Orient overseas container line (oocl)

ORIENT OVERSEAS CONTAINER LINE ( OOCL )

01.BRIEF DESCRIPTION OF OOCL.

Container transportation is most popular types of merchandiser transportation over the universe. Due to size, usage, and handiness, it is celebrated and convenient for transporting from one topographic point to another topographic point to all clients from little bargainer to large bargainer. OOCL is the taking container chief line operator in transporting industry holding ain information engineering installations.

OOCL is a wholly-owned subordinate company of OOIL ( Orient Overseas International Limited ) group which listed on Hong Kong Stock exchange as a populace limited company.

OOCL is one of the universe ‘s largest integrated international container transit, logistics and terminal companies holding planetary trade name images in container transportation ( OOCL, 2010a )

The laminitis of OOCL is CY Tung who dreamed to make Chinese merchandiser fleet in international transportation. In 1947, he succeeded when first ship with all Chinese crew reached in USA and Europe under the name of his company Orient Overseas Line ( OOL ) . Due to the demand of container vas and age of containerisation in transportation, OOL renamed to OOCL in 1962.

Today, it has more than 230offices in 58 states around the universe and the present Chairman is CC Tung.

OOCL Mission Statementis “To be the best and most advanced international container conveyance and logistics service supplier ; supplying a Critical Link to universe trade and making value for our clients, employees, stockholders and partners” ( OOCL,2010b ) . The nucleus values of OOCL for people or employee of the company, clients and wants to keep high criterion of services through community duties.

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OCCL is a renewed container bearer who has own female parent and feeder vas, rail path, containers, dawdlers and terminuss. In December 2008, OOCL awarded “Best of the Best” ocean career by World Trade Magazine of USA ( Shister, 2008 ) .All vass of OOCL achieved the quality certification of QUALSHIP 21 issued by US Coast Guard.

However, recent universe recession covered OOCL besides and it ‘s container traffic fell 17.2 per cent compared with the first half of 2008, while gross fell 37.2 per cent to $ 2.05bn and runing loss for the half of $ 197m, against a $ 216m net income in the first half of 2008 ( Lau and Wright,2009 ) .

United Nations Conference on Trade and development- UNCTAD positioned OOCL within the taking container conveyance operators of 20 MLO ( Main Line Operators ) .

Figure 1 ( Table ) Performance of OOCL in universe container trade – 2004-2008 ( UNCTAD,2010 )

The place of the OOCL is universe container industry is fluctuating extremely twelvemonth by twelvemonth. There is no changeless improving that means growing in public presentation index by UNCTAD. However, they are increasing the figure of vas and container capacity ( TEU capacity ) in every twelvemonth. Within 5 old ages they increased the figure of vass approx 50 % and capacity over 68 % .

As a entire logistics service supplier, OOCL ‘s international cargo consolidation and logistics service unit, OOCL Logistics, provides its clients with advanced cargo direction services and leading-edge IT solutions. OOCL China Domestic Ltd. offers extended domestic distribution services and supply-chain direction to clients in China, the turning market which OOCL has been functioning for over 50 old ages ( OOIL,2010 )

OOCL is renowned for its pioneering attack to developing intermodal connexions. All agencies of intermodal conveyance are carefully integrated with bole ocean services to offer seamless connexions across continents utilizing feeder services, flatboats, trucks and block trains ( OOCL, 2010c )

02.STRATEGIC MANAGEMENT

Peoples have different positions for apprehension, developing and implementing scheme economically and seasonably to derive particular advantages in concern. Before taking any scheme, need to warrant and measure the administrations present state of affairs particularly internal environment of the administration. After that, external environment will assist to put a preliminary program for traveling frontward. This is really of import to measure the state of affairss by marketing mix and political factors besides. In a survey ( Johnson et wholly, 2005 ) of strategic geographic expedition found that, there are three scheme lenses: design, experience and thoughts which are utile to develop a scheme in a administration.

Model of Strategic Management ( Johnson et wholly, 2005 )

The above theoretical account indicates that strategic direction indicates the strategic place of a administration depends on the environment and its capablenesss to accommodate besides its outlooks. The pick of scheme may be in concern degree or corporate-level ; it may be internationally for the development of the administration by following the strategic way or methods. Furthermore, need to organize, enable the scheme into action to acquire competitory advantage. The research and development of the scheme based on the some environment analysis such as SWOT, PESTLE, value concatenation, Porter ‘s Five forces manner and etc. By using these administrations can happen the place where it placed and take effectual step to rectify modify for developing the state of affairs.

03.SWOT ANALYSIS FOR OOCL

In a survey Stacey ( 2000 ) stated that “SWOT analysis is the list of an administration ‘s strengths and failings indicated by an analysis of its resources and capablenesss, plus a list of the chances and menaces that an analysis of its environment individualities. Strategic logic evidently requires that the future form of actions to be taken should fit strengths with chances, ward off menaces, and seek to get the better of weaknesses.” ( P-5 ) . In add-on, Strengths ( Koch, 2000 ) can function as a foundation for constructing a competitory advantage, and failings may impede it. By understanding these four facets of its state of affairs, a house can break leverage its strengths, correct its failings, capitalise on aureate chances, and discourage potentially annihilating menaces

Container Shipping is the most complicated globalized industry which has to vie with internal rivals like other container operators besides homogeneous concern like dry majority or oiler operators. Furthermore, it has a large competition with air transit. Customer ever wants to cognize the good and bad affairs of the company before stuffing his lading. By SWOT analysis of a company we can easy happen out the negative and positives of an administration. So, SWOT analysis is really of import for developing company profile by rectifying present failings and aware the menaces internally, externally and environmentally.

OCCL has immense competition with other operators nationally and internationally and need to pull off little shipper or large client, furthermore, fluctuation of international trade create the environment to calculate its all sight. Furthermore, it is a client focused administration. SWOT analysis will assist to pull the client for better concern besides develops the administration economically and socially.

04.SWOT Analysis

A. STRENGTHS OF OOCL

1. OOCL is a subordinate of a planetary group of company OOIL group, Hong Kong. They can take any organisational or fiscal aid from the group even from the authorities.
2. Offering quality services in Asia, Europe, America and Australasia where container service is extremely demanded as speedy ocean transit and easy entree to shipper or consignee premises.
3. Quick and rapid service, theodolite clip is less, easy connexion, planetary service & A ; web
4. Pioneer in IT ( Transporting ) .Very strong in information engineering. Vendor services are executing by specialised package “Operationsmart” , “Depotsmart” and “Schedulesmart” . Vendor can easy log on and contract with OOCL from anyplace by utilizing this installations. Any client can cognize his lading place by this nexus. All vass are managing by utilizing information engineering.
5. Has ain bearers ( Mother and feeder vass ) , rail path ( Owned in China and partnership in America & A ; Europe )
6. Global trade name image & A ; designation to bargainer, importer and exporter.
7. Trained and skilled employees who ‘s are truly professional & A ; devoted in their occupations.
8. Market leader in refrigerated container trade and temperature -controlled environment over ocean, rail and burden line.
9. Strong intermodal web in Asia, Europe and America.
10. “DGsmart” which cares the unsafe goods client. OOCL provides preparation for all for managing these types of lading

B. WEAKNESSES OF OOCL

1. High competition and market fluctuation. Insignificant market growing of the line. No changeless concern growing in the industry.
2. High cargo & A ; costs. Peak season surcharge on service paths.
3. Limited allotment of container in assorted paths and state
4. GSA trade in maximal state. No direct trade for maximising net income and mass customization.
5. Imbalance of equipment. Huge rental container.
6. Africa service is non available.

C. OPPORTUNITIES OF OOCL

1. OOCL can increase the figure of vass and container as universe demand is increasing twenty-four hours by twenty-four hours.
2. Introduction of Africa and South American services and intermodal connexion at that place.
3. Addition market portion in Asiatic part by direct concern.
4. Introduction of feeder service in south Asia and investing in terminal concern.
5. More investing in port and terminal concern.

D. THREATS OF OOCL

1. World recession which may be incurred immense loss which will impact to the portion market and stockholders view to deviate from their place or sell the portion.
2. Due to surcharge or excess payment, client may deviate to other operators.
3. Heavy competition with national and international bearer.
4. Globalization of the industry. May loose domestic ‘s lading.
5. Limited Feeder Vessel allocation from hub port to talk port in Asiatic market

05.BUSINESS Scheme

Business scheme is the cardinal constituent of developing the administration as reputed administration of the universe. In add-on, it will assist to set up the operational guidelines by which company can continue measure by measure. This good program may assist to make the mark point for accomplishing the desired end products. It will assist to do program, alteration, control and execution of the undertaking. In a survey Lasserre ( 2007 ) argued that a company concern scheme is a set of cardinal picks which defines its long-run aims, its value proposition to the market, how it intends to construct and prolong a competitory concern system and how it organises itself. He added that a concern scheme will by and large cover the followerss for acquiring the maximal results: –

1. Ambition. This will assist to put a long-run aims of the company by which it is possible to make a mark particularly increasing the size of the organisation economically, nationally and internationally.
2. Positioning. It will add the value proposition to client. Branding the merchandise and service, client cleavage, penchant of client picks will put a criterion of the company and good place on the market.
3. Investing. Business scheme will assist to make the environment of investing for traveling really near of the client. Besides create a system that is able to present value to clients competitively.
4. Organization. The profound beliefs of the organisation will add value to the employee and long-run working installations will develop a good construction of human resources direction. From human resources to the production, everyplace will be a procedure and will steer the organisation in a system.

The concern scheme of an administration may be different in different location or part. The company concern scheme may be FDI ( Foreign Direct Investment ) , M & A ; A ( Merger and acquisition ) , Diversification, CSR ( Corporate Social Responsibility ) or Global Strategy or any corporate schemes that will rule or bespeak how the company will convey competitory advantages to make concern.

06.DIVERSIFICATION STRATEGY OF OOCL

a ) Diversification

Diversification ( Johnson et wholly, 2005 ) is a scheme that takes the administration into both new markets and merchandises or services and be undertaken for a assortment of grounds, value making than others. It may derive the economic systems of range by administrations bing installations besides corporate managerial capablenesss. Keeping the merchandise is the chief challenge of variegation. Alternatively of increasing growing, it sometimes is a load for the administration. The growing of the nucleus concern of the administration may make the fiscal or distribution channel strength to spread out the concern in related or unrelated map. Sometimes directors or employee motivates the proprietors to prosecute in new concern. In add-on, the good trade name value may pull to diversify the merchandise or present new merchandise by which company can give extra client service. Furthermore, offer from authorities to make concern in a new country or merchandise for protecting the national involvement towards a strong place of the company besides fiscal stableness in a state.

In a research of variegation, Reed and Luffman ( 1986 ) argued that basic strategic purposes can merely be decided after calculated concentration on the company ‘s present restriction and hereafter demands which helps to last, growing, usage of resources or accommodating to client so variegation is one option in several option available to the company. They besides added that analysis of market ; material supplies, technological development and production procedure are required before traveling to the determination of variegation. Where the chance is available but hazard to develop, administration may non diversify from their nucleus concern. The appraisal to spread out the concern in assorted ways can assist to take a determination in what manner they will look frontward towards bing or new client but offering the qualitative merchandise or service depends on the client ‘s desire and handiness of channel by which they can advance the merchandise or service. Otherwise, hazard will be increased and nucleus concern may be hampered by the new one.

Grant ( 2008 ) argued that variegation scheme or determinations by the company involves for two issues: attractive force of the industry and end product by competitory advantages. The economic sciences of range can be tangibles or intangible resources of the company even organizational capablenesss can besides be transferred within the diversified company. OOCL had competitory advantages by its diversified merchandises like information systems and terminal concern. The group concern expanded concern in related and unrelated industry for acquiring the logistics support for its nucleus concern ocean transportation. He prescribed that variegation motivates the administration for turning, cut downing hazard and doing net income to make incompatibility of stockholder position.

OOCL diversified in both homocentric and pudding stone to develop their administration economically besides making trade name value. But they extremely focused on homocentric variegation because transportation is the derived demand and extremely globalized concern where client needs all sort of logistics support. Supplying the logistics support they made strong information systems from the beginning of conveyance to the concluding finish which one is the full version of logistics.

The OOIL group diversified in container concern by making the OOCL logistics which helps to add value in their nucleus concern ocean transporting. In add-on, they involved in larboard terminus concern in Kaoshiung ( China ) and Long Beach ( North America ) which form an built-in portion of international containerised conveyance concern ( OOIL,2010a ) . The lading smart is the advanced package of OOCL by which they can maintain relation with their clients in 24 hours. Preliminary it is developed for their ain administrations but now utilizing by most of the logistics company of the universe. It ( CargoSmart,2010 ) is a Software as a Service ( SaaS ) planetary transportation and logistics solutions provider that enables companies to take down transit direction costs, streamline operations, and cut down the hazard of late cargos.

For acquiring the house servants cargo, they established OOCL China house servants limited for acquiring the house servants lading which besides add value in their concern. Due to heavy industrialisation in China and holding competition with national and international transportation company, OOCL diversified in their merchandise to make a good selling attack to the local bargainer. Kaoshiung larboard terminus is back uping them by giving logistics Centre installations to the shipper and consignee in China. Furthermore, route and rail transit besides help to pull the client as it is the multimodal installations for transporting the lading at bearer ‘s hazard. Enhance, they structured intermodal service in China, Europe and North America

In pudding stone variegation, they established belongings concern in two states ( China and USA ) as OODL which helps to increase the stockholder value and hereafter of the company for any crisis or recovery of their nucleus concern.

B ) Vertical Integration in OOCL

There is a perpendicular integrating in OOCL variegation as they set a list of merchandise and service in forepart of their clients. The nucleus concern of OOCL is ocean transporting that means selling the vas infinite to the client and supplying the installations of instrument container for caring the lading. Along with this concern they integrated the services by backward and forward integrating. The backward installations are the information installations by which client can log on from any topographic point of the universe. In add-on, Logistics Company like OOCL logistics, intermodal systems besides added in backward integrating. The forward installations are larboard and terminal concern which added value to pull the client for uncluttering the lading easy and economically.

C ) Performance and Outcomes.

Diversification and public presentation are correlated in their possible activities but depends on the credence of the client. Grant ( 2008 ) believes that variegation has the possible to make value for stockholders where it exploits economic sciences of range and where dealing costs in the market for resources make it inefficient to work these economic sciences of range through market contracts. The transporting market depends on its rhythms from the ship edifice to scrapping and mid times utilizing installations. Furthermore, it ‘s perishable service where customization is really of import to utilize its all rhythms. As a container service chief line operator, it is really hard to run the concern by merely its vas public presentation but besides need linking installations to maintain the client. Diversification in OOCl helps to make logistics merchandises or service like Cargo Smart, Intermodal, Port & A ; Terminal and catalyst their nucleus concern ocean transportation. The pudding stone variegation of OOCL in belongings concern helped to last in recession. Due ( Reuters,2010 ) to planetary economic downswing and company immense loss in this downswing, OOIL group has sold $ 2.2 billion in Chinese belongings to raise hard currency and concentrate on its nucleus transportation concern.

07. Critical Analysis

The variegation scheme of OOCL is partly failure. Due to economic downswing, group is unable to prolong and sold their unrelated belongings concern OODL. It will be impacted to their nucleus concern because stockholder will non be influenced to maintain their portion. In add-on, they had chance for developing their concern in port terminuss but sold two terminuss out of four. Port terminuss are large entree of a transportation company. However, their present terminus is utilizing by their ain and expansive confederation vass.

The best option for container transportation in strategic direction may be in planetary scheme because this is the extremely globalised industry. They can take the scheme for increasing their services in all over the universe. Some companies are really successful in M & A ; A similar MAERSK. They merged with Sealand foremost and eventually acquired P & A ; O Nedlloyd which 1 is the great and extremely capitalized acquisition in transporting industry. OOCL has great chance to unify with some African or South American container line to diversify their concern in these parts. It will convey more clients. In add-on, their core competency of HR policy indicated that CSR may be the best scheme to develop the concern. The Grand Alliance ( Hapag-lloyd,2009 ) formed in 1998 is the taking incorporate pool in planetary container transportation by the taking chief line operator in container transporting Hapag-Lloyd ( Germany ) , MISC Berhad ( Malaysia ) , NYK ( Japan ) and OOCL ( Hong Kong ) . Jointly they are presenting transporting paths and new services twenty-four hours by twenty-four hours to widen the container transportation.

08.CONCLUSION

Lasserre ( 2007 ) stated that directors, politicians, journalists and faculty members are normally utilizing the construct of globalisation along with planetary industries, competition, or corporation or schemes to globalise or decease. Container transporting industry is extremely globalised as it is the derived demand of universe trade. Furthermore, it has to contend with same line industry like dry majority or oiler transportation. The concern competition among the chief line container operators is really high. In add-on, universe confederation by some companies that doing groups and get down amalgamate concern is the new dimension to minimise the loss or maximising the net income. Strategic confederation between two or more houses like the expansive confederation of OOCL with other operators brought competitory advantages in concern. OOCL is the household concern administration and featured the nucleus competence of human resources. SWOT analysis of the administration and variegation scheme may demo the ways to confront the planetary economic downswing and be more strategic in their concern.