existing and potential customers who reside in
Northern markets and vacation for substantial periods in Southern markets will prefer to
purchase and service their boats from the same well-known company. Pg. 7
There seemed to be a trend that customers that either vacationed or lived in the South preferred
to purchase or service their boats more than individuals that only resided up north. This of course
can be attributed to both the weather and geographical conditions for owning a boat, illustrating
the fact that Florida generated approximately 49%, 51%, and 52% of of revenue during the years
of 2012-2014 (pg.45). This could also explain why the companys executive offices are all
located in Florida (pg. 5), as well as why environmental conditions such as hurricanes
(predominantly affecting the Florida area), have caused more issues in obtaining and
implementing boat insurance (pg.27).

4. Technological
Utilizing Technology Throughout Operations. We believe that our management information
system, which currently is being utilized by each of our dealerships and was developed over a
number of years through cooperative efforts with a common vendor, enhances our ability to
integrate successfully the operations of our dealerships and future acquired dealers. The system
facilitates the interchange of information and enhances cross-selling opportunities throughout
our company. Pg. 9
The company is currently using a management information system that integrates the aspects of
efficiency and spreadability, enhancing its overall productivity within their daily operations. The
system impacts a multitude of disparate operational levels, ranging from inventory, receivables,

and financial reporting, all the way to budgeting and sales management. Its the idea of
intertwining all these facets into one collective database, and having the ability to facilitate both
financial and operation data through such a technological approach. The company has also
implemented online marketing through www.MarineMax.com, where customers are able to learn
all about their company and products, as well as drive traffic to various social networking sites
(pg.7). The company is adapting to the changes of consumer behavior, and taking advantage of
direct online purchases, leads, product engagement, factors that are becoming more profitable for
their sales.

5. Environmental
Weather and environmental conditions may adversely impact our operating results. For
example, drought conditions, reduced rainfall levels, excessive rain and environmental
conditions, such as the BP oil spill in the Gulf of Mexico, may force boating areas to close or
render boating dangerous or inconvenient, thereby curtailing customer demand for our
products. Pg. 32
Due to the nature of using and sustaining a boat, environmental conditions and regulations are
important factors in both the companys sales and operating results. Whether there may be excess
flooding, oil spills, or a shortage of rainfall, all these possible predicaments can directly
influence the consumers decision in acquisition and upholding of the product. If environmental
conditions do not permit the use or need for a boat, or it is deemed both too dangerous and
inconvenient to use, than customers may turn away from such a proposition. The company also
takes into consideration the need of investing and ameliorating in their boats engines and carbon
foot print, since environmental laws and regulatory agencies such as EPA, are constantly
requiring higher standards and qualifications for both recreational boats and facilities (pg.11).

6. Legal
Our manufacturers generally maintain product liability insurance, and we maintain third-party
product liability insurance, which we believe to be adequate. However, we may experience legal
claims in excess of our insurance coverage, and those claims may not be covered by insurance.
Furthermore, any significant claims against us could adversely affect our business, financial
condition, and results of operations and result in negative publicity. Pg. 22
With any sort of product that may potentially create injury or damage, the aspect of liability
insurance can both considered both a benefit and a constraint. As mentioned, if legal claims from
third parties are over the insurance coverage offered, than this may create both financial and
operational issues for the company. If the excess payouts and reimbursements are made, than this
may cause an increase in both insurance premiums and coverages, adversely affecting the
consumers perception of whether or not to acquire such a costly insurance. Lastly, with any sort
of lawsuits and liability cases, there is the chance of obtaining negative publicity, which could
potentially hurt the brand image and customer perception of the safety and functionality of the
products.

Porters Five Forces

7. Current Competitors and Rivalry
We operate in a highly competitive environment. In addition to facing competition generally
from non-boating recreation businesses seeking to attract discretionary spending dollars, the
recreational boat industry itself is highly fragmented and involves intense competition for
customers, product distribution rights, and suitable retail locations, particularly on or near
waterways. Pg. 32
The company elucidates on the notion that they do face a lot of competition, primarily with
single-location boat dealers, which compromise of national specialty marine stores, sporting

good stores, and catalog retailers for example (pg. 32). Some of the threats they experience from
competitors is that they have a multitude of financial and marketing resources to penetrate the
market, as well as a strong presence in their targeted market boating shows (pg. 23). In
retrospective though, MarineMax illustrates having a strong nationwide foundation, intertwining
their effective use of management information systems, marketing and sales capabilities, as well
as market adaptability, as means of standing out amongst their competitors.
8. Threat of New Entrants
There is significant competition both within markets we currently serve and in new markets that
we may enter. In addition, several of our competitors, especially those selling boating
accessories, are large national or regional chains that have substantial financial, marketing, and
other resources. Pg. 23
As stated within their current industry stance, there is an already abundant number of both
boating and non-boating businesses they are currently competing within, as well as the aspect of
strong competition if they were to enter a new market. They did not specifically allude to any
new competitors entering or taking over the industry, but did however mention their goals in
identifying new markets to obtain distribution rights or constructing suitable facilities in order to
focus on their companys internal growth (pg. 31). Therefore it does not seem clear if they have
established plans on acquiring new locations or product offerings or are experiencing new
business entrants, but they have considered the threat of even more competition if they were to
enter a new market.
9. Suppliers and their Bargaining Power
Manufacturers generally establish prices on an annual basis, but may change prices at their
sole discretion. Manufacturers typically discount the cost of inventory and offer inventory
financing assistance during the manufacturers slow seasons, generally October through March.

To obtain lower cost of inventory, we strive to capitalize on these manufacturer incentives to take
product delivery during the manufacturers slow seasons. Pg. 16
MarineMax purchases most of their boat inventory directly from manufacturers (pg. 15), which
can be considered both a pro and a con in regards to pricing and products. The company engages
with a multitude of disparate manufacturers, which essentially provides a strong foundation for
constant re-stock of inventory and availability, as well as lower switching costs. The company
also takes advantage of the slow seasons, in which in tries to acquire its boat inventory at
discount, since the con is that manufacturers establish pricing within annual intervals. Also,
MarineMax did enter into a multi-year agreement with both Brunswick and Azimut-Benetti
Group, but still has the rights to sell any product lines or competing products, taking away some
of the bargaining power away from the supplier in essence.

10. Buyers and their Bargaining Power

We purchase substantially all of our new boat inventory directly from manufacturers, which
allocate new boats to dealerships based on the amount of boats sold by the dealership. We also
exchange new boats with other dealers to accommodate customer demand and to balance
inventory. Pg. 15
If we analyze the disparate threats and factors involved in acquiring, using, and sustaining a boat,
then it becomes evident how much power the buyers have in regards to the industry demand. As
mentioned previously, the industry is highly fragmented and competitive, therefore the buyer will
have low switching costs, industry information, and high price sensitivity to such products. There
is also a threat of integration when it comes to laws and regulations, for example, where certain
states that require a license to operate a recreational boat, which in essence may discourage
potential first-time buyers (pg.22). Lastly, the question of product liability may also come into

play, distinguishing the extra costs of boat insurance or increased insurance premiums,
influencing the customers fluctuating demand for such an expensive product.

11. Threat of Substitute Product/Services

Though the 10k does not mention any specific types of product or substitute threats, I surmise
that potential substitutes would depend on the purpose of the boat acquisition in the first place. If
the boat is used for more of a transportation method, than the notion of air travel could be a
possible alternative, if environmental conditions such as flooding or oil spills inhibit the use of
boats. On another hand, if the product is viewed in terms of luxury or pleasure, then perhaps a
sports vehicle or vehicles in general could be looked upon as a substitute for those recreational
attributes.

SWOT
12. Strengths
We believe that our full range of services, no hassle sales approach, prime retail locations,
premium product offerings, extensive facilities, strong management and team members, and
emphasis on customer service and satisfaction before and after a boat sale are competitive
advantages that enable us to be more responsive to the needs of existing and prospective
customers. We strive to provide superior customer service and support before, during, and after
the sale Pg. 1
The company heavily emphasizes on their core attributes, which intertwine the aspects of mass
marketing through both traditional and digital media outlets, disparate product offerings and
sales approaches, as well as a focus on constant market expansion. The company has also
capitalized on outperforming the industry through the means of effective management systems
and retailing strategies, illustrating an increase in their overall industry market shares (pg.46). It
seems that MarineMax strengths consist from a collaboration of both financial and operational

processes, along with decentralized approaches within both their management and target
markets. Finally, one of their key strengths was also becoming one of the largest retailers
nationwide, which further exemplified their notion of expansion into new markets with a
competitive approach outlook.
13. Weaknesses
Turmoil in the credit markets and weakness in the retail markets may interfere with our ability
to remain in compliance with the covenants of the credit facility and therefore our ability to
utilize the credit facility to fund operations. Pg. 51
As mentioned within the previous concepts, economic conditions may cause a lot of
predicaments for the company, directly affecting both their financial and operational processes.
In this case, the financial aspects of cash and credit are directly influenced by both the credit
market and retailer markets, foreshadowing that notion of customer influence on demand. For
example, during the most recent recession, the company was even competing from banks when it
came to liquidating repossessed boats (pg. 32). The weakness then becomes MarineMax not
being able to potentially fund operations due to low collateral levels, portraying the sensitivity of
the companys financial facets.
14. Opportunities
In addition to pursuing growth by acquiring boat dealers, we intend to continue to pursue a
strategy of growth through opening new retail locations and offering new products in our
existing and new territories. Pg. 31
The company has been focusing on both identifying and acquiring new markets, elucidating on
various growth strategies that could potentially be implemented. MarineMax is also interested in
establishing additional retail facilities in both new and existing markets, focusing on reaching out
to new customers through innovative retail strategies as one of their goals (pg.8). Such

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innovative retail strategies would intertwine the use of online marketing through their direct
company website, as well as the use of social media platforms and online engagement. Their
opportunity for geographic expansion would also include opening new retailer locations as well
as possible product extensions, which they believed could ameliorate their competitive
advantage.
15. Threats
Increased global cybersecurity vulnerabilities, threats and more sophisticated and targeted
cyber-related attacks pose a risk to the security of our and our customers, suppliers and thirdparty service providers products, systems and networks and the confidentiality, availability and
integrity of our data. Pg. 37
As with any new form of technology, there are always threats and risks associated within the
internal and external environments of a company. The presence of management information
systems as well as online marketing and softwares have created threats to the companys
customers, suppliers, third-party service providers, and general networks collectively (pg.37).
This would allude to the issues of privacy, data integrity, and sensitive customer information,
which could then all become prone to cyberattacks and online malfunctions. Though the online
marketing and system databases have ameliorated the companys use of spreadability and
efficiency, there are still possible consequences of litigation, protection costs, and possible
damage to the brands reputation as well (pg.37).
16. Competitive Strategy
Pursuing Strategic Acquisitions. We capitalize upon the significant consolidation opportunities
available in the highly fragmented recreational boat dealer industry by acquiring independent
dealers and improving their performance and profitability through the implementation of our
operating strategies. Pg.8
We believe we are regarded as an attractive acquirer by boat dealers because of: (1) the
historical performance and the experience and reputation of our management team within the

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industry; (2) our decentralized operating strategy, which generally enables the managers of an
acquired dealer to continue their involvement in dealership operations; (3) the ability of
management and employees of an acquired dealer to participate in our growth and expansion
through potential stock ownership and career advancement opportunities; and (4) the ability to
offer liquidity to the owners of acquired dealers through the receipt of common stock or cash.
Pg.8
MarineMaxs business strategy emphasizes on pursuing strategic acquisitions, where they would
be incorporating their distinct values and market strengths, in order to establish a level of
differentiation within the industry. As mentioned within the statements above, there would be
four main characteristics that the company would implement in order to achieve this form of
differentiation, ranging from the decentralization of their operating strategies and historical
experience, all the way to liquidity and the growth expansion of their products and locations.
(pg.8) This would explicate their strengths by allowing their suppliers and customers to see their
companys unique internal and external processes, alluding to even their management
information systems and technological ameliorations within the company for example.
The key differentiation drivers would be those facets of even further expansion and
acquisition after becoming one of the largest retailers, as well as identifying new markets and
product extensions that the company could possibly invest in. As stated, MarineMax believes in
capitalizing on significant consolidation opportunities within the highly fragmented market
(pg.8), as well constantly exemplifying emphasizing on their human capital, best practices, and
business operations as means of standing out. Their strategy also notes the importance of their
operating strategies, since they feel it is a major element when it comes to their differentiation
approach. This approach seems to compliment their current goals and opportunities towards
expansion, with the reinforcing notions of new market entry, product demand, and technological
market adaptation, found within the 10k. In essence, their differentiation strategy seems to

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compliment and support their current competitive position within the company, tying in their
various strengths and opportunities as a basis for further growth and expansion.

Works Cited
MarineMax Form 10-K. (2014). Retrieved September 29, 2015.