1|P a g e
CanadianMarketAnalysis
DevelopedBy:
MeretheFlatla,GilbertLunde,ThomasRemes,HenrikLysdahlandLasseAlfsvåg.
“ThisreporthasbeencompletedasapartofthebachelorprograminInternationalMarketing,at
SimonFraserUniversity/NorwegianSchoolofManagementBI.Thisdoesnotimplythatthe
methodswhichhavebeenused,thegeneratedresults,ortheconclusiondrawn,havebeenverified
byanyoftheseinstitutions.”
2|P a g e
Memorandum___________________________________________________________________________________
To:KongsbergMaritime
From:MeretheFlatla,GilbertLunde,ThomasRemes,Henrik
Lysdahl&LasseAlfsvåg
Date:May14,2009
Subject:KONGSBERGMARITIME–CANADIANMARKETANALYSIS
___________________________________________________________________________________
AsaresponsetoyourrequestofdevelopingawaytopositionKongsbergMaritime’sproductsbetter,inordertoreach“TheFullPicture”goal,wehavedevelopedthisreport.ThereportincludesanalysesoftheCanadianIndustry,thecompanyandanyotherrelevantfactorsthatwillbeofinterestforexpandingmarketshares.ThereportwillalsogiverecommendationsforfurtherdevelopmentbasedonstrategiesdesignedtofitKM’scurrentpositioninthemarket.
KMhasagoodpositioninthemaritimeindustry,andhasbeenabletomaintainastrongmarketpositionincertainareas.However,therehavebeenindicationsthattheyneedtoimprovetheservicetosomeoftheircustomers.Basedoninterviewsandsecondaryresearch,thisreportwillprovideyouwithinsightaswellasrequiredinformationforpotentialsolutions.
Ifyoufeelsomeinformationislackingorsomethingneededtobeclarified,pleasefeelfreetocontactusatanytime.
3|P a g e
ExecutiveSummary
ThefollowingreporthasbeendevelopedonbehalfofKongsbergMaritime.KMisaleading
providerofmarineelectronicsintheshippingindustry,andthereportanalyseshowKM
canimprovetheircurrentpositionintheCanadianmarket.Thereportisasawholebased
onKMbeingabletoprovidetheircustomers“theFullPicture.”
IntheintroductionofthereportKM’sbackground,theresearchproblemandthereport’s
researchobjectivesarediscussed.Theobjectiveistodeterminewhichfactorswillbe
importanttocompletethereport,withinthesetlimits.Theliteraturereviewsectionofthe
reportisacombinationofacademicmarketingtheoriestodetermineKM’sopportunities
andhowfarKMisintheinternationalizationprocess.Thereportfocusesfurtheronother
industryrelatedissuessuchascompetitorsandpotentialcustomersforKM.Further;the
reportprovidesastrategicproblemdefinitioninadditiontoshorttermandlongtermgoals
forKM.
ResearchMethodology
Inordertoobtaininformationabouttheresearchtopic,exploratoryresearchwas
conductedbasedonprimaryandsecondaryresources.Asapartoftheexploratory
research,qualitativeresearch,intheformofinterviewsandquestionnaires,wascarried
outwithkeypersonnelregardingsupplychainandengineeringofmarineelectronics.
TheseincludedshippingcompanieslocatedinbothEasternandWesternCanadaandthe
ShipConstructionDevelopmentdepartmentofthepublicworksandgovernmentservices
ofCanada.
4|P a g e
Secondarysourceshavebeenusedasamainsourceofinformationtoprovidebothan
overallandin‐depthperspectiveoftheshippingindustryandanyrelatedissues,aswellas
theCanadianmarketasawhole.Thesecondaryresearchprimarilyincludedinformation
obtainedthroughelectronicresources,suchaswebsites,aswellasprintmediaand
academicreports.Secondaryresourceshavealsobeenusedtoobtaindescriptiveresearch
informationrelatedtothetopicathand.
Summaryoffindings
FindingsfromtheprimaryandsecondarydatashowthatthoughKMispresentlycovering
majorpartsofthemarket,theyhavelostandareonthevergeofloosingmoremarket
share.Themarketiscurrentlyexperiencingadownfallinproductionaftera5yearsboom.
Itcanthereforebeassumed,thatmaintainingtheexistingcustomerbaseisvitaltolong
termcompanysurvival.
Thereasonforreductioninmarketsharetracesbacktoonekeycomponent‐theactual
relationshipbetweenKMandtheircustomers.ResearchhasshownthatKMcouldimprove
customerrelationships,andthatinternalcommunicationatKMhasroomforimprovement.
Despitetheseissues,KMcoversmostofthecommercialmarketinBritishColombiaand
Canada,yet,itcangainmoreoverallmarketsharebyattractingnon‐commercialplayers.
KM’scustomersinthecommercialmarketperceiveKMasaleadingbrandofhighquality
marineelectronics.
WhenlookingatKM’scompetitors,itshouldbenotedthattheirtargetmarketsaresplit
betweenthecommercialandthenon‐commercialmarketsuchasthemilitary.
ThestrategysectioninthereportfocusesonvariouswaysKMcanimprovetheircurrent
positionwithexistingcustomersandhowtowinmarketshareinthemilitarysector.
5|P a g e
Recommendations
ForKMtosucceedwiththeproposedstrategy,thereareseveralpointsthatKMwillhaveto
directtheirattentionto.ThesearetherecommendedissuesforKM:
•Identifyandfurtherdevelopopportunitiesforimprovementinsidetheirserviceand
communicationbranch.
•Bepro‐activeingettingformerandpotentialcustomersback.
•CreateastrongerpresenceinVancouverbyrepresentationfromanagent.
•Developaguidelineandastrategyforemployeestofollowwhentheycontactexisting
andpotentialcustomers.
•Lookforapotentialalliancepartnertoprovideabroaderrangeofproducts,packagesand
solutions.
•Developa“FullPicture”solutionwithanalliancepartner.
6|P a g e
Acknowledgements
ThisreporthasbeenpreparedasaconclusionoftheauthorsBachelorDegreeinInternationalMarketing.ThereporthasbeenwrittenandsubmittedatSimonFraserUniversity,asapartoftheauthorsexchangeprogramthroughtheNorwegianSchoolofManagementBI.ThisprojectiswrittenforandincooperationwithKongsbergMaritime,asamarketanalysisforthecompany’scurrentpositionandtheopportunitiestoexpandinBritishColombiaandCanadaoverall.
Theauthorswouldliketoacknowledgekeyindividualsfortheirhelpandcontributionthroughouttheprocessofcreatingthisreport.TheauthorswouldliketorecognizeandthankMr.BobCrockett,forhisinvolvement,knowledgeandoverallguidancethroughouttheproject.Withhisfeedback,ideasandhisoverallinsighthehascontributedtohelpimprovetheprojectinnumerousways.Theauthorswouldalsoliketoacknowledgethemanyresourcefulpeopleinvolvedinthisindustry,usingtheirpersonaltimetosharetheirknowledgewiththeauthorsthroughvariousinterviews,eitherinperson,emailortelephone.
TheteamwouldliketoacknowledgeJuliaNossovaforhercontributionsregardingtheeditingofthisreport.
Finally,theauthorswouldliketothankKongsbergMaritime,fortheopportunitytoconductthismarketanalysis,andallowingustousetheircompanyasabasisforourbachelorproject.
Vancouver,May14,2009
GilbertLunde ThomasRemes
HenrikLysdahl MeretheFlatla
LasseAlfsvåg
7|P a g e
TableofContents
ExecutiveSummary ..................................................................................................................................... 3
Acknowledgements ..................................................................................................................................... 6
TableofContents......................................................................................................................................... 7
Introduction................................................................................................................................................. 9
KongsbergMaritime .................................................................................................................................. 13
MarketBackground ................................................................................................................................... 19
ExistingCustomers..................................................................................................................................... 22
PotentialCustomers .................................................................................................................................. 25
Competitors ............................................................................................................................................... 26
LiteratureReview....................................................................................................................................... 30
Porter’sFiveForces ................................................................................................................................... 34
GAPModel................................................................................................................................................. 37
BusinessCultureinCanada........................................................................................................................ 42
SWOTAnalysis ........................................................................................................................................... 43
StrategicProblemDefinition ..................................................................................................................... 46
Goals .......................................................................................................................................................... 46
KongsbergMaritimeinCanada ................................................................................................................. 48
MarketingMix ........................................................................................................................................... 50
Porter’sGenericStrategies ........................................................................................................................ 53
Strategy...................................................................................................................................................... 54
Strategy#1‐PresenceinVancouver ......................................................................................................... 54
Strategy#2‐ServiceImplementation ....................................................................................................... 56
Strategy3–Strategicalliances .................................................................................................................. 57
8|P a g e
FinancialEstimates .................................................................................................................................... 64
Conclusion&Recommendations............................................................................................................... 69
Discussion .................................................................................................................................................. 71
References ................................................................................................................................................. 73
Appendix.................................................................................................................................................... 77
Contacts ..................................................................................................................................................... 95
9|P a g e
Introduction
Backgroundforresearch
Ourclient,KongsbergMaritime(KM)isasubsidiaryoftheKongsberggroup.KMdelivers
productsandsystemsfordynamicpositioning,navigationandautomationtomerchant
vesselsandoffshoreinstallations.KMalsosuppliesproductsandsystemsforseabed
surveillance,trainingsimulators,andforfishingvesselsandfisheriesresearch(Kongsberg
Maritime,2009).TheKongsbergGroupisaninternationalknowledgebasedcorporation
withmorethan5200employeesin25countries.Kongsbergsupplieshightechnology
systemsandsolutionstocustomersengagedintheoilandgasindustry,themerchant
marineandthedefenseandaerospaceindustries(KongsbergMaritime,2009).KMconsists
ofthreedivisions:oil&gas,shipping&offshoreandsubsea.Inourdiplomaproject,wewill
focusontheshippingandoffshoredivisiononrequestfromKM.OneofKM’slargest
customers,TeekayCorporation,islocatedinVancouverandtheirinterviewwillserveasa
focalpointforthisproject.InadditiontoTeekaywewillalsocontactotherKMcustomers
inCanadasuchasSeaspanLtd,BCFerries,AtlanticTowing,CanshipUglandandSecunda
MarineServices.
Thecompanypridesitselfinofferinganextensiveportfolioofvarioustechnological
componentsusedinships,somethingtheyrefertoas“TheFullPicture,”meaningthatKM
isabletoprovidetheircustomerswithafulllineofmarineelectronics.AproblemforKMis
10|P a g e
thatsomeoftheirproductsarenotpositionedaswellasothers,andtheyare,therefore,not
achievingtheir“FullPicture”goal.
TheresearchislimitedtoincludetheproductssoldfromtheKMCanadasalesofficein
Halifax,NovaScotia.Theseare:
• Altimeters
• CameraSystems
• DynamicPositioningSystems
• HydrographicSystems
• JoystickSystems
• MarineAutomation
• MarineInformationSystems
• NavigationSystems
• ProcessAutomation
• PropulsionControlSystem
• ReferenceSystems
• Sonar,Multibeamandscanning
• TankGaugingSystems
• ThrusterControlSystems
• VoyageDataRecords
11|P a g e
ResearchProblem
OurtaskwillbetodevelopawaytorepositionKM’sproducts,inordertoreach“TheFull
Picture”goal.WewillperformresearchonexistingKMcustomerstomeasurecustomer
satisfactionandidentifynegativeandpositiveexperiences,aswellasidentifysuggestions
forimprovements.Forthisproject,onlyCanadabasedship‐ownerswillbeconsideredas
wearewritingarecommendationfortheKMCanadasalesoffice.Wewillalsoperforma
competitoranalysiswithinthemarineelectronicsindustry.
ResearchObjectives
Inordertosuccessfullyexecutethisdiplomaproject,itisnecessarytodeterminespecific
researchobjectivesandgoals.Bydoingso,thegroundsforactioncanbecorrectly
identified.Theresearchobjectivesincludeobtaininginformationonthefollowing:
• Shippingindustrykeyfactsandfigures,worldwideandCanada.
• ExistingcustomersofKongsbergMaritimeinCanada.
• PotentialnewKongsbergMaritimecustomersinCanada.
• Competitorswithininthemarineelectronicsmarket.
• BackgroundinformationonKongsbergMaritime.
12|P a g e
• InformationonKMproductsandservices.
ResearchLimitations
Thisisanevaluationofmethodologyusedinthesurveycompletionandtheacquiringof
informationsurroundingthecase.Thesectionaimstohighlightthesoundpointsofthe
process,aswellaslookatthepossiblelimitationsthatcouldaffecttheoutcome.
• Allresponseswereretrievedthroughinterviewsconductedbymembersofthe
group,therefore,limitingpossibilityofsamplingerrors.
• Therespondentsinthesurveyallhadsufficientcompetencetoprovidetheresearch
teamwithrelevantanswers.
Pointsthatcanbesubjecttocriticism:
• Priortodesigningthequestiontemplateandsurvey,themembersofthegroupdidnot
haveathoroughunderstandingoftheindustry.
• Thedatasample,althoughofgoodquality,canbeconsideredtoberelativelysmall
evenforaqualitativesurvey.
13|P a g e
• Aninherentproblemwithhavingavoluntaryansweringprocessisthatitcouldleadto
ahomogenoussamplewherepossibilityofoutlierswoulddecline.
KongsbergMaritime
History
KM’shistorydatesbacktothefoundingofAutronicain1957withthefirstalarmsystem
readyin1959.KMhasovertheyearsabsorbedanumberofwell‐knownmaritimeand
offshore‐relatedcompanies,throughyearsofsystematicworktowardsanetwork.Key
eventsinthehistoryofKMare:theworld’sfirstcomputerizedradar/ARPAsystem(1969),
thefirstengineroomsimulator(1978)anddevelopingIntelligentElectronicApplicationin
termsofsoftware,sensorsandinstruments(2008).KMhasthroughtheyearsdeveloped
relationshipswithsimilarorcompetingbusinessestocoverandachieveabetter
understandingofthemarket.Theyareoperatingthroughanumberofdomesticand
internationalsubsidiaries(KongsbergMaritime,2009).
CurrentSituation
KMoperatesinmarketsthatareaffectedbytheturbulenceintheglobaleconomy.The
marketmaybeaffectedbycancelationsandtheriskofdownsizinginfutureoperations.
However,theprospectsfor2009stilllookfine,accordingtotheboardatKM(Kongsberg
Maritime,2009).
14|P a g e
KMoperatesinmarketsthatareindependentofeachotheranddrivenbycompetition.To
maintainastrongmarketposition,KMfocusesonlong‐termperspectivesconcerning
adaptingtochangesinthemarket.
Placement
InCanada,theHalifaxofficecurrentlyhandlessalesandservicesforallKMproductsexcept
simulators,whichishandledattheofficeinSt.Johns’.KongsbergMesotechinVancouver
designsandmanufacturessonarsystemsfortheglobalmarket.Theproductsaresoldto
countriesallovertheworldviaKM“sistercompanies”oragents(JohnGillis,2009).
HalifaxandSt.John’sare“sistercompanies”forCanada.TheHalifaxofficeinteractswithall
KMmanufacturingsitesliketheofficesinVancouver,Trondheim,Horten,Kongsbergand
Aberdeentoacquireproductsandreceivetechnicalsupport.KMconsiderstheorganization
amatrixwithtechnical/manufacturingcompaniesononeaxisandsales/servicessister
companies/agentsineachcountryontheotheraxis.(JohnGillis,2009)
PotentialMarkets
Thisreportwillevaluatenewpotentialmarkets,inadditiontofocusingonbuilding
strongerrelationshipswithcurrentcostumers.
15|P a g e
KMcurrentlyholdsagoodpositioninthemaritimeindustryasawhole,andhasbeenable
tomaintainastrongmarketpositioninspecificareas.However,therehavebeen
indicationsthattheyneedtoimprovetheservicetosomeoftheircustomers.
Products
KMspecializesinmarineelectronics.Theirequipmentissuitableforvariousvesselsthat
include:cargo,bulk,RO‐RO,containerships,cruise,ferries,megayachts,drillingunits,
fishingvessels,FPSOandFPU,liquidgascarriers,navalships,offshoresupportvessels,
researchandsurveyvessels,shuttletankersandtankers(KongsbergMaritime,2009).
SomeoftheproductsKMoffersaredescribedbelow.
Navigationssensors
KMoffersawiderangeofqualitynavigationsensorsfromreputablesuppliersthatcanbe
usedwithintheK‐BridgesystemalsoprovidedbyKM.
KBridge
K‐Bridgeisaradarsystemthatprovidessuperiortargettrackingandhasadvanced
navigationintegrationwithamultisensorinput.K‐Bridgecanincludeelectronicchart
functions,automaticnavigationandtracksteeringwheninanintegratedK‐Bridgebridge
system.Thecolordisplaypresentsasquareradarpicture,whichgivesanincreasedactive
displayareaforbettertrafficsurveillance.
16|P a g e
Logbooks
K‐logelectroniclogbooksareelectronicalternativestorecordkeynavigation,engine
watch,portcallsandotheroperationalactivitiesonboardvesselsofallsizes.AllofKM’s
logbooksmeetthespecificreportingrequirementsofIMO,SOLASandflagstates.Theship’s
officersaregivenaneasywaytologallactivitiesonboard.Manuallyinsertedinformationis
automaticallycombinedwithdatarecordedfromvessel’sinstruments.
Navigatorsafetysystems
KM’snavigatorsafetysystem,or“deadmanalarm,”isdesignedtomonitorbridgeactivity
andalertthemasterorotherqualifiedcrewifthebridgebecomesunattended.Thesystem
firstalertstheofficeratwatchthroughlocalalarmindicationatthebridgeunit,andifno
response,thenalertsthemasterorotherqualifiedofficer.Thenavigatorsafetysystem
confirmstotherequirementsofIMOresolutionMCS.128(75)performancestandardsfor
bridgenavigationalwatchalarmsystemandthebridgeclassnotationsforone‐manbridge
operation.(KongsbergMaritime,2009).
VoyageDataRecorder
Voyagedatarecordershavethesamepurposeas“blackboxes”onaircrafts,andcanhelp
investigatorsreviewproceduresandinstructionsamomentaheadofanincidenttoidentify
thecause.(KongsbergMaritime,2009)
17|P a g e
DynamicPositioning–DPsystems
DPsystemsservethepurposekeepingthevesselswithinspecifiedpositions.Thesystems
aredesignedtominimizefuelconsumptionandwear‐and‐tearonpropulsionequipment.
Currentlymorethan1200dynamicpositioningsystemshavebeensuppliedtooilandgas
relatedvessels(KongsbergMaritime,2009).
Thrustercontrols
Thethrustercontrolsystem,K‐Thrust,isanindependentremotecontrolsystemmadefor
electricallydriventhrusters,propulsionunitsandrudders.Theapplicationincludesside
thrusters,azimuththrusters,azimuthsteeringpropulsion,electricmainpropulsionand
rudders(KongsbergMaritime,2009).
18|P a g e
Promotion
KMhasfourpeopleinHalifax,allresponsibleforsales.Theyhavedirectcontactwith
customersandperformdemonstrationsofequipmentuponrequest.KMrepresentatives
attendtradeshowslikeTheInterservice/IndustryTraining,SimulationandEducation
Conference(I/ITSEC),Sea–Airspace,CANSEC,OffshoreEuropeandATEC.Theyalso
attendtechnicalconferenceslike:offshoretechnologyconference,WITSMLpublicseminar
andvendorexhibitionandtheSocietyofExplorationGeophysicistsmeetings(JohnGillis,
KongsbergMaritime,Halifax).KMhasadvertisedinmagazinesforthemaritimeindustry
suchasMarineLog.
MarketNeedsandTrends
KMenjoysagoodpositionwithintheshippingindustry.However,itisreasonableto
assumethatinalong‐termsituationthedownturnintheworldeconomywillcatchupwith
KMandcancreateriskofcancelationsandcutbacks.
AccordingtoareportfromStratfordGlobalIntelligence,theshippingindustryhasbeenhit
hardbythedecliningglobaleconomy.Numbersshowthattheworldtradevaluesforthe
lastquarterof2008havedropped45percentcomparedtothelastquarterof2007.“The
worldTradeOrganizationisnowpredictinga9percentdecreaseintheworldexportby
volumein2009,thelargestcontractionsinceWorldWar2”(StratfordGlobalIntelligence,
2009).
19|P a g e
MarketBackground
WorldwideShippingIndustry
Everyproductevermade,boughtorsoldhasbeenaffectedbyshipping.Therearemany
waystoshipproducts,buttherearethreebasictypesofshipment:byland,airorsea.This
reportfocusesonshippingbysea,asKMspecializesinmanufacturingmarineelectronics
forships.
Merchantshippingisessentialtotheworldeconomy,carryingthebulkofinternational
trade.Thevesselsareexpensive,beingoneofthelargestmanmadevehiclesever.There
areapproximately50.000merchantshipsthatareinvolvedwithinternationaltradeof
everykindofcargo.Theworldfleetisregisteredinover150nationsandmannedby
millionsofpeoplefromallovertheglobe.(Equitymaster,2009)
Therearedifferenttypesofvesselsinthemerchantfleetincluding;
• Containerships,carryingmostoftheworldsmanufacturedgoodsandproducts.
• Bulkcarriers,the“workhorses”ofthefleet,transportingrawmaterialssuchasiron
oreandcoal.
• Tankers,includingtransportcrudeoil,chemicalsandpetroleumproducts.
• FerriesandCruiseships,performingmainlyastransportationforpassengers.
20|P a g e
• Specialistshipssuchasanchorhandlingandsupplyvesselsfortheoffshoreoil
industrysalvagetugs,icebreakersandresearchvessels.
Someofthelargestcontaineroperatorsintheworldare;APM‐Maersk,MediterraneanShg
Co,CMACGMGroup,EvergreenLine,COSCOcontainerLandHanjin/Senator
(Equitymaster,2009).
Theindustryishighlycapital‐intensiveandadequatecashflowsarerequiredforday‐to‐
dayfunctioning.Moreover,expertiseandtechnicalknow‐howalsoserveascriticalfactors.
Sinethenumberofshippingagenciesaregrowing,thereisahighlevelofcompetition.This
cangivecustomersahigherbargainingpower(Equitymaster,2009).
CanadianShippingIndustry
ShippinginCanadahasplayedasignificantroleinthedevelopmentofmodernsocietyfor
centuries,aformofeconomiclifelineforCanadians,especiallyforthefirstsettlers.The
industryprovidedTheOldWorldwiththingssuchasfur,agricultural,forestryandmining
productstomeettheincreasinglevelsofdemand.
IneasternCanada,particularlyintheMaritimes,atraditionbasedonshipbuilding,fishing
andtradeflourishedwiththeshippingindustrygrowinginthe1840’s.SamuelCunardfrom
HalifaxestablishedatransoceanicservicethatdevelopedintotheCunardCompany,once
rankedasfourthamongtheshipowningnationsoftheworld.TheCanadianshipping
industryalsohaditsupsanddowns.Alackofsteelandengineeringskillsservedto
21|P a g e
downsizetheCanadianshipbuildingactivity.The2ndWorldWar,however,gaveCanadian
shippingatemporaryboom(TheCanadianencyclopedia,2009).
TheshippingindustryisimportanttoCanadaduetotheimportanceoftradetothe
economy.In1996,exportswere33.5%andimports29.2%ofGrossDomesticProduct.
Approximatelyonethirdofexportsandoveraquarterofimportsaretransportedbywater.
AlthoughmostofCanadiantradewiththeUSisbylandtransport,shippingisvitaltothe
competivenessofresource‐basedproductsintheglobalmarkets.Someoftheoverseas
nationsCanadatradeswithareJapan,UKandotherwesternEuropeannationssuchas
Norway,makingtheNorthAtlanticandNorthPacificroutethebusiest.
TheshipsandportfacilitiesareefficientlyservingCanadiantrade.Someofthemodern
containerterminalsareessential,specificallythoseinHalifax,Montreal,Vancouverand
PrinceRupert.TheportsofMontrealandVancouverarethelargestandmostprofitable.
In1895,theCanadiangovernmentimplementedtherecommendationonthetaskforceon
deep‐seashippingbyamendingtaxregulations,whichmeansthatthemanagementof
internationalshippingcouldbeconductedinCanadawithoutexposingtheearningsofthe
shippingservicestocorporatetaxuntildistributed.ThislegislationmadeCanada
competitivewithothercountries,asmostshipownersdidnotpaytax,whichhasresulted
inanincreaseinemploymentopportunities.WiththeCanadianshippingindustrygrowing,
anumberofcompanieshavemovedintoCanada,thelargestbeingTeekayCorporation,
foundedin1973.Teekay’scorporateheadofficeislocatedinBermudaandtheir
operationalheadofficeisinVancouver(Teekay,2009).
22|P a g e
ExistingCustomers
TeekayCorporation
Withtheirlargefleet,theyareoneofthemostimportantsuppliersofshippingservicesfor
leadingoilandgascompaniesworldwide.Currently,Teekayhas158vesselsinadditionto
17otherscurrentlyonorder.Thevesselshaveanaveragelifeexpectancyof10years
(Teekay,2009).
TheindustriesinwhichTeekayoperatesare:oil,liquefiedpetroleumgas,andliquefied
naturalgas.Vesselsarelocatedallovertheworld,withofficesinEurope,Australia,Asia,
NorthAmericaandSouthAmerica.Theirfourbusinessunitsare:TeekayTanker,Teekay
NavionShuttletankerandoffshore,TeekayGasservicesandTeekayMarineservices.
(Teekay,2009).
Teekayisthelargestoperatorofmediumsizetankersintheworld.Theyareaworld‐
leadingoperatorofoffshoreloadingshuttletankersandoffercomprehensiveshuttle
tankerservices.Theyalsodeliverinnovativemethodsforstoringandtransferringoffshore
oil,fromfloatingstoragesystemstocomplexexportandtransportationservices.Teekay
transportsmorethan10%oftheworld’sseaborneoil(Teekay,2009).
23|P a g e
SeaspanInternationalLtd.
Startingoutin1898byservicingtheB.Ccoastalcommunities,Seaspanhasgrownintoa
multimillion‐dollaroperationservingthewholeWestCoastofNorthAmerica.Aswellas
providingship‐dockingservicesatPortofVancouver,VictoriaandotherB.Cports,they
alsooperateafleetof64shipsrangingfromflatdeckbargestochemicaltankers(Seaspan,
2009).ThecompanyisownedandoperatedundertheWashingtonMarineGroup,which
alsoownslocalferryandtugboatservicesandthreemajorshipyards:Vancouver
Shipyards,VictoriaShipyardsandVancouverDrydock.(WashingtonMarineGroup,2009)
BCFerries
BCFerriesservesupto47portsalongthecoastofBritishColombia.Theyhavesince2007
added7newstate‐of‐the‐artshipstotheirfleet.BCFerriesAuthorityisanosharecapital
corporationcreatedundertheCoastalFerryAct.BCFerriesroutesandserviceslevelsare
definedinthecostalferryservicescontractbetweentheprovinceofBritishColombiaand
BCFerries.BCFerriesisanindependentregulatorwhoisappointedbytheprovinceof
BritishColombia.BCFerries’soleshareholderistheprovincialgovernmentofBC(BC
Ferries,2009).
24|P a g e
CanshipUglandLtd.
AsajointventurebetweentheNorwegiancompanies,J.J.UglandCompaniesandKnutsen
OASShipping,CanshipUglandLtd.starteditsoperationsin1997.WithheadquartersinSt.
John’s,Newfoundland,thecompanyemploysatotalof380peopleonandoffshoreandhas
9shipsundermanagement,servicingtheoilindustryaroundNewfoundland.Themain
bulkoftheirfleetconsistsofcrudeoiltankersinthe120,000–150,000tonsdeadweight
classandtherestbeingspecializedtugboatsfittedforoperationsdemandingheavylifting
andfirefighting(CanshipUgland,2009).
SecundaMarineServices
Createdin1983asaNovaScotiacompany,SecundaMarineServiceshastodaygrowntheir
fleetto14fulltimevesselsandonetrainingvessel.PerformingoperationsinEastern
Canada,NorthSea,andtheGulfofMexico,theyservicetheoilandgasindustrybyoffering
anchorhandling,platformsupply,cablelay,subseaconstruction,divesupportvesselsand
conversions.J.RayMcDermottacquiredSecundaMarinein2007(SecundaMarine,2009).
25|P a g e
PotentialCustomers
TheCanadianCoastguard
Thefederalgovernment’scivilianfleetoperatestheCanadianCoastguardandprovideskey
maritimeservicestoCanadiansatsea.TheCoastguardisresponsibleforensuringsafeand
accessiblewaterways,itaidstonavigation,icebreaking,environmentalresponseaswellas
searchandrescue.Theyprovideservice24hoursaday,365daysayearthroughout22
centersacrossCanada.CanadianCoastguardoperates114vesselsinadditionto22
helicopters.Theannualoperatingbudgetis$285Million.(CanadianCoastGuard,2009)
TheCanadiannavy
TheCanadiannavyhas3destroyers,12frigates,2supplyships,4submarines,and12
costaldefensevessels.The33vesselsaredividedbetweentheAtlanticandPacificcoasts.
ThehomeportoftheAtlanticfleetliesinHalifax,andthePacificfleetisbasedinEsquimalt,
BC(CanadianNavy,2009).
Nautisol
NautisolisanewcompanybasedinVictoria,BritishColombia.Theirgoalistolaunchtwo
high‐speedferrieswitha90‐minutetraveltimefromVictoriatodowntownVancouver.
Dependingonsufficientsupportandresources,athirdferrymaystretchbetweenNanaimo
anddowntownVancouver.(Nautisol,2009)Nautisolintendstobuildthreenew
26|P a g e
catamaransinVancouver;twoofthemareexpectedfinishedby2010.Thethirdvessel
shouldbedoneby2011(AndrewPetrozzi,2009).
Competitors
KMhasseveralcompetitorsinthemarineelectronicsmarket;thefollowingisabrief
overviewofthemostprominentones.
SperryMarine/NorthropGrumman
SperryMarinewasformedin1997fromthreewell‐knownbrandnamesinthemarine
industry:Sperrymarine,DeccaandC.Plath.SperryMarineisadirectcompetitortoKMand
hasaverysimilarportfoliothatincludes:autopilotandsteeringcontrolsystems,
communicationequipment,ECDIS,intergradednavigationandbridgesystemsand
gyrocompasses.Sperrymarineemploysaround1300people(SperryMarine,2009).Allof
Sperrymarine’sequipmentisgearedtowardslargervessels,themostimportantbeing
gyrocompassesandradars.
NorthropGrummanrevenuesin2007reached$32billionUSD(NorthropGrumman,2009).
Theirmarketissplitbetweenthecommercialandthemilitarysector.Theeconomic
downturnhasmadeitsimpactonSperryMarineandthecommercialsectorhasbeen
downscaled,especiallyconstructionofnewvessels.(AlanAitken,Canadianregional
manager,SperryMarine).
27|P a g e
Customersarecurrentlyrequestingmultifunctiondisplayscapableofperformingmultiple
tasks.AnewproductSperryoffersistheVisionmasterFTTotalwatch,functioningasa
radar,chartradarandECDISamongothers.MostoftheequipmentSperrymanufacturesis
standardized,however,theyalsooffercustomsteeringstandsandbridgeconfigurations.
SomeoftheSperry’slargestcustomersinNorth‐Americaare:theUSNavy,theUS
Coastguard,Chevron,Maersk,CanadianCoastguard,CanadianNavyanddifferentcruise
lines(AlanAitken,SperryMarine,2009).
Sperry’sstrongestsellingpointsareconsideredtobeproductquality,companyethicsand
aglobalservicenetwork.(AlanAitken,SperryMarine,2009)
Sperry’scustomersreceivebothroutinemaintenanceandemergencyrepairs.Someofthe
routinemaintenanceismandatedbyregulatoryagencies,suchasinspectionsofVDR’s
(VoyageDataRecorders)(SperryMarine,2009).
(SeeAppendix2forthetranscriptoftheinterviewwithAlanAtiken)
RadioHolland
TheNetherlandsbasedcompanyRadio‐Holland,isoneofKM’sdirectcompetitors.Radio‐
Hollanddescribethemselvesas“aleadingsystemhousespecializingininnovative,efficient,
andfunctionalsolutionsinthefieldofsatelliteandradiocommunication,automation,
observationandnavigationsystems”.Radio‐Hollandhasofficesin42differentcities
worldwide.TheCanadianbranchofRadio‐Hollandwasfoundedin1919only3yearsafter
28|P a g e
thecompanywasestablished,andhasitsheadquartersinOntariowithalocalofficein
Vancouver.Thecompanyemploys750peopleinsidetheirCanadianstructure.In2006
Radio‐HollandbecameasubsidiaryofImtechNV.(RadioHolland,2009)
MoreindepthinformationwasconsideredtoosensitivebyRadioHolland.
RutterTechnology
RutterTechnologyprovidesproductsandsupportofworld‐classelectronicstomarine
aviation,aerospace,militaryandsecuritysector.Theproductstheyofferareamixof
electronichardwareandsoftwareengineeredtointegratewellwithothersystems.
RutterTechnologyhasover100customerslocatedworldwide.Theymanufactureproducts
forcargovessels,passengervessels,militaryandenforcementvessels.Theirproductline
includes:voyagedatarecorders,radarsystems,highresolutionradarprocessingand
recordingtechnology,high‐fidelityaudioandhigh‐resolutionvideorecordings.Theirmost
importantproductisthevoyagedatarecorder.RutterTechnology’sheadofficeislocatedin
St.Johns,Canada.(RutterTechnologies,2009)
Shipyards
Shipyardsoftenhaveacentralpositioninpurchasingofproductsforvessels.Theshipyards
providetheship‐ownerswithalternativesandoftenmakearecommendation.
29|P a g e
VancouverandVictoriashipyardsareapartofTheWashingtonMarineGroupthat
providesservicesalongthecoastofthePacificNorthwest.WashingtonMarinealsohasa
ferrybusiness,aswellasatugandbargetransportationcompany.Seaspanisalsoowned
byWashingtonMarineGroup.(WashingtonMarineGroup,2009).Therearethree
shipyardsundertheWashingtonMarineGroup,theseare:
VancouverDrydockCompanyLtd
Vancouverdry‐dockislocatedattheVancouverharbor.TheyhavetwoLloydsfloatingdry‐
docksandmachinerythatcanhandleshaftsupto18meters.(Vancouverdry‐dock,2009)
VancouvershipyardsCo.Ltd
VancouvershipyardhasbeenindowntownVancouversince1968.Theydorepairs,
maintenance,constructionanddesignofvarioustypesofvessels.Facilitiesfoundat
Vancouvershipyardincludemajorsteelforming,alargefabrication,anassemblyhallanda
20.000feetpaintfacility.Theycandry‐dockmultiplevesselsatthesametimeandcan
performrepairsonthevessels.(Vancouvershipyards,2009)
VictoriashipyardsCo.Ltd
VictoriashipyardisoperatedandownedbyPublicWorksandGovernmentservicesof
Canada.Theshipyardsperformrepairsandcompletevesselconversions.Theyperform
repairsoncruiseships,deepseavesselsandcontainershipsinadditiontotheCanadian
30|P a g e
navy,ferries,tugs,fishingvessels,barges,yachts,andresearchvessels(Victoriashipyards,
2009).
LiteratureReview
Degreeofglobalization
KMisaglobalcompanyandiswellknownintheindustry.Theirtechnologyisshipped
aroundtheworldtotheshipyardswherethevesselsarebuilt.KMhasastrongpositionin
themarketwithofficesin25countriesaroundtheworld.ThreeoftheseareinCanada:
Halifax,St.John’sandVancouver.KMhas,intherecentyears,strengtheneditsposition
internationallybyopeningofficesinIndia,BrazilandChina,allbeingimportantemerging
markets.(KongsbergMaritime,2009).
KMprovideditsproductstotheworldbiggestcruiseship“OasisoftheSeas”andtwoofthe
biggestdrillingrigs“AkerSpitsbergen"and“AkerBarent”.KM’smanufacturinglocations
includeHorten,TrondheimandKongsberginNorway,AberdeenandVancouver
(KongsbergMaritime,2009).
31|P a g e
TheNineStrategicWindows
Bornglobal
Abornglobalcompanyisacompanythatgoesabroademinentlyafterstartup(Rasmussen
E.S,Madsen.T.K,2002).Kongsbergwasestablishedin1814asamanufacturerofweapons
underthenameKongsbergVaabenfabrikk.Kongsberghasthroughthelastdecades
establisheditselfasaninternationalcorporation.Kongsbergreceivedoneofthefirstlarge
exportcontractsinNorwaywhentheysoldKragJørgensenriflestotheUSNavy.Thefirst
navalyardwasestablishedinHortenin1849.(KongsbergMaritime,2009)
Ninewindows
KMcanbeplacedinwindownumber8inSolberg’sninestrategicwindows(Seeappendix
3),toseeknewalliances.Fromastrategicpointofview,KMisinthepositiontogrowand
enhancetheirpositioninthemarket.Thiswillbediscussedfurtherinthestrategysection.
TrendAnalysis
Political
Canadaisafederalstatewith13provincesandterritories.Theparliamentconsistsofthe
HouseofCommonswith310electedmembersandtheSenatewith105chosenbythe
32|P a g e
GovernorGeneral.(Passport,2009).TheheadofstateisQueenElizabethandtheprime
ministersince2006isStevenHarper(ConservativeParty)(Passport.2009).
TheconstitutionofCanadaisthesupremelawinCanadaandconsistsofacombinationof
acts,traditionsandconventions.TheConstitutionActof1867hasinthelateryears
regulateddistributionofpowerbetweenprovincesandthefederalgovernment.The
CanadianCharterofRightsandFreedomsoutlinesthecivilrightsandlibertiesofevery
Canadiancitizen,suchasfreedomofspeech,freedomofreligionandmobility.(Department
ofJustice,Canada,2009)
Politicalrisk
Canada’slargestexportpartnersaretheUSAandEuropeandthelargestimportpartners
aretheUSAandAsiaPacific.However,withtherecessionexportsareindecline.Thereis
sometensionbetweenthedifferentprovincesandthefederalgovernment,butthiswill
howevernothaveabigimpactintheshippingindustry.(Passport,2009)
Economy
CanadaresemblestheUSmarketorientedeconomicsystem,productionpatternsandliving
standards.Almost80%ofCanadianexportseveryyeargototheUS,withCanadabeingone
ofUS’slargestsuppliersofenergy,includingoil,gas,uraniumandelectricity.(CIA,World
factbook,2009)
33|P a g e
ThedownturnintheUSeconomyhasaffectedCanadianexports,withalowerdemandfor
productsandfewershipsleavingfromCanadianports(Passport,2009).Theshipping
industrywillmostlyexperiencetheeffectoftherecessionattheshipyards,wherethe
demandfornewvesselswilldecrease(AlanAitken,SperryMarine).
Tradeagreements
CanadasignedtheNAFTAagreementin1994,anagreementbetweentheNorthAmerican
countriesandEFTAin2008,whichincludescountriessuchasNorway,Iceland,
LichtensteinandSwitzerland(CanadianGovernment,2009).
Sociocultural
Canadaisthesecondlargestcountryintheworld,coveringalmosthalfoftheNorth‐
Americancontinent.Canadahastwoofficiallanguages,EnglishandFrench.Theethnic
groupsinCanadaaredividedwith28%BritishIslesorigin,23%Frenchorigin,15%other
Europeanandmixedbackground,and26%Asian.Thepopulationisapproximately33.5
Million(CIAWorldFactBook,2009).
34|P a g e
Technological
ThereareafewcompaniesthatprovidecompetitiveproductstoKM.Sincethisisavery
internationalmarket,mostofthetechnologyismanufacturedindifferentpartsofthe
world.ThereareafewinternationalcompaniesthatmanufactureproductsinCanada.A
subsidiaryofKM,KongsbergMesotechmanufacturessonar’sfortheworldmarketin
Vancouver.
Porter’sFiveForces
Industrycompetitors
KMhasafewdirectcompetitors,andSperryMarineandRadioHollandareamongthe
largest.ThedemandformarineelectronicsinCanadaismoderate,sincefewship‐owners
arepresentwithheadquartersinthecountryandrelativelyfewshipsarebuilthereona
globalscale.SperryMarinehasafewbigcustomersliketheCanadiannavyandcoastguard,
butKMalsohasarelativelylargemarketshare.Sincecustomersareoftenloyaltotheir
vendors,itcanbedifficulttoattractthewell‐establishedones,withbetterfocusbeing
companiesstartingup,withfewerbusinessrelations.
35|P a g e
Potentialentrants
ItcanbedifficultforKMtoenternewmarketsinCanada,sincemostshippingcompanies
headquartersareoftenlocatedinotherpartsoftheworld,representedthroughagencies
here.MostofKM’scustomersareinternational,thoughafewareCanadiansuchasBC
Ferries.Whenthecustomerisgovernmentownedtheyhavedifferentrulesandregulations
regardingpurchasing.
Substitutes
Theresearchteamdidnotdiscoversubstituteproducts,sincetheproductsaremoreorless
standardizedandmeetspecificrequirementsfornavigationandsafety.
Buyers
Thebuyersintheindustryaresometimestheshipyardsonbehalfoftheircustomers.
Shipyardsusuallymakerecommendationsofvendors,andtheship‐ownermakesa
decision.
Inatypicalbuyingprocessthecustomerasksthreevendorsforarequestonproposal.
Accordingtoourinterviews,usuallypriceislessimportantthanreputationandprevious
experiencewhenselectingavendor.
36|P a g e
Suppliers
Althoughalmostallsoftwareisengineeredinternally,KMisprovidedwithhardwaresuch
asPCB’s,cables,computers,printersanddisplaysfromlocalsuppliersinVancouver,
Horten,Kongsberg,Aberdeen,TrondheimandSeattletotheproductionfacilitiesinthose
areas.Herearesomeexamples:
• Theconsolesusedforoperatorstations,aresuppliedfromacompanycloseto
Horten.
• ManyofthesensorsusedinKMproductsaresuppliedfromcompaniesin
Kongsberg.
• SatellitebasedpositionreferencetechnologyisprovidedbySeatexinTrondheim.
• Pressure/temperature/liquidlevelsensorsareprovidedbyKMAutomationin
Trondheim.
• HiPAPpositionreferencetechnologyisprovidedbyKMSubseainHorten.
• Othercompaniesprovideproductssuchasgyrocompasses,echosoundersand
radios(JohnGillis,KongsbergMaritime).
37|P a g e
Summaryofthefiveforces
KMhasastrongpositioninthemarket.Althoughsomeoftheircustomershave
complainedaboutsomeserviceissues,theyacknowledgeKM’sproductsas“thebestinthe
industry”.Itcanbehardtoexpandinthemarket,inwhichKMisalreadyestablishedin
servingthreeship‐ownersoneachcoastofCanada.
GAPModel
Buyingprocessintheshippingindustry
Thedecisionofwhichvendortochoose,isnotbasedentirelyoncost.Whattheresearch
teamdiscoveredwasthatthemostimportantaspectsinselectingavendorwerepast
experienceaswellasreputationwithintheindustry.Larger,well‐establishedvendorswere
preferred,sinceaneventualbankruptcycancauseproblemsatalaterstage,since
purchasesusuallyrequireanexpectedpartnershipof10+yearsdependingontheproduct.
GapServiceModel
Thegapmodelcanbeusedtoseeifthereareanygapsinexpectedandreceivedservice
betweencustomerandsupplier(Appendix5).TheresearchteamspoketosomeofKM’s
customershereinCanada:Teekay,BCFerriesandSeaspanfromthePacificcoastand
SecundaMarineandCanshipUglandfromtheAtlanticcoast.
38|P a g e
ResearchshowedthatthereisagapbetweentheserviceexperiencedandKM’spromise.
OnecustomerexplainedthattheywishedtohaveamorepersonalcontactwithKMbefore
asale,aswellasabetteraftersalesservice(RajDewan,Seaspan).Anotherindividualfelt
thatsomeprocessescouldbetootime‐consuming,especiallywhenitcomestohavingto
communicatewithdifferentofficesofKMinNorway.Thetwothatwerethehardesttoget
intouchwithareHortenandTrondheim(TerjeRusdal,TeekayCorp).
AccordingtoBCFerries,problemsolvingtooklongeroutsidetheNordicseabasin.They
alsoexperienceda“nocando”attitudefromKMwhentheyneededsupport;whentheyhad
aproblemwithoneoftheirvessels,andhadtotakeitoutofservice,bothpassengersand
BCFerriessuffered.AccordingtoBCFerries,servicewasprovidedbyKMlaterthan3
weeks,whichisconsideredunacceptable(MarkCollins,BCFerries).BCFerrieshasa
serviceteamandhasapolicyofrepairingandperformingmaintenanceontheirownfleet.
BCFerriesinquiredifKMcouldtraintheirservicepersonnel,butunfortunatelytherequest
wasdenied.SecundaMarineexplainedthatlogisticsfromKMcouldtakefrom8‐10weeks,
andhavingshipsoutofserviceforsuchanamountoftimecouldleadtolargeexpenses
(DwayneE.Murphy,SecundaMarine).KMcouldbemoreadaptabletocustomerneedsand
deliverserviceassoonaspossibletoensuregoodreputationandbusinessrelations.
39|P a g e
WhyRelationshipsareImportant
ByrelationshipbuildingKMshouldrecognizethelong‐termvalueofkeepingcustomers.In
marketing,itisaknownfactthatitcostsmoretoattractnewcustomersthantomaintain
existingones.Therearevariouswaystoexecutesuchastrategy,withbothadvantagesand
disadvantages.Today,creatingameaningfulandlong‐termrelationshipthatbothparties
canbenefitfromcanbeakeyfactortosuccess.Creatingrelationshipsbetweenyouand
yourbusinesspartnersisaterrificwaytoaddvalueandenhanceyourbrandposition
againstyourcompetition.
KM’sviewofrelationshipmarketingisthat“networkingtiesitalltogether,”ensuringthat
knowledgeandcompetenceisspreadthroughouttheorganization,addingvalueto
customers.Thesevaluesaredemanding,butnecessarytomeetthechallengesofthe
market.KM’svaluessupplythedriveanddirectiontoimproveconstantly,providing
reliableproductsandresponsiveservicefortheircustomers(KongsbergMaritime,2009).
ResearchshowsthatKM’sactualrelationshipmarketingisnotalignedwiththeirvision,
givingKMroomforimprovement,especiallytowardssmallerbusinesses.
AdvantagesofCloseRelationships
Therearemanyreasonsforchoosingtospendmoreofthecompany’sresourceson
relationshipmarketing,whichincludebotheconomicalandnon‐economicaloutcomes:
40|P a g e
Economical
Costreductions
‐ Costreductionregardingmaintenanceandadaptioncosts.Bydeveloping
cooperationbasedoncoordinatedroutinesregardingservicesanduseof
technology.Youwillinthefutureachievemoretimeefficientprograms.
‐ Reductionofupkeepisalsoafactorthatwillbeinfluencingthecost
reduction.Basedonthecoordinatedserviceroutinesthepersonnelwillhave
betterunderstandingofproductsandroutines.Therebythetimeatthe
repairingdockwilldrop,whichisanimportantfactorfortheshipping
industry.
Crosssales:
‐ Closerelationshipwillresultinsharingcustomerslistaswellasaccessto
othermarkets.
Newandimprovedproducts/services.
‐ Closerelationshipoftenresultinbetteraccesstoinformationfromthe
oppositebusinesspartner.Makingiteasiertocreateoptimalsolutionsfor
bothparts.
41|P a g e
Noneconomical
Accesstospecificresources.
‐ Developmentofspecificresourcessuchasbetterunderstandingofcustomers
needs.
Reductionofuncertainty:
‐ Therelationshipwillautomaticallycreatemorewillingnesstosucceedwith
thebusinesspartners,duetothereasonthattheyareeconomically
dependentoneachother.
Strengthenthereputation:
‐ Oftenstrongrelationshipresultsinpositiveachievementsthatwillcreatea
strongerreputation,especiallyinasmallmarketliketheCanadianmarket
(Biong&Nes,2003).
IndividualCustomerRelationships
Thefocusonarelationshipbetweentwobusinesspartnersshouldbeadaptedtothe
differentcustomerneeds.Theyhavedifferentviews,andthereforeexpectdifferent
outcomesofeachrelationship.Accordingtoresearch,KMshouldbelocatedinthe“Long‐
termrelationship”box(Appendix6).OneofKM’scustomersexpressedconcernthatKM
42|P a g e
focusesmoreonshort‐termrevenueratherthanlong‐termrelationships.Theproject
researchfoundthatmostoftheircustomersandpotentialcustomersrequestclose
relationshipswhenconductingpurchaseswithavendor.Itisthereforelogicaland
beneficialthatKMshouldfocusonlong‐termrelationshipsinstead(Appendix6).
BusinessCultureinCanada
Thereisarangeofaspectstoacountryorregion’sbusinessculture,itis,therefore,beyond
thescopeofthisreporttodoanin‐depthinvestigationoftheCanadianbusinesscultureas
awhole.However,certainpartsoftheCanadianculturethatareimperativeforKMand
theirfutureCanadianventurewillbehighlighted.
GeertHofsedesdimensionsonbusinesscultureshowthatCanadacanbefoundrankedhigh
ontheindividualismscale,andthatsuccessisoftenmeasuredbypersonalachievements
(Hofstede,2008).ThisisimportantinformationforKMastheywillbeplanningtoconvince
keydecisionmakersintheindustrythattheirproductsandservicesarebeneficialfortheir
company.
ThemajorityofCanadianshasahighdegreeofindividualismandhasatendencytobeself
confidentandopentodiscussionongeneraltopics.However,theykeeptheirpersonallife
limitedtotheirclosestfamilyandfriendswithrelativelyloosebondswithothers
(Hofstede,2008).
43|P a g e
SWOTAnalysis
TheSWOTanalysisisatooltoprovideuswiththegeneraloverviewofstrengthsand
weaknessesinacompany.Thisanalysiswillprovideuswithinformationthatwillbe
helpfulindecisionsconcerningimprovementsinKM.
Strengths
KMhasastrongdedicationtoprovidinginnovativeandreliablemarineelectronicsthat
ensureoptimaloperationatsea.Byutilizingandintegratingtheirtechnology,experience
andcompetenceinpositioning,hydroacoustics,communication,control,navigation,
simulation,andautomation,KMaimstogivetheircustomers“TheFullPicture”.
KM’svisionofsharingknowledgeandinformationwithcustomers,givesthemthe
opportunitytoprovidetheirclientswiththemostefficientsolutions.Thisvisionisbuilton
theirphilosophyofnetworkingandcreatingalliances.
KMisamarketleaderindynamicpositioningsystems,automationandsurveillance
systems,processautomation,satellitenavigationandhydroacoustics.Themostimportant
marketsarecountrieswithlargecoastlinesandbusyharbors,whichmeansCanadaisa
suitablemarket,withtheopportunityforfurtherexpansion(KongsbergMaritime,2009).
Weaknesses
44|P a g e
OnecompanymentionedthroughtheinterviewsthatKM’sstoragedepotsoutsideof
EuropeandNorthAmericacouldhavebetterstoragecapacityforspareparts.Therewasa
voicedconcernespeciallyabouttheBrazilandSingaporelocations,astheKMemployees
wereperceivedas“moody”,thishavingapossibleeffectonlogisticsanddeliverytime.
ThecombinationofhighdemandandhighqualityofproductsthatKMoffershasresulted
inpremiumpricepoints.Althoughpremiumpricingcanhaveanegativeeffectinthe
evaluationprocessofproductpurchasing,offeringoutstandingservicescancompensate
forit.
ResearchshowsthatKM’slargestcustomer,TeekayconsidersKM’sserviceassufficient,
howeverthesatisfactionlevelwaslowerinsmallercompanies.Specificcomplaintswere
regardingfollow‐upproceduresandKM’swillingnesstocooperate.Pacificcoastcustomers
explainedthattheyweremorelikelytoexpectlessservicefromKM,comparedto
customersontheAtlanticcoast.
Forvariousservices,customercontactisacrucialissue;theprovidermustbeinface‐to‐
facecontactwiththecustomer.Closecontactsuggestsalocalpresenceintheforeign
marketandcustomization(Bradley,2004).
Opportunities
Byutilizingandintegratingalltheirproducts,KMaimstoprovidetheircustomers“TheFull
Picture”.Thisideayieldsprofessionalsolutionsandglobalservicesthatmakeadifference
45|P a g e
enablingyoutostayaheadofthecompetition.Thisconceptmayinthefutureprovidetheir
customerswithtechnologyandservicesthatareuniquetoeachsituation.Itwillmakeit
easierforbothKMandcustomerstoplanfuturebusiness.
KM’sglobalreputationconcerningmarineelectronicsisadirectresultofyearsof
consistentengineering,developing“stateoftheart”technology.Theirdevotedwork
towardsdevelopmentoftechnologyhaspaidoffandgiventhemachancetobecomethe
marketleaderincertainareas.Withagoodreputationitiseasiertoacquirenewcustomers
andbuildlonglastingrelationships.
46|P a g e
Threats
KM’stechnologyis“stateoftheart”,howeveritispossibleforcompetitorstocopyitor
furtherdevelopit,therefore,KMhastoprovidetheircustomerswithservicesandpackages
thecompetitionlacks.
AnotherthreatforKMasacompanyisthechangesinglobaleconomy.KMisdependenton
longperspectiveplanningandstrategydevelopmenttopreventnegativeoutcomes
(Bradley,2004).
StrategicProblemDefinition
“HowcanKongsbergMaritimeimprovetheircurrentpositionintheindustry,inadditionto
conqueringnewmarkets,resultinginKMoffering“theFullPicture.”
Goals
Short‐termgoalsareneededtoreachlong‐termgoals.Short‐termgoalsarereachable
within12months.SuggestionsforKMare:
• Identifyopportunitiestoimprovecommunicationsbothinsidethecompanyand
withclients.
• Rethinkandimprovethecurrentafter‐salesservice.
47|P a g e
• ImprovecustomerrelationsinthePacificcoastofCanadabyestablishinganoffice,
possiblythroughanagent.
Long‐termgoalsarereachableafteraperiodof12months.SuggestionsforKMare:
• Developareputationasacompanywithsuperiorcommunicationandservice.
• Deliveranidealsolutiontowhattheclientsregardas“TheFullPicture”.
‐Verticalaswellashorizontalpackages.
• CapturenewcustomersinthePacificcoast.
KeySuccessFactors
• Improverelationshipswithexistingcustomers.
• Performquickerafter‐salesserviceandadaptmoretocustomer’swayofdoing
business.
• AchievebetterreputationinthePacificcoastmarket.
CompanySpecificAdvantages
• Advancedhigh‐qualityproducts.
• Worldwidereputation.
• In‐depthindustryknowledge.
48|P a g e
• Humancapital.
StrategicGAPAnalysis
Whencomparingkeysuccessfactorsandcompanyspecificqualities,onestrategicgap
emerges:KMneedstodevelopadeeperunderstandingoftheircustomer’sneedsonthe
Pacificcoast.
KongsbergMaritimeinCanada
KMneedstoidentifytheirtargetmarketsinordertoreachtheirdesiredcustomers.This
sectionwillidentifythesemarkets.
Primarymarket
TheprimarymarketsforKMareexistingcustomers,sincetheyarecurrentlyfamiliarwith
KM’sproductline.KM’sexistingcustomerswillexperiencechangesinservicequickerthan
newones.Repeatpurchasesbyexistingcustomersareimportanttomaintainingthe
marketshare,inadditiontoupgradingtheirproductline.
49|P a g e
Secondarymarket
KM’ssecondarymarketsarenewcustomerscurrentlyusingcompetitiveproducts,or
customersintheprocessofpurchasingequipmentfornewvessels.Toachieveastronger
positioninthemarketandgainahighermarketKMneedstoreachnewship‐owners.
EstimatingtheDemand
InordertoestimatethedemandforKM’sproductsandservicesinCanada,primaryand
secondarysourceshavebeenused.Bysummingupthefleetsizeofexistingcustomersand
potentialcustomers,itispossibletoestimatethenumbervesselsthatareinuseandshow
ifthereisademandfornewequipmentandrepairs.Theproductshavedifferentlife
expectancy,soitisimpossibletodoarealisticcalculation,however,thesefigurestellus
allowustolooselyestimatethesizeofthemarket.
BCFerries:40vessels
Seaspan:64vessels
AtlanticTowing:4vesselsand16tugs
SecundaMarine:15vessels
CanshipUgland:9vessels
Nautisol:3vessels
CanadianNavy:29vessels
CanadianCoastguard:114vessels
50|P a g e
Teekayoperates158vessels,butpurchasesarenotmadeinCanada,andtherefore,arenot
includedinthisestimate.Lookingatthesenumbers,itispossibletoclaimthatKMhasthe
opportunityofdoublingthenumberofvesselswiththeirproductswithintheCanadian
market.
MarketingMix
Asuccessfulmarketingentrydependsonawell‐developedmarketingmix.Themarketing
mixisbasedontheclassic4P’swithsomechangestobetteradapttotheB2Bmarket.In
theconsumermarket,the4P’sare:promotion,price,placementandproduct.Wewillfocus
onthe“TheTrue4P’sofB2Bmarketing”(Evancar,2009).
• Prospect:Thecustomer’sneedthatcreatesanopportunity.
• Promise:Thefaculty/intimacyargumentforwhyyouaresuperior.
• Product:Deliveringthepromisedproduct/service.
• Position:Thesumofadvantagesthatiscreatedoveryourcompetitionbydoingthe
threeotherP’swithexcellence(TheCornucopiaGroup,2009).
Prospect
Theshippingindustrycreatesaneedforthecustomerstohavetop‐notchequipmentwhen
theyareatsea.Theindustryisglobal,andalldowntimeonvesselisexpensivefortheship‐
51|P a g e
owner.Theneedforreliableservicesandhighqualityproductsarethereforecrucial
aspectsofselectingavendor.Understandingthecustomer’sneedsisanimportantfactorto
succeedinanybusiness.ThemarketKMoperatesinhasvariouscompetitorsoffering
similarproductsandservices.Awaytodifferentiateandbecometheclearchoiceinthe
marketisthroughadaptingindividualservicestoeachcustomer.Offeringcustom‐made
servicescreatesauniquebuyingreason,whichwillsuitKM’svisionofcommittingtothe
customer’sneeds,aswellasadjustingtotheCanadianmarket.
Promise
Tosucceed,KMmustkeepthepromisestheypromote.Bydoingthis,thecompanywill
buildareputationasreliableanddependable,animportantfactorintheshippingbusiness.
OnKM’swebsitetheystate:
“Webelieveinqualityinallaspectsofourbehaviors,andwillstrivetoconsistentlyproduce
reliablesolutions.”
“Wecommitourselvestothecustomer’sneedsandtheorganization’saims.”
“Wetakepersonalresponsibilityforcustomerissuesandensurefollowup.”
“Wearethereforourcustomers.”(KongsbergMaritime,2009).
52|P a g e
Theseareallgoodvaluesforacompany;however,someofthemarenotfulfilledas
promised.Byperformingcontinuouspromotionthroughtradeshows,events,conferences
anddirectsales,KMcanenhancetheirreputation.
Product
KMprovidestechnologyequipmentforvesselsincargoandpassengersboats,withawide
rangeofmarineelectroniccomponentsandparts.AccordingtoKM,thismakesitpossible
tooffer“TheFullPicture”totheircustomers.CombiningKM’sproductswiththeirexpertise
willsavecustomerstimeandmoney,sincetheythenareconnectedtofewervendors.The
vesselswillbefullyequippedwithproductsthatfunctionwelltogetherandarefamiliarin
caseofrepairsorupgrade.
Position
Bypositioningthecompanyasaproviderofqualityproductsfrom“TheFullPicture”
programwithlong‐termservicegoals,KMwillbeabletocreatealingeringrelationship
thatwillhavepositiveeffectonthecooperationbetweenthebusinesspartnersandthe
developmentofnewtechnology.Theoptionofstrategicpartnersandmoreagenciesto
managelocalissueswillhelpthecompany’s’visibilityinthemarket,especiallywhen
consideringsmallercustomersseekingface‐to‐facemeetings.
53|P a g e
Porter’sGenericStrategies
Acompanypositionsitselfbyleveragingitsstrengths.Porterhasarguedthatacompany’s
strengthfallsintooneofthetwocategories:costadvantageordifferentiation.Byapplying
thesestrengthsinabroadornarrowscoop,youwillgetthreegenericstrategiesasaresult:
costleadership,differentiationorfocus(QuickMBA,2009).
Withcostleadershipstrategy,thecompanycanselltheirproductsatpremiumprice
gainingahigherprofitthanitscompetitors;theycanalsoselltheirproductswithalower
margintoconqueralargermarketshare.(QuickMBA,2009)
Withdifferentiationstrategythecompanyoffersaproductwithuniqueattributesvaluable
tothecustomer.Auniqueandvaluedproductthecompanycanbesoldatpricepremium.
(QuickMBA,2009)
KMfollows,andshouldcontinuefollowingdifferentiationstrategy,sincethecompanyhas
thestrengthsrequired.Someofthestrengthsneededforthisstrategyare:strongresearch
skills,highlycreativeandskilledproductdevelopmentdepartment,astrongsalesteamand
agoodreputationfortechnicalquality.KMismorefittedtobeinthiscategorythanina
costleadershipstrategy.
Tomaintaincurrentmarketposition,KMneedstofocusonitscurrentreputationinthe
industry.Byenrichingtheserviceexperience,KMcanachievebetterloyaltyamongtheir
customersandreceivethebenefitsofmaintainingtheirmarketshare.Toachievethis,KM
54|P a g e
canbenefitfromhavingadeeperunderstandingoftechnology,exceptionalsales
representationandinternationalexperienceinacompetitivemarket.
Strategy
Introduction
ResearchshowsthatKM’sgreatestopportunityforimprovementliesintheirapproachto
service.ArecommendedstrategyforKMisaplanofactionconsistingof3mainpoints
aimedtoprovidethedegreeofserviceandproductofferingthatKM’scustomersprefer.
KM’scustomerscommentedonthelackofface‐to‐facedealing,andhow,whenpresent,it
helpedtoestablishsomeoftheinterpersonaltrustthatisavitalpartofbusinessdealing.
ThisreportwillthereforefirstoflookatincreasingvisibilityinVancouver,coveringthe
regions.Itwillbefollowedbyindepthlookatimplementingcertainserviceguidelinesto
helpestablishbetterconnections.ThelastpointforKMwillbesearchingforanalliance.
ThesepointsarealltieduptoKM’swishtoprovidethe“FullPicture”.
Strategy#1PresenceinVancouver
KMhasabroadrangeofcustomers.Long‐termcustomers,suchasTeekay,canbe
categorizesasmostloyal.Theyaremostcosteffectivetokeepastheyprovideasteady
55|P a g e
sourceofincome.SinceTeekayisdeeplyinvolvedwithKM,itwouldbecostprohibitivefor
acompetitortostealtheclient.However,KMalsohassmallerorlessinvolvedcustomers
knownascommoditybuyers.Theseclientswilloftenchangesupplierwithlesshesitationif
thesuppliercanofferthemabetterormoreconvenientdeal.KMneedsastablestrategyto
attractbothkindsofcustomerstomaintaintheircurrentpositioninthemarket.(Das
Narayandas,2005)
WhenmarketingtoacustomerinaB2Benvironment,itisoftenhardertosegmentthe
market,asbusinessesoftenhavemoreuniqueneedsandpreferences.(DasNarayandas,
2005).
Asresearchshows,customersinthePacificregionstatedthatcommunicationwithKM
couldattimesbedifficult,andsomeformercustomersactuallyfeltignored.
OursolutiontotheseclaimswouldbetoestablishourownagentintheVancouverarea.
Thiswillhelptoenforcetheaccessibilityforsupportandprovideanopportunitytostart
reestablishingKM’simageasasuperiorserviceproviderinB.Cwithapresencethat
potentialcustomerswouldnotice.
Someoftheagent’sdutieswouldbetoprovideKMwithafaceinthecitieslikeVancouver,
VictoriaandSeattle.Itwouldalsoestablishamoredirectcommunicationschanneltothe
majorofficesinCanadaaswellasNorway.Lastly,theagentwouldprovidemore
comprehensiveafter‐salesproductinformationandpersonalfollowupserviceasthiswas
statedasadealbreakerinformerKMdealings.
56|P a g e
Strategy#2ServiceImplementation
Increasefrequencyofcommunicationandchoiceofmedium
Byhiringagents,itispossibleforKMtoachievebettercommunicationwithsmaller
companiesaswellasthemoreestablishedones.Someofthedissatisfactionconcerningthe
relationshipbetweenKMandtheirbusinesspartnersisalackofface‐to‐facemeetings.By
increasingthelevelofcommunicationandadoptingamorepersonalapproach,KMwill
lowertheriskofmisunderstandingsandcreateasettingwherethecustomersfeelmore
appreciated.ThiswasoftenmentionedasKM’s“achillesheel”.
Createafeedbackchannelforcustomers
Communicationandfeedbackfromcustomersareimportant,andshouldbehighly
prioritizedwhendevelopingstrategies.Theagentsmayusetheiradvantageasthelink
betweenthetwopartiestohandlethefeedbackfromcustomers.Thiswaythefeedbackwill
bemorerepresentative,asthecustomerswillnotbeindirectcontactwithKM,and
thereforehaveachancetospeakmoreopenly.Arepresentativeforbothcompanieswill
alsohaveadeeperunderstandingofbothsidesandwill,therefore,haveachanceto
presentproblemproperly.
Anotherwayofimprovingthefeedbackchannelsmaybetocreatebetterwebsitelayout
wherecustomerscanshareortakepartinproblemsolutions.Eachcustomerhasdifferent
needs,andtheseshouldbehandledrespectfully.Bylaunchingawebsitelayoutwhere
57|P a g e
customerscansharetheirexperiences,youalsocreateaneasywayforthecustomersto
reachappropriatecompanypersonnelandexpresstheirneeds,perceptionsandcomplaints
(Kotler&Keller,12.ED,p.160).Apositiveoutcomefromthistoolisthatitenablesafeeling
ofinclusionandcaretowardsthecompany,whichcancreatemoreloyalcustomers,aswell
asdevelopingmoresuitablesolutionsforbothparties.
Internalmarketing
InternalMarketingfocusesonorganizationalcultureandvalues,animportantpartofthe
strategyinordertocreatemorededicatedandpassionatepersonnel.Thisisalsoapartof
organizationalstrategythathelpstostrengthencompetitiveadvantages.Bytrainingthe
stafftoachievebettercommunicationskillsandunderstandingofcustomer’svalues,KM
canimprovetheirpositionasaserviceprovider.Inthisindustry,thefocusonserviceand
personalrelationshipsismostimportant,sincetheproductsarecanbeinterchangeable.
Strategy3–Strategicalliances
Selling“TheFullPicture”
AproblemthisreportaddressesistoinvestigatehowKMcouldbetterofferthe“TheFull
Picture”totheirexistingcustomers.KMexplainedthattheirproductsarelogically
combined,howeversomeofthemhaveabettermarketingpositionthanothers.Inother
58|P a g e
words,someoftheproductsdonotsellaswellastheyshould,leavingKMshortof
achievingthisgoal.
ResearchhasshownthatKM’sclientsdidnotperceiveTFPinthewaythatKMenvisioned.
AreoccurringstatementwasthatKM’sfullpackagewasahorizontallineofproductsthat
wasrelativelyautonomousfromeachothercomparedtowhattheclientsreferredtoasa
preferredpackagedeal.Thetrendinourresearchwasthattheclientswerelookingfor
verticalsystems,toptobottom,thathadbeenfullyintegratedinterfaces.Asmentionedby
multipleinterviewees,thisespeciallyconcernedthedifferentialpositioningandreference
systems,power,generatorsandpropulsion.IfKMcoulddeliversuchaverticalpackage
throughanalliancewithathirdparty,itwouldopenuptheopportunitytotieengine
monitoring,engineconditionmonitoringandothersystemsmoreflawlesslyintoTFP.
IntroductionforCooperation
AnalternativeforKMistoimprovetheirpositionintheCanadianmarketthrougha
strategicalliancewithacompanyservingshipswithothercomponents.Throughsucha
measure,thegapbetweenKM’svisionof“TheFullPicture”,andwhattheclientsactually
envisionedasa“FullPicture”couldvanish.
Asystemthatparticularlywasmentionedinseveralinterviews,concentratedonthe
claimedinterfacingproblemsbetweenDynamicPositioning/Referencesystemsand
Propulsion/Generators.Theresearchteamhaslookedintocompaniessuitablefortherole
59|P a g e
ofalliancepartnerswithKMtoprovideastartingpointinsuchaprocess.Outofthe
existingcompaniesthataregettingpositivereviewsoftheirpackagesSiemensappearsto
beoneofthebetterexamples(Siemens,2009).
Potentialpartners
TheidealcooperationforKMiswithanothercompanythathassimilarvaluesandgoals,no
directlycompetingproducts,andanidealgeographicdistance.Leadingcompaniesinthe
fieldofenginesandpropulsionthatcouldbesuitableforKMtocooperatewithare:
MANDiesel
MANDieselisamongthetopsuppliersintheworldformedium/largedieselengines,
generators,superchargersandCPpropellerswith7,000employeesworldwide(MAN
Diesel,2009).AccordingtoanestimatebyWärtsiläAS,MANDieselhasamarketshareof
24%ofthemediumand81%ofthelowspeedenginemarketin2008(Wärtsilä,2009).
WärtsiläAS
WärtsiläisadirectcompetitortoMANDieselwith18,800employees’worldwide,net
revenueof$7,26billionin2008,andcurrentlyaimsforagreenprofile.Accordingtotheir
ownestimatetheyhaveamarketshareof37%ofthemediumand15%ofthelowspeed
enginemarketsrespectively(Wärtsilä,2009).
60|P a g e
MAK
SituatedinHamburg,Germany,MAKwasacquiredbyCaterpillarInc.in1997(MAK,2009)
andisconsideredthethirdlargestsupplierofmediumspeeddieselenginesforships
worldwide,withanestimated23%ofthetotalmarketshare(Wärtsilä,2009).
Allthecompaniesconsideredcould,tovaryingdegrees,fulfillwhatisrecommendedfor
KM.However,Wärtsiläprobablyisthebestpotentialpartner,sincetheycoverbothlow
andmediumspeedenginesinawidevarietyofsizes,aswellasfocusingonenvironmental
sustainability.Theyhavealsoactivelyvoicedinterestinapartnershipthatcanallowthem
tooffermorecompletepackagestocustomers.
“FullPicture”Competitors
ApotentialpartnershiptowardsaverticalfullpackagewillputKMinapositionwherethey
couldcompetedirectlywithfullsolutioncompanies.Threecompaniesthatareprominent
basedonourresearchare:
Converteam
Converteamprovidecustomizedsolutionstoconvertelectricalenergythroughoptimum
applicationoftechnology.Theyofferdriveandautomationpackagesthatinterfacewith
andintegratewithmechanicalsystemsandnavalarchitecture(Converteam,2009).
61|P a g e
MitsubishiHeavyIndustries
ConsideredamajorcompetitorbyWärtsiläAS,MitsubishiHeavyIndustriesdeliversalarge
rangeofproductsfromelectronicsystemstopropulsionenginesaswellas
underwater/camerasystemsthatcompetedirectlywithKM’sproducts(Mitsubishi,2009).
SiemensMarineSolutions
SiemensMarineSolutionsdeliversfullelectronicsystemandenginepackagesforboth
electronicanddieselengines(Siemens,2009).
ApproachinganAlliance
KMshouldfirstsetupsomeshort‐termgoalswhenapproachinganalliance.Inthisreport
itisrecommendedthatKMdecideonwhowouldbetheiridealco‐operationalpartner.
Moreoverinitiatedialogtoestablishthegroundrulesinthepartnershipandalsorunatrial
periodarenecessary.Asalong‐termstrategytheyshouldlookintoanalliancewherethey
sharetechnology,serviceexperienceandindustryknowledgetoreachthegoalasthebest
integratedfullsysteminthemarket.
WithregardstoWärtsiläitwouldleadtoanexpandedmarketaccessastheyhaveastrong
presenceonallcontinents.Thecooperationcanpotentiallyinvolveoptimizinginterfacing,
simplifiedservicedealsordevelopingnewandimprovedproducts/services.Ultimately
62|P a g e
providingKMwiththeabilitytodeliverwhattheircustomersintheCanadianmarket
perceiveasthe“FullPicture”.CooperationcouldbelimitedtotheCanadianmarketfirstas
atrialmarket,butifsuccessful,canthenbeappliedtoothermarkets,asitisaglobal
marketsphere.
Sincebothcompaniesinthepartnershipdonothaveanycompetitiveproducts,itmakes
theriskofspilloverratherlowandallowsamovementtothecontractualagreements.
Theroleoftrustplaysalargepartincontractualdealing,whereaddeddetailingcan
increasesuspicionandlessenthevalueofhumaninteraction.Thereisacorrelation
betweenpersonaltrustandcorporatetrustinsideanalliance,whichsuggeststhatKMmust
improvetheircurrentaftersalesserviceforsuchanalliancetoworksuccessfully.
Wärtsilä
TheindustryconventionMaritechwasheldduringthetimeoftheteams’finalresearch.A
lowerlevelrepresentativefromWärtsiläMontrealinformedtheteamthateventhoughhe
couldnotprovideconclusiveanswers,Wärtsiläconsidereditself“abroadmindedcompany
openforsuggestions”andiscertainsomeonewillfurtherdiscussaproposalfor
cooperationwithKMifrequested.
Asalong‐termstrategy,KMcouldconsidertocombinerespectiveserviceofferstotheir
package,creatingapresenceinmostoftherelevantareasoftheworld.Aquotefromoneof
63|P a g e
theresearchintervieweeswasthatthecompanyLipsWaterjets,ownedbyWärtsiläcould
beconsidereda“matchmadeinheaven”ifeveralliedwithKM.
Conclusion
Theconclusionisthattheshort‐termgoalforKMshouldbetoestablishapresencein
Vancouver,VictoriaandSeattlethroughanagentinBC,preferablyinVancouver.A
proactiveapproachshouldbetakentowardsbuildingpersonalrelationshipsthatwould
strengthenestablishedconnectionswhilewearingdownresistanceofpotentialclients.KM
shouldalsolookforapartnertoprovidetheactual“FullPicture.”
Inalong‐termperspective,KMshouldaimatbuildingtheirreputationasthenumberone
serviceproviderintheareaandtheindustry.Inadditiontheyshouldalsoaimatbecoming
amajorproviderofintegratedsystemsthatcanpowershipsfromtoptobottom
seamlessly.Finally,ifsuccessful,beabletoworktogetherwiththeirpartnerstohavea
presenceallovertheworld.
64|P a g e
FinancialEstimates
ToestablishasuccessfulanalysisoftheCanadianmarket,thefinancialriskofthe
expansionhastobeasclearandasspecificaspossible.SinceKMalreadyhasanestablished
positioninCanada,thisresultsinapositiveimpactonourfinancialmodel.Someofthe
majorcostsofenteringanentirelynewmarketcanbeavoidedsinceamajorityofthe
competencefromtheofficeinHalifaxcanbeappliedinsettingupanofficeinBCwithan
agent‐representingKM.
Fixedcosts
Establishingagenciesandofficesinnewcitieswilladdfixedcoststothebudget.Itis
recommendedtoopenanofficeinVancouver,withanagenthandlingsalesandservicein
theregion.HerearepriceestimatesforsettingupanofficeindowntownVancouver:
Startupcosts:
• Furniture $6000
• Officesupplies $6000
• Decorations $1000
• Deposit $1500
65|P a g e
RunningcostsNumbersarebasedonaveragesintherespectivecategories:
• Averagesalaryforasalesrepresentativeisapproximately$50,000annually
(CanadaVisa,2009.)
• Anaverageofficelocationcosts$2500–3000permonth(Craigslist,2009)
• Assumedofficesupplycostsof$100permonth.
• Utilitiessuchashydro,phone,internet,insurance$150eachmonth(Novus.ca,2009
andBCHydro,2009)
Variablecosts
Forvariablecosts,tripsbetweenVancouver–Victoriaisamajorcostposting.Aroundtrip
isestimatedat$268(harbor‐air.ca)plusdrivingexpensesandwouldlikelybemade
between2–5timesperyeardependingontheprogressingettingB.Cferriesbackasa
customer.Apartfromthat,mostofthecustomersinB.Carelocatedatwalkingordriving
distancefromadowntownoffice.
Income
OurprojectiondoesnotincludearevenuemodelforBCaswewillmainlyfocuson
rebuildingKM’sserviceimagefirst.Butwebelievethatoursuggestedstrategywillre‐open
theB.Cmarket,whichwillinturnprovideKMwithamorelong‐termsourceofincome.
66|P a g e
Annualestimatedincome
Timerangebetweenupgrades
• Softwareupgradesaredoneeveryyear
• Navigationsystemsareupgradedevery4thyear
• DPsystemsareupgradedevery8thyear.
• Radarsareupgradedevery10thyear
Estimatedupgradescostforeachproduct
Wehaveestimateda5%upgradecoastonKM’sproducts.The5%isestimatedbasedon
minimumpriceofKM’sproducts($300.000).
Shorttermcategory
• Lessthan12months.
• Newproductssoldtocustomers(Thefullpicture,aswellassingleproducts).
• Smallserviceprojectssameyear.
Longtermcategory
• Morethan12months.
• Fullservices.
67|P a g e
• Futuresales.
Totalcostforanagent
Salary 50000
Furniture 6000
Officesupplies 6000
Decorations 1000
Deposit 1500
Rent 36000
Utilities 1800
Officesupplies 1200
Total $103500
68|P a g e
Company: NumberOfVesselsBCFerries 40Seaspan 64Pacificcoasttotal: 104Nautisol 3BCFerries Short‐term Long‐term
$150,000 $450,000 Seaspan Short‐term Long‐term
$90,000 $870,000 Nautisol Short‐term Long‐term
$1,200,000 $600,000Total:$1,440,000 $1,923,000
WithoutNatisolasacustomer Short‐term Long‐term
$240,000 $1,320,000 WithoutBCFerriesandNautisolascustomers: Short‐term Long‐term
$90,000 $870,000 WithoutBCFerriesasacustomer: Short‐term Long‐term
$1,290,000 $1,470,000
ThesefiguresarebasedonaminimumincomeofplacinganagentinVancouver.Thecostof
thisisestimatedtobe$103.000annually.
• IfKMachievesbothNautisolandBCFerriesascustomers,theestimatedincomeof
thefirstyearwillbe$1.440000.
• IfKMachievesBCFerriesback,butdoesnotsignNautisolasacustomer.The
incomeisestimatedtobe$240.000.
• IfKMfailswithbothNautisolandBCFerriesasacustomertheywillearn$90.000.
69|P a g e
• IfKMgetsNautisol,butlooseBCFerries.Theywillhaveanestimatedincomeof
$1.290000.
Conclusion&Recommendations
Thisreporthascompletelybeendevelopedfromthedefinedresearchproblem:
“HowcanKongsbergMaritimepositiontheirproductsbettertobeabletoprovidetheir
customerswiththeFullPicture.”
Forthereporttoprovideacorrectansweroftheresearchproblem,informationwas
collectedfromvarioussources,including,interviews,andelectronic,printedandacademic
sources.Combinedwithrelevanttheoriesfrominternationalmarketing,KMwasanalyzed
forthetopicathand.
Afteranalyzingthecollecteddata,aSWOTanalysiswasconductedtodetermineKM’sgoals
andtospecifyanddeterminethestrategicproblemdefinition:
“HowcanKongsbergMaritimeimprovetheircurrentpositionintheindustry,inadditionto
conquernewmarkets,resultinginKMoffering“theFullPicture.”
TheSPDwasfurtherdefinedthroughacombinationofkeysuccessfactor,firmspecific
advantagesandaGAPanalysis.
70|P a g e
ThereportthenfocusesonthevariouscoursesofactionthatareproposedtoKM.The
recommendedstrategyforKMisestablishingastrategicalliancewithacompanywhowill
supplementKM’sproductlinewithmechanicalproducts,whichcanresultinKMoffering
theircustomerstheirvisionofthe“FullPicture.”ThecompanythatisfoundtosuitKMbest
isWärtsilä.Thecompanyisofsubstantialsize,withinternationalexperienceandtopofthe
linemechanicalproducts.ThiscooperationcouldbelimitedtotheCanadianmarketatfirst,
andifsuccessful,beimplementedasapartofKM’sworldwidesolution.
ForKMtosucceedwiththeproposedstrategy,thereareseveralkeyaspectsthatwill
requireKM’sattention.Thefollowingisrecommended:
TheresearchwasperformedwiththegoaloffindingasolutiontoofferwhatKMcalls“The
FullPicture”.Duringtheanalysisofthematerial,itbecameevidentthattheunderlying
concernsamongcustomerswereKM’scustomersupportandfollowuproutines.Several
strategieswereconsidered,howeverwerecommendthisthree‐stepstrategytobringKM
totheirdesiredpositioninaeffectivemanner.Thestrategyentitlesfirstestablishinga
presenceinVancouverandtheborderingcitiesthroughanagent,combinedwithapro‐
activeapproachtothecustomers,withfrequentvisitsandfollow‐ups.Thisaddressesthe
mostcommonclientconcerns.
Secondlyitwillberecommendedtomakeaservicestatementinsidethecompanyaimedat
improvingtheservicevisionandcommunicationbothoutwardsandbetweenKM
branches.ThirdlyKMshouldstartlookingforapotentialpartnerinthemarketof
generators,propulsionandpropellersinordertoaddressthe“TheFullPicture”goal.Asa
71|P a g e
partofstep3inthestrategyincludesthecompanyprofileofWärtsilä,acompanywitha
suitableprofileforapotentialpartnership.Wärtsilä’sproductlineisaperfectfit,andthey
havealsomentionedinterestinpartneringupwithothercompanies.
Discussion
Thisreporthasbeendevelopedbyusingresourcesavailablethedeterminedtimeframe.
ThefollowingsectionisthecriticismaswellassuggestionsforfurtherresearchforKM.
Criticism
Thisreporthadlimitationsregardingtheprocessofgatheringdata.Severalbarriershave
occurredduringthemakingofthisreport,however,thesehavebeenovercome.
Informationneededwasnotavailablethroughtraditionalresources,theresearchteamhad
tomeetvariousemployeesintheindustry.DatafromKM’scustomerswastimeconsuming,
butapprehendedwhileKM’scompetitorsinformedthattheinquiriesweretoosensitive.
VariousshipyardsintheVancouverandVictoriaareawerecontacted,however,noneof
theseprovidedanyresponse.
DuetothegeographicaldimensionofCanada,theabilitytoreachallofKM’scustomerswas
challenging.Thismadepartsofthereportrelyonphoneandemailinterviews.Thiscaused
72|P a g e
problemsinthesenseofshortanswersanddifficultiesreachingtheappropriate
employees.
However,KM’scustomerslocatedinBC,weremorethanwillingtomeetandprovided
usefulandindepthinformationtothisreport.
Suggestionsforfurtherstudies
Thisreporthasconductedresearchessentialforthetaskathand,andforthecompleteness
ofthereport.ThealternativesforfurtherstudiesaresubjectsthatKMcanlookintoand
learnmoreabout.
Pacificcoastmarket
Lookintothepacificcoastmarketandseeifthereispotentialforfurtherexpansion
totheUS.ThereareafewimportantportslikeSeattleandSanFranciscoonthewest
coastwithtraffictoandfromAsia.
Strategicalliance
Lookintotheoptionofanalliancewithamanufacturerinthepacificcoastto
improvetheservicetothecustomersbasedonthePacificcoast.Lookintooptions
regardingwhotheperfectalliancewouldbeandthecostsofgoingintoanalliance.
73|P a g e
References
Aitkin,Alan,Canadianregionalmanager,Sperrymarine,emailQ&A
BCFerriesauthority(2009),homepage,RetrievedfromApril2009http://www.bcferryauthority.com
BiongogNes:MarkedsføringpåBedriftsmarkedet,Tano‐Aschehoug2003
Canadiancoastguard(2009),homepage,retrievedfromApril2009http://www.ccg‐gcc.gc.ca/eng/CCG/Home
Canadiannavy(2009),homepage,retrievedfromApril2009http://www.forces.gc.ca/site/home‐accueil‐eng.asp
Canadiangovernment(2009),Canadiansalarycalculator,retrievedfromMay2009,http://www.canadavisa.com/canadian‐salary‐survey.html
Canshipugland(2009),homepage,retrievedfromApril2009:http://www.canship.com/CUL/about.html
Craigslist(2009),officeindowntown,retrievedfromMay2009,http://www.craiglist.com
DepartmentofJustice,Canada(2009),retrievedfromMay2009,http://www.justice.gc.ca/eng/dept‐min/pub/just/05.html
Dewan,Raj,technicalmanagerSeaspanLTD,personalinterview,interviewerGilbertLundeandLasseAlfsvaag
Equitymaster(2009),Investorsbestfriend,RetrievedfromApril2009http://www.equitymaster.com/research‐it/sector‐info/ship/
Euromonitor(2009),passport,FactsaboutCanada,retrievedfromApril2009:http://www.portal.euromonitor.com.proxy.lib.sfu.ca/passport/ResultsList.aspx
Foreignaffairsandinternationaltrend(2009),tradeagreements,retrievedfromMay2009Canada:http://www.international.gc.ca/trade‐agreements‐accords‐commerciaux/agr‐acc/index.aspx
GestelandRichard:CrossCulturalbusinessbehavior:negotiation,selling,sourcingandmanagingacrosscultures,Copenhagenbusinessschool2005,
Gilles,John,KongsbergmaritimeHalifax,interviewsoveremail,questionsoverthephone.
Harbour‐Air(2009),travelfromVancouvertoVictoria,retrievedfrom2009http://www.harbour‐air.com/
74|P a g e
HofstedeGeert(2009)culturaldimensionsCanada,retrievedfromApril2009http://www.geert‐hofstede.com/hofstede_canada.shtml
InternationalMarketingStrategy4thEdition,FrankBradely
Kongsberggroup(2009),Historyhomepage,retrievedfromMay2009:http://www.kongsberg.com/en/KOG/AboutUs/History/1814‐1955.aspx
KongsbergMaritime(2009)homepageFactsretrievedfromMay2009:http://www.km.kongsberg.com/ks/web/nokbg0237.nsf/AllWeb/0B29D39758C415B0C1256DF700560834?OpenDocument
KongsbergMaritime(2009),homepageproducts,retrievedfromMarch2009:http://www.km.kongsberg.com/ks/web/nokbg0240.nsf/ProductAreaListingKongsberg?ReadForm
KongsbergMaritime(2009),homepageUSNavy,RetrievedfromMay2009:http://www.km.kongsberg.com/ks/web/nokbg0238.nsf/AllWeb/A856FACF324AF101C125708C002AA7C3?OpenDocument
KongsbergMaritime(2009),homepagevision,retrievedfromMay2009:http://www.km.kongsberg.com/ks/web/nokbg0237.nsf/AllWeb/957CC88032C0F154C1256E3600327614?OpenDocument
MANDiesel(2009)homepage,retrievedfromApril2009,http://www.mandiesel.com
Marisec(2009),Shippingandworldtrade,retrievedfromApril2009:http://www.marisec.org/shippingfacts/worldtrade/index.php
MichelangeloCelliofTheCornucopiaGroup.(N/A).“TheTrue4P’sofB2BMarketingforCEOs”.RetrievedApril2009,fromhttp://www.evancarmichael.com/Marketing/961/The‐True‐4‐Ps‐of‐B2B‐Marketingfor‐CEOs.html
MitsubishiHeavyIndustries(2009),homepage,retrievedfromApril2009www.mhi.co.jp/en
MurphyDwayne,Secundamarineservice,interviewoveremail
NaryandasDas,buildingloyaltyinbusinessmarkets,September2005,HarvardBusinessschool,page1‐9.
Nautisol(2009).Homepage,retrievedfromApril2009http://nautisol.com/?aboutus
NorthropGrumman(2009),homepage,retrievedfromApril2009http://www.northropgrumman.com/about_us/index.html
Officefurnisher(2009),furnituretotheoffice,retrievedfrom2009,http://www.officefurnitureuniverse.com/default.aspx?af=1315?af=1315&s_kwcid=office%20furniture|2684179736
75|P a g e
PetrozziAndrew,BusinessinVancouver,issue1016,April14‐29,2009,BCFerries:http://www.bcferries.com/
Quickmba(2009),Porter’sfiveforces,retrievedfromMarch2009:http://www.quickmba.com/strategy/porter.shtml
Quickmba(2009),Porter’sgenericstrategies,RetrievedfromApril2009:http://www.quickmba.com/strategy/generic.shtml
RadioHolland(2009),homepage,retrievedfromApril2009,http://www.rhme.co.ae/
RasmussenE.S,Madsen.T.K,2002,TheBornGlobalconcept,paperfortheEIBAconference,December2002,universityofSouthernDenmark,departmentofmarketing.
RusdalTerje2009,personalinterviewwithTerjeRujdalinTeekay,interviewersHenrikLysdahlandLasseAlfsvaag
RutterTechnology(2009).Homepage,retrievedfromApril2009:http://www.rutter.ca/product/products/pr_prdcts_over‐txt‐main.asp)
SeaspanLTD(2009).Homepage,retrievedfromMarch2009:http://www.seaspan.com/default.htm
Secundamarineservice(2009),homepage,retrievedfromMarch2009:http://www.secunda.com/history.htm
SiemensMarineSolutions(2009),homepage,retrievedfromApril2009http://www.industry.siemens.com/Marine/en/
Sperrymarine(2009)Homepage,retrievedfromMarch2009:http://www.sperrymarine.northropgrumman.com/
Sperrymarine(2009),Sperrymarinebudget,retrievedfromApril2009:www.northropgrumman.com/.../corporate‐responsibility/pdf/2007‐corporate‐social‐responsibility‐report.pdf‐2009‐02‐19
Sperrymarine(2009),Sperrymarinefacts,retrievedfromApril2009:http://www.sperrymarine.northropgrumman.com/Company‐Information/Welcome
Stratfordglobalintelligence(2009),TheShippingIndustryandtheGlobalEconomy,retrievedfromApril2009:http://www.stratfor.com/analysis/20090428_shipping_industry_and_global_economy
Teekay(2009),homepageFacts,retrievedfromMarch2009:http://www.teekay.com/index.aspx?page=news_centre_quick_facts
Teekay(2009),Teekayhomepagefleet,retrievedfromApril2009:(http://www.teekay.com/?page=fleet_list)
Teekay(2009),Teekayhomepageindustry,retrievedfromApril2009:http://www.teekay.com/index.aspx?page=the_industry
76|P a g e
Teekay(2009),Teekayhomepageoil,retrievedfromApril2009:http://www.teekay.com/?page=oil
Teekay(2009),Teekayhomepageoverview,retrievedfromMarch2009:(http://www.teekay.com/index.aspx?page=corporate_overview)
TheCanadianencyclopedia(2009),ShippingIndustry,retrievedfromApril2009:http://www.thecanadianencyclopedia.com/index.cfm?PgNm=TCE&Params=A1ARTA0007364
Vancouverdrydock(2009),homepage,retrievedfromMay2009,http://www.vcrdrydock.com/
Vancouvershipyards(2009),homepage,retrievedfromMay2009,http://www.vanship.com/
Victoriashipyards(2009),homepage,retrievedfromMay2009;http://www.vicship.com/
Vigen,HansIvar,managingdirectorCanshipUgland,interviewoveremail
WashingtonMarineGroup(2009),homepage,retrievedfromApril2009:http://www.washingtonmarinegroup.com/.
WärtsiläAS(2009),homepage,retrievedfromApril2009http://www.wartsila.com/,en,investors,0,generalcontent,CC5BBBB1‐FE6E‐4E4E‐8A20‐778298FD5796,73482228‐74E5‐4348‐B3FE‐599F6BA0169F,,6100.htm
WärtsiläAS(2009)homepage,retrievedfromApril2009,(http://www.wartsila.com/Wartsila/global/docs/en/press/media_publications/annual_reports/Wartsila_Annual_Report_2008_EN.pdf
WärtsiläAS(2009)homepage,retrievedfromApril2009http://www.wartsila.com/,en,investors,0,generalcontent,CC5BBBB1‐FE6E‐4E4E‐8A20‐778298FD5796,73482228‐74E5‐4348‐B3FE‐599F6BA0169F,,6100.htm
Worldfactbook(2009),Canada,retrievedfrom2009:https://www.cia.gov/library/publications/the‐world‐factbook/geos/ca.html#Econ
77|P a g e
Appendix
Appendix1
SecundaMarineInterviewwithDwayneMurphy
Mr.MurphystartedoffbyexplainingpurchasingroutinesandhisviewregardingKM’s
products.UsuallyKMisfamiliarwiththeirequipmentontheirfleet,andhasan
understandingofSecunda’sneeds.KMusuallyprovidesrecommendationsonorderswhen
performingrepairsormaintenance.Regardingafewspecificproducts,Secundasearches
forneededproductsatleast3to4timesaweek.Duringthisprocesstheyusuallyconsider
previousordersfromtheircurrentvendor.
Whensearchingfornewvendors,thefinaldecisionisbasedoncompanyreputation,price
anddeliverytime.Iftheproductsarenotfromtheoriginalmanufacturer,Secunda
normallyrequiresthreeoffers.SecundadoesthisbysendingoutRFQ’stothreeseparate
distributors,andoneoftheseisfinallychosen.
Mr.Murphy’sviewsonKM’sproducts,isthattheyhavestateofthearttechnology,and
competewellintheindustry.MostofSecunda’spurchasesfromKMarebasedmainlyon
dynamicpositioningandjoysticksystems.HestatedthattherearenomissinglinksinKM’s
productline.
78|P a g e
Mr.MurphyinformsthatSecunda’spreviousexperienceswithKMhavebeensatisfactory;
especiallytheirservicerepairspeoplewhowerewelledtrained.
CanshipUglandCorrenspondancewithLloydButton&HansIvarVigen
CorrespondencewithbothMr.ButtonandMr.Vigenwasconductedbyemail.Thegroup
feltthatMr.Button’sresponsewasvagueandratherweak,andthereforecontactedMr.
Vigentoprovidedeeperinsight.TheyinformedthatCanshipUglandhasknownKMfor
morethan25yearsandaregenerallysatisfiedwiththeirexperiencewithKM.Weare
informedthattheyfeelthatKMdeliversgoodandreliableproductsandbuyspareparts
continuously.Mr.VigenexplainedthatCanshipUglandiscurrentlyusingnumerous
productsfromKM.However,theircontrolsystemsarecurrentlyprovidedfromRolls
Royce,whichcouldbeprovidedfromKMinthefuture.CanshipUglandstartedtheir
businesswithKMin1980whentheystartedusingdynamicpositioningsystems.
HansIvarVigen&LloydButtonagreethattheyaresatisfiedwiththecurrentservice
providedfromKM,however,theydofeelKMareexpensive.
TeekayInterviewwithTerjeRusdal,DirectorofTendering&ProjectsandPerAbrahamsen,SiteManager
WheninterviewingMr.RusdalandMr.Abrahamsen,tworepresentativesfromTeekay’s
officeinStavanger,Norwaywerepresentonconferenceall.Thissectionisthereforebased
79|P a g e
oncommentsfromfourrepresentativesfromTeekay.
OurteamwastoldthatTeekaychosevendorsbasedon“habit”andpreviousexperience.To
beconsideredasavendor,yourcompanyhastobeon“makerslist”.Thisisalistofvendors
thatcansupplyproductsfornewbuildsandrebuilds.Usuallytheshipyardwillconsiderthe
optionsandmakearecommendationtotheship‐owner.Thepurchasesareusuallymadea
yearinadvance.
Teekayfoundfollow‐upfromthevendorespeciallyimportant.Fewervendorswerealso
preferred,sincefewerpointsofcontactleadstobetterefficiency,productpackagedeals
andproductcompatibility.
WhenaskinghowpurchasesatTeekayweredone,theysaidthattheshipyardgathers
offersfromvendorsautonomously,offeringaminimumofthreeapprovedvendors.Extra
vendorscanbeprovidedifrequested,butthiscostsmore.Theshipyardarranges
transportationoftheproducts,usuallybytrain,shiportrailers.Ifashipneedsan
emergencyrepair,productsaretransportedbyplanetotherequestedlocation.Theteam
wastoldthatTeekayhashadpositiveexperienceswithKMregardingtransportationof
products,anddeliverieswerealwaysontime.Teekayordersproductsthoughttheiroffices
inStavanger,Houston,GlasgowandSingapore.
TeekayusesmostofKM’sproductlineexceptcamerasystemsandaltimeters.Theproduct
linecoversmostofTeekaysneeds,howevertheysuggestedthatKMcouldimprovethe
dynamicpositioninginterfacebetweenthrustercontrolsandtheengine.Convertimewas
80|P a g e
mentionedasacompetitorthatprovidedthissolution.
WhenenquiringaresponseonpersonalexperiencewithKMproductsandservice,Teekay
mentionedthatKM’sdynamicpositioningandreferencesystemswere“worldclass”,and
thattheyoffer10yearsofsupportafterdiscontinuingaproductline.Teekaygenerally
expressedthatKMdoeseverythingintheirpowertosatisfytheirneeds,andaregoodat
followinguptheircustomers.
Howevertheymentionedsomeradarproblems.KMhastheirlogoonsub‐firmsradarandit
malfunctions.TheseradarsarecurrentlybeingphasedoutfromTeekay’svessels.Another
suggestedareaofimprovementwasthattheserviceexperiencewaspooreroutsidethe
NorthSeabasinthanwithin.TeekaymentionedthatKMcouldimproveinternal
communicationwithinregionalofficesinNorway.AfinalrequestfromTeekaywasthatKM
couldimprovetheirlogisticsofsparepartsthroughouttheworld,especiallyinBrazil,
possiblybyincreasingtheirstoragecapacityattheselocations.
SeaspanInterviewwithRajDewan,TechnicalManager
SeaspanisoneofKM’slargestcustomersinCanadawhoarelocatedinVancouver.The
teamhadameetingwithRajDewan,whoistheManagerofSeaspan,withfocusonthe
technicalaspectsofthecompany.
81|P a g e
RajinformedthatSeaspanhasnumerouswaysoffindingproducts.However,akeyaspect
wasexperience.RajexplainedthatSeaspanwouldoftendecidevendorsfrompersonal
experiencewithequipment.Butinaddition,Sespanalsosubscribetotechnicalmagazines,
surfedtheInternetandattendtradeshows.Anotherwaytheyfoundproductswasthrough
fellowpeers,socalledwordofmouthandofcoursetraditionalmarketing.
WhenSeaspanbuysnewequipment,itisoftenbecausetheyarereplacingdamagedgoods
orbuyingpartsfornewships.Theirpolicywhenbuyingproductsistofindgood,reliable
products,hopefullywithagoodvolumediscount.Seaspankeepstheirfleetsuniform;they
feelthismakesiteasierandcheapertotransfercrewfromshiptoship.
WhenSeaspanchoosesavendor,thedecisionifoftenbasedonacombinationof
experience,vendor’shistory,price,quality,aftersalesserviceandmaybethemost
importantrelationship.Rajstressesthefactthatagoodfundamentalrelationshipbetween
vendorandcustomerishighlyappreciatedinSeaspan.Seaspanoftencontactedwhatthey
perceivedasthebestvendorinthemarketandthevendorthattheyfeeltheyhavethebest
relationshipandnarroweditdowntowhichvendortheyfeelprovidesthebestproductand
service.
TheproductsSeaspancurrentlyseeasessentialfromKMaremarineautomation,
navigation,clustercontrolandvoyagedatarecorders.Mainengine,remotecontrolsand
alarmmonitoringareproductsthatSeaspancouldinthefutureseeprovidedtothemfrom
KM.SeaspanacknowledgesthattheyfeelKongsbergshouldlookintodelivering
mechanicalproductsinadditiontotheirelectronics.
82|P a g e
SeaspancurrentlyusemarineelectronicsprovidedfromKMbecausetheyhaveworked
withKMbefore,hadgoodexperienceandexperiencedgoodaftersalesservice.
SeaspanarecurrentlysatisfiedwithKM’sservice,theonlyconcernsRajinformsaboutis
thatKMhaveproblemswhendealingintheFarEast,especiallyregardingthelogistics.He
alsofeelsthatKMisslightlyexpensiveandthatKMkeepsanimpersonalrelationshipwith
Seaspan.RajfeelsthatKMhasroomtoimproveonoperatingvessels.Herecommendsthat
KMdealmorewiththeircustomersonafrequentbasis,atleastonceayear.
BCFerriesInterviewwithMarkCollins,VicePresidentEngineering
MarkCollinsexplainedthatthemostimportantthingwhenselectingamongthevendors
wastheirownpreviousexperience,howeverpriceanddeliverytimewerealsoimportant
criteria.BCferrieshas$3,5billiondollarsofassets,andfewervendorsareeasiertodeal
with.Furtherhesaidthatpotentialvendorsshouldbeonthe“equipmentvendorlist”,and
usuallythetoptwooftheseareselected.Thecontractswithvendorsaresignedtwoyears
inadvance.Thelongevityoftheproviderisveryimportant,sincetherewillbeanafter
salesserviceperiodofthevesselsfor20+years.
BCFerriescurrentlyhavehas40ships,whicharetakenoutforservice3weeksevery4th
year.Mr.Collinsemphasizedtheimportanceonadecentrelationshipwiththevendorto
getyouthroughbadtimes,notif,butwhensomethingbreaksdownaferry.
83|P a g e
Inapurchaseprocess,engineersdeterminetheneedforproducts,whilesupplyhandles
orderingoftheseproducts.Regardingexpensivepurchases,BCFerriesissuesacompetitive
requestforproposals.TheproductsareusuallydeliveredfromEurope,butalsofromthe
US,andarriveincontainersinRichmond.BCFerriesusesmarineelectronicsfromSAM
electronics,onlyonevesselisequippedwithproductsfromKM,thisbeing“Northern
Adventure”.Thevesselcamewithautomationsystems,VDRandfiredetectionsystemspre‐
installed.
WhenaskingMr.CollinsaboutKM,hestatedthattheymanufacturefirstclassequipment.
HoweverBCFerrieshasexperiencedsomeserviceissues.Whenequipmentneededrepairs,
BCFerrieshadtoputpressureonKMinorderforatechniciantoshowup.Thetechnician
showedupafterthreeweeks,noturgentenough.Mr.CollinsstatedthatheexperiencedKM
asacompanywith“nocando”attitude,andmentionedSperryasapartnerwithexcellent
service.
Furtheron,hewentintomoredetail.WhentheVDRneededannualservice,KMwouldnot
trainBCferries’serviceteamtodothis,sincetheyhaveahabitofmaintainingtheirown
fleet,withoutdependingonthirdparties.Lasttime,VDRwaspurchasedfromNovaScotia
basedRutterswhohada“cando”attitude.RutterprovidedthesoftwareCDfortheVDR
uponrequest;ittookKMayeartodothis.Mr.CollinssuggestedthatKMshouldbecome
84|P a g e
moreadaptabletoBCFerrieswayofdoingthings,andnot“theKongsbergway”ifthey
wishedtodobusinesswiththeminthefuture.
WhendiscussingvendorsingeneralwithMr.Collins,heexplainedthatsomevendorstend
tomakemistakeswithorders,whileothervendorsalwaysgetitright.Regardingservicehe
explainedthattherewasadiscussionofresponsibilitywhenequipmentbreaks,anda
furtherquestionofmoneyandpayment.SincesomanypeopleareaffectedwhenBC
Ferriesaretakenoutofservice,includingthepassengersandtheprovincialgovernmentof
BC,BCFerriesprimaryconcernisthattheferryisrepairedASAP,andthediscussionon
paymentandresponsibilitywillbetakenafterwards.
Whenaskingaboutfinancingonpurchases,Mr.Collinsexplainedthatdownpaymentsare
usually15‐20%inadvance,75%withinshipping,and5%afterequipmentisinstalledand
approved.BCFerrieshasbond‐issues,andneedstoraise$150’‐200’ayeartoupgradethe
fleet.
NautisolInterviewwithDonStein,CEO
DonSteinisfounderofthenewVictoriabasedcompanyNautisol.Mr.Steininformedthe
teamthathewillbesoonfinishedwithestablishingthefinancialcontractsneededto
furtherdevelophisgoalofdevelopingandlaunchinghighspeedpassengerferryservice
betweenVictoriaandVancouver.
85|P a g e
Whenaskedifhehaddecidedwhichvendorwouldprovidehisferrieswithmarine
electronics,DonSteinexplainedthattherehewouldonlyconsiderKM’sproducts.Mr.
SteinexplainedfurtherthathehadworkedwithKMbeforeandwashighlysatisfiedwith
hispreviousexperiences.LastlyheaddedthatcooperationbetweenKMandLipsWaterjets
wouldbeconsidereda“matchmadeinheaven,”forDonSteinandNautisol.
Appendix2
SperryMarine–EmailQ&AwithAlanAitken,RegionalManagerQ:WhatkindofproductsdoesSperryMarineoffer?
A:Weareamanufacturerofmarinenavigationequipmentforthe
commercialshippingindustryandvariousnaviesoftheworld.Our
productsaregearedtowardslargervesselsandwespecializeinanumber
ofareas,mostnotablygyrocompassesandradars.Takealookatour
websiteformoreinformationonourproductsandhistory.
Q:Whichisthemostimportantmarket?Arethereanynew
developmentswithinmarineelectronics?
A:Ourbusinessisprettymuchevenlysplitbetweenthecommercial
sectorandthemilitary,althoughcurrenteconomicconditionshavehurt
someareasofthecommercialsector,specificallynewvessel
construction.Themostnotablenewdevelopmentintheindustryisamove
86|P a g e
towards"multifunctiondisplays"wherebyonepieceofequipmentisnow
abletodomanythings.InourcasewehaveintroducedVisionmasterFT
TotalwatchwhichfunctionsasRadar,ChartRadar,ECDIS,aswellas
manyotherthings.Lotsofgoodinformationonourwebsite.
Q:Areyourproductsstandardizedorcustomized?
A:Ourfullproductlineisonthewebsite.Ninetyninepercentof
ourproductisstandardizedhoweverwedooffercustomsteeringstands
andbridgeconfigurations.
Q:WhicharethemostimportantshippingportsinNorthAmerica?
A:InCanada,Halifax,Montreal,andVancouver.IntheUS,Los
Angeles,SanDiego,Seattle,Miami,NewYork,Bostonandtheremaybea
fewontheGreatLakes.
Q:WhoareyourmostimportantcustomersinNorthAmerica?
A:USNavy,USCoastGuard,Chevron,Maersk,anumberofcruise
Lines,CanadianandUSCoastGuard,CanadianNavy,
Q:HowdoescustomersfinancepurchasesfromSperry?
A:Prettymucheverythingispaidwithin30‐90daysfrominvoice
87|P a g e
datealthoughverylargeprojectssuchasnewshipconstructionhave
whatarecalled"milestonepayments"wherebymoneyisreleasedafter
variousstagesofthetotalprojecthavebeencompleted,essentiallya
partpayment.
Q:WhatareSperry’sstrongestsellingpointsinthisbusiness?
A:Productquality,companyethics,andaworldwideservice
network.
Q:WhyshouldcustomerschooseSperryasvendor?
A:Probablybecauseofthethreeitemsabove.Sperryiswellknown
andhasanexcellentreputationwithintheindustry.
Q:Haveyouexperiencedalowerdemandforyourproductsafterthedownturninthe
economy?
A:Sofarthedownturnonlyseemstobehurtingnew
construction,retrofitworkcontinuestobestrong.
Q:Howoftendoesshippingcompaniesperformmaintenancedoneontheirelectronic
equipment?
A:Thereisroutinemaintenanceandemergencyrepairs.Someroutine
maintenanceismandatedbyregulatoryagencies,suchasinspectionsof
88|P a g e
VDR's,VoyageDataRecorders.Aswithcars,somevesselsareinbetter
statesofrepairthanothers.Someareusingjunkequipmentandsomeare
usingthebestavailable.
89|P a g e
CanadianCoastGuard–TelephoneInterviewwithSamRyan,ManagerElectronicsandInformatics
TheinterviewwithSamRyanwasconductedbyphone.Mr.Ryanexplainedfromthe
beginningthathisanswerswouldbelimitedsincesomeinformationisconsideredtoo
sensitivefortheCanadianCoastguardtoexpose.WhenspeakingwithMr.Ryan,he
explainedthattheCanadianCoastGuardhassimilarproceduresasKM’scurrentcustomers
whentheyaresearchingforvendorsofmarineelectronics.
HeinformedthatTheCCbuysnewequipmentiftheircurrentequipmentisdamagedor
needstobechangedduetomeetregulatorydemands.Acombinationoftechnicaland
financialattributeswouldbetwocriteria’sthattheCCweighwhenchoosingavendor.
Mr.RyanstatedthatheknowaboutKMandknewoftheirreputation.Theykeeptheirfleet
uniformedtomakeiteasierforcrewtoworkonthevariousships.Whichalsomeansthatif
KM’smarketsharewouldincreasegreatlyifchosenasanewvendorofmarineelectronics
bytheCC.
AcriterionthatdifferentiatestheCCfromKM’scurrentcustomersisthattheCCprefer
productwith“civilianapplication,”whichbasicallymeansthatproductsapplicableforthe
civilianpublicwouldbehighlyconsidered.
90|P a g e
HealsostatedthatfornewvendorstoestablishthemselvesintheCC,traditionalmarketing
wouldbeconsiderednormal.Facetofacemeetingswithdetailedinformationwouldmake
iteasierfortheCCtoswitchvendors.
91|P a g e
Appendix3
92|P a g e
Appendix4
Porter`sfiveforces
93|P a g e
Appendix5
GAPServiceModel
94|P a g e
Appendix6
TheBusinessTransactionModel
95|P a g e
Contacts
KongsbergMaritime261BrownlowavHalifax,NSB3B1T5Tel.24h/day+4781535535
JohnGillis,GeneralManagerTel. +1(902)468‐2268Fax +1(902)468‐2217Cell. +1(902)489‐[email protected]
SecundaMarineServicesLtd1CanalStreetP.O.Box605Dartmouth,NovaScotiaCanadaB2Y‐2W1
DwayneSmithers,PresidentTel. +1(902)465‐[email protected]
ChrisPitts,Sales&CharteringTel. +1(902)465‐3400Cell: +1(902)456‐[email protected]
SperryMarine
1‐1000WindmillRoadDartmouth,N.S.B3B1L7
AlanAitken,CanadianRegionalManagerTel. +1(902)468‐9479Fax. +1(902)468‐9480Cell. +1(902)233‐[email protected]
96|P a g e
CanshipUglandP.O.Box8274,Sta.A1289TopsailRoadSt.John's,NFLDA1B3N4
HansIvarVigen,ManagingDirectorUglandMarineServicesASTel. +4737292600Fax: [email protected]
LloydButton,VesselSuperintendentTel. +1(709)782‐[email protected]
TeekayShippingSuite2000Bentall5550BurrardStreetVancouver,BCV6C2K2Canada
TerjeRusdal,DirectorTendering&ProjectsTel. +1(604)683‐[email protected],[email protected]
SeaspanLtd.2600‐200GranvilleStreetVancouver,BCV6C1S4
RajDewan,TechnicalManagerTel. +1(604‐482‐8777)[email protected]
97|P a g e
AtlanticTowingLtd.99WyseRd.Suite1150Dartmouth,NSB3A4N5
SeanLeet,CommercialDirectorTel. +1(902)494‐5400x5404,[email protected]
WallaceFletcher,PurchasingManagerTel. +1(506)648‐2750.
CanadianCoastguardFisheriesandOceansCanada200KentSt.7S036Ottawa,ONK1A0E6
SamRyan,ManagerElectronicsandInformaticsTel. +1(613)998‐17773Sam.Ryan@dfo‐mpo.gc.ca
BCFerries1112FortStreetVictoria,BCCanadaV8V4V2
MarkCollins,VicePresidentEngineeringTel. +1(250)381‐[email protected]
Recommended
