Corporate Strategy
Corporate Strategy: What actions and decisions do we need to make today so that we are successful
tomorrow. Our overall strategy needs to be flexible enough to incorporate the needed
corrections and changes in response to our business and political environment, and at the same time
clearly define the important directives underlying our daily decisions.
Continually update and improve our products through an aggressive research and development
program.
Aggressively develop international markets through broad communication and solicitation to
high-volume international boating dealerships.
Continue to expand our market penetration through the introduction of new product models.
Increase the delivery of products and services to international distributorships through
acquisition and joint ventures of foreign manufactures and distribution channels.
Pursue an ongoing development of internal personnel, and accelerate the selection and training of
outside personnel for future management positions.
Continually improve product quality through regular vendor inspections, and an unrestricted
interchange of information between consumers, dealers, and engineers.
Company Vision
By 2001, American Hydrofoil will be a highly visible company known as the primary manufacturer of
Surface Skimming, Vertically Dampened, Wave Piercing, ride comfort, fuel efficient hydrofoil
watercraft. We will have developed and marketed these products through our exclusive
distributorship network, thereby becoming a leader in personal, commercial, and government hydrofoil
watercraft
Company Mission
In order to achieve our Vision, American Hydrofoil commits to the following:
American Hydrofoil's mission is to provide innovative, practical, and top-quality products that
save time and improve the way people boat. We believe our first responsibility is to the high
and middle disposable income consumers who are most likely to purchase our products. Our
strong financial planning will enable us to become the leading hydrofoil boat manufacturer and
distributor. In carrying out our day-to-day business we strive to:
1. Treat our employees with respect.
2. Follow the philosophy that our customers are our first priority.
3. Be considered as involved in our communities.
Through a long-term commitment to this mission, we will be known as a company that values
customers, employees, and our communities. Our customers, distributors, employees, and
management will see American Hydrofoil as providers of innovative, productive, high performance,
fuel efficient watercraft.
In general, American Hydrofoil will establish Hydrofoil boating in the personal, commercial, and
government markets of the United States, and around the world, and become the industry leader in
hydrofoil watercraft by providing the fastest, most fuel efficient, best in ride comfort, and safest
at high-speed hydrofoil watercraft to the boating consumer.
American Hydrofoil will achieve excellence in our relations with customers:
By promoting customer satisfaction through a high level of service through company
representatives and dealership representatives, product quality and technological innovation will
insure an acceptable price-value relationship.
With Employees
Achieving excellence with employees by providing equal opportunity, a climate conducive to a high
degree of personal development, a high degree of economic satisfaction, and an opportunity for
personal involvement of all employees.
With Dealerships
Achieving excellence with dealerships by providing services, products, and systems to optimize
the potential of our dealerships while ensuring mutual respect.
Through Social Involvement
Achieving excellence through social involvement by recognizing our social and local community
responsibility and encouraging positive involvement.
Goals
In order for American Hydrofoil to attain its vision in the manner described in our mission
statement, the following primary strategic goals need to be achieved.
Products: By the year 2000, American Hydrofoil will develop the Sea Shark and the HydroSport
personal hydrofoil boat models, and continue to develop proposals for research and development.
Market: By the year 2000, American Hydrofoil will begin in-water marketing demonstrations, and
boat show previews of the Sea Shark and HydroSport hydrofoil watercraft. By the year 2001,
American Hydrofoil will begin distribution of the Sea Shark and HydroSport hydrofoil boats to
distributors worldwide.
We feel confident that the above goals can be reached. All of our managers come from
environments where they have experienced a high level of success in relation to expectations.
Company Overview
Legal Business Description
Company Name
The legal name is American Hydrofoil.
Legal Form of Business
The legal form of American Hydrofoil will be a Corporation.
BUSINESS LOCATION
American Hydrofoil's mailing address is P. O. Box 1443, Santa Barbara, California, United States,
93102.
Board of Directors
An outside Board of Directors, including highly qualified business and industry professionals and
experts, will assist our management team in making appropriate decisions and taking the most
effective actions.
Mr. Alfred M. Frankel, CPA, Founder, Director, Senior Vice-President, Certified Public
Accountant, Accounting Services.
Glenn S. Nesbitt, Founder, Promoter, Inventor, Director.
Strategic Alliances
American Hydrofoil plans to form some very important relationships with major manufacturing
companies in the watercraft manufacturing industry, marine hardware industry, and alloy foundry
industry. The following is a partial list of these relationships:
Fiberglass Hull Manufacturers
Boat interior manufacturers
Alloy metal casting manufacturers
Shock dampening system manufacturers
Marine outboard motor manufacturers
OEM Relationships
OEMs (Original Equipment Manufacturers) provide another source of customers, yet with less
product recognition. The major advantage of selling through OEMs is that it provides a way to
rapidly penetrate our target markets.
These relationships also provide American Hydrofoil with worldwide coverage through an
established sales force.
We plan to sign OEM agreements with several major manufacturers.
Joint Marketing Agreements
Joint marketing with established companies will produce revenues, credibility, and market
presence.
American Hydrofoil is pursuing joint marketing agreements with other organizations to further the
name of American Hydrofoil watercraft in the boating industry. Our plans include having them
market our products with their current product lines.
In addition, we plan to offer selected outboard engines to augment our product line.
Third-Party Supplier Agreements
Because we do not have the resources internally, we will rely on third-party suppliers for the
development of many types of boating and fishing accessories, as well as many of the interior
components of our watercraft.
Joint Development Efforts
A joint development project will be sought between several fiberglass hull manufacturers and
American Hydrofoil.
Product Strategy
Current Products
American Hydrofoil currently offers 4 products:
Sea Shark high performance hydrofoil watercraft
HydroPod high-speed search and rescue hydrofoil watercraft
HydroSport family recreational and sportfishing watercraft
HydroBus mass transportation and executive watercraft
The HydroPod watercraft was our first design introduced in 1997. Next came the Sea Shark in
1998, followed by the HydroBus and HydroSport models in 1999. All four designs incorporate our
exclusive patented Vertical Dampening, Surface Skimming, Wave Piercing, ride comfort, fuel efficient
technologies.
Product Research and Development
Technical Report Prepared by Glenn Nesbitt 12/1/98
Early results of the Surface Skimmer Hydrofoil Technology are based on the performance of a
prototype which weighs approximately 650 pounds including the weight of the fuel and driver, has a
Johnson twenty-five horsepower outboard motor (with no performance modifications other than a long
shaft), and attains a top speed between forty and fifty miles-per-hour. This can be compared
to a safety chase boat (which is involved in the testing) weighing approximately the same, 650
pounds, which includes the weight of the fuel and driver, has a twenty-five horsepower outboard
motor, and attains a top speed of approximately 15 miles-per-hour.
During normal lake conditions with swells of approximately one to two feet, the ride of the
Surface Skimmer prototype hydrofoil boat is extremely solid, level, and predictable with respect to
handling characteristics, this is owing to the wave-piercing capabilities of the hydrofoils¾ the
prototype did not have a vertically adjustable dampening system. Instead of the hydrofoils
riding up and over an approaching swell, they pierce the swell crest. As the Surface
Skimmer hydrofoils pierce approaching swells, the curved upper surface and flat lower surface
generate the required lift to return the hydrofoils to the surface of the body of water.
One advantage of Surface Skimmer wave-piercing hydrofoils at high speeds compared to a
traditional mono-hull watercraft is safety. When a traditional high speed mono-hull watercraft
encounters a cresting swell of approximately two to six (or more) feet in height, this traditional
mono-hull watercraft may be lifted off the surface of the water (somewhat like a ramping effect
water skiers experience when using a ramp for jumping) and become airborne with sometimes an
unpredictable result which may then lead to a complete airborne rotation owing to the relatively
large hull surface acting (temporarily) as an airfoil (at speeds approximately 80 miles-per-hour or
more). In contrast, the wave-piercing characteristics of the Surface Skimmer design cuts a
relatively level path through the water wave, it might also be thought of as cutting off the top of
the wave. Once the hydrofoil enters the water wave, the lift properties of the Surface Skimmer
wave-piercing hydrofoil design take effect, and if the design incorporates a vertically adjustable
strut assembly (which mounts to the forward and rearward ends of the center beam), then the Surface
Skimmer wave-piercing hydrofoil design rises to the surface of the body of water. The Surface
Skimmer design incorporates a mechanical dampening effect and thus, the Surface Skimmer
wave-piercing hydrofoil design avoids the ramping and subsequently unpredictable airborne effect
which might otherwise be experienced by a traditional mono-hull watercraft moving in a forward
direction at high speed.
Previous hydrofoil watercraft designs are fully wetted, meaning the hydrofoil operates under the
surface of the water and requires a sophisticated active control system to maintain the desired
distance between the bottom of the hull and the water surface, and to keep the watercraft in an
upright vertical position with respect to the earth while traveling in a forward direction.
This is because forces acting on the hydrofoil wing (or wings) are relatively the same above and
below the surfaces of the hydrofoils, opposed to the Surface Skimmer wave-piercing design which
operates in the boundary layer between the water (which may be thought of as a dense liquid) and the
air (which may be thought of as a less dense liquid). The dense liquid or water exerts the
greater forces on the hydrofoil resulting in the hydrofoil wing operating at the surface of the
water (at forward speeds), when the hydrofoil wing is inclined with relation to the surface of the
water (and in consideration of the forward motion of the marine vehicle). To summarize, the
Surface Skimmer wave-piercing hydrofoil design results in a simplification of the necessary controls
which combine to keep a traditionally submerged hydrofoil level (with the surface of the water), and
increases overall marine vehicle stability, inherent safety at high speeds, and fuel efficiency¾
fuel efficiency owing to the low drag-to-mass ratio characteristics of the Surface Skimmer
hydrofoils.
The prototype was tested at Lake Cachuma, Santa Barbara County, California. On about the
fourth outing the research team successfully urged the Surface Skimmer wave-piercing hydrofoil to
the surface of the lake by using a quick burst of power from the twenty-five horsepower outboard
motor, and reached speeds between forty and fifty miles-per-hour in three to six seconds.
Three additional test outings were successfully completed, one at Lake Cachuma, California, one at
Lake Cacitas, California, and the last at the University of California at Santa Barbara enclosed
salt water pond.
The American Hydrofoil Sea Shark incorporates a patented forward and rearward mono-shock coil
spring damping system along with two wide hydrofoil wings, and either a 75 or 100 horsepower
outboard motor. The expected top speed for the 75 horsepower model is between 70 and 100
miles-per-hour. The expected top speed for the 100 horsepower model is between 110 and 130
miles-per-hour. Seating on the American Hydrofoil Sea Shark may be configured as motorcycle
style with room for two passengers and one driver, or seating for four with two inset rear passenger
seats and two forward console seats, one for the driver and a forward facing or rearward facing
reversible passenger seat which can assist in spotting one or two water skiers. The expected
top speed of the Sea Shark with the 100 horsepower motor pulling two water skiers, a driver, and a
passenger water-skier-spotter are between 30 to 60 miles-per-hour.
The center beam, and forward and rearward hydrofoils of the Sea Shark are made from metallic
alloy, and the main body, which also acts as the static flotation, is made from composites or
fiberglass construction, or a combination of the two. Under normal lake or sea conditions the
main body of the American Hydrofoil Sea Shark will rise twelve inches above the surface of the
water. During normal swell activity, the distance between the bottom of the main body of the
American Hydrofoil Sea Shark and the surface of the water will fluctuate between approximately
sixteen inches and three inches, and under these conditions the hydrofoil wings are expected to be
fully wetted approximately twenty-five percent of the time and skimming the surface seventy-five
percent of the time
Service Strategy
Current Services
American Hydrofoil currently offers one service:
Custom designed and manufactured Surface Skimming, Vertically Dampened, Wave Piercing, ride
comfort, fuel efficient hydrofoil watercraft.
The customized hydrofoil watercraft design service consists of the design and construction of
custom hydrofoil watercraft. Overall, our existing service line is in the proposal and market
assessment stages. The development of our high-speed Surface Skimming, Vertically Dampened,
Wave Piercing, ride comfort, fuel efficient hydrofoil watercraft service is in progress, and future
services are planned.
Marketing Strategy
American Hydrofoil's marketing strategy is to enhance, promote and support the fact that our
products are the fastest, safest at high speeds, most fuel efficient, and provide the most in ride
comfort, and fuel economy.
Sales Strategy
Our hydrofoil watercraft is considered luxury and transportation merchandise.
As such, the target market segments to focus on are middle to upper income consumers.
Because of the special market characteristics (of high speed boating, enhanced safety at higher
speeds, ride comfort, and increased fuel efficiency) our sales strategy will include the
introduction and promotion through industry sponsored competition racing, and sport fishing
events. These efforts will give American Hydrofoil national and international exposure, and
winning results will generate brand name prestige.
Current Selling Methods
We will use an international distributor and manufacturer's representative network, as-well-as a
commercial and proposal initiative to market our hydrofoil watercraft.
Methods we use to promote our watercraft include television, radio, magazines, boat shows,
industry sponsored competition racing, the internet, and competition sportfishing events, as-well-as
film industry tie-in promotions.
Marketing Responsibilities
Marketing responsibilities for our hydrofoil watercraft are divided between the marketing manager
and the general manager, with input from the sales manager who will make decisions regarding market
analysis, forecasting, and planning, as-well-as all of the general merchandising duties. The
marketing manager will contract out the duties of brochures, data sheets, and advertising to local
graphic artists, but plan the overall concept and campaign. The general manager will determine
the budget for marketing, and will decide on the business direction based in part on the latest
market research. The sales manager will provide input regarding what sales support materials
are required for each promotion.
We also plan to attend industry trade shows to get input from dealers and distributors on the
initial and ongoing promotions.
Distribution Channels
American Hydrofoil's marketing strategy incorporates plans to sell our hydrofoil watercraft
through several channels. Our distribution channels will include established boating
dealerships worldwide and specifically in those regions in which there are established marine
resources such as marinas, and marine service and repair facilities, and additionally through
international agents with marine industry experience.
The determining factors in choosing these channels are the established professional reputations
and service relationships each regional boat dealer has with their unique community, and their high
quality of continuing service to their customers.
Executive Sales
Because some of our customers are top corporate managers, it is important that our company
president and senior managers be available to present our products to our high-ticket customers.
Direct Sales
The majority of American Hydrofoil's sales will be handled externally through our distributor
network.
Manufacturers' Representatives
Because manufacturers' representatives may carry several watercraft product lines, we feel it
will be appropriate to select manufacturers representatives who carry complementary and compatible
products such as high performance, recreational, personal, sportfishing, as-well-as high end luxury
watercraft.
Also, manufacturers' representatives that sell dissimilar products yet ones that are appropriate
to their customers', such as fishing gear and water ski equipment, who also have mechanical service
capabilities will be considered in remote regions.
Distributors
One of the key elements designed into American Hydrofoil's marketing plan is the selection of our
key distributors. We will select distribution channels already in existence and staffed with
professionals possessing appropriate backgrounds and customer bases.
This strategic marketing approach takes full advantage of the fact that these professionals are
already involved with parallel products and services, and that they already have a track record of
excellence.
Retailers
Possible retail and wholesale outlets include boat, marine, watersports, and motorcycle
dealerships.
OEMs
Original Equipment Manufacturers (OEMs) can incorporate our watercraft into their product lines
by selling our hydrofoil watercraft with their outboards, water-skiing gear, and fishing equipment.
International Market
Our international strategy includes the following countries:
United States
Canada
United Kingdom
France
Germany
Australia
New Zealand
South America
Italy
Spain
Japan
Netherlands
Europe
Asia
Method of Distribution
The primary means of distribution will be through our certified distributor network.
Additional channels planned are international distributors, manufacturers' representatives, and
agents. An important advantage to these alternate channels is flexibility and regional
breadth.
By using more than one method, American Hydrofoil will have more control and will be more readily
able to respond to special needs and circumstances. Other features of our secondary channels
are low cost, quick start-up, and increased distribution capabilities.
Coverage
Regional target areas are California, Florida, the Gulf states, the New England states, and the
Great Lakes area. Boating industry studies indicate that these areas generate the highest
level of consumer interest.
Product Roll-Out Program
For our first watercraft entry into the marketplace, the specific areas under consideration are
California, and Florida.
After initial roll-out and evaluation of results, we will expand our marketing to additional
areas in this order of priority: the New England states, the Gulf states, Canada, and international
markets such as Europe, South America, and Asia.
Customer Service
Our customers emphasize that service and support is one of their major concerns. They will be
constantly impressed with the support we provide. Factory hot-line service will be available
to all customers enrolled in a maintenance, customer support, or product warranty program.
Another service to add value is to warehouse production inventories. This allows us to book
larger orders and provide faster order response.
Support to manufacturers' representatives will allow them to perform efficiently as a sales
force. We intend to treat our manufacturers' representatives as an extension of the
"American Hydrofoil" marketing department. They will be given the same information
and support as "American Hydrofoil" internal staff members.
Technical backup to OEM support groups will be supplemented by American Hydrofoil Internet
Services Group. The OEM staffs will respond to the needs of their customers, and when they
encounter a support issue that requires more information, they may direct their customer to American
Hydrofoil, or they may directly contact American Hydrofoil to obtain the necessary information by
telephone, over the internet, or in person through our company offices.
Technical support to marketing and sales functions will be strengthened over time. Pre-sales and
post-sales situations involving the application, presentation, and demonstration of products will be
supported by company product support technicians.
Returns and Adjustments Policy
At this time, general trade customs for handling returns are handled with pre-approved return
orders, where shipping is paid by the sender. We will use the following policies:
1) If for some reason your product is not right, you may return it for a full refund within 30
days of receipt. You must call 805-681-9028 for a Return Authorization number (RA#).
Refunds are made only on the price of the watercraft plus applicable taxes and do NOT include
shipping costs.
2) Credit card refunds are credited to your account and cash or check payments are refunded
within 30 days of receipt of returned merchandise in good condition with a RA#.
We intend to follow industry customs by implementing a returns and adjustments policy whereby
undamaged products are returned when sender pays the freight, and the item is accompanied by a
return invoice. Our reasons for this are our commitment to customer satisfaction, and our goal
of providing our customers with the industries highest in quality standards.
Advertising and Promotion
American Hydrofoil recognizes the key to success at this time requires extensive promotion.
This must be done aggressively on a wide scale without overspending. To accomplish our sales goals,
we require an extremely capable advertising program. American Hydrofoil plans to advertise in
major trade magazines, newspapers, radio, television, industry sponsored racing events, sportfishing
events, and regional boat shows.
Objectives
American Hydrofoil's overall advertising and promotional objectives are to:
Position American Hydrofoil as the leader in the market.
Increase company awareness and brand name recognition among business managers, retailers, buyers,
and consumers.
Generate qualified sales leads and potential new distributors for our field based sales
organization.
Develop, through market research, significant information to create immediate and long-term
marketing plans, and plan modifications.
Create product advertising programs supporting the excitement, safety, fuel efficiency, and ride
comfort qualities of our hydrofoil watercraft.
Media Objectives
American Hydrofoil's media objectives are to:
Gain awareness of our company among industry groups, engineers, buyers, and boat owners.
Establish an image of American Hydrofoil as an organization that is professional, reliable, and
highly positioned in the market.
Maximize efficiency in selection and scheduling of published ads in publications to cover
targeted markets.
Media Strategy
American Hydrofoil's media strategy is to:
Select primary business publications with high specific market penetration.
Schedule adequate frequency of ads to impact markets with corporate image and product messages.
Where possible, position advertising in or near industry articles on industry, product reviews,
front cover, center spread or appropriate editorials.
Utilize U.S. and international editions of consumer, trade, or specialty publications.
Take advantage of special high-interest issues of major publications when possible.
Maximize "ad life" with monthly and weekly publications.
To get the most out of our initial promotional budget, our media coverage will focus on boat
shows, racing events, and sportfishing events.
We will develop an advertising campaign built around product innovation, high performance, riding
comfort, safety, and fuel economy, beginning with a "who we are" statement and supporting
it with ads and promotions that reinforce this message.
Additionally, we will develop a consistent reach and frequency throughout the year.
Due to the nature of our product, it is necessary to run 4-color advertising depicting the
adventure and excitement of hydrofoil boating.
Advertising Campaign
The best way to reach our potential customers is to develop an intense advertising campaign
promoting our basic premise: "hydrofoil boating is exciting, safe, family oriented, and highly
enjoyable".
To establish and maintain our company image, the delivery and tone of our statements will be
lighthearted, and images fast paced.
Ideally, after becoming familiar with our products, the consumer will want to test drive our
boats and experience the ride comfort, speed capabilities, fuel efficiency, and safety enhancements.
Due to the geographical nature of our audience, we plan to target coastal and inland lake
regions.
In regards to our competitor's advertising, it is necessary to demonstrate the superior
performance, handling, fuel efficiency, ride comfort, and safety characteristics of our hydrofoil
watercraft.
Promotion
In addition to standard advertising practices, we will gain considerable recognition through
televised industry sponsored racing and sport fishing events.
The number of trade shows attended will be increased each year. These shows will be
attended independently, and with companies with which American Hydrofoil has joint marketing and or
sales, or OEM agreements.
Reports and papers will be published for trade journals and technical conferences.
As a service to our audience, our products will be showcased in a family recreational, sporting,
and fun loving environment. This showcase will double as an ongoing product development theme.
Sales Support Collateral Materials
American Hydrofoil has developed a variety of collateral materials to support our sales
efforts. These items are intended to sell our products, attract and support our distributors,
and help our distributors sell our products. These items will include:
Audio promotional materials
Video promotional materials
Color product brochures
Establish contact with editorial staff for the purpose of being included in product
"round-ups," product comparisons in publications where competing products are
compared. This exposure will build credibility and market acceptance.
Produce a complete company backgrounder on American Hydrofoil to be used as the primary public
relations tool for all target media editorial contact. This will also be effective for
inclusion in press kits, dealer kits and sales packages. The backgrounder would include
sections on the following broad subjects:
Overview of our Market: Size and characteristics.
Our target Markets present and future.
The company history, management philosophy, and brief sketches of top executives.
Our products and market niches.
Trade Shows
American Hydrofoil participates in the following types of trade shows: IMTEC trade convention in
Orlando, Florida, and national boat shows sponsored by NMMA (National Marine Manufactures
Association), as-well-as regional and international boat shows, industry sponsored racing
competitions, and fishing association sponsored sportfishing events. In the past, we have
concentrated on shows geared to the industry in an effort to introduce our hydrofoil
technologies. We will add to this effort shows that include the boat buying public.
In deciding on the American Hydrofoil plan for trade shows, the following factors have been taken
into consideration:
Target audience of the show
Geographic location
Time frame
Past experience with the show
Participation in other exhibitor’s promotions.
Based on the above considerations, these shows have been chosen for 2000:
IMTEC convention, Orlando, Florida
Miami International Boat Show, Miami, Florida
San Diego Boat Show, San Diego, California
Ventura Offshore Powerboating Competition, Ventura, California
Mexico Boat Show
Cabo Sportfishing Competition
Long Beach Offshore Powerboat Competition, Long Beach, California
Miami Offshore Powerboat Competition, Miami, Florida
Internal and External Newsletter
We currently plan to produce a newsletter to serve as an informational piece for internal
personnel, the sales force, and key customers. It includes sections covering each major
department or group within American Hydrofoil, with a message from the executive staff. It
will also highlight major developments, such as key sales stories, successful customer applications,
uses, promotions, significant marketing events, and product development news.
All information or material presented, or contained, on or in this page, is subject to change at
any time and without notice, and cannot be reprinted or published in any form without written
consent from American Hydrofoil Company, P.O. Box 1443, Santa Barbara, CA 93102, (805)
681-9028. Copyright © 1999 American Hydrofoil Company. All rights reserved worldwide.
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