0 Sustainable value creation through corporate entrepreneurship A case study of Univan Ship Management Limited in Hong Kong Alin Coman Master of Science Thesis Stockholm, Sweden May 2014
Welcome message from author
This document is posted to help you gain knowledge. Please leave a comment to let me know what you think about it! Share it to your friends and learn new things together.
Transcript
0
Sustainable value creation through corporate entrepreneurship
A case study of Univan Ship Management Limited in Hong Kong
Alin Coman
Master of Science Thesis Stockholm, Sweden May 2014
1
Sustainable value creation through corporate
entrepreneurship A case study of Univan Ship Management Limited in Hong Kong
Alin Coman
Master of Science Thesis INDEK 2014:13 KTH Industrial Engineering and Management
Industrial Management SE-‐100 44 STOCKHOLM
2
Master of Science Thesis INDEK 2014:13
Sustainable value creation through corporate entrepreneurship
A case study of Univan Ship Management Limited in Hong Kong
Alin Coman
Approved
2014-‐May-‐21 Examiner
Terrence Brown Supervisor
Gregg Vanourek Commissioner
Contact person
Abstract Due to rapid and major economic change in recent years, the need for more flexible, dynamic and innovative companies is widely recognized. Firms must clearly understand and translate customers’ needs in order to foster value creation. Many scholars have focused their attention on the entrepreneurial behavior of owners or top managers and their actions that encourage innovation, venturing and strategic renewal. However, rigorous empirical research examining the factors that support corporate entrepreneurship and lead to sustainable value creation is scarce. The purpose of this study is to identify the factors that support corporate entrepreneurship and lead to sustainable value creation in a ship management company, using a case study approach. In this context, the following research question is addressed:
-‐ What factors support corporate entrepreneurship and lead to sustainable value creation in a ship management company?
This research uses an interpretive paradigm and utilizes three methods for collecting data, consisting of observational technique, surveys and semi-‐structured interviews. Findings reveal the factors that support corporate entrepreneurship and lead to sustainable value creation in ship management. These are analyzed in relation to the literature and the ship management sector. The study concludes that corporate entrepreneurship, when conducted effectively, can be a significant contributor of sustainable value creation. However, this may or may not be applicable to other sectors. Key-‐words: corporate entrepreneurship, factors, sustainable value creation, ship management
3
Table of Contents
Abstract ............................................................................................................................................................ 2 Acknowledgements ...................................................................................................................................... 5 Abbreviations ................................................................................................................................................. 6 Key terms ......................................................................................................................................................... 7 List of figures .................................................................................................................................................. 8 List of tables .................................................................................................................................................... 9 1. Introduction ........................................................................................................................................ 10 2. Review of literature and theoretical framework .................................................................... 12 2.1. Sustainable value creation .............................................................................................................................. 12 2.1.1. Defining sustainable value creation ............................................................................................. 12 2.1.2. Driving sustainable value creation through corporate entrepreneurship .................. 12 2.1.3. Challenging the notion of sustainable value creation .......................................................... 13
2.2. Corporate entrepreneurship .......................................................................................................................... 13 2.2.1. Various definitions .............................................................................................................................. 13 2.2.2. Innovation and entrepreneurship ................................................................................................ 14
2.3. Dimensions supporting corporate entrepreneurship .......................................................................... 14 2.3.1. Internal factors supporting corporate entrepreneurship .................................................. 14 2.3.2. External factors supporting corporate entrepreneurship ................................................. 15
2.4. Shipping and world trade ................................................................................................................................ 15 2.4.1. Ship management ................................................................................................................................ 18
3. Research process ............................................................................................................................... 20 3.1. Methods ................................................................................................................................................................... 20 3.2. Description and suitability .............................................................................................................................. 21 3.2.1. Advantages of case studies .............................................................................................................. 21 3.2.2. Disadvantages of case studies ........................................................................................................ 21 3.2.3. Semi-‐structured interviews ............................................................................................................. 21 3.2.4. Survey ....................................................................................................................................................... 21 3.2.5. Observational technique ................................................................................................................... 22
3.3. Reliability, validity, representativeness and execution ...................................................................... 22 3.4. Limitations ............................................................................................................................................................. 23 3.4.1. Limitations of qualitative studies ................................................................................................. 23 3.4.2. Limitations of case studies ............................................................................................................... 23 3.4.3. Limitations of surveys ........................................................................................................................ 23 3.4.4. Limitations of other nature .............................................................................................................. 23
4. Case study ............................................................................................................................................. 25 4.1. Univan Ship Management Limited .............................................................................................................. 25
5. Findings ................................................................................................................................................. 29 5.1. Internal factors that support corporate entrepreneurship and lead to sustainable value creation ................................................................................................................................................................................ 29 5.1.1. Culture, leadership and employee dynamics ........................................................................... 29 5.1.2. Organizational structure ................................................................................................................... 30 5.1.3. Communication ..................................................................................................................................... 32 5.1.4. Acquiring and developing capabilities ........................................................................................ 32 5.1.5. Rewards ................................................................................................................................................... 32 5.1.6. Risk-‐taking .............................................................................................................................................. 33
5.1. External factors that support corporate entrepreneurship and lead to sustainable value creation ................................................................................................................................................................................ 33
4
5.1.1. Trend of owners outsourcing ship management ................................................................... 33 5.1.2. Sector outlook ........................................................................................................................................ 34 5.1.3. Competitive forces ............................................................................................................................... 35 5.1.4. Maritime institutions, public policies, laws and regulations ............................................ 36
5.2. Roadmap and vision for value creation .................................................................................................... 37 6. Conclusions and future research .................................................................................................. 39 References .................................................................................................................................................... 41 Appendix 1 -‐ Survey questions and participants ............................................................................. 45 Appendix 2 -‐ Interview questions ........................................................................................................ 47 Appendix 3 -‐ Tables and figures ............................................................................................................ 48 Appendix 4 -‐ Plan of work ....................................................................................................................... 50
5
Acknowledgements This thesis would not have been possible without the contribution of a number of people. First of all, I want to express my sincere gratitude to my supervisor from KTH, Gregg Vanourek. His expertise in my research area was irreplaceable and I thank him for all the time he spent with and for me. He provided me with a clear vision and gave me plenty of helpful and detailed advice. I also want to thank Cali Nuur and Terrence Brown for their thoughts and ideas. Secondly, I want to thank the whole team of Univan for all the support, assistance and encouragement for my work there. There are three persons that I especially want to thank, starting with Pradeep Ranjan, COO, who was the first person I had contact with and took the time to introduce me to ship management. Then there is my supervisor, Alex Slee, Director of Strategy, who always had an open ear for me and provided me with a lot of useful information and guidance. Last but not least there is Richard Hext, the Chairman, who made this internship possible and advised me in various aspects. Also there are several other people who strongly supported me and hence had a major impact on my research: Vikrant Gusain, Bjorn Hojgaard, Cammy Chan, Antony Cowie, Mark Speirs, Raja Ram Kogta, Peter Helm, Shrinath Hegde, Kohichi Onodera, Arun Deo Mishra, Eric Cheung.
6
Abbreviations BMI – Business Model Innovation CAGR -‐ Compound Annual Growth Rate CE – Corporate Entrepreneurship CEO – Chief Executive Officer CFO – Chief Financial Officer COO – Chief operating officer CS – Case study CV – Corporate Venturing DWT – Deadweight Tonnage EMT – Executive Management Team HR – Human Resources IMO – International Maritime Organization IT – Information Technology KPI – Key Performance Indicators OECD -‐ Organization for Economic Co-‐operation and Development OP – Organizational Processes PESTLE -‐ Political, Economical, Social, Technological, Legal & Environmental SVC – Sustainable Value Creation
7
Key terms Compound annual growth rate – The year-‐over-‐year growth rate of an investment over a specified period of time (Investopedia) Corporate entrepreneurship – the activities that an organization undertake to enhance its product and process innovations, risk-‐taking and proactive response to environmental forces (Castrogiovanni et al. 2011) with the final goal of value creation Corporate venturing – the set of organizational systems, processes and practices that focus on creating businesses in existing or new fields, markets or industries—using internal and external means. Internal means typically include innovation, new business incubation and corporate venture capital. External means usually include licensing, joint venturing, and acquisitions (Narayanan et al. 2009). Deadweight tonnage – is a measure of how much weight a ship is carrying or can safely carry. It is the sum of the weights of cargo, fuel, fresh water, ballast water, provisions, passengers and crew. Entrepreneurship – generating value through an innovative new enterprise, while assuming risk and reward Innovation – the process of translating an idea or invention into a good or service that creates value or for which customers will pay Organizational climate -‐ a set of properties of the work environment, perceived directly or indirectly by the employees, that is assumed to be a major force in influencing employee behavior (Ivancevich & Matteson 2002) Shipping industry -‐ The industry concerned with transporting freight (goods transported in bulk) by water Strategic renewal – the processes, contents and outcomes of “refreshment or replacement of attributes of an organization that have the potential to substantially affect its long-‐term prospects” (Agarwal & Helfat 2009) Sustainable value creation -‐ A firm’s capability to understand and translate customers’ needs into superior solutions, fostering performance over a prolonged period of time for both sellers and buyers Third party ship management – specialized firms offering a range of different ship management packages, from crew management and technical assistance, through to full commercial management
8
List of figures Figure 1 -‐ Top 10 countries of ownership by main vessel types (DWT as%, January 2012 estimates) ________ 17 Figure 2 -‐ Univan's footprint ______________________________________________________________________________________ 25 Figure 3 -‐ Fleet by vessel type _____________________________________________________________________________________ 26 Figure 4 -‐ Culture, leadership and employee dynamics relationship ___________________________________________ 29 Figure 5 -‐ Organizational structure ______________________________________________________________________________ 31 Figure 6 -‐ S.M.A.R.T. Goals ________________________________________________________________________________________ 33 Figure 7 -‐ Univan's strategic vision and roadmap1 ______________________________________________________________ 38 Figure 8 -‐ Market share of top 10 countries of ownership by type of vessel ____________________________________ 48 Figure 9 -‐ Top 10 Nationality of seafarers _______________________________________________________________________ 49 Figure 10 -‐ Fleet by crew nationality _____________________________________________________________________________ 49
9
List of tables Table 1 -‐ Common internal factors supporting CE ______________________________________________________________ 15 Table 2 – Main types of ships and their function ________________________________________________________________ 16 Table 3 -‐ Strengths of in-‐depth interviews and surveys _________________________________________________________ 20 Table 4 – List of interview respondents __________________________________________________________________________ 23 Table 5 -‐ Univan's history _________________________________________________________________________________________ 25 Table 6 – Services provided by Univan ___________________________________________________________________________ 27 Table 7 – Principal ship management competitors ______________________________________________________________ 35 Table 8 -‐ The most common factors considered by researchers and the factors revealed by this paper ______ 39 Table 9 – Survey questions ________________________________________________________________________________________ 45 Table 10 – List of survey respondents ____________________________________________________________________________ 46 Table 11 – Interview questions sample __________________________________________________________________________ 47 Table 12 -‐ Top 10 countries with the largest owned fleets ______________________________________________________ 48 Table 13 -‐ Top 10 flags of registration with the largest registered DWT ______________________________________ 48 Table 14 -‐ Plan of work ___________________________________________________________________________________________ 50
10
1. Introduction This chapter begins with a background introduction to establish the general territory and continues with the problem statement, research objectives and delimitations. In recent decades, rapid and major economic change has been occurring. More precisely, the strong pace of technological development coincides with the advancement of globalization, resulting from greater market liberalization. This has substantially increased competition, risk and uncertainty (Knight 1997) and the fragmentation of markets, promoting a growing need for flexibility, competitive aggressiveness, innovativeness and adaptive capacity (Carlsson 1996; Carree et al. 2002). The aforementioned characteristics are functions generally attributed to entrepreneurship, by means of which opportunities are discovered and innovation strategies are implemented gradually and continuously improving the organizational and technical procedures, as well as decision-‐making (Lee et al. 2011). In this sense, entrepreneurship is attracting more and more attention as a useful instrument for value creation (Dabic et al. 2011). Corporate entrepreneurship (CE) has been proposed as one key instrument to promote flexibility and change in established organizations (Zahra et al. 1999). CE may be defined as:
The activities that an organization undertake to enhance its products and process innovations, risk-‐taking and proactive response to environmental forces (Castrogiovanni et al. 2011) with the final goal of value creation.
Many scholars have focused their attention on the entrepreneurial behavior of owners and/or top managers (Clargo & Tunstall 2011) and their actions that foster innovation, venturing and strategic renewal (Kuratko & Morris 2002). However, rigorous empirical research examining the factors that support CE and lead to sustainable value creation (SVC) is scarce. The main problem is that today’s businesses, “especially the large ones, will simply not survive in this period of rapid change and innovation unless they acquire entrepreneurial competence” (Drucker 1985). Fostering CE appears to be a major issue for companies that face different challenges such as:
• Grasping growth opportunities and capturing new markets • Addressing threats to profit margins by continually looking for profit-‐
maximizing innovations and by adopting organizational measures that are both flexible and responsive (Fayolle & Basso 2010)
• Nurturing competitiveness in a dynamic environment • Implementing growth strategies by freeing up the creative energy within the
business, but also acquiring and managing entrepreneurial capital and knowledge assets.
• Business model innovation (Chesbrough 2010) • “Innovator’s dilemma” (Christensen 1997) -‐ when a venture’s successes and
capabilities become obstacles in the face of changing markets and technologies.
The purpose of this study is to identify the factors that support corporate entrepreneurship and lead to sustainable value creation in a ship management
11
company, using a case study approach.
To enable this analysis, the research first establishes the theoretical framework related to SVC and CE; second, it delivers an in-‐depth analysis of Univan, a global third party ship management company with headquarters in Hong Kong. From a theoretical perspective, the study’s implications are beneficial to the corporate entrepreneurship literature linked to sustainable value creation in the ship management sector. Due to the limited timeframe of the thesis project and the complexity of the problem studied, but also to improve the quality of work, the following delimitation is imposed:
• This research focuses on the value creation factor and is not addressing the implications of value delivery and value capture (Chesbrough 2010)
• This research focuses on value creation for the company and customers and will not discuss value creation related to other stakeholders (e.g., suppliers, communities).
• Other dimensions contributing to SVC, such as business model innovation, internal organizational processes, social influences, stakeholders’ relationships, and others, are not subject of this research.
• This research is not addressing the discussion about the portrayal of the psychological disposition that individuals bring to the process of corporate entrepreneurship.
• This research is not addressing the discussion about cognitive style, which measures the way intellectual activities are performed.
• This research focuses only on one company (Univan), thus the results and conclusions will not necessarily apply to other types of organizations (different in terms of size, stage of the business, location, sector, or industry).
12
2. Review of literature and theoretical framework This chapter begins by describing the sustainable value creation concept and continues with a brief section about corporate entrepreneurship, providing various definitions and outlining the relationship between innovation and entrepreneurship. Further on, the dimensions supporting corporate entrepreneurship are presented. The last section illustrates various aspects of the shipping industry.
2.1. Sustainable value creation
2.1.1. Defining sustainable value creation Creating and delivering value for companies and customers has been studied in the marketing, strategy, and business model literature for many years. Anderson et al. (1998) suggested that companies must first understand what customers value (through market sensing and other market-‐oriented activities) to be able to create said value for their customers.
In a fundamental sense, creation of value has been said to be the purpose of a firm. Value can be measured in different ways, such as by total shareholder returns, profitability, customer satisfaction, cash flows, stock prices, achievement of some strategic objectives and other metrics. Issues related to value creation are important and lively areas of business, finance, management, and innovation. In fact, value creation is now said to be at the intersection between the functional areas of finance and strategy (Choi & Click n.d.). Kahan (2013) states that value creation is about identifying what drives the customers, and generating a curve of offerings around those drivers bringing together the buyer and the seller. Drawing upon multiple sources, sustainability in value creation adds a time dimension to the process but also neglects the ecological and environmental aspects. The following definition of sustainable value creation has been proposed:
A firm’s capability to understand and translate customers’ needs into superior solutions, fostering performance over a prolonged period of time for both sellers and buyers
2.1.2. Driving sustainable value creation through corporate entrepreneurship
For years, popular press and academic literature have been praising CE as an effective means to fight inertia, stagnation and lack of innovation (Mair 2002). However, rigorous empirical research examining the link between CE and value creation is still scarce (Zahra & Covin 1995; Covin & Miles 1999). Traditional concepts of CE typically refer to dispositions (Miller 1983), or orientations (Lumpkin & Dess 1996), largely overlooking the processes that are core part of CE and contribute to value creation. Adopting and supporting corporate entrepreneurship processes for value creation has been promoted by Gartner (1988), stressing that it involves an ample resource
13
commitment, consisting of both financial and human capital. It also requires time in order for the markets and clients to react. However, once an effective design is constructed, the chances of achieving sustainable value creation are high. Apart from CE, Mair (2002) points out that there are several other dimensions contributing to SVC, such as business model innovation, internal organizational processes, social influences, stakeholders relationships, and others, which will not be addressed in this thesis.
2.1.3. Challenging the notion of sustainable value creation Other researchers (McGrath 2013) challenge the notion of sustainable value creation, or its related concept of sustainable competitive advantage. It is rather transient and not sustainable, McGrath says, mostly due to the ‘creative economy,’ which is constantly introducing new sets of assumptions and challenges changing the working environment, where new opportunities arise. However, “it’s almost impossible for a company to call it correctly every time. What matters, though, when you have been taken by surprise or something negative occurs, is what you do next. The best firms look candidly at what happened, figure out how to do it better the next time, and move on. It’s a bit like surfing a wave—you might fall off and find yourself embarrassedly paddling back to shore, but great surfers get back on that board; so too with great companies. They move from wave to wave of competitive advantages, trying not to stay with one too long because it will become exhausted, and always looking for the next one.”
2.2. Corporate entrepreneurship
2.2.1. Various definitions Corporate entrepreneurship has long been recognized as a potentially viable means for promoting and sustaining corporate competitiveness (Covin & Miles 1999). According to Zahra & Covin (1995), CE is the sum of a company's innovation, renewal and venturing efforts. Morris and Kuratko (2002) indicate that CE represents a framework for the facilitation of ongoing change and innovation in established organizations. It provides a blueprint for coping effectively with the new competitive realities that companies encounter in today’s global marketplace. Terms such as “intrapreneurs”, “those who take hands-‐on responsibility for creating innovation of any kind within an organization” (Pinchot 1985), and “corporate entrepreneurship,” which “…encompasses the birth of new businesses and the transformation (or rebirth) of organizations through a renewal of their key ideas” (Burgelman 1983), have been used to define and describe intrapreneurship. Moreover, corporate venturing (CV) (MacMillan 1986) and internal corporate entrepreneurship (Jones & Butler 1992) also played an important role in describing the phenomenon, but the consensus on the concept of intrapreneurship is that it involves creating value and developing opportunity through innovation via human and capital resources (Özdemirci 2011).
14
Other definitions of CE focus more on new products and new markets (Jennings & Lumpkin 1989), where new product innovation is seen as an important activity in established businesses (Miller 1983; Zahra 1993; Shane & Venkataraman 2000).
2.2.2. Innovation and entrepreneurship Innovation and entrepreneurship have been closely linked since the Austrian economist Schumpeter (1942) highlighted the force of the ‘creative destruction’ process that characterizes innovation. The idea contained in this seemingly paradoxical expression is that the emergence of new innovative activities often puts other existing companies and activities (which, comfortably established in their sector, have not managed to adapt their products, services or technologies) in a difficult position, or may even lead them to disappear (Fayolle & Basso 2010). According to Schumpeter (1934), entrepreneurs constitute the main engine of this ‘creative destruction’ process, by identifying opportunities that the actors in place cannot see, and by developing technologies and concepts that give birth to new economic activities. Innovation usually requires a strong organizational commitment to engage in and support new ideas, novelty, experimentation, and creative processes that may result in new products, services or technological processes (Lumpkin & Dess 1996).
2.3. Dimensions supporting corporate entrepreneurship Empirical data linking CE and ship management is scarce, however existing literature suggests there are three broad dimensions supporting corporate entrepreneurship in general: internal factors, external factors, and characteristics of employees related to corporate entrepreneurship (Srivastava & Agrawal 2010). Only the first two will be addressed in this paper.
2.3.1. Internal factors supporting corporate entrepreneurship Researchers (Kuratko et al. 1990) developed a framework (the Intrapreneurial Assessment Instrument) consisting of several items hypothesized around six factors, which summarized the concept of entrepreneurship in organizations. These factors were: management support for corporate entrepreneurship, which relates to willingness of managers to facilitate entrepreneurial behavior and projects; rewards, considering aspects like goals, feedback, individuals’ responsibility, and results; resource availability, where employees must perceive the availability of resources for innovative activities; organizational structure and boundaries; risk taking indicating that management must have a willingness to take a risk and have a tolerance for failure should it occur; and time availability. However, after a thorough investigation and multiple interviews with executive managers, the researchers concluded that the results of their study supported only five of the factors: management support, organizational structure, rewards, resource availability and risk-‐taking. Other researchers (Joseph 2004) suggested even more factors (7 factors) for a successful entrepreneurial organization: risk awareness and opportunity focus, safe and free environment for employees to experiment collaboratively, accepting change and ambiguity, empowering employees, flexible network of systems connecting employees, reward and motivation to encourage innovation, providing opportunities for individual and team growth.
15
The most common factors supporting corporate entrepreneurship (Srivastava & Agrawal 2010) considered by the majority of the researchers can be observed in Table 1 below.
Table 1 -‐ Common internal factors supporting CE
Factors Citations Rewards and Motivation Fry, 1987; Block & Ornati 1987 Management Support Hisrich and Peters, 1986; Sykes and Block,
1989; MacMillan et al. 1986; Resource Availability Von Hippel 1978; Hisrich et al. 2005; Katz
and Gartner, 1988; Damanpour, 1991 Organizational Structure Hisrich and Peters, 1986; Schuler, 1986;
Bird, 1988; Sykes and Block, 1989; Risk Taking MacMillan et al. 1986; Bird, 1988;
2.3.2. External factors supporting corporate entrepreneurship CE is not only a result of the internal climate and support of entrepreneurship orientation (Sebora & Theerapatvong 2009). All organizations innovate in response to their environments (Damanpour 1988). Competitive forces influence how organizations view their markets and configure their product development and delivery technologies in response (Pfeffer & Salancik 1978; Lengnick-‐Hall 1988). Moreover, the regional macro structure of a certain market, consisting of local institutions, public policies and culture might have a great influence on the type, quality and quantity of entrepreneurship. “Over time, firms develop strategic patterns (i.e., streams of actions) and positions (i.e., specific competitive postures within an environment) that reflect the alignment and arrangement decisions they make” (Mintzberg 1987).
2.4. Shipping and world trade The international shipping industry is responsible for the carriage of around 90% of world trade. Shipping is the lifeblood of the global economy. Without shipping, intercontinental trade, the bulk transport of raw materials, and the import/export of affordable food and manufactured goods would simply not be possible. Ships are technically sophisticated, high value assets (larger high-‐tech vessels can cost over US $200 million to build), and the operation of merchant ships generates an estimated annual revenue of over half a trillion US Dollars in freight rates (the price at which a certain cargo is delivered from one point to another). Seaborne trade continues to expand, bringing benefits for consumers across the world through competitive freight costs. Thanks to the growing efficiency of shipping as a mode of transport and increased economic liberalization, the prospects for the industry's further growth continue to be strong. There are over 50,000 merchant ships trading internationally, transporting every kind of cargo. The world fleet is registered in over 150 nations, and manned by over a million seafarers of virtually every nationality.
16
Among the top 35 ship-‐owning economies, there are 17 in Asia, 14 in Europe and 4 in the Americas. Practically half of the world tonnage (49,7 %) is owned by shipping companies from just 4 countries – Greece, Japan, Germany and China (Asariotis & Benamara 2012). Appendix 3 -‐ Table 12 depicts the major ship-‐owning countries and their market share. It is common in shipping that vessels operate under a different flag than the nationality of the owner, in order to reduce operating costs or avoid the regulations of the owner’s country. The flag state has the authority and responsibility to enforce regulations over vessels registered under its flag, including those relating to inspection, certification and issuance of safety and pollution prevention documents. As a ship operates under the laws of its flag state, these laws are used if the ship is involved in an admiralty case (also referred to as maritime law -‐ a distinct body of law which governs maritime questions and offenses). In Appendix 3 -‐ Table 13 the most preferred flags of registration by the owners can be seen, along with their market share and percentage of vessels owned by foreign owners for each flag of registration. From a commercial and regulatory point of view, size and type of ships are two key criteria upon which maritime institutions classify the ships. For the scope of this research, I chose to include only the biggest and most used types of ships and briefly explain their function (see Table 2).
Table 2 – Main types of ships and their function
Type of ship Ship function Container ships
They carry most of the world's manufactured goods and products, usually through scheduled liner services.
Bulk carriers The workhorses of the fleet, these transport raw materials such as iron ore and coal. Identifiable by the hatches raised above deck level which cover the large cargo holds
Tankers They transport crude oil, chemicals and petroleum products. Tankers can appear similar to bulk carriers, but the deck is flush and covered by oil pipelines and vents
General cargo ships
They carry packaged items like chemicals, foods, furniture, machinery, motor and military vehicles, footwear, garments, etc.
The top 10 ship-‐owning countries heavily use these 4 types of ships, but as seen in Figure 1 each country emphasizes on different types of vessels, mostly because their interests vary, but also due to economic factors (country’s resources, geographical position and so on).
17
Container Dry Bulk Tankers General Cargo
0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0% 35.0%
40.0%
Greece Japan Germany China Korea United
States Norway Denmark Singapor
e Hong Kong
Container 6.8% 8.8% 37.0% 6.3% 3.2% 1.5% 0.3% 8.8% 3.3% 2.2% Dry Bulk 19.9% 22.7% 4.8% 14.0% 6.3% 3.1% 1.4% 1.1% 2.0% 4.5% Tankers 20.8% 12.5% 4.6% 5.2% 2.8% 5.0% 3.4% 3.4% 3.9% 3.0% General Cargo 2.4% 12.4% 13.3% 11.0% 2.3% 1.0% 12.0% 1.1% 1.4% 1.8%
Figure 1 -‐ Top 10 countries of ownership by main vessel types (DWT as%, January 2012 estimates)
Adding the numbers from Figure 1 for each type of vessels, we find that the total market share of the top 10 countries of ownership represent somewhere in between 58-‐78% of the global sea trade (see Appendix 3 -‐ Figure 8). As shipping has become a global transport system capable of moving millions of tons of cargo and thousands of passengers safely, efficiently and in an environmentally friendly manner each day – not to mention that it does so at a fraction of the cost required by other modes of transport – seafarers play a vital role. They operate the world’s shipping fleet, thus making international trade and the global economy utterly depend on their services. Seafarers are, in effect, the lubricant without which the engine of world trade would not run (or nearly as well as it does). The OECD countries (North America, Western Europe, Japan etc.) remain an important source for officers, but growing numbers of officers are now recruited from the Far East and Eastern Europe. As with previous years the Philippines was found to dominate the global seafarer labor market, with almost 28% of the sample holding Filipino nationality (Ellis & Sampson 2008). Russians, Indians, Ukrainians, and Chinese nationals all constituted a similar proportion of the sample (between 6 and 7 %) followed by Turkey, Indonesia, Poland, Greece and Myanmar in descending order (see pie-‐chart in Appendix 3 -‐ Figure 9).
18
Shipping is the safest and most environmentally benign form of commercial transport according to International Maritime Organization (IMO). Perhaps uniquely amongst industries involving physical risk, commitment to safety has long been seen as a very important factor for sea shipping operations. Shipping was amidst the very first industries to adopt widely implemented international safety standards. Because of its inherently international nature, the safety of shipping is regulated by various United Nations agencies, in particular IMO, which has developed a comprehensive framework of global maritime safety regulations. There has been a substantial reduction in marine pollution over the last 15 years, especially with regard to the amount of oil spilled into the sea, despite a massive increase in world seaborne trade.
2.4.1. Ship management Operating a ship—not to mention a fleet of ships—takes a great deal of resources, knowledge and expertise. There are cargoes to manage, regulations to meet, maintenance schedules to consider, crew to employ and a whole host of other jobs that collectively constitute ship operating. Ship management, as an adjacent sector of the shipping industry, takes on some or all of those operational activities, leaving a ship owner free to pursue other business aims, for example expanding the business. Whether a ship owner decides to manage its ships internally, or outsources the tasks to a third party ship manager, the same operational needs must be covered.
The role of third party ship management In recent decades, the ownership of the world’s merchant fleet has become more diversified. On the one hand, there are the independent ship owners who have their own vessel operating capability. And on the other hand there are investors, banks and leasing companies, which also own ships but lack the necessary expertise to operate them. In some cases cargo owners also choose to own or control a portfolio of tonnage themselves, partly as a strategy to hedge risk. Such owners often enlist the assistance of third party ship managers who specialize in ship operation and usually offer a range of different management packages, from crew management and technical assistance, through to full commercial management. Many ship managers also offer other shipping services such as broking (specialist negotiators between ship-‐owners and charterers who use ships to transport cargo), ship agency (the provision of services to a vessel whilst in port), maritime information technology and other consultancy functions, which will be further discussed in this paper. Using the third party ship manager’s economies of scale and resources can help owners cut costs. An owner of perhaps just a few ships might not be cost-‐effective running with a large in-‐house management team and might not have a high bargaining power either.
19
Thus, placing a small fleet with a sizeable ship management company will generate the advantages of being with a large fleet. Third party ship managers also bring an expertise, which can help improve cash flow benefits and keep the fleet in employment through careful ship selection, good relationships with charterers and preventative maintenance. Today, around a quarter of the world’s internationally trading fleet is reliant on services provided by third party managers
Development of third party ship management Before 1980 -‐ Third party ship management was an almost unknown concept. There were practically no agreed rules, standard contracts or case law around the concept of outsourced management. 1980s – The ship management sector begins to take shape and assume the form we know today 1990s – This period was vital for the advancement of third party ship management, due to increasingly commoditized ship owning, in particular increased participations of non-‐traditional ship-‐owners. Oil Pollution Act of 1990 (OPA90) and many other new requirements/conventions were introduced, ever increasing demands on the operators of the vessels. The fast growing global fleet, experienced a rise in wage levels in the West, thus a crisis on the supply of seafarers emerged. Bigger ship managers were better able to handle recruitment and training. At the end of this decade, economic fluctuations and crisis took place in almost all freight markets, leading to greater and greater focus on the expenditure side. Today – Third party ship managers range from very small units with 10-‐25 employees operating 10-‐15 ships to very large companies employing over 1000 staff and managing 500-‐800 ships. The ship management market is highly fragmented with approximately 450 players in the world, of which only a handful have more then 200 ships under management. The main centers for ship management are in order of size: Hong Kong, Singapore, Cyprus and Hamburg. Many of the larger ship managers have established offices in several of these ship management capitals. Ship managers enjoy relatively long term, stable income throughout the ship’s life, acting as a necessary element of stability.
20
3. Research process In this section, the methodology used to conduct this research is presented. The chosen approaches will affect both the collection and interpretation of information. Accordingly, the methods are described and criticized.
3.1. Methods In this thesis, the methodology used is a case study (CS). The CS approach is suitable for studying and increasing the understanding of complex, longitudinal phenomena, such as sustained value creation. Of course, generalizability of the results is not suggested in a statistical sense. Rather, the aim with this interpretive study is to achieve analytical conclusions based on a set of results and contribute to the existing literature. Collecting data through more than one method and/or methodology can result in a richer view of the studied phenomena.
In this case, the thesis is using three methods to collect data. First, observational technique along with reviewing relevant documents was used for building up the background of the company, but also for understanding the business dynamics. Second, a survey was used as a preliminary tool for determining the potential shortcomings and/or barriers of CE, but also uncover divergent views, if any, over the company’s main strategies, culture and procedures at the upper and middle management levels. This was based on a survey developed for practitioners to improve management of business models (Achtenhagen et al. 2013). It supports the self-‐reflection of managers on how to achieve sustained value creation through shaping, adapting and renewing the business strategies. The survey attempts to reflect the inherent complexity of grasping and understanding relevant components of driving business innovation, development and change. “To what extent” questions were used (see Appendix 1 – Table 9). Third, in-‐depth, semi-‐structured interviews were conducted to secure a better understanding of the studied phenomena. They were mostly based on the results of the survey and focused on the topics where divergent views arose. Additional CE-‐related questions were used. A sample of questions can be seen in Appendix 2 – Table 11. Combining these three, an enriched view of the business was obtained. According to Gable (1994) interviews and surveys could complement each other in their strengths/weaknesses:
Table 3 -‐ Strengths of in-‐depth interviews and surveys
Factors In-‐depth Interviews Survey
Controllability Low Medium
Deductibility Low Medium
21
Repeatability Low Medium
Generalizability Low High
Discoverability High Medium
Representability High Medium
3.2. Description and suitability
3.2.1. Advantages of case studies Case studies allow the collection of detailed information that would not normally be easily obtained by other research designs. The data collected is normally a lot richer and of greater depth than can be found through other experimental designs. CSs can also help experimenters adapt ideas and produce novel hypotheses, which can be used for later testing and generalization of the findings.
3.2.2. Disadvantages of case studies One of the main criticisms is that the data collected cannot necessarily be generalized to a wider sample. This leads to data being collected over longitudinal case studies not always being relevant or particularly useful. Moreover, case studies generally focus only on one person, organization or entity and are conducted by only one experimenter, which can lead to bias in data collection.
3.2.3. Semi-‐structured interviews The “interview” is a managed verbal exchange (Ritchie & Lewis n.d.). Its effectiveness heavily depends on the communication skills of the interviewer. In my interviews I aimed to clearly structure questions (Cohen et al. 2000) and listen attentively; pause, probe or prompt appropriately (Ritchie & Lewis n.d.); and encourage the interviewee to talk freely, making it easy for them to respond. My interpersonal skills such as the ability to establish rapport, perhaps with humor and humility, were also important. This last point draws attention to the relational aspect and trust, which is needed, between participants. The aim of the semi-‐structured interviews was to provide a basis for interpreting significant findings and there were four criteria that were followed along the process (Flick 2009): (1) non-‐direction -‐ achieved by addressing open questions, (2) specificity – not being too detailed but also not too general in the question, (3) range -‐ meaning that the questions should be chosen in a way that all relevant aspects and topics are taken into account, and that the interviewees have the chance to add own topics and ideas, (4) the depth and personal context shown by the interviewee -‐ the purpose here is to create a situation where we try to find out what the interviewee thinks. Different (indirect) questions were used to exclude incoherent answers.
3.2.4. Survey A survey includes many methods, which focus on collecting quantitative data. Quantitative data refers to people, objects, and specific situations, which can be analyzed using interpretative methods (Collis & Hussey 2009). Surveys are meant to
22
collect primary or secondary data from a sample. A sample can be defined as “a subset of population”, where the population is “a precisely defined body of people or objects under consideration for statistical purposes” (Collis & Hussey 2009). In my case the survey was a cost-‐effective method and a very efficient way of gathering information about the unit of analysis. It made it possible to accurately estimate the characteristics of the target sample without interviewing all members of the company. On the other hand it didn’t allow me to develop an intimate understanding of individual circumstances or the local culture that may be the root cause of respondent behavior. Respondents might have been reluctant about sharing sensitive information in the survey format. Moreover, additional effort was required in order to communicate the importance of the survey and increase the response rate.
3.2.5. Observational technique Observational data collection was accomplished by taking field notes as Flick (2009) recommends. Being an intern at Univan, I was able to closely collaborate with the staff, understanding the dynamics of the company. In detail, I observed: (1) how the company internally conducts business, (2) how the industry looks like and (3) how the company and its stakeholders interact. This included understanding of how key individuals are thinking, behaving, and communicating with each other.
3.3. Reliability, validity, representativeness and execution Each research method was examined critically on its reliability, validity and representativeness as Finn et al. (2000) suggests. The reliability of the research is related to the consistency of the results obtained from it. In the case of the survey and interviews, I used shadow questions aimed to verify if respondents are cohesive in their answers. To assure this, the questions were simple and clearly worded. The validity of the research relates to the collected information, which, as seen in the findings chapter, measure and reflect the phenomenon that is studied. The representativeness of the research results indicate to what extent these results can be generalized, by asking if the data and the research methods, together with conclusions derived from data analysis, are broader in their application than the sample of respondents studied. Finally, the execution consisted of gathering a sample of respondents, primarily business executives in revenue-‐generating roles across job functions; notably, at different levels in sales, marketing and HR, including executives from the highest levels of management. An email was sent to 17 individuals, providing the link to the survey, supported by one reminder email. All 17 individuals clicked on the link; 16 respondents completed the 32-‐item survey yielding an 88.2% response rate. Of these, 5 respondents from the executive management team were selected for further interviews (see Table 4).
23
Table 4 – List of interview respondents
Name & Age Position at Univan Number of interviews
Average interview time [min]
Alex Slee, 33 Strategy Director 3 30 Bjorn Hojgaard, 45 CEO 1 40 Cammy Chan, 45 Director of Marine
Services 2 35
Mark Speirs, 51 Director of Commercial 1 40 Pradeep Ranjan, 58 COO 3 35 Vikraint Gusain, 40 Business Development
Director 2 35
3.4. Limitations
3.4.1. Limitations of qualitative studies A limitation associated with qualitative study is related to validity and reliability. “Because qualitative research occurs in the natural setting it is extremely difficult to replicate studies” (Wiersma 2000). When I selected methodologies and designs of my research, for example phenomenology, it might have come with limitations over which I had little control.
3.4.2. Limitations of case studies It is a fact that we cannot make causal inferences from case studies, because we cannot rule out alternative explanations. It is always unclear about the generality of the findings of a case study. It involves the behavior of one person, group, or organization. The behavior of this one unit of analysis may or may not reflect the behavior of similar entities. The Univan case study may be suggestive of what may be found in similar organizations, but additional research would be needed to verify whether findings from one study would generalize elsewhere (Simon & Goes 2013).
3.4.3. Limitations of surveys Surveys that are distributed with time constraints were noted by Delva et al. (2002) as problematic in that people who struggle with real or perceived time constraints are less likely to respond to surveys because these possible respondents feel overworked – they just do not have the time to complete the survey. Surveys often also suffer the limitation of forcing respondents into particular response categories, thereby limiting the range of responses. Unlike an interview, where respondents can ask clarifying questions, respondents are usually limited to the text in the survey itself for direction about how to complete it and where to respond (Simon & Goes 2013).
3.4.4. Limitations of other nature Other limitations that influenced the overall research process are represented by the short time span for this thesis, limited availability of key people with management functions within the company, cultural barriers, but also blurring information and different perceptions. To reduce the possibility of this, I tried to create an atmosphere of knowledge sharing by introducing myself and explaining what the research is all about.
24
Both in the interviews and the survey, I introduced ‘shadow’ questions (asking the same questions rephrased at a different time) for analyzing the individuals’ cohesiveness.
25
4. Case study In this chapter an in-‐depth presentation of Univan Ship Management is provided.
4.1. Univan Ship Management Limited Univan is a privately held third party ship manager, operating a wide range of ship types owned by entities from all over the world. The company is headquartered in Hong Kong and it has offices in India, Philippines, China, Singapore, Myanmar, Japan, United Arab Emirates, as well as agents all over the world (see Figure 2).
Representative office Manning & training office Manning office Head office Agency office
Figure 2 -‐ Univan's footprint
Univan's founder Captain Vanderperre is recognized as the father of modern ship management. He founded Univan (UNIted VANderperre) in 1973, right after he pioneered the third party ship management model while working for Wallem (owner and ship manager). From humble beginnings, with a shrewd sense of business, direction and foresight, Captain Vanderperre steered Univan safely through growth and expansion, providing high quality ship management services to ship owners around the world. He remained at the helm for 36 years building Univan into a force in ship management. The company’s history is represented in Table 5. Following the captain’s passing in September 2009, Univan continues to work inspired by his four guiding principles: passion, performance, precision and perfection.
Table 5 -‐ Univan's history
Year Facts 1973 Univan Ship Management Ltd. was established by Late Captain C A J Vanderperre
1975 Univan took its first tanker ship "M.T. Sun Clipper" under technical management
1976 Univan established its own manning office in Mumbai, India
1989 Univan established its own manning office in Manila (Philippines), Yangon (Myanmar) and New Delhi
1994 Univan inaugurated its third manning office in India based in Chennai
26
1995 Univan inaugurated its fourth manning office in India based in Kochi
1998 Univan inaugurated its first training academy in Kochi, India
2005 Univan expanded its training facility in Mumbai, India and started Univan Maritime Training Academy
2006 Univan had a joint venture with Clipper Group of Denmark
2006 Univan established its fifth manning office in India based in Kolkata
2006 Univan inaugurated its "ship maneuvering simulator" and "full mission Liquid handling simulator for 5 different oil / chemical gas cargo handling" in Mumbai.
2007 Hong Kong Marine Department awards Univan for providing maximum tonnage as third party ship manager. Univan at this point managed 16 VLCC's in its fleet profile.
2008 Univan manning office in Dalian, China was established
2009 Univan loses its founder Capt. C.A.J. Vanderperre at the age of 87
2010 Univan representative office in Japan and UAE was established
2010 Univan initiates a joint venture company with Cido Shipping under the name of "Univan Maritime (HK) Co, Ltd."
2012 Seatrade Asia awards Univan “Best Ship Manager”, Lloyd’s List Asia awards Univan “Ship Manager of the year”
2013 Seatrade Asia awards Univan “Best ship Manager”
Univan has managed over 700 vessels from 2000 to 320000 DWT including containers, general cargo ships, bulk carriers, tankers and many others. It has also provided new building and conversion supervision for very large crude carriers (VLCCs), tankers and bulk carriers at major shipyards in Japan, Korea and China. Any of these wouldn’t have been possible without a great emphasis on crew management. Throughout Univan’s history (see Table 5) crewing was one of the most important drivers of their success, heavily investing in training facilities all around Asia. Univan enjoys a high crew retention rate of some 90%. The care and attention that the company places on crew welfare is not just lip service but is part of Univan’s management philosophy that filters down right from the most senior levels. Currently the company has around 2300 crew at sea, 4900 active seafarers and over 10000 seafarers in their database. The fleet’s crew nationalities are represented in Appendix 3 -‐ Figure 10. While adding a distinguished management team to the existing crew, Univan succeeds in operating a diverse fleet of 104 vessels, including tankers, dry bulk carriers and containerships (see Figure 3).
Figure 3 -‐ Fleet by vessel type
32%
40%
28%
Tankers
Bulk carriers
Containerships
27
The growth of Univan in recent years (size, managed vessels, profitability), but also the high retention and satisfaction of employees as well as customers, suggest that the company achieved sustainable value creation. A proven track record of discipline, delivering safety, quality, maintenance and performance on budget, but also of commitment to integrity, transparency and long-‐term partnership with owners is backed-‐up by the company’s mission:
“Keep its managed fleet on hire, operating economically and in optimal condition (in line with the requirements of its owners) whilst maintaining a total commitment to safety and to the protection of the environment.”
Univan is offering a large pool of services to its clients, being able to tackle most of the demands or issues that ship owners might have (see Table 6).
Table 6 – Services provided by Univan
Sectors Services Comments
Technical management
Safety and quality management
The provision and servicing of safety equipment.
Planned maintenance Procurement Organizing spare parts to be delivered to
the vessel when required. Tanker pre-‐vetting & chemical distribution inspection
In-‐depth pre-‐inspection covering all areas on board in relation to the Ship Inspection Report (SIRE Vetting).
Dry docking and major repair
Taking the ship to the service yard, inspecting or repairing the submerged portions of the hull.
Budget control and reporting
Onshore & offshore.
Marine consultants
New building consultancy and supervision
Assistance throughout the construction process of a ship.
Plan approvals Engineering, modeling and supervision. Chandlery The provision of food and consumables
for the vessel and crew. Travel Transport and visa requirements of
crew. Eco services Preserving the environment through
technical measures. Communication and IT systems
Equipment and services provided to vessels and the on-‐shore offices to facilitate communication and monitoring
Crew management
Recruitment, training and development of seafarers
Commercial services
Asset management Handling the takeover and return to service of distressed assets.
Chartering strategies and options
Finding cargo for ships to transport for a certain price, called freight rate.
28
Sale & Purchase services Advise owners in regards to their options when purchasing a ship and its employment.
Insurance & Legal Minimizing owners' exposure to unexpected claims, delay or commercial loss.
Bunker supply Supplying ships with fuel. Agency Provide services to vessels whilst in
port. Post-‐fixture Papers and contracts due to the actual
employment of the ship
29
5. Findings This chapter presents the results of the case study conducted in Hong Kong at Univan Ship Management, but also of the research work carried out in Stockholm. The results are analyzed in their associated theoretical context with the aim of answering the research question. First, the internal factors that support CE and lead to SVC are presented, addressing topics such as culture, leadership and employee dynamics, organizational structure and communication, acquiring and developing capabilities, as well as rewards and risk-‐taking. Second, the external factors that support corporate entrepreneurship and lead to SVC at Univan are discussed, touching upon trends, industry dynamics, competitive forces, maritime institutions, public policies, laws and regulations.
5.1. Internal factors that support corporate entrepreneurship and lead to sustainable value creation
This section analyzes the factors that support CE and lead to sustainable value creation within Univan. The discussion will focus on culture, leadership and employee dynamics, organizational structure and communication, acquiring and developing capabilities, but also rewards and risk-‐taking.
5.1.1. Culture, leadership and employee dynamics Culture, leadership and employee dynamics are three concepts that are deeply connected (see Figure 4). While conceptually different, the three concepts are intertwined according to Hojgaard. It can be inferred from various internal newsletters and the interview with him that is the leader’s job to embed and transmit the culture. That is, leaders cultivate awareness, articulate the culture and transfer it throughout the organization, which further on facilitates change, committing employees to collective objectives that ultimately lead to value creation.
Figure 4 -‐ Culture, leadership and employee dynamics relationship
At Univan, culture is a core element of the overall vision and strategic plan, strongly supported by the management team. As a leader, Hojgaard sees culture as a tool that helps the organization achieve its goals. The vision of the organization is created by the decisions made regarding the creation and transmission of core norms that comprise the organization’s culture, grounded by the company’s four main values: Passion, Performance, Precision and Perfection.
Leadership
Organizational culture
Employee dynamics
Cultivating awareness
Facilitating change
Value creation
30
Both Hojgaard and Alex Slee (Director of Strategy) explain the intention of switching from a ‘one-‐man show’ driven culture to a more modern and flexible culture. The former was established by the late Captain Vanderperre and consisted of a working context that was not so much about giving power but more about accepting the power, where employees tended to be obedient and conservative when it came to decision-‐making, as Cammy Chan explained. The latter, however, is meant to increase transparency and loyalty, but also power and information flow through its hierarchy, stimulating risk-‐taking and innovation. In other words, the EMT seeks to involve various people in the decision-‐making process, spreading the responsibilities all the way down to the lowest levels of implementation. Whether employees are vested with formal authority or not, everybody is considered a leader, with ‘a choice and a voice.’ It is up to them to make wise decisions that will not only benefit themselves but rather the whole team, working with a ‘higher purpose’ and focusing on sustainable value creation.
With this new approach Hojgaard believes that “a different growth trajectory is bound to be achieved, having more control over the ships and benefiting from economies of scale to increase size of fleet under management.”
5.1.2. Organizational structure Innovation, whether related to products, processes, strategies, or marketing, is a complex, multidisciplinary activity that involves several areas of a firm (such as Business Development, Strategy, Financial, R&D etc.), but also its clients and its suppliers. In order for this system to function effectively, a structure must be created to coordinate all the different activities it entails. Univan has a functional organizational structure (see Figure 5) in which people are organized by function. This organizing of specialization leads to operational effectiveness where employees act as specialists with clear roles and scopes of authority. These specialized units contain personnel with various but related skills grouped by similarities. Each functional unit handles one aspect of the services provided. Managers are responsible for coordinating the efforts of each unit and meshing them together into a cohesive whole. The structure aims to encourage and make use of experience-‐based learning, knowledge sharing, and interaction – through project teams, problem solving groups, and task rotation – which contribute positively to the performance of innovative activities. Because functional units are not accountable to one another, synchronization of work and project completion is a challenge. However, a good balance between communication and decision-‐making addresses this issue.
31
Figure 5 -‐ Organizational structure
CEO
Director of strategy
Director of commercial
Marine services manager
Marine director
Safety & quality manager
COO
Technical management
Fleet director
Fleet personnel
Manager of global Aleet personnel
CFO
Accounts
Legal & Insurance
Director of marine services
Corporate support (HR &
IT) Marine services
Procurement
Agency
Catering
Travel
Business development director
Chairman
Senior Advisor
32
5.1.3. Communication Given the company’s functional organization structure, lateral communication becomes important at Univan, so that information is disseminated, not only vertically but also horizontally within the organization. A network of systems connecting employees assists cross-‐departmental communication and facilitates collaboration, change and innovation. Multiple channels, such as weekly meetings, face-‐to-‐face talks, emails, faxes, phone conversations, and bulletins are used to debrief employees, communicate objectives, share information and generate feedback. Vikrant Gusain (Business Development Director) states that this process becomes more and more challenging considering the growth curve of the company, where human capital increases almost every month. However, advanced IT systems are implemented in order to increase efficiency and transparency of communication fostering value creation.
5.1.4. Acquiring and developing capabilities In today’s economy, where value comes more and more from knowledge assets and capabilities of people, it is of high importance to nurture those skills, develop talent and encourage renewal of ideas. Although Univan’s working environment can be described as a challenging setting, where acquiring and improving personal competences come as a consequence, the need for a training system is recognized by most of the managers. Chan mentions that a ‘training analysis template’ is in development and will be used for evaluating employees. Based on the results a training plan will be consolidated and a budget will be allocated. Continuously assessing the workforce and its capabilities is an important task that helps to sustain value creation. While some departments work at full capacity, according to Gusain, displaying a superior understanding of the business, others may need additional improvements through acquiring new workforce capital and coaching the current employees for a better yield. One recent example of this was bringing a new Chief Financial Officer (CFO) who better resonates with the current objectives of the company.
5.1.5. Rewards In order to stimulate quality of work and innovations an incentive system must be in place. Univan uses an incentive system, which is based on a set of objectives known as ‘S.M.A.R.T. goals’, developed by (Doran 1981), that are defined at the beginning of each year and reassessed every six months. The goals must be Specific, Measurable, Achievable, Relevant and Time-‐bound (see Figure 6).
33
Figure 6 -‐ S.M.A.R.T. Goals
An interpretive method is used for determining individuals’ share of success, upon which a bonus is attributed.
5.1.6. Risk-‐taking As with any new business opportunity or operational process, risks are present and the necessity of having a framework for analyzing and managing risks is well recognized by the management. Usually, a team consisting of various people within the company (from legal to technical) conducts case-‐by-‐case driven risk-‐analysis, testing and filtering projects/issues. That way the risks are well considered and the chances of failure are very low. Speirs points out that any technical risk related to vessels is well mitigated through safety and quality management, but also insurance. However, Gusain acknowledges the need for a more formal management of risk, which will incorporate financial, operational and market risks.
5.1. External factors that support corporate entrepreneurship and lead to sustainable value creation
As previously mentioned in Chapter 2.3, companies enhance their products and processes innovations, risk-‐taking and proactive response to environmental forces for SVC, not only as a response to internal factors but also external. In the ship management sector, as Pradeep Ranjan (Chief Operating Officer) explains, external factors may be represented by the trend of owners outsourcing ship management, sector dynamics, competitive forces, but also maritime institutions, public policies, laws and regulations. All of which are addressed below.
5.1.1. Trend of owners outsourcing ship management The interview results suggest the trend of owners outsourcing ship management represent an important environmental force. Univan is constantly assessing these trends by cultivating awareness and proactively responding to any opportunity that arises. Based on both the observations and interviews, I was able to understand the rationale behind outsourcing ship management by the owners. According to a private source, 58% of all ship owners own a single ship, 92% of all ship owners own less than 10 ships
S • Speci&ic -‐ What, why, who, where, which?
M • Measurable -‐ How much, how many, how we know it's been acomplished?
A • Achievable -‐ Is it feasible? Do we have control/in_luence over it?
R • Relevant -‐ Does this seem worthwhile? Is this the right time? Does this match our other efforts/needs?
T • Time-‐bound -‐ When? What can it be done in six months, six weeks, today?
34
and 1% of all ship owners own more than 50 ships. The same 1% of owners controls a staggering 28% of the total world fleet. As reported by the International Maritime Organization there are over 50.000 vessels around the world and 7000 owners/operators, of which approximately 6000 of these are owners and operators with fleets of fewer than 10 vessels, making it rather difficult for third party ship managers to build a steady business pipeline in such a highly fragmented market. Approximately 24% of the world fleet outsource their ship management, where 13% outsource both full technical and crew management and 11% only the crew management section. By 2015 this trend is expected to reach 27%, 14% for full technical and crew management and 13% for the crew-‐only management. Contrary to popular belief, where smaller owners are more inclined to outsource their management due to lack of resources and scalability, as well as knowledge gaps, it is rather the larger ones that have a bigger appetite for outsourcing management. Mainly because they realize that finding and hiring the many specialists needed to operate the ships is a very costly and time-‐consuming process. Considering that shipping is rapidly changing over years, owners want the ability of scaling their organizations quickly (both up and down) so it can better cope with the changes in the marketplace and minimize losses. Another very important factor why they choose to outsource is to benchmark their own in-‐house operation. This way they compare their processes and performance metrics with the specialized third party ship managers in order to make improvements or adapt to specific best practices, with the aim of increasing performance. A common practice for large ship owners is to employ somewhere between 1.5 -‐ 1.75 onshore employees per ship in full management.
5.1.2. Sector outlook According to the same private source mentioned earlier, both ship management and marine services markets are forecast to demonstrate attractive and visible growth in the near term. The US$1.5 billion ship management market is projected to reach US$2.1 billion by 2015, representing a compound annual growth rate (CAGR) of 7%. The marine services is forecast to reach US$37 billion from US$29 billion by 2015, 5% CAGR. The total ship management market was estimated to be worth US$1.5 billion in fee income in 2010, of which US$1,1 billion related to c. 7400 vessels under full technical an crew management and the remaining US$400 million to the 6500 vessels under crew only management. As stated in Chapter 2.4 seaborne trade represents approximately 90% of total world exports. Further growth in seaborne trade is forecast in the emerging regions of the world, most notably Asia, Eastern Europe and Latin America and thus a growth in third party ship management is likely to happen. Other factors that support the growth in third party ship management are the continuing trend of increasing regulation, under-‐supply of qualified crew, ongoing focus
35
on cost control by vessel owners, generational change within vessel owners (Greek ship owners have been historically less open to the concept of external ship management, however as generational change occurs over time, old owners will be succeeded by new senior managers, which show a greater propensity to outsource their ship management in order to benefit form the associated cost and other advantages). Being aware of this forecasted increase in the level of penetration into the global fleet, Univan can implementing a series of actions (reassessing the services and improving them, better sales and marketing strategies etc.) meant to enhance their products, increasing market share and creating more value.
5.1.3. Competitive forces According to the Baltic and International Maritime Council (BIMCO) there is an intense competition between ship management companies. Accurately assessing the competition is important at all stages of a company and in different economic periods. Univan is continuously updating and analyzing information about their competitors by building a matrix where several attributes are ranked. This framework facilitates awareness, proactive response and innovation, which can lead to developing methods of running ships more efficiently, improving the training of the staff and providing a better career structure for professionals ashore and afloat, as well as others. Due to the strong competitive environment within ship management structural changes in the industry often incur, with the bigger companies merging or acquiring smaller ones in an effort to remain competitive and achieve SVC. Moreover, the formulation and implementation of competitive business strategies have a positive effect on innovation. By looking at the ship management market, seven main competitors of Univan were identified (see Table 7).
Table 7 – Principal ship management competitors
Company Total vessels
Split of managed fleet Vessel foot print Regional footprint
Full Mgmt.1
Crew Mgmt.
Tanker
Container Bulk EU Asia Row2
V-‐Group ~700 60% 40%
Bernhard Schulte
~650 50% 50%
OSM ~420 50% 50%
Anglo-‐Eastern
~350 80% 20%
Wallem ~350 70% 30%
Thome ~300 60% 40%
36
Columbia ~300 50% 50%
Comparison
Univan ~105 85% 15%
Zero High Strength of footprint
1 Management 2 Rest of the world Source: Private The focus of third party managers might differ in terms of vessel types and regions of interest, depending on their strategies, knowledge assets, goals and footprint.
5.1.4. Maritime institutions, public policies, laws and regulations Maritime institutions and governments are the setting authority for the safety, security and environmental performance of international shipping. Its main role is to create a regulatory framework for the shipping industry that is fair and effective, universally adopted and universally implemented. Over the past two decades international maritime law has evolved from a set of rules designed to avoid naval warfare, by keeping maritime powers apart, towards a new global framework meant to facilitate maritime security cooperation, by bringing naval forces together to collaborate toward achieving common goals. In other words, its role is to create a level framework so that ship operators cannot address their financial issues by simply cutting corners and compromising on safety, security and environmental performance. This approach also encourages innovation and efficiency. There are numerous ways that government policy decisions can affect the shipping industry; where awareness is a crucial thing for third party ship managers in order to identify the potential impacts/opportunities and quickly react. Examples of changes could be (1) changes in costs and revenues to vessels, (2) changes in freight volumes, (3) changes in quality of ship services, (4) changes to ship operations and safety, and (5) changes in environmental security. Cammy Chan (Head of Marine Services and HR) explains that interpreting major PESTLE (Political, Economical, Social, Technological, Legal & Environmental) trends is a vital part of their proactive behavior, which helps position the business in a proper setting. At Univan, the process is rather ad hoc, based on self-‐motivation and self-‐interest, where each individual is responsible for assessing the information provided internally or externally, through newspapers subscriptions, industry magazines and other informative materials. According to Bjorn Hojgaard (Chief Executive Officer), it should come as natural for managers to stay up to date with the macroeconominc factors and different industry-‐related matters.
37
5.2. Roadmap and vision for value creation As explained in Chapter 2.1, value can take many forms. At Univan, value is seen as a mixture of financial and non-‐financial goals: on the one hand financial goals represented by returns on the invested capital that exceed the cost of that capital, and on the other hand the non-‐financial goals, represented by customer satisfaction, product innovation, and employee satisfaction. Such goals do not contradict value maximization. On the contrary, some of the most prosperous companies usually excel in these areas. Nonfinancial goals must, however, be carefully considered in light of a company's financial circumstances. Objectives might also differ depending on the levels of implementation. For the EMT the objective may be explicit value creation measured in financial terms. A functional manager's goals could be expressed in terms of customer satisfaction, product quality and safety, or productivity. While in business development, the objectives may be the discovery and implementation of growth opportunities. Univan’s strategic vision and roadmap for sustainable value creation is depicted in Figure 7. It includes several CE actions, but also other dimensions (non-‐CE organizational processes) contributing to SVC, which were not treated in this paper.
38
Figure 7 -‐ Univan's strategic vision and roadmap1
1Source: Univan internal materials supplemented and modified by the thesis author based on observations
• Market leader • Impeccable safety record • Strong pro_itability, stable cash position, and growth platform • Responsible employer recognized as a “best place to work”
Ambition
• Focus accounts -‐ con_irm existing customers, ensure recurring business and initiate new leads • Key products and services • Key regions
Where to play?
• Client management -‐ customer segmentation across key dimensions • Strategic sales force -‐ structured team of engaged and enabled employees • Value proposition -‐ most reliable solution through integrated offering and continuous innovation for best-‐in-‐class leadership
How to win?
• Implement strategic planning of operations • Enhance decision-‐making accross the hierarchy • Build innovation framework • Implement relevant tools and metrics
Priorities
• Increase internal transparency regarding organizational processes • Identifying and experimenting with new business opportunities • Place focus on acquiring and training of onshore team
Other procedures
39
6. Conclusions and future research The aim of this study was to identify the factors that support corporate entrepreneurship and lead to sustainable value creation in a ship management company. Due to rapid and major economic change in the last decades, much emphasis has been placed on CE as a key driver for flexibility and change in established organizations. The strong pace of technological development requires companies to implement strategies and processes that can gradually and sustainably create value. Several external and internal factors supporting entrepreneurship within organizations have been identified in previous research, however a consensus has not been reached regarding which ones are more significant by looking at different types of companies, considering aspects such as industry, size, location or stage of business. For instance, transnational companies may be influenced less by environmental forces from a certain region, whereas national companies will likely have more structural links to a focal host region. Regulations and policies may also be stricter for some industries compared to others. Moreover, corporate cultures may differ from one sector to another, depending on various aspects (the activities that companies undertake, their goals and where they operate). According to this case study of Univan, a ship management company with headquarters in Hong Kong, the factors supporting CE are similar but not identical with the most common factors considered by researchers (see Table 8). Additional factors having a significant role, in this particular industry and company were identified. Type of factors Literature Findings Internal factors -‐ Management support
-‐ Organizational structure -‐ Rewards and motivation -‐ Resource availability -‐ Risk-‐taking
-‐ Culture, leadership & employee dynamics -‐ Organizational structure -‐ Communication -‐ Acquiring and developing capabilities -‐ Rewards -‐ Risk-‐taking
External factors -‐ Competitive forces -‐ Institutions, public policies -‐ Local culture
-‐ Trend of owners outsourcing ship management -‐ Sector outlook -‐ Competitive forces -‐ Maritime institutions, public policies, laws and regulations
Table 8 -‐ The most common factors considered by researchers and the factors revealed by this paper
For instance, maritime institutions are seen as a key driver for change and innovation due to their frequent issuance of new laws and regulations, which have a great focus on environment and costs. Additional factors such as the trend of owners outsourcing ship management, the sector outlook and the competitive forces are also very important
40
factors within ship management. Companies must cultivate awareness and proactively respond to these environmental forces. Moreover, the culture, leadership and employee dynamics factor has an essential role as well; it fosters transparency, power and information flow through the hierarchy, stimulating risk-‐taking and innovation. All these factors make up a network of systems, which helps Univan to understand and translate customers’ needs into superior solutions, fostering performance over a prolonged period of time for both the firm and its customers. Such a network of systems is a rather laborious and long-‐term development, which asks for a well-‐considered stream of actions and effective implementation. The factors supporting CE at Univan, cover a wide range of critical aspects and significantly contribute to SVC. However, there are also other dimensions contributing to that, such as business model innovation, non-‐CE organizational processes, social influences, or stakeholders’ relationships. These dimensions were not part of this paper (see delimitations and future research). In summary, the findings of this research, suggest that corporate entrepreneurship, when conducted effectively, can be a significant contributor of sustainable value creation. Nevertheless, it is early to take on a sturdy position, further research being needed. Future research The aim of this interpretive case study was to achieve analytical conclusions, based on a set of results and contribute to the existing literature. Therefore, generalizability of the results may not apply to a wider sample. However, further case studies could be conducted following the same framework for a better understanding of the studied phenomena. Moreover, qualitative research is not always sufficient to construct a strong argument. Therefore, this paper can be followed up by a more quantitative approach. Even though it is not widely adopted, it has been successfully used many times before for product and technology forecasting, in marketing studies. Based on the future results, a framework for sustainable value creation may be conceived for the ship management sector. This will contribute to the existing literature by improving the current processes and offer an appropriate solution for this specific sector. Some, but not all, aspects that could be included in the future research are as follows:
• Value creation related to other stakeholders (e.g. suppliers, communities) • Value delivery and value capture (Chesbrough 2010) • The portrayal of the psychological disposition that individuals bring to the
process of corporate entrepreneurship • The influence of social aspects on corporate entrepreneurship • Other dimensions contributing to sustainable value creation
41
References
Achtenhagen, L., Melin, L. & Naldi, L., 2013. Dynamics of Business Models – Strategizing, Critical Capabilities and Activities for Sustained Value Creation. Long Range Planning, 46(6), pp.427–442. Available at: http://linkinghub.elsevier.com/retrieve/pii/S0024630113000198\nhttp://www.sciencedirect.com/science/article/pii/S0024630113000198 [Accessed January 21, 2014].
Agarwal, R. & Helfat, C.E., 2009. Strategic Renewal of Organizations. Organization Science, 20(2), pp.281–293. Available at: http://pubsonline.informs.org/doi/abs/10.1287/orsc.1090.0423 [Accessed January 22, 2014].
Anderson et al., 1998. Business marketing: Understand what customers value. Harvard Business Review, 76(6), pp.53–65.
Asariotis, R. & Benamara, H., 2012. Review of Maritime Transport, 2012. UNCTAD Report. Available at: http://trid.trb.org/view.aspx?id=1238887 [Accessed April 6, 2014].
Block, Z. & Ornati, 0., 1987. Compensating Corporate Venture Managers. Journal of Business Venturing, 21, pp.41–52.
Burgelman, R.A., 1983. Corporate entrepreneurship and strategic management: Insights from a process study. Management Science, 29, pp.1349–1364.
Carlsson, B., 1996. Small business, flexible technology, and industrial dynamics. Admiraal, P.H. (Ed.), Small Business in the Modern Economy, Blackwell, Oxford, pp.63–125.
Carree, M.A. et al., 2002. Economic development and business ownership: an analysis using data of 23 OECD countries in the period 1976-1996. Small Business Economics, 19(3), pp.271–290.
Castrogiovanni, G.J., Urbano, D. & Loras, J., 2011. Linking corporate entrepreneurship and human resource management in SMEs. International Journal of Manpower, 32(1), pp.34–47.
Chesbrough, H., 2010. Business Model Innovation: Opportunities and Barriers. Long Range Planning, 43(2-3), pp.354–363. Available at: http://linkinghub.elsevier.com/retrieve/pii/S0024630109000569 [Accessed March 19, 2014].
Choi, J.J. & Click, R.W., Introduction to value creation in multinational enterprise. , 7(06), pp.3–15.
Christensen, C., 1997. The Innovator’s Dilemma. Harvard University Press, Cambridge, MA.
Clargo, P. & Tunstall, R., 2011. Leading an entrepreneurial workforce: development or decline? Education and Training, 53(8), pp.762–783.
Cohen, L., Manion, L. & K., M., 2000. Research Methods in Education. London: Routledge Falmer, (5).
Collis, J. & Hussey, R., 2009. Business Research: A practical Guide for Undergraduate & Postgraduate Students. Palgrave Macmillan, 3.
Covin, J.G. & Miles, M.P., 1999. Corporate entrepreneurship and the pursuit of competitive advantage. Entrepreneurship Theory and practice, 23(3), pp.47–63.
Dabic, M., Ortiz de Urbina Criado, M. & Romero Martinez, A.M., 2011. Human resource management in entrepreneurial firms: a literature review. International Journal of Manpower, 32(1), pp.14–33.
42
Damanpour, F., 1988. Innovation type, radicalness, and the adoption process. Communication Research, 15(5), pp.545–567.
Delva, M.D. et al., 2002. Postal survey of approaches to learning among Ontario physicians: Implications for continuing medical education. British Medical Journal, 325, pp.1218–1222.
Doran, G., 1981. There’s a S.M.A.R.T. way to write management's goals and objectives. Management Review, 70(11), pp.35–36.
Drucker, P.F., 1985. Innovation and entrepreneurship: Practice and principles. New York, NY: Harper & Row.
Ellis, N. & Sampson, H., 2008. The Global Labour Market for Seafarers Working Aboard Merchant Cargo Ships,
Fayolle, A. & Basso, O., 2010. Entrepreneurial spirit and corporate entrepreneurship in large companies. International Journal of Entrepreneurship and Small Business, 10(3), p.307. Available at: http://www.inderscience.com/link.php?id=33570.
Finn, P. et al., 2000. The effects of familial risk, personality, and expectancies on alcohol use and abuse. Journal of Abnormal Psychology, 109(1), pp.22–33.
Flick, U., 2009. An introduction to qualitative research. Hamburg: Rowohlt Taschenbuch Verlag GmbH, (4).
Gable, G., 1994. Integrating case study and survey research methods: an example in information systems. European Journal of Information Systems, 3, pp.112–126.
Gartner, W.B., 1988. “Who is an entrepreneur?” is the wrong question. American Journal of Small Businesses, 12(4).
Von Hippel, E., 1978. Users as innovators. Technology Review, 80, pp.3–11.
Hisrich, R., Michael, P. & Dean A. Shepherd, 2005. Definition of entrepreneur today. McGraw-Hill Irwin, 6, p.2.
Ivancevich, J.M. & Matteson, M.T., 2002. Organizational Behavior & Management. McGraw-Hill Education, (8).
Jennings, D.F. & Lumpkin, J.R., 1989. Functioning modeling corporate entrepreneurship: an empirical integrative analysis. Journal of Management, 15, p.489.
Jones, G.R. & Butler, J.E., 1992. Managing internal corporate entrepreneurship: An agency theory perspective. Journal of Management, 18(4), pp.733–749.
Joseph, L., 2004. The Age of Entrepreneurial Turbulence: Creating Sustainable Advantage for Individuals. Organisations and Societies in the New Century.
Kahan, S., 2013. Getting Innovation Right: How Leaders Leverage Inflection Points to Drive Success,
Knight, F., 1921. Risk, Uncertainty and Profit. Houghton Mifflin, NY.
Kuratko, D.F., Montagno, R.V. & Hornsby, J.., 1990. Developing an Intrapreneurial Assessment Instrument for an Effective Corporate Entrepreneurial Environment. Strategic Management Journal, 11, pp.49–58.
Kuratko, D.F. & Morris, M.H., 2002. Corporate entrepreneurship. New York: Harcourt College Publishers.
43
Lee, S.M., Peris-Ortiz, M. & Fernández-Guerrero, R., 2011. Corporate entrepreneurship and human resource management: theoretical background and a case study. International Journal of Manpower, 32(1), pp.48–67. Available at: http://www.emeraldinsight.com/10.1108/01437721111121224 [Accessed February 11, 2014].
Lengnick-Hall, C., 1988. How to achieve efficiency and innovation. Organization Development Journal, 6(2), pp.67–74.
Lumpkin, G.T. & Dess, G.G., 1996. Clarifying the entrepreneurial orientation construct and linking it to performance. Academy of Management Review, 12(1), pp.135–172.
MacMillan, I.C., 1986. Progress in research on corporate venturing. In D.L. Sexton and R.W. Smilor, eds., The Art and Science of Entrepreneurship.
Mair, J., 2002. Value creation through entrepreneuria; activity: a multiple constituency approach.
McGrath, R.G., 2013. The End of Competitive Advantage: How to Keep Your Strategy Moving as Fast as Your Business. Harvard Business Review Press, (June), p.240.
Miller, D., 1983. The correlates of entrepreneurship in three types of firms. Managerial Science, 28, pp.770–791.
Mintzberg, H., 1987. he strategy concept I: Five Ps for strategy. California Management Review, 29(Fall), pp.44–57.
Narayanan, V.K., Yang, Y. & Zahra, S. a., 2009. Corporate venturing and value creation: A review and proposed framework. Research Policy, 38(1), pp.58–76. Available at: http://linkinghub.elsevier.com/retrieve/pii/S0048733308002060 [Accessed January 27, 2014].
Özdemirci, A., 2011. Corporate Entrepreneurship and Strategy Process: A Performance Based Research on Istanbul Market. Procedia - Social and Behavioral Sciences, 24, pp.611–626. Available at: http://linkinghub.elsevier.com/retrieve/pii/S1877042811015965 [Accessed February 7, 2014].
Pfeffer, J. & Salancik, G., 1978. The external control of organizations. New York: Harper & Row.
Pinchot, G., 1985. Intrapreneuring. New York, NY: Harper & Row.
Ritchie, J. & Lewis, J., Qualitative Research Practice: A Guide for Social Science, Students and Researchers. Sage Publications, London, p.336.
Schumpeter, A., 1942. Capitalism, socialism and democracy. Harper, New York., pp.82–85.
Schumpeter, J.A., 1934. The Theory of Economic Development. Harvard University Press, Cambridge, MA.
Sebora, T.C. & Theerapatvong, T., 2009. Corporate entrepreneurship: a test of external and internal influences on managers’ idea generation, risk taking, and proactiveness. International Entrepreneurship and Management Journal, 6(3), pp.331–350. Available at: http://link.springer.com/10.1007/s11365-009-0108-5 [Accessed February 10, 2014].
Shane, S. & Venkataraman, S., 2000. The promise of entrepreneurship as a field of research. Academy of Management Review, 25, pp.217–226.
Simon, B.M.K. & Goes, J., 2013. Dissertation and Scholarly Research: Recipes for Success.
44
Srivastava, N. & Agrawal, a., 2010. Factors Supporting Corporate Entrepreneurship: An Exploratory Study. Vision: The Journal of Business Perspective, 14(3), pp.163–171. Available at: http://vis.sagepub.com/lookup/doi/10.1177/097226291001400302 [Accessed February 13, 2014].
Wiersma, W., 2000. Research methods in education: An introduction. Boston MA., Allyn and Bacon.
Zahra, S.A., 1993. Environment, corporate entrepreneurship, and financial performance: A taxonomic approach. Journal of Business Venturing, 8(4), pp.319–340.
Zahra, S.A. & Covin, J.G., 1995. No Contextual influences on the corporate entrepreneurship performance relationship: a longitudinal analysis. Journal of Business Venturing, 10(1), pp.43–58.
Zahra, S.A., Nielsen, A.P. & Bogner, W.C., 1999. Corporate entrepreneurship, knowledge, and competence developmen. Entrepreneurship Theory and Practice, 23(3), pp.169–189.
45
Appendix 1 -‐ Survey questions and participants The following questions were used in the online survey (see Table 9).
Table 9 – Survey questions
A. Strategizing actions for value creation Do you know how value is generated in the company? Do you know which capabilities your company possesses and which it lacks? Do you take concerted actions to develop or acquire lacking capabilities and competences? Do you keep close watch over your competition? Do you systematically review whether and how you could expand into new markets and new products and/or services? Do you attempt to expand products into complete serviced product packages? Do you strive for operational excellence in all organizational processes? Do you monitor whether the quality of your products and services is at an optimal level? When introducing new strategies, do you always assess possible impacts on other activities? B. Identifying and experimenting with new business opportunities Do you systematically interpret major PESTLE trends? Do you systematically retrieve information about changes in the marketplace? Do you make use of formal and informal systems for sharing information and assisting knowledge transfer across the company’s units? Do you keep up to date with technological developments in your current and adjacent industries and consider how these could be applied in your company? Do you explicitly encourage the searching for and experimenting with new opportunities for value generation? Do you leave room for learning from mistakes and for experimenting with new product or market ideas? C. Balanced use of resources Do you focus on achieving steady cash flows for current and future activities? Are you actively managing your human resources? Do managers have the chance to continuously develop their personal skills? Do you hire people with specific skills sets? Do you know where in the company which costs are generated? Do you reinvest profits into the company to facilitate further expansion and development? D. Leadership, culture, and employees Is an important role of top management to facilitate processes and coach employees? Are strategic impulses from employees collected, evaluated, and followed up in projects? Can you define your company’s culture and what is special about it? Do you and your company have clear values that must be followed? Do you show commitment and loyalty to the employees? Do you conduct activities aimed at enhancing employees’ trust and loyalty to the company? Do you sense which issues are important to the employees and act on them?
46
Does your incentive system attempt to improve the quality of work within and between units? Do you focus on enhancing communication in the company? Do you strive for internal transparency regarding strategic processes? Can employees take charge in the company? Are employees responsible for their activities?
Table 10 – List of survey respondents
Name Position at Univan Alex Slee, 33 Strategy Director Antony Cowie, 39 Head of Legal & Insurance Arun Deo Mishra, 59 Fleet Director Bjorn Hojgaard, 45 CEO Cammy Chan, 45 Director of Marine Services Cloe Walton, 36 Chairman Assistant Kohichi Onodera, 38 Business Development Manager Mark Speirs, 51 Director of Commercial Peter Helm, 57 Marine Director Pradeep Ranjan, 58 COO Raja Ram Kogta, 46 Director of Vessel Accounts Richard Hext, 55 Chairman Shrinath Hegde, 41 SQM Manager Victor Lo, 64 Senior Advisor Vikraint Gusain, 40 Business Development Director
47
Appendix 2 -‐ Interview questions A sample of questions used in the interviews are presented in Table 11.
Table 11 – Interview questions sample
What do you consider is special about your company’s culture? How would you describe the decision-‐making process in the company? Is it characterized by bold decisions? How do you analyze and manage risk? Do you use any frameworks? E.g. Pert or Monte Carlo analysis Are you actively searching for business opportunities? How do you identify leads for building up the business pipeline? Which capabilities does your company lack? And what kind of actions do you take to develop or acquire those lacking capabilities? Do you see innovation as an absolute necessity for the organization’s future? Why? How do you reinvest profits for further development and expansion? How do you monitor if the quality of services you offer is at an optimal level? In the survey I was asking you if you interpret major PESTLE trends; Do you see it as an important thing for future development? Why? What do you do to increase internal transparency regarding organizational processes? Is there a framework available for Univan managers to develop their personal skills? How do you incentivize employees? How would you describe the internal communication across different departments? Are you continuously improving service delivery and process innovation? Are you actively trying to develop new services?
48
Appendix 3 -‐ Tables and figures Table 12 -‐ Top 10 countries with the largest owned fleets
Country of ownership
Number of vessels Deadweight tonnage (DWT)
Estimated market share National
Flag Foreign Flag
Total
Greece 738 2583 3321 224.051.881 16,10 Japan 717 3243 3960 217.662.902 15,64 Germany 422 3567 3989 125.626.708 9,03 China 2060 1569 3629 124.001.740 8,91 Korea 740 496 1236 56.185.570 4,04 United States 741 1314 2055 54.622.733 3,92 Norway 851 1141 1992 43.099.867 3,10 Denmark 394 649 1043 39.991.334 2,87
Table 13 -‐ Top 10 flags of registration with the largest registered DWT
Flags of registration
Number of vessels
DWT [mil]
Share of world total DWT [%]
Percent tonnage owned by foreigners
Panama 8127 328,210 21,39 99,97 Liberia 3030 189,911 12,38 100 Marshall Islands 1876 122,857 9,01 100 Hong Kong 1935 116,806 7,61 75,26 Singapore 2877 82,084 5,35 72,99 Greece 1386 72,558 4,73 10,36 Malta 1815 71,287 4,65 99,94 Bahamas 1409 69,105 4,5 99,3 China 4148 58,195 3,79 10,28 Cyprus 1022 32,986 2,15 93,8
Figure 8 -‐ Market share of top 10 countries of ownership by type of vessel
Container
Dry Bulk
Tankers
General Cargo
0.0% 20.0%
40.0% 60.0%
80.0% 100.0%
Container Dry Bulk Tankers General Cargo Top 10 78.2% 79.8% 64.6% 58.7% Rest of the world 21.8% 20.2% 35.4% 41.3%
49
Figure 9 -‐ Top 10 Nationality of seafarers
Figure 10 -‐ Fleet by crew nationality
27.8%
7.0%
6.6%
6.4% 6.1% 4.0% 3.5%
3.0% 2.8%
2.2%
30.6%
Philippines
Russian
India
Ukraine
China
Turkey
Indonesia
Poland
Greece
Myanmar
Other (n=124)
9%
51%
38%
2%
Chinese
Indian
Filipino
Others
50
Appendix 4 -‐ Plan of work The following table describes the structure of work and time management.
Stage of the dissertation writing process
Number of days/weeks needed
Start date End date
STAGE ONE: Reading and research a) Seek to identify an original, manageable topic
13 days 05.12.2013 18.12.2013
b) Reading and research into chosen topic
≈12 weeks 05.12.2013 01.03.2014
STAGE TWO: The detailed plan a) Construct a detailed plan of the dissertation
≈7 weeks 07.01.2014 01.03.2014
STAGE THREE: Initial writing a) Draft the various sections of the dissertation
12 days 05.02.2014 17.02.2014
b) Undertake additional research where necessary
≈7 weeks 05.02.2014 01.04.2014
STAGE FOUR: Internship at UNIVAN, Hong Kong
a) Work & Case Study 4 weeks 01.03.2014 01.04.2014 STAGE FIVE: The first draft a) Compile and collate sections into first draft of dissertation
2 weeks 02.04.2014 16.04.2014
b) Check the flow of the dissertation
2 days 16.04.2014 17.04.2014
c) Check the length of the dissertation
2 days 16.04.2014 17.04.2014
d) Undertake any additional editing and research
2 weeks 18.04.2014 02.05.2014
STAGE SIX: Final draft a) Check for errors 2 days 02.05.2014 04.05.2014 b) Prepare for submission 1 week 04.05.2014 11.05.2014 c) Final proof-‐read and final editing
2 days 11.05.2014 13.05.2014
d) Submit dissertation 16.05.2014 Table 14 -‐ Plan of work
Related Documents
