1.0 SUMMARY
Merbatty is a company based in northern European, specialized in building boat industry. It has formed 33 years ago, and recently became listed on European stock exchange. Merbatty had facilities in two region area, which are Europe and West Coast in United States of America (USA). Prior to year 2012, Alberto Blanc the founder of Merbatty held the major shares in Merbatty before the transformation of share possession which enable the external investors to share the same chair in Board of Merbatty which is JKL company and corporate fund investors.
Merbatty currently has a range of 15 boats varying in price between €0.4 million (5 metre boat) to over €4 million for 35 metre boat, and this price will be varied based on the specification of the customer towards the interior design and accommodation facilities in the boat. The building of boat also took different times for different types, from three months to ten months and it started from event of signing contract until the completion of boat. The installments made for sales of boat are made in three installments; first 20% of deposit paid when the contract has been signed by customer, another 30% will be paid once the engine of boat was delivered and the remainder of payment will be made when the customer has inspected the completion of the boat.
Sales agents play pivotal role in continuous sales in Merbatty, where these people will secure sales from the end customer and help the sale process from initial contact until delivery of boat. The employees of Merbatty have reached almost 2,200 employees in the meantime, and will be added to accommodate other facilities that will be opened in Middle East at the next year of 2013. The expansion of Merbatty worldwide will be in the five-year plan, and the new boat building facility will be built in year 2013, where another 180 additional boats can be built in the facility and capture the market in Middle East located in Surania.
Using latest technology in modern marine production for the boats has increased the speeding time taken for production of boats. This is efficient as the customer’s demand will be delivered and completed in the rapid time. However, the new technology will come into Merbatty’s production whereby Merbatty invested in newly released ‘off the shelf” state-of-the-art production management software system. Merbatty also adding value to the business when it had deals in sponsorship contracts for speedboat race, glbal travel and high quality hotel chain. These have promoted Merbatty in public relations and important for the sustainability of the business in the future. Merbatty also involved in charity works such as contribution for new hospital wing and European Child Poverty Prevention Charity.
Merbatty has a good relationship with its suppliers which are MNE, Marinatron, Topcrest, Sea Safety Equipment (SSE) and Aqua Designs. MNE is the supplier of nautical diesel engines for Merbatty, Marinatron in the other hand supplies marine satellite navigation systems. Topcrest is another supplier of Merbatty in hulls, SSE supplies board safety equipment while Aqua Designs supplies interior designs for all Merbatty’s boats.

2.0 SWOT ANALYSIS AND PEST ANALYSIS

Strengths 1. A sale is secured through sales agent. 2. Long-term relationship with suppliers. 3. Customization and just-in-time production. 4. Customer-oriented. 5. Loyal customer/ close contact. 6. Listed company with experienced Board of Directors. 7. Good motivation system: Executive compensation (share option). 8. Upgraded and improved IT systems. 9. Growing demands in cheaper and smaller type of boat. 10. Approved 5 year plan with high growth prospects. 11. Good market reputation for quality. 12. Good range of boat models with new models being introduced each year. 13. New boat building facility in the Middle East which gives Merbatty spare boat building capacity to meet demand 14. Strong asset backed balance sheet 15. High market profile with 2 sponsorship contracts 16. Experienced employees, many of whom own shares in Merbatty. | Weaknesses 1. Time consuming to complete the product. 2. Currency exchange conflict. (Western Europe and United States) 3. Sales less in expensive and bigger type of boat. 4. Excessive debt and loan for production. 5. Not fully utilize capacity (94%) 6. High cost of new information technology (IT) and new boat design. 7. Too much reliance of sales agent. 8. Operating in competitive market. 9. High staff turnover leads to high costs to be borne in future. 10. Dependent to its suppliers for many bought in components. 11. Operation cost is high. | Opportunities 1. Produce more ranges of new model boats. 2. Produce boat not only when the order and payment is placed. 3. Market development (Oceania) 4. Market penetration in present product and markets. 5. Attract more investors to finance the expansion of the business. 6. Change in location of future boat building facilities to reduce operating costs. | Threats 1. Supplier (Marinatron) also supply to other competitors. 2. Risk of leak information to Merbatty’s rivalry (by sales agent). 3. Quality of the product in Surania will not be the same as in Western Europe and United States of America (USA). 4. High cost of transportation. (From facility to customers around the world) 5. Conflict between Blanc and JKL. 6. Reliance on the information of agent rather than doing the industry research in Middle East. |

PEST ANALYSIS
Political:
1. Possible operational problems in Middle East boat building facility for initial operation. 2. Problems with culture, language, and work practices. 3. Unfamiliar legal system in Middle East. 4. Political unrest (Arab Spring) in Middle East in year 2012.
Economic:
1. Merbatty is offering luxury goods and is subject to global changes in demand. 2. Downturn for the luxury goods due to economic unrest in Middle East. 3. Operating in competitive market. 4. Has to ensure their price is competitive with their rival.

Social: 1. Changes in customer’s behaviour and tastes. 2. Employee welfare and pressure on employees to meet challenging delivery targets. 3. Safety standards expected by customers. 4. Safety standard for employee. 5. Environmental issues regarding luxury boats need to be look into by company.
Technology:
1. Need to continue to be innovative in production to generate better standards for customers and to reduce boat construction cost. 2. Need to be innovative in boat designs in order to stay competitive. 3. The use of improved technology to make boats safer and improve market confidence. 4. Improved use of high technology equipment in order to save staff costs.

5.

SALES STAFF VERSUS AGENTS
Background
The arguments whether to employ more sales staff as a replace to sales agents have taken place in management meeting between Sales Director and Human Resource Director. The pros and cons of both choices has been outspoken by the directors hence they need to find other alternatives to ensure that the sales can be guaranteed and growing in a period of time. | Sales staff | Sales agent | Payment | * Payment based on wages | * Commission-based | Loyalty | * Loyal and have to obey the regulations | * Uncertain issue of loyalty and difficult to assure their activities | Relationship and contacts | * Need to build the relationship with customer | * Good network and connection within industry | Time work | * Normal working hour | * Flexible working hour | Sales | * Obligated to sell all types of luxury boat in company * Tend to sell randomly without knowing what is best for customer | * Sells boat of Merbatty and their rivalry * Know what types of boat to sell according to customer | Training | * Require more cost and time for training | * No need of training as they are expertise in sales |

Recommendation
The decision to substitute agents with sales staff can be done by Merbatty as sales staff can give more tangible benefits to company in the future as they also capable in making more sales for Merbatty and company can save much from giving the commission if they hired sales staff. The saved cost from laid off the sales agent can be used to open more new sales offices for Merbatty’s expansion worldwide. However, this decision can be reviewed in by making it into stages as if Merbatty laid all of them in a blink of eye, it is afraid that the reputation of the company will be affected and regular customers that usually dealt with them will go to the competitors.
It is suggested that Merbatty replaced the agent in three stages: 1- retained all the agents and employed more sales staff, 2- give more training and get them work together with agent to get the experience (in period of 2-3 years), 3- once they are more competent than agents, agents can be laid off according to region for the future plan of five years.