Master Business Administration

GLOBAL STRATEGIC MANAGEMENT IN LINER CONTAINER SHIPPING



Dr. Alfred J. Baird

Head, Maritime Research Group, Transport Research Institute, Napier University, Edinburgh. (a.baird@napier.ac.uk)




1. Introduction


In this paper a framework entitled strategic choice in the global container shipping industry is presented. The framework sets out the principal optionsfacing global container shipping lines in relation to alternative asset configurations and modes of operation.


This is not a general business environment analytical framework. Traditional theories of the business environment seek to analyse the significance of both internal and external environments, and take account of, among other things, factors such as customers, employees, tradeunions, culture, investors, government regulations, economic and political conditions, and societal influences (Johnson & Scholes, 1993; Clarke-Hill & Glaister, 1995; Dobson & Starkey, 1994). In other words, they consider environmental influences (internal and external) that impact in some way or another on the performance and activities of a business.


The strategic choice framework presentedhere is instead specific to the global container shipping business in that it outlines the key strategic options relating to the way a carrier may decide to provide a global service. Many of the choices a carrier makes will inevitably depend, to a large extent, on internal and external environmental influences (e.g. availability of capital, labour etc.), and this will necessitate separateanalysis and evaluation.


The strategic choice framework distinguishes between the choices facing competitors under two broad headings - assets and operations. Assets refers to the ‘hardware’ (e.g. ships, containers, terminals etc.) that a global carrier must put in place in order to provide a global service, and the framework explains key choices relating to the way in which such assets may beconfigured. Operations refers to the ‘software’ carriers also need to have in place in order to compete globally. This includes factors such as organisation structure, service networks, and operating/trade agreements, and again the framework outlines the main options in relation to each.


Essentially, the framework implies that there is no single specific approach, but in fact severalalternative ways whereby competitors may provide a global container transportation service. Crucially, it is through these choices that a carrier’s senior management will endeavour to develop leverage and hence competitive advantage over adversaries. In this regard, choices contained in the framework refer to senior management decisions concerning aspects of corporate strategy.


The frameworkis not intended to be an alternative to existing business environment theoretical frameworks that firms employ to assist with strategy formulation. Rather, its purpose should be seen as being more of a complementary nature, to be used in conjunction with other, general business environment analytical frameworks and other strategy tools, as an aid to strategic planning. Neither does it suggest whichchoices are best; it merely sets out the choices which may be available (assuming resource availability), and which are most commonly adopted by industry competitors.


When applied as an analytical tool, it is argued that the framework represents a valid and practical contribution. For instance, the framework can be used in the following ways:


❑ To help facilitate comparison andanalysis of corporate strategic management in the container shipping industry;

❑ As an aid in the decision-making process of global container shipping competitors, and;

❑ As a mechanism to help minimise some of the complexity surrounding the industry, thereby facilitating greater understanding.


In describing the framework, industry examples are provided in order to...