Shipping Strategy on Maersk
Porter Five force Model
The shipping industry is nowadays a contestable business especially for the container business which occupies more than 80% of the international trade. Therefore, it is better to 1) examine the intensity of competition in the industry and hence 2) industry profitability since competition can drive down the rate of return, so it is easier to investigate the way to formulate thee competitive strategy in this industry. Therefore, the company can 3) identify the position in the industry whether to defend or attack in its favor. To understand such competition can help the company to consider and implement its strategies.
Porter 5 Competitive Force Model points out that the competitive force from different sector.
Threat of Entry (-)
The newcomers in the industry bring new capacity and acquire a certain piece of market share, the rate of return in the industry, therefore, would increase and the competition would enhance. Since it is common for the newcomer to offer lower price services or products that may cause the existing firms lose market share and implement a relative strategy to lower its price and made a cut-throat competition. Eventually, the rate of return in the industry would decrease. However, to enter or to exit the industry is dependent on the barriers to entry or exit. The barrier to entry may be the capital requirement, switching cost, government policy, etc.
The Potential Entrants
In the shipping industry, the potential entrants to the container business can be identified by the alongside of the supply chain. Most of the firms in the supply chain may be implement the upward integration or downward integration and they would become the competitors in the shipping industry.
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For example, the retailers may implement upward integration to acquire the distribution functions to gain the competitive advantages in the retail industry and
The shipping industry is nowadays a contestable business especially for the container business which occupies more than 80% of the international trade. Therefore, it is better to 1) examine the intensity of competition in the industry and hence 2) industry profitability since competition can drive down the rate of return, so it is easier to investigate the way to formulate thee competitive strategy in this industry. Therefore, the company can 3) identify the position in the industry whether to defend or attack in its favor. To understand such competition can help the company to consider and implement its strategies.
Porter 5 Competitive Force Model points out that the competitive force from different sector.
Threat of Entry (-)
The newcomers in the industry bring new capacity and acquire a certain piece of market share, the rate of return in the industry, therefore, would increase and the competition would enhance. Since it is common for the newcomer to offer lower price services or products that may cause the existing firms lose market share and implement a relative strategy to lower its price and made a cut-throat competition. Eventually, the rate of return in the industry would decrease. However, to enter or to exit the industry is dependent on the barriers to entry or exit. The barrier to entry may be the capital requirement, switching cost, government policy, etc.
The Potential Entrants
In the shipping industry, the potential entrants to the container business can be identified by the alongside of the supply chain. Most of the firms in the supply chain may be implement the upward integration or downward integration and they would become the competitors in the shipping industry.
U
P
W
A
R
D
U
P
W
A
R
D
D
O
W
N
W
A
R
D
D
O
W
N
W
A
R
D
For example, the retailers may implement upward integration to acquire the distribution functions to gain the competitive advantages in the retail industry and