Why There Are Numerous Challenges Experienced by the COSCO Company - Research Paper Example

Service Management Operation management in service sector is focused on individually-based approach. Container-based shipping “made the world smaller and the world economy bigger” (Desrochers, Pierre, 2007). COSCO Company provides its customers with convenient container-based shipping. Their main goal is to reduce transportation costs and time; enhance reliability and decrease theft. Consequently, the world’s customers are focused on fast ant high-quality shipping services. China has gained much thanks to developments of this industry. Nevertheless, there are numerous challenges experienced by the company and very often their customers are looking for services from other container-based shipping industry companies. In order to become a competitive rivalry for other shipping companies, COSCO is focused on service strategy improvement. China positions itself as the largest international company, providing with their services 75% of international cargo volume. COSCO in XXI century “will focus on providing differentiated and value-added services to acquire long-term contracts and life-long customers. As alliances and mergers have become a major part of the international shipping industry, we (COSCO) will co-operate closely with our partners. We aim to be a world-class global shipping service provider, in the near future, with high efficiency and high quality service” (China Cosco Holdings Confident on Recovery in Container Rates, 2010). Therefore, COSCO positions it as the world’s leading shipping industry company, which is able to provide its customer with efficient, high quality services. The Company contributes much for financial and technological development of the company. Thus, it should be noted that COSCO is concerned about improvements of infrastructure of the Company, development of strategies, which refer to the modern needs of the international society and the newest tendencies in the shipping industry. Starting from 2002 the country is able to offer to the clients “a comprehensive package of ocean shipping services with fleets covering a wider range from traditional bulk tonnages to more value-added ones such as post-panamax container vessel, heavy-lift ship, LNG carrier and so on” (China COSCO 2010). Value-added services and life-long customers are of great importance for COSCO. The main challenge for the company occurs, when potential clients find out that to reach Shanghai from Chongqing takes about 900 miles. Thus, shipping goods from Chongqing to Shanghai takes too much time. The Company tries to deal with this problem in spite of the fact that rail system of China is fragmented. Moreover, potential international clients are scared off by challenging import-export documentation: it takes too much time at the customs. Licensing and trade challenges in China can be facilitated by WTO. Thus, service challenge should be solved within the company and nationally. To repair roads in the country and improve roads in the ports is on behalf of the Chinese government. COSCO should work hard in order investors wanted to support the Company. “Green protectionism policy” is of high relevance in the world. Therefore, COSCO is focused on environmentally friendly shipping services. Potential clients are interested in COSCO’s post-crisis measures, because sub-prime crisis special study team in COSCO enabled the Company to recover as soon as possible. An innovation of the Company, such as tariff decrease for ASEAN countries from 9.8 percent to 0.1 percent is rather attractive for the international partners (China, Korea Aid for Shipping Industry May Prolong Rates Slump, 2009). Out of 4 million of TEUs globally, many countries are estranged from container-based shipping services. COSCO and its subsidiaries have more than 120 ports in 40 countries. The sustainability of the Company is provided by logistics. There is a shift from passive service to active service. Starting from 2010 the Company implements TCSS, system, which considers customer’s satisfaction. On the basis of analysis of more than 171 effective examples COSCO identifies CSI or customer satisfaction index (Redman, Ham, Dille and Savage 2005, p. 35). The interests of the customers are protected by simplification of procedures and capital transit time reduction. The Company works out the systematic approach to innovative products and services. For example, the Company has Dongfeng CKD export project and positions the principle of “taking customer demand as a command” high on the agenda. COSCO scientific development is chosen by the Company as a remedy of post-crisis period. Since 2008 this policy enabled COSCO to construct 11 marine products and modify 5 marine products. Thus, international partners are much focused on positive changes, which occurred at COSCO and feel a great relief, which occurred in the result of technological modification and innovation. Moreover, the Company considers the importance of new shipping routes identification in order to please its customers. Business plans of the Company are developed in accordance with the modern demands of the market. There are numerous stages of verification and validation at various stages of service improvement at COSCO. There is a tripartite system of service sector improvement: effectiveness, quality and costs. In such a way, COSCO is able to spend more on service improvement, develop environmentally friendly policies and operate in the international market in accordance with the current trends. Moreover, the interest of the customers is improved by COSCO’s routes expansion and active position of the Company internationally. China’s shipping industry is positioned as one of the most innovative and technologically savvy ones. COSCO is the developer of a modern vision of marine engineering practices and services provided to the customers. Service in the Company is focused on individuals and this anthropocentric approach is in line with Aristotelian developments of “common good”. Thus, there is a deep background of the Company’s services improvements and COSCO is greatly interested in the current trends of the international shipping industry. We can consider COSCO’s service strategy in accordance with the Company’s intention to "live through the winter" (the company used this metaphor for economic crisis reference); COSCO stays “dormant" and observes the customer’s needs; the Company tries "winter swimming" when uses different strategies of strategic development; "winter training" approach refers to innovative development of service sector improvement (China Cosco Holdings Confident on Recovery in Container Rates). In other words, COSCO is developing in a high-speed and innovative manner and there is no doubt that service improvements, developed with regards to the needs of the customers, are reliable pillars of the Company. Moreover, these positive changes are supported by an active international position of China. Thus, the country follows the rules of free trade and shipping industry of China experiences an evident breakthrough in service sector of shipping industry. COSCO could survive during post-crisis period and it continues fighting for potential customers on the background of dynamically changed global market. Works cited “China Cosco Holdings Confident on Recovery in Container Rates.” Manila Bulletin March 16 2010, p. NA 2010. “China, Korea Aid for Shipping Industry May Prolong Rates Slump” Manila Bulletin, November 12 2009, p. NA. COSCO Looking into the New Millennium. 16 May 2012. Web. Desrochers, Pierre. “The Box: How the Shipping Container Made the World Smaller and the World Economy Bigger”. The Independent Review 12 (2007), p. 146+. Redman, Rod E., Walter T. Ham, Patrick Dille, and Mark Savage, 2005. “Shipping Delays Plague Container Ship Industry”. Sea Classics April (2005), p. 34+. Read More