Analysis of Porter Maersk Essay

1400 Words Apr 18th, 2012 6 Pages
Analysis of Porter’s Five Forces for Moller Maersk

(Analysis of Container Line Business) FIVE FORCES | 1. Threat of New Entrant is High | 2. Threat from Substitute is High | 3. Bargaining Power of Suppliers is Low | 4. Bargaining Power of the Buyers is High | 5. Rivalry Among existing Players is Low |

* Threat of New Entry

Every firm would love to invest in shipping industry due to large profits involved. However this would seem easy but practically it is lot more difficult and virtually impossible to establish in container line business. The problem pertains to large capital investments in form of vessel and container procurements and risk of operating vessels. Even if we take the examples of biggest companies
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Literally speaking suppliers of these services hardly make any difference to shipping line, financially as well as socially. If we consider supply of ship stores, food stuffs and other supplies in ships, than there are many suppliers of these supplies in market today while in contrast the demand is much less. Therefore the price factor remains weak in favor of suppliers here.

There are other supplies like stevedoring, loading/ unloading of containers from vessel, movement of containers to CFS (container freight station) and vessel towing which are provided by port authorized suppliers and companies don’t have to arrange separately. Port authority charges fixed amount towards these handling from shipping lines and shipping lines charges the same from customers after adding their profit margin.

Factors | Barriers and threat from Suppliers | | High | Moderate | Low | Number of Suppliers | * | | | Price Factor for Suppliers | * | | | Availability of Raw material | | * | | Profit Margin | | | * | Switching Cost | * | | | Operating and Hiring Cost | * | | |

* Buyer Power:

Buyer is one the strongest factor in shipping line business. Buyers may be in form of importer or exporter, clearing agent, freight forwarder or manufacturer of goods. Sometimes manufacturer himself acts as an exporter or importer, if not than trader acts on

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