Академический Документы
Профессиональный Документы
Культура Документы
0 Introduction
1.2 Objective
The primary objective of the report is to fulfill the partial requirement of the
course.
1.3 Scope
1.4 Methodology
Primary data were collected through face to face interviews with concerned
persons. There were several interviews with the concerned persons. The
interviews were quite extensive and time consuming. The officials of SSA-
Bangladesh were very much helpful in providing the necessary Data. The
interviewed persons include
Joe Ritzman, Business Development Manager, SSA-Bangladesh
Ashfaque J Rahman, Deputy Managing Director, SSA-Bangladesh
Some of the data were also collected from the Bureau of Statistics, Dhaka.
No sample survey was conducted for collecting primary data.
1.5 Limitations
2.1 SSA
The terminal at Patenga will ease the worrisome congestion at Chittagong Port
and will further facilitate the ongoing and expanding container handling
requirements of the nation.
It is hoped to commence the operation in the year 2002 and SSAB is looking
forward to providing the full advantage and economic benefits of
containerization to the exporters and importers of Bangladesh.
Mission Statement:
Objectives
Through acquisitions and joint ventures, SSA has become one of the largest
independent terminal operators and stevedores in the world. With over 150
operations worldwide, SSA handles every type of cargo and serves every
major ocean carrier. In the last year, SSA has handled 4 million vessel TEU’s
worldwide and million containers at over 60 rail yards. SSA has also handled
43 million tons of bulk and break bulk, including:
Services
Marketing Support: SSA will sell the features and benefits of a facility in
an effort to attract new business. SSA’s ongoing relationship with shipping
lines and transportation companies throughout the world provide a strong
potential customer base, SSA will represent its clients and their needs with
outside organizations.
Financial strengths
Being a huge and successful company, it possesses tremendous financial
strengths. Moreover, worldwide financial organizations such as International
Finance Corporation (IFC), Internationally Monetary Fund (IMF)
Lobbing power
Both the Bangladeshi counterpart and the American counterpart have
tremendous lobbying power regarding the establishment of the container
terminal. The American president himself talked to the Prime Minister of
Bangladesh for the implementation of the project while his visit here in
Dhaka.
Modern Machineries
SSAB will bring in modern port-equipments such as the gantry cranes in order
to facilitate the faster the shipments. It is to be mentioned here that these
cranes are totally unavailable in the other ports of the country.
Enough Berths
Unlike the present scenario of Chittagong Port, the adequate amount of berths
will be constructed in order to avoid traffic-jams.
No waiting time
Adequate berthing facilities together with modern machineries will result in
no-waiting time for the ships.
Weakness
The present container handling capacity of the port is 1.9 lakh TEUs (Twenty
feet Equivalent Units) whereas the port had to handle 3.65 lakh TEUs in the
current year (1999), and the containers to be handled are increasing at the
rate of 20%.
In addition to these, if the neighboring countries are provided with the facility
of using Chittagong port, additional requirement will be about 700000 to
800000 TEUs per year.
Again, the requirement of the transport services from Chittagong to Dhaka
(and vice-verse) is increasing at the similar rate since Dhaka is the main focus
of the imported goods. The barge services SSAB is going to provide will
hugely benefited in this regard. This particular service will not only get hold of
the increase market in the total market share but also acquire a very good
share in the existing market. The reason is that the barge services SSAB is
going to provide is a much easier and more reliable process on behalf of the
exporters and importers.
The service will also help reducing the traffic jam in the Chittagong-Dhaka
highway.
In the similar way, the ICD (inland Container depot) to be built at Pangaon
will be able to acquire a very good market share as the present ICD at
Kamalapur is already having congestion problem.
Brand Competitors:
Chittagong Port is the only brand competitor of SSAB. SSAB’s container
terminal and the part of Chittagong Port engaged in handling containers have
similar target market and similar placement.
Industry Competitors:
The industry competitors of SSAB are Chittagong Port and Mongla Port,
because all of them are engaged in container handling in ports. Mongla port is
not a brand competitor because their target market is mainly limited to frozen
food products (e.g. shrimp) exporters.
Form Competitors:
All types of export-import terminals for trade via air, road, and sea are the
form competitors of SSAB. All these provide the similar service, i.e. they
facilitate shipment of export-import products. So besides Chittagong Port and
Mongla Port, the form competitors are
♦ Zia International Airport, Dhaka
♦ M A Hannan International Airport, Chittagong
♦ Benapole land port
♦ Burimari land port
♦ Hilli land port
Brand Competitors:
The barge service will be provided to only those customers who will use the
container terminals of SSAB in Dhaka and Chittagong. Under this
circumstance, there is no brand competitor of SSAB, because none has the
similar target market as of them.
Industry Competitors:
The companies providing barge services between Dhaka and Chittagong, such
as
♦ Atlas Shipping
♦ M/S N. N. Corporation
Islam Chamber, 12th floor, Motijeel, Dhaka
Form Competitors:
All the transport services engaged in transferring containers between Dhaka
and Chittagong are the form competitors of SSAB’s barge services. These
include Bangladesh Railway, and other truck agencies.
MAIN COMPETITORS
Because other competitors have minimal affect on SSAB, this analysis will
focus on only the main competitors.
2. Government Support
As a government organization, the Chittagong Port gets full government
support in all its activities.
1. Inadequacy of Berths
The port lacks adequate berths, which has led to an inability to properly
maintain the existing port, resulting in inefficient use of men and equipment,
and cargoes are also being moved in areas that are not port property because
the port simply cannot handle the workload.
Ports are generally considered to have reached full capacity when the
available berths are occupied from 70 to 80% of the time available. At this
point, the demurrage charges from vessels standing by awaiting a berth
become so large as to make such transportation uneconomical. Due to the
inadequacy of berths, the Chittagong Port is currently operating with all
berths occupied more than 94% of the time.
6. Corruption
The corrupted laborer and employees earn about 70 crore Taka illegally taking
help of the chaotic situation prevailing in the port activities. Of this illegal
earning, about 60 crore come through Container Handling section.
7. Political Interference
Different political parties back the labor unions. This is the reason behind the
strongly rooted standing of these unions. Whenever CPA wants to take any
measure against the unruly activities of the unions, it gets strong hindrance
from the political parties.
Strengths of Competitors:
Barge
Provide transportation facility for general cargo.
Very short-contract process
Trucks
Available in many places.
Takes less time.
Bangladesh Railway
Takes less time than the barge service to be provided by SSAB.
It is the only competitor, which provides transportation of containers.
Weaknesses of Competitors:
Barge
Cannot provide the bill of lading facility at Dhaka.
Do not handle containers.
Trucks
Most costly
Lack of security – high chance of accidents, exposed to weather.
Cannot provide the bill of lading facility at Dhaka.
Bangladesh Railway
More costly than Burge service
Cannot provide the bill of lading facility at Dhaka.
COMPETITORS’ STRATEGIES
Therefore, from the above condition of the product, it can be deduced that the
product strategy of the port is just to load-unload the containers of the
customers and the port simply doesn’t care about whatever happens to the
containers of the shippers. It’s the headache of the customer (rather than the
port authority) so that they get a good service. It is simply take it or don’t
take approach.
In the 1980s, the port authority undertook a project for determining pricing
policy of different services. The objective of the project was to formulate the
pricing policy of Port Authority, and to prepare a tariff structure with as
appropriate management accounting and operational information and
Statistics. The first phase of the study was completed in 1982. The study
proposed a revised tariff structure. The Authority, based on this report,
engaged consultants to calculate a tariff rate to a level aimed at –
full recovery of its cost of operation, and
to generate sufficient fund to meet the demanding development
expenditure, and
to fund the servicing needs, and
to implement the accounting system.
The decision of using Chittagong Port is done while opening L.C. In most
cases, the shippers themselves decide which port to use to handle the
containers. But sometimes, the shippers seek help from the mainline
operators to decide about using the port. The customers are not provided with
any types of agency facilities from where they can make contracts with the
Chittagong Port. Rather the contract had to be made directly with the port
authority.
Barge
Barge service from Dhaka to Chittagong (and vice-verse) provides services
that include carriage of goods that comes in or goes out in the form of
containers from Chittagong Port. In the case, the barges carry the general
cargo only from Chittagong to Dhaka. The containers that come from outside
are at first unloaded at the port, then they are unpacked there and ultimately
loaded into the barges with the help of their own cranes or with manual
laborers. The goods are kept in the piled-up form while being carried in the
barges.
Trucks
Trucks provide the transportation of containers from Chittagong to Dhaka.
Very few trucks in Bangladesh actually can carry the containers. They
transport goods after releasing them from containers. This requires more
manual processing. So the consignees and shippers cannot take the full
advantage of container transport in boxes as close as possible to their
premises. The truck operators take some care on the goods with poorly
trained and mostly illiterate employees and workers.
Bangladesh Railway
Bangladesh railway has direct link with Chittagong port. From the port they
load the containers on its wagons and carries them to ICD in Dhaka, and vice
versa. Railway provides safer and cheaper service. But sometimes it fails to
meet the timetable.
Pricing Strategy:
Trucks
The price set by trucks varies from owners to owners. Since most of the
trucks do not have any corporate entity, they charge up to the mark possible.
In this scenario, the trucks set their prices, which will maximize their profit
per contract. Often, the truck drivers themselves make the pricing contract
with the customer for any particular trip.
Bangladesh Railway
Bangladesh Railway’s pricing objective is to maximize government revenue.
With this objective in mind, the price is set so that BR can acquire a
significant market share. However, it does not provide any commission to the
customers who bring huge number of containers. The price per container
varies according to size.
Barges
Current profit maximization is the pricing objective of the barges. The prices
don’t vary per contract as was in the case of trucks, rather a fixed rate per
ton is determined. Charge is different when the full barge is hired.
Social barrier
Social consideration simply cannot be ignored, as the any investment this big
would have a definite huge impact on the society. There is a misconception of
the influential part of society about losing sovereignty or drainage of profit
and capital to foreign country in such kind of investments. Also they oppose
any such investment as they view it would ruin the prospect of Chittagong
Port, the long cherished economic gateway of Bangladesh.
Political barrier
The political condition of Bangladesh itself acts as a barrier to any foreign
investment. As it can be assumed that an investment of this kind has to be
financed from outside the country. Even if it is in favor of the economy if it
conflicts with the interest of any political party it is likely to face heavy
protests. Subsequently creation of disturbances would be ignited to in an
effort to delay if not abandon the project. This kind risk exposer would
definitely give a hard time to any new entrance even if the market potential is
very lucrative.
Bureaucratic Barriers
Any company willing to enter will have undergo a series of procedures
involving documentation, licensing, leasing etc. to start their operation. It is
not unknown, that the bureaucratic hurdles are quite significant in signing
agreements prerequisite for starting the project, such as -
Implementation Agreement
Land-Lease Agreement
Operating-Agreement
Agreement with Water-Board
Even when some agreements are signed the implementation phase never
intends to start. This can be frustrating.
The capital requirement in this project is so high that only few of companies
would be able to invest. Also the uncountable impediments in the way of
establishing such facilities make this huge investment even more unjustified.
The only positive factor that may contribute to any new entrance is the level
of differentiation that they can bring in the market. As the service rendered by
Chittagong port is not that satisfactory any improvement or addition to it
would increase customer value hence would work in favor of the new
company.
The other barriers like economics of scale, experience effects would not
impose any serious threat as the existing facilities any indisputably
inadequate. At the same time this industry is dominated with players who
have a long history of their own operations, rather than be challenged by the
experience of the existing players they might very build their strength on it.
Product Differentiation
Capital Requirements
Switching cost
Access to distribution channel
Anticipated growth
???????????????
As the major service offered in this sector is container service, there are in
fact no substitutes if the consideration of cost taken. The closest substitute
would be the air cargo services which is buy far much more expensive than
container services.
Intensity of Rivalry Among Competitors
ECONOMIC ANALYSIS1
Median Income per household: [GDP per head TK. 13655 savings rate: 5.4%
of GDP
LEGAL ANALYSIS
Current Trend
1
Bangladesh Statistical Pocket Book – 1998.
enjoy the ownership of their establishment in a ‘Chirosthayee Bondobosto’
policy. The government is also offering BOT (Build, Own, & Transfer)
package, where the investors operate the establishment for 30/40 years as
per agreement and then transfer it to the government. SSAB is enjoying
the opportunity of BOO and the policies are friendly for their operation.
“National Policy for Ports, Maritime Shipping and Inland Water Transport”
supports the construction and operation of private container terminal.
“The Fifth Five Year Plan (1997-2002)” has a provision to implement this
project in order to increase the involvement of private sector in economic
activities of the nation.
Regulatory Agencies:
CPA
Construction and operation of the container terminal will be regulated by
DOE (Department Of Environment). The terminal will require an
Environmental Clearance Certificate, which will have to be renewed each
year.
Political Analysis
First, the mayor of Chittagong is inserting his influence and pressure to cease
the activities of SSAB. He argues that this private container terminal will
ultimately destroy Chittagong port and make thousands of workers
unemployed in there. The top most decision-makers have given their consent
to implement the project, but the mayor, being a ruling party member is
obstructing the project, criticizing ministers-concerned in public. Mr ABM
Mohiuddin Chowdhury, the mayor, is a very powerful political figure in
Chittagong. Unless he gives the green signal, it is quite impossible to
implement the project.
If the mayor can be convinced regarding the benefits of the country and
Chittagong city itself, SSAB can speed up the process of setting up the new
facilities. But the government and ruling party leaders have to initiate the
process to clear up the confusions. Recent developments do not indicate those
sort of positive signs. The present shipping minister does not want to face the
mayor with the issue.
Third, some left leaning and some conservative politicians apprehend that
this facility will be against our sovereignty.
It is the age of cooperation and freedom. In the age of free and liberalized
trade we have to open ourselves to reap the benefits. In Bangladesh left
leaning parties have a very small stake. So we hope that they cannot make a
considerable impact on SSAB.
Fourth, general people fear from some groups that are actively supporting
the proposed venture of SSAB. Some of the individuals who are supporting
SSAB have negative impression on public mind due to their previous deeds.
So opponents are mobilizing public opinion against SSAB.
We hope that the fear on public mind can be removed through widespread
promotional campaign. The real value of the service is very high as it will lead
to increased direct foreign investment and trade opportunities for Bangladeshi
businesses.
SOCIAL ANALYSIS
Cultural values
1. Prone for using imported products, especially from the western world –
Our society experienced a long era of state owned industrialization. In that
time those State Owned Enterprises (SOEs) failed to maintain quality,
sought by the customers due to their inefficiencies and technological
limitations. But in recent years private sector is flourishing and domestic
organizations are trying their best to produce quality products. As a result
people are now slowly recognizing our domestic product’s quality in certain
sector. In most likely scenario, this perception of people will remain for a
considerable time and import of foreign products will continue to rise.
Marriage: Very often, individuals make their own choices in having their
marriage. This phenomenon was quite low in previous years.
Divorce: In our country, divorce rate is quite low, considering the overall
population. But the rate is increasing among the villages and cities.
TECHNOLOGICAL ANALYSIS
Opportunities:
Boom in the garments industry – increase in container traffic
Present government’s welcome attitude towards the foreign investors
Very relaxing law to FDI (Foreign Direct Investment)
Current trend towards urbanization
Increase in the number of educated people
Disorganized, poorly established, inefficient competitors.
Friendly attitude of the local people towards the foreign companies and its
foreign employees.
Possibilities of giving neighboring countries (such as Nepal) access to the
port.
International support.
Threats:
The fall of garment industry after 2004 due to GAAT
The establishment of another terminal with huge capacity by CPA
Bangladesh government’s giving permission to another company to build
another container terminal
Natural threat-Cyclone
The vulnerable condition of the economy.
Hartal culture of the opposition parties – highly unstable political
environment.
High protest from the Chittagong Mayor.
Protest from the trade unions.
5.0 Implemented Strategies
SSA has over 100 years of experience in stevedoring, marine terminal and rail
yard operations in 150 locations worldwide, serving the US West Coast, Gulf
Region and Atlantic Coast, as well as multiple international locations. This is
the outcome of SSA’s Global Diversification Strategy which is to enable the
company operate successfully as well as profitably in multinational locations
using its competitive advantages and tapping corporate resources – expertise
and experience - worldwide.
These above mentioned three services are usually performed various other
different business, but SSAB decides to integrates these three business to its
core business for smoother, better-coordinated operations which will give
SSAB competitive advantage over Chittagong Port to customers.
PRODUCT DIFFERERENTIARION:
On the other hand, product differentiation can also be viewed also in terms of
providing efficient service. Customers’ need is a flawless and timely transfer
of containers. So SSAB focuses on offering the customers the most efficient
container handling services currently available in the country. In this regard,
SSAB’s strategy is to be equipped with world-class technology and to operate
these facilities with well-trained employees. Thus SSAB’s business level
strategy is differentiation in terms of efficiency in container handling.
Tactics Pursued:
In order to implement the above mentioned product differentiation strategy,
SSAB has been using the following tactics:
Pioneering
SSAB is the pioneer in Bangladesh in introducing state of the art container
handling faculties along with augmented services such as transportation of
containers between Dhaka ICD and Chittagong terminal by its barge service,
and providing Bill of Lading at Dhaka using its trained human resources and
years of experience. The company is thus enjoying first mover advantage as it
has initiated such differentiation prior to its existing competitors as well as
would be competitors. As a result of using this tactic, SSAB steps a long way
forward to its competitors.
Capture
SSAB has a strong advantage over its competitor Chittagong as it has a
strategic alliance with SSA, which has expertise in container handling using
state of the art equipment, technology and trained employees. SSAB will be
this advantage in order to combat Chittagong port.
Financial Strategies
Strategy 1
SSAB will allocate its financial resources in the most efficient manner to achieve an IRR
of 25%.
Regarding the construction phase, SSAB will acquire loans from various financial
institutions such as:
International Financial Corporation (IFC)
World Bank
Infrastructure Development Company Limited (IDCOL)- a non-bank financial
institution of Bangladesh.
Overseas Private Investment Corporation (OPIC)
The cost required to implement the project will be almost fully financed by the above
mentioned organizations and the rest (quite negligible) will be financed by SSA-
International and Orient Maritime Ltd.
Strategy 2
During the operational stage, SSAB will fully finance its operational cost from the revenue
collected and it will also pay the loaned amount simultaneously. The pay back period of
the loaned amount has been estimated to be 30 years.
HR Strategies
Strategy 1
In order to have a loyal, and satisfied work force, SSAB will provide a high remuneration
(higher than its competitors).
Strategy 2
SSA will provide several fringe benefits such as providing onsite housing, medical
facilities. The Human Resource section of the firm will undertake these facilities.
Strategy 3
Training program to the key managerial posts at the headquarters of SSA at USA etc will
also be undertaken in order to increase the efficiency of the employees.
Strategy 4
To motivate the local people, SSAB will recruit 99% of its employees from Bangladesh.
Operations Strategies
Strategy 2
In order to provide efficient service, SSA will take steps to fulfill the installation of the
contracted equipment, like gantry cranes, toplifters, forklifts etc.
Strategy 3
SSA will bring in USA-developed software in order to operate the modern machineries as
well as to keep track of all information regarding the operation of the firm.
Strategy 4
Preplanned allocation of berths and anchorage- SSAB will establish a totally computerized
control room, which one of the many functions would be to allocate the berthing facility
and anchorage before any ship, reaches the port area. This facility will enhance the activity
and will help SSAB in time service.
Strategy 5
A division of marine safety and pollution will be established to provide the special service
in response to the social need
Marketing Strategies
All efforts of the marketing will be focused on the quality leadership (timely and efficient
service) so that customers perceive SSAB’s service with high value. This will ultimately
help in achieving the desired market share since customers in this sector are very much
quality sensitive.
Strategy 1
Positioning the container handling service to the exporters-importers as the most efficient
one in the country with the help of modern equipments such as gantry cranes, toplifters,
forklifts etc.
Strategy 2
Additional facilities such as the onsite rest house, customer information booth will be
established in order to acquire loyal customers.
Strategy 3
Different customer segment will get differentiated service such as frozen food storage
facilities for the food exporters- importers, RMG storage facilities in case of hartals etc.
This facility will be provide in order to enhance proper shipment.
Pricing Strategy
Pricing aimed at Achieving Product-Quality Leadership.
Different price offers for different segments in order to facilitate the target market.
Placement Strategy
Direct linkage with the end-users
Placement through mainline operators
6.0 Recommended Strategies
SSAB needs to diversify its business more to use its core competence as well
as increase power over its competitors, should extend its Vertical
Integration Strategy.
SSAB should introduce railroad facility along with its existing container
handling and other services in order to offer customer more value. This will
enable SSAB to move containers using rail cars other than trucks from port
side to its dockyard. On the other hand, those customers want to avail
Bangladesh Railway to transport container form Chittagong, they can use the
rail cars conveniently and less costly from SSAB’s container terminal.
Advantages
1. SSAB can use its parent company’s yearlong core competence in rail road
operation
2. SSAB will be able to increase its market power to a great extent.
3. It will decrease the cost of container handling between shipside to
dockyard.
4. SSAB can then attract more customers, especially those avoid SSAB’s
terminal because of the inconvenience created by not using Railway.
Disadvantages
1. The installation of railroad will require huge setup cost
2. There might be a chance that customers may prefer using railway to SSA”s
own barge service as it takes more time.
Business level Strategy
Advantages
1. Customer can get a more extended full bundle of services along with core
service of container handling at Chittagong.
2. More differentiated than its competitors.
3. It will decrease the cost of container handling between shipside to
dockyard.
4. SSAB can then attract more customers, especially those avoid SSAB’s
terminal because of the inconvenience created by not using Railway.
Disadvantages
1. The installation of railroad will require huge setup cost
2. There might be a chance that customers may prefer using railway to SSA”s
own barge service as it takes more time.
Quick Response
Using a state of the online MIS system, decision support system (DSS), team
based decision making approach, SSAB can develop a quick response
strategy.
Advantages
The advantages behind adopting Quick Response Strategy are as follows
1. In a highly volatile environment like Bangladesh, if a business fails to
respond quickly to changing situations or competitive activities, it will not
be able to survive in the long run.
2. Quick response will allow a firm to obtain competitive edge and to create
value that cannot be created otherwise.
3. As Chittagong port and Bangladesh Railway are government run
bureaucratic organizations, they will surely lack this competitive
advantage. On the other hand, Barge and truck operators independent
businesses, developing and implementing quick response strategy is not
possible for them.
4. Quick response will give SSAB more flexibility.
Disadvantages
1. To develop quick response through various operational strategies such
implementation of MIS, TQM, employee training, etc. will require increased
setup cost.
2. Focus might shift from efficient container handling to sophistication of
operations.
Figure: Correlation of Financial Performance and competitive Advantages
Product
Differentiation Through
Addition of Railroad
Quick Response
Through Use of MIS,
DSS, Team Approach
Operational Strategy
Product Strategy
Addition of railroad facility
Extension of the full package of services concept – from container handling to transportation to Dhaka, Bill of Lading at
Dhaka
Operations Strategy
Installation of state of the art MIS system
Installation of Decision Support System (DSS)
Implementation of TQM and QC
Marketing Strategy
Create customer awareness through direct marketing and press conference
Conduct regular research to read current environmental trends as well as customer needs and preferences.
7.0 Conclusion
Existing ports of Bangladesh is operating in excess of reasonable capacities. The result of this overcrowded condition at the
existing ports has been increasing prices for transportation due to increasing demurrage charges, thus causing an increase in
the costs of goods imported and exported. In a relatively underdeveloped country such as Bangladesh, export is essential to
economic development, and economic development is essential to the health and welfare of the people. So, higher costs for
transportation ultimately mean slower rates of economic growth.
Private container terminal, to be established by SSA-Bangladesh, has the potential to help the existing ports to be free from
overcrowding. The new terminal will also bring world-class container handling facilities in the country. All these will ultimately
increase the international trade volume as well as contribute to economic growth.
However, SSA- Bangladesh should be very watchful in carrying out its strategy in a volatile situation like this. Change in the
environment both external as well internal must be carefully observed and subsequent strategies needed to be developed
and implemented in order to create maximum value for the firm.