Maestrsk Line Case Analysis
This section aims to take a closer look to the shipping industry, moving from a macroeconomic perspective to a microeconomic one. The text provides an analysis on a new serie of determinants of industry attractiveness and profitability, analysis conducted on Porter’s model of competitive industry structure.
6.1 New entry
The more new entrants in an industry the less attractive this become for the existent players, and the higher the competition will be between these.
In case of shipping industry, this manages to keep its attractiveness at a high level, due to its relatively high entry barriers, especially when thinking about capital requirement. Besides this initial barrier, new entrants should take into consideration many other aspects like
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6.2 Bargaining power of suppliers
While buyers would like to minimize the price they pay, similarly suppliers are seeking to maximize the profit setting up higher prices for the requested supplies. In case of shipping industry there are a large number of suppliers and from this perspective the switching cost is very high for them.
Looking at Maersk Line, the company has suppliers all over the world. To be able to keep their collaboration, suppliers have the responsibility to accomplish a set of environmental and social standards in accordance to the Responsible Procurement programme of the Danish company. Maersk has a large group of suppliers, 1500-5000, which are assessed constantly in order to determine if their performance aligns with company’s requirements, and where necessary they are asked to perform an improvement plan.
To conclude with the bargaining power of suppliers is low in shipping industry, so the price factor remains weak for them.
6.3 Bargaining power of buyers
The bargaining power of buyer is high in shipping industry. This because there are few dominant buyers and many
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