Ferretti Group Case Study

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A case study from lecture. 1 Ferretti group: navigating through stormy seas Introduction At the time of its 40th anniversary in mid-2008, Ferretti Group, the Italian luxury yacht builder, appeared to be ‘riding on the crest of a wave’. However, as for many other organizations, the onset of the global financial crisis in 2007 heralded a period of uncertainty. The decade from the mid/late-1990s onwards had been a good time for luxury yacht builders. Growth in many parts of the world economy had led to continued demand from already rich and newly wealthy populations in the wider luxury goods market. In this period, Ferretti had become one of the leading yacht building companies in the world. It positioned itself as a global player with a presence in all significant segments, with the medium-term objective of becoming the world’s Number 1 manufacturer of luxury motor yachts. By the end of 2008 though, the effects of the world-wide financial crisis and economic downturn were clearly in evidence. Early in 2009, Ferretti defaulted on its debt repayments forcing a financial restructuring that avoided the immediate risk of going into administration or foundering altogether. While it appeared to have bought itself time to ride out the storm, many strategic issues needed to be addressed as the Ferretti board and senior management plotted a new course towards a less certain future in the decade ahead. The Luxury Yacht Market and Industry Prices for new boats are anywhere between €1 million and €150 million plus and with significant annual operating costs to take into account in aspiring to a luxury lifestyle afloat. Annual growth in industry orders for large luxury yachts had risen steadily since the early years of the decade (Table 1) and the industry’s order book for the very largest yachts had risen considerably (Table 2). On the supply side of the industry, the
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