TTS Marine Group - Essay Example

INTRODUCTION TTS marine group with more than 40 years of experience in the maritime industry is a leading player in providing dry cargo handling, offering marine cranes services, port and material handling services, deck machinery services. The vision of the company is “to be the preferred global supplier for handling equipment to the maritime industry on a sound financial basis” and the mission of the company is to become a global company that develops, markets, and supplies complete handling systems for the maritime industry that meets the markets requirements and expectations, in a way that the clients are able to increase their own productivity and profitability. The company’s resources are focused on design and engineering in addition to assembly, testing and training. The core values of the company include integrity, openness/honesty, loyalty and initiative. With branches and alliances with companies across the world including Germany, China, Korea, Finland, Vietnam and Italy TTS creates and supplies innovative systems and equipment to the Marine and Offshore industries. TTS works closely with customers to devise intelligent and innovative handling solutions, TTS offers the expertise to improve productivity, quality and system capacity. A 40-years history of commitment to moving the industry forward has secured our customers trust. With these accomplishments in its history, TTS marine group wants to enter into the mega yacht business. The demand for recreational boating was high during the 1990s and such an opportunity should be exploited by TTS marine group. The demand for luxury yachts are in demand but there are various factors such as increased regulation over safety and protection of marine life and increased competition from the US manufacturers make it challenging for TTS marine group to create a niche for itself. Source: http://www.tts-marine.com Hence, in this paper a strategy for entry into the segment and the steps to carried out to establish TTS marine group in the mega yacht business as a strong player is discussed. To formulate the strategy for a business the following model will be very useful: Source: Fred. R. David(1) According to Fred R. David, alternative strategies have to be derived from the firm’s mission, vision, objectives, external audit and internal audit and the consistencies with past strategies for an organization. With the visions and mission of he company already stated clearly, the next step is to conduct an internal and external environment analysis. External environment analysis: to have a good understanding of the external environment first an extensive market research has to be conducted. The market research should comprise of all the aspects of the industry like, the competitors, update technology, consumer base and demography, sources of finance, skills and competencies of the competitors and promotion campaigns used. The major external factors that influence an organization are shown in the following model: In this case of TTS marine, the factors from the external environment that plays an influencing role can create the following opportunities in the near future: Increase in demand for pleasure boats/ yachts – increase in customer taste for unique, custom-made and super luxury yachts Asian market not being served – very less competition in the emerging super rich of China and other Asian countries New weather forecasting technology available Better ship building technologies available Increasing strength of Euro in case of exports Collaborations with marine industry associations for sharing of technology The threats faced by the industry will be currently and in near future are: Weakening of USD can affect US sales because it is disadvantageous for the customers to pay in Euro Increasing frequency of natural disasters – with the global warming, weather forecasting is highly unpredictable and unreliable though technology has improved. Recession in US and world economies – recession in US economy will reflect in Asian economies also, hence sales may be affected Protests by environmental groups regarding emissions and damage to the ecosystem caused by water traffic – there is an increase in the number of Laws and their requirements specified with respect to emission control. Competition from US and Australian companies – especially in Australia, the association of yacht development is very active in having a coordinated approach to develop yachting industry, which may be advantageous for the Australian companies Nonavailability of quality marinas due to increasing traffic which may cause trouble in finding dock spaces for the yacht owners in specific destinations like Malta Internal assessment of the company is equally essential for indentifying the strengths and weaknesses of the company. An internal audit has to be carried out be gathering essential information about the company’s management, accounting, marketing, research & development and human resources. An internal analysis for ATT marine can show the following list of strengths: Huge market share in the engineering and cargo handling industry Experience in marine industry for more than 40 years Strong product line in the areas of cargo handling and crane services Excellent brand image in the same area Technology alliances across the world Operations across the world Weaknesses for the company will be the following: New to the yacht industry Inadequate competency of human resource with respect to skills essential for the mega yacht sector Nonavailability of update in-house technology Increase in debt because of new operations Yet to create brand personality in the yacht industry Does not possess clear information about the nature of the customers and the competition due to the nature of the yacht industry, where there is not much of research database SWOT MATRIX After identification of the SWOT through the external and internal assessments the next stage is to match the key internal factors and key external factors to decide on appropriate strategy. The SWOT matrix is a very important tool that helps managers to develop four types of strategies: SO (strengths-opportunities) strategies, WO (weaknesses - opportunities)strategies, ST (strengths-threats) strategies and WT (weaknesses-threats) strategies(2).Matching key external and internal factors is the most difficult part of developing SWOT matrix and requires good judgment as there is no best set of matches. SO strategies use a firm’s internal strengths to exploit the external opportunities. This is the most favorable position for any company. Organizations generally will pursue WO, ST and WT strategies in order to get into a situation in which they can apply SO strategies. WO strategies aim at improving internal weaknesses by taking advantage of external opportunities. But sometimes the internal weaknesses may prevent the company from exploiting the opportunity to the full extent. ST strategies use a firm’s strengths to avoid or reduce the impact of external threats. It is advantageous for a firm to tackle the threat with its strength to reduce the impact of the threat and to convert the threat into an opportunity. The SWOT matrix comprises of nine cells. The four key factor cells, four strategy cells and the top left cell is always left blank. The steps involved in constructing the SWOT matrix are: 1. List the firm’s key opportunities, threats, weaknesses and strengths 2. Match the strengths, weaknesses, threats and opportunities to create appropriate SO, WO, ST and WT strategies. We can construct a SWOT matrix to indentify the four types of strategies, as follows: Strengths Huge market share Experience in marine industry Strong product line Excellent company image Technology alliance Operations across the world Weaknesses New to the industry less competency of human resource No in-house technology Increase in debt No brand personality in yacht industry No idea about competition and customers Opportunities Increase in demand Asian market not being served New weather forecasting technology available Better ship building technologies Increasing strength of Euro Collaborations with marine industry associations SO strategies 1. Enter into global markets with the strong brand image 2. Build on the alliances already established in Asia 3. Procure technology from the partners 4. Gather information on consumers and create promotion strategy WO strategies 1. Procure technology from partners 2. Find out sources of finance taking advantage of the exchange rate differences 3. Contact industry associations for training of human resource Threats Weakening of USD Increasing frequency of natural disasters Recession economy emissions and damage to the ecosystem caused by water traffic Competition from US and Australian companies Nonavailability of quality marinas ST strategies 1. Procure latest technology weather forecasting technology 2. Collect information and do research to identify the niche not served by the competitors 3. Compliance with the specific standards with respect to emission control WT strategies 1. Offer at very low industry prices 2. Outsource business processes 3. Explore marketing alliances The purpose of this matching approach is to find out the feasible strategies, which have to be individually analysed and the most feasible strategy has to be selected. In this case the above table shows the various strategies available for choice in case of different kinds of situations. To enter into the niche market of mega yachts, the best strategy has to be chosen. This best strategy is based on all the choices available in the matrix. This best strategy is the basic framework based on which the appropriate changes can be made and used effectively according to the requirement of the situation. The major advantage of creating a SWOT matrix is that it takes into account a complete range of factors both in the internal and external environment. This analysis can be done for any type of organization, whether small or large does not matter. Another major advantage is that the construction of this matrix requires a lot of subjective decisions to be made at the smaller level which lead to the formulation of the strategies. This thought process in the form of analysis adds to the chances that the final strategy is successful. But on the other hand there are a number of limitations also for this analysis. It includes a number of assumptions and intuitive judgments. Analysis and discussion during the development of the matrix may lead to misinterpretation of information and politics within the organization. Another major drawback with this method is that, the strategies formulated are only as good as the information collected. An understanding of the advantages and drawbacks of this technique helps in choosing the best strategy that is suitable for the company. When there is a confusion about choice between alternatives, then the Quantitative Strategic planning matrix (QSPM) can be constructed. The steps involved in creating this matrix are: 1. Make a list of the firm’s key external opportunities/ threats and the internal strengths and weaknesses 2. Assign weights to each key external and internal factor 3. Examine the SWOT matrix and find out alternate strategies which are mutually exclusive 4. Determine the attractiveness scores, i.e., define numerical values to the relative attractiveness to each strategy. the strategy which scores the highest is selected. This approach is helpful when we have choose between two mutually exclusive strategies. But here in this case of TTS marine in the absence of mutually exclusive strategy sets, choice of alternate strategy is done by combining adopting the following steps: Product: the product that will cater to the needs of the ultra sophisticated customer will have to be researched and designed so that the yacht facilities and technology is unique. To produce such a elite product, the following questions should be answered: With respect to product: What are the features necessary in the yacht? What is the kind of technology required? What is the source of technology? What are the unique features? With respect to the price: What is the price quoted by my competitors? What is the production cost? What is the pricing strategy to be adopted? What is the expectation of the customer? With respect to promotion: What is the promotion budget? What kind of brand positioning is needed? What are our promotional objectives? What is the trend in the industry? With respect to operations Who are the crucial interest groups/ intermediaries in this mage yacht introduction? What is the budget of this operation and where is the money going to come from? What will be the role of the already existing strategic partners? What kind of infrastructure do we need? The above mentioned questions are just a few to highlight the nature of analysis that has to be done. When such analysis is done, a clear picture of the strategy that has to be chosen for the introduction of mega yacht can be identified from the SWOT matrix. CONCLUSION Though scientific analytical tools and models are available to formulate strategies, there are a lot of factors that hinder this analysis such as , the corporate culture, politics in the organization and corporate governance. But TTS marine should be beware that it should not become a prisoner of its own strategy. Because, even the best thought strategy will become obsolete sooner or later. Regular appraisal of strategy based on the internal and external environmental changes is essential to make the strategy effective. REFERENCES 1. David R. Fred, 2007, Strategic management – Concepts and cases, Prentice Hall, New Delhi 2. Weihrich Heinz, April 1982, “The TOWS matrix: A tool for Situational analysis”, Long Range Planning, No.2, 61. 3. Shaw John, Oct-Dec 1999, “Mega-yachts earn millions”, Europe business review, Available at http://findarticles.com/p/articles/mi_m0GYN/is_9_2/ai_57605057 4. Rowe H, Mason R, Dickel K, 1982, Strategic management and business policy: A methodological approach, Addison – Wesley Publishing Co, MA 5. The US boat building and repairing industry: National trends and characteristics, An initial report of the Centre for Competitive Analysis, 2000 available at http://www.umsl.edu/~cca/IndustryReports/BBR-final-July2000.pdf. 6. The Marine Industry and Pleasure Craft Market in China - Risks and opportunities for the worldwide marine industry, Marine Dragon Consulting, 2006, Shanghai. Available at http://www.marinedragon.com/dld/china_yachting_market_executive_summary_detailed_plan.pdf. 7. Kerns C. D, July-August 2002, “An Entrepreneurial approach to strategic decision setting”, Business Horizons 45, No. 4, 2 8. Luo Y, October 2002, “Contract, Cooperation and performance in International Joint Ventures”, Strategic management journal 23, No.10, 903-920 Read More