Sustainable Competitive Advantage in
Transport by Road
A framework to identify opportunities to enhance the strategic
positioning of Dutch SMEs in the road freight industry
Rob Bruggeman
University of Groningen
Student number: 3274268
Email address: r.j.bruggeman.1@student.rug.nl
Course: Master’s Thesis BA SB&E | EBM712A20.2017-2018.2 Supervisor: Dr. C. Lutz
Sustainable Competitive Advantage in Transport by Road | 2
Abstract
Few articles have been published that specifically deal with how to support strategic analysis and management in SMEs. This study aims to develop a suitable framework for strategic analysis which can be used at firm level. The second aim of this study is to apply the proposed model and assess its usefulness and convenience in practice, by conducting cases studies on three Dutch logistic service providers. As a result, strategic options are provided with regard to the financial, physical, human, and organizational bundles of resources and capabilities of the firms. A strategic option for Bakker
Transport & Warehousing is to invest in technical knowledge by collaborating with universities and with a partnership with a software supplier, whereas an option for Netko Koel- & Vrieslogistiek is to invest in a new warehouse in the area of Zwolle-Deventer-Almelo. In case of Müller Fresh Food Logistics, the firm should improve its customer service department and become leading on customer relationship management.
Keywords: strategic management, small-medium sized enterprises, resource-based view,
Sustainable Competitive Advantage in Transport by Road | 3
Sustainable Competitive Advantages in Transport by Road
Introduction
This study focuses on the field of Transports and Logistics, a field that includes transport by road, rail, water and air, and logistic services, such as warehousing. The sector Transports and Logistics has gone through major changes during the past decade (Kindt and Van der Meulen, 2015). Two examples of critical events that have influenced the organizational decision-making and performance in this sector are the economic crisis of 2007-2009 and spectacular technological innovations. These events have affected business models indirectly. Some of these technological innovations are ‘Internet of Things’ (mainly used for process optimization) and various forms of automation (such as robotization of warehouse systems and automated guided vehicles). These innovations are relevant, since these may have an influence on the core activities, total cost and employment of firms (Kindt and Van der Meulen, 2015). Nowadays, the sector is largely recovered from above mentioned crisis, which is subscribed by an increasing volume of transporting entities and a decreasing number of bankruptcies (Buijs, 2017).
A study on the strategic positioning of firms in the field of Transports and Logistics in general and the road freight industry in particular is relevant, since the sustainability of current business models of firms in this industry is under pressure and likely to shorten. According to Kindt and Van der Meulen (2015), technological developments and changes on the demand side at the consumer level are likely to shorten the length of business models in the sector, since customers typically demand a complete logistic solution rather than a single transportation service (Kindt and Van der Meulen, 2015). This means that, in order to remain competitive, firms have to adapt new developments and focus on improving core activities and assets to differentiate. Moreover, the sector is known for its high level of competition (Rabobank, 2018; Kindt and Van der Meulen, 2015), so a critical assessment on current business models is essential to keep successful in the near future. Relevance on this topic is further acknowledged, since most logistic service providers and transportation companies do not seem to be very aware of the urgency of this topic. In a study of Kindt and Van der Meulen (2015), logistic service providers appear to have insufficient knowledge about new entrants to the market. Only a few of the questioned logistic service providers confirmed to worry about their business model. Also, these firms appear to focus on the short-term operational level, which supports the relevance of the strategic approach of this study.
Sustainable Competitive Advantage in Transport by Road | 4 and is incomplete. This study tries to overcome these problems, an elaboration will follow in the theory section. The second aim of this study is to apply the proposed model and assess its usefulness and convenience in practice, by conducting cases studies on three Dutch logistic service providers. Therefore, the research question that this paper addresses is stated as follows:
Which opportunities can be derived from applying the proposed framework to sustain and strengthen Dutch firm’s strategic positioning in the road freight industry?
From an academic perspective, this study contributes to literature in multiple ways. First, current literature on management of small and medium sized enterprises (SMEs) includes various articles dealing with strategic analysis (Rangone, 1999). The resource-based view is frequently applied in the literature including Barney (1991), Grant (1991), Amit and Shoemaker (1993) and Sanchez et al. (1995). However, there is not much attention paid on how to support entrepreneurs and
management when it comes to strategy analysis (Rangone, 1999). That is, the resource-based view provides information about a company’s endowment of resources and its potential for long-term competitiveness, but it does not provide supporting guidelines for the company’s strategy. According to Rangone (1999), the resource-based view is mainly applied among large firms. Therefore, Rangone (1999) developed a framework that can be used when studying SMEs. Her framework involves the following steps: (1) definition of the company’s strategic intent and key performances, (2)
identification of the company’s resources influencing the key performances, (3) assessment of the strategic value of resources, (4) assessment of the strategic consistency of resources, and (5)
generation of strategic options. However, the framework as developed by Rangone (1999) consists of three conceptual problems, which is the basis of the contribution to literature of this study. Therefore, the first sub question in order to be able to answer the main research question adequately is formulated as follows:
Sub question 1: How can existing conceptual problems in Rangone’s framework be solved?
The first problem is about the variable strategic consistency, that Rangone (1999) uses to elaborate on the consistency of resources with a firm’s strategic objectives. To measure strategic consistency, Rangone (1999) uses three steps, which can be considered as confusing and time-consuming. In this study, this issue is solved by taking strategic intent into account in the current business strategy. According to Searle (1983), intent, a psychological concept, is held by a conscious subject, capable of forming intentional states, mental states connected to an external reality. Strategic intent is used as a bridge between the mental states of all levels of the organization (Hamel and Prahalad, 1989) and the external environment of the firm. A second problem is the vagueness
Sustainable Competitive Advantage in Transport by Road | 5 industry’s key success factors are derived from. Therefore, this framework is incomplete and not really suitable in practice for strategic analysis. A third conceptual problem in the framework of Rangone (1999) is about the focus on resources. In order to assess whether a firm has a (potential) sustainable competitive advantage, Rangone (1999) only evaluates the strategic value of resources, but the focus should rather be on unique bundles of resources and capabilities, since an individual resource (or capability) may have potential value, but this value can only be realized when it is combined with a corresponding capability (or resource) (Newbert, 2008). The limitations of Rangone’s framework will be further elaborated in the theoretical framework.
This framework will be developed with the help of current literature and tested in practice by applying it to three Dutch firms. As a result of the strategic analyses, strategic advice can be given in order to increase the length of current business models in the Dutch road freight industry. Also, the strategic analyses conducted with the help of the proposed framework give insights whether the proposed framework is a useful and convenient instrument for strategic analysis at firm level and what potential limitations might be. Therefore, the second sub question in order to answer the research question adequately is formulated as follows:
Sub question 2: Is the proposed framework a useful and convenient instrument to derive strategic options from?
Strategic options refer to the strategic advice that will be given to the participating firms, filling the research gap with regard to the supporting guidelines for the company’s strategy.
This paper starts with a verification of the relevant concepts in the theoretical framework. The relevant concepts refer to the variables that are included in the proposed framework, which is shown in figure 1. These concepts are Current Business Strategy, Internal Analysis of the Firm, External
Sustainable Competitive Advantage in Transport by Road | 6
Theoretical Framework
In the theoretical framework several relevant concepts (variables) are defined and discussed with the help of existing literature.
Current Business Strategy
In the literature, various definitions of business strategy exist. These definitions vary from a solely internal perspective of the firm to a perspective including both internal aspects of firms and external aspects of the firm’s environment. Firstly, Chandler (1962) defines business strategy as a determination of long-term goals and courses of action. This definition mainly focuses on the internal organization, so it belongs to the first perspective. According to Porter (1995), a business strategy is about creating a unique and differentiated position involving a different set of activities. Newbert (2008) discussed to combine internal resources and capabilities in order to create such a unique and differentiated position as proposed by Porter (1995). Following Newbert (2008), by combining
internal resources and capabilities a firm is able to create a competitive advantage. His point of view is guided by the internal firm and does not say anything about the external criteria of firms. Rumelt (1991) belongs to the second perspective and applies both internal and external components in his definition of strategy. According to Rumelt (1991), business strategy is about the fit between the business resources, which has to do with the internal firm and the external environment. According to Grant (2012), successful business strategies consist of four components: clear goals, understanding the competitive environment, resource appraisal, and effective implementation. Therefore, Grant’s view on business strategy embodies a link between the internal firm and the external industry environment. Grant (2012) states: “The task of business strategy is to determine how the firm will deploy its resources within its environment and to satisfy its long-term goals and how will it organize itself to implement that strategy” (p. 10). According to Rangone (1999), “the long-term competitiveness of a company depends on its endowment of resources that differentiate it from its competitors, that are durable and, that are difficult to imitate and substitute” (p. 233). De Wit and Meyer (2004) explain why attention to both aspects should be paid and define business strategy as follows:
Strategic management is concerned with relating a firm to its environment in order to
successfully meet long-term objectives. As both the business environment and individual firms are dynamic systems, constantly in flux, achieving a fit between the two is an ongoing
Sustainable Competitive Advantage in Transport by Road | 7 Since the definition of De Wit and Meyer (2004) contains an explanation why both firm and
environment matter and acknowledge these are continuously changing, this definition can be considered to be most relevant and will be used in this study therefore.
As already mentioned in the introduction section, one of the conceptual problems in the framework of Rangone (1999) is about the variable strategic consistency, that is used to elaborate on the consistency of resources with a firm’s strategic objectives. To measure strategic consistency, three steps are taken to calculate the importance of each resource in contributing to the achievement of the company’s strategic intent. This way of measuring the resource’s alignment with the company’s strategic objectives is time-consuming and is executed by Rangone (1999) at the end of the analysis. In this study, this issue is solved by taking strategic intent into account in the current business
strategy. Strategic intent connects the internal firm with the external firm’s environment, since it links mental states of organizational layers to the external reality (Searle, 1983). As a result, the link from strategic intent as a bridging variable to the strategic value of the resources and capabilities and the industry’s key success factors is much more transparent (see also proposed framework in figure 1). Strategic intent can be seen as a reflection on the management of firms and is defined as “a desired leadership position and criterion the organization will use to chart its progress” (Hamel and Prahalad, 1989, p. 64). Strategic intent is built around a firm’s mission and vision. According to Campbell et al., 1991), a firm’s mission answers two questions: (1) “What is our business?” and (2) “What should it be?”. A mission is about strong norms and values that influence the way in which people behave, how they work together and how they pursue the goals of the organization. According to Grant (2012), a mission reflects the organizational purpose, the ‘why’ of the company’s existence. A firm’s vision makes explicit in what way the company will position itself in the future and is aligned with the desired future state (Campbell et al., 1991).
Internal Analysis of the Firm
By stating the strategic intent, mission, vision and underlying values, attention is paid to the mind-set of the entrepreneur and the management team. According to Grant (2012), a firm is not only known for these strategic aspects, but also for their resources and capabilities. Resources and
Sustainable Competitive Advantage in Transport by Road | 8 theory of Barney (1991) is frequently applied in the literature, some criticism arose during the years. First, the definition of resources from Barney (1991) is much too broad, which may cause problems in practice. Besides, Priem and Butler (2001) discuss the tautology issue. According to them, the
resource-based view is tautological, since Barney (1991) states that “valuable and rare organizational resources can be a source of competitive advantage” (Barney, 1991, p. 106), while competitive
advantage is defined in terms of value and rarity, and value and rarity are the resource characteristics
that lead to competitive advantage” (Priem and Butler, 2001, p. 28). In other words, it is self-verifying and therefore not subject to disconfirmation, since the analytic statements are true by definition. Rangone (1999) tried to overcome the tautology issue by taking key performances into consideration that can possibly lead to a sustainable competitive advantage. However, these key performances depend on the industry’s key success factors, but it is not clear where those key success factors are derived from (see also next section about external analysis of the firm’s environment). As a solution on the tautology issue, a sustainable competitive advantage should not be defined in terms of value and rarity. Therefore, the definition of Besanko et al. (2013) of competitive advantage is used in this study, which is “a firm’s ability to earn a higher rate of economic profit than the average rate of economic profit of other firms competing within the same market”. To be sustainable, a competitive advantage must be underpinned by resources and capabilities that are scarce (referring to a shortage) and imperfectly mobile (the resource cannot ‘sell itself’ to the highest bidder).
Resources can further be divided in (1) physical capital resources, (2) human capital resources, and (3) organizational capital resources. Physical capital resources include physical technology a firm possesses, its plant and equipment, its location and its access to raw materials (Williamson, 1975). Human capital resources contain subjects like training, experience, relationships, intelligence and insights of individual managers and workers in a firm (Becker, 1964). Organizational capital resources contain both formal and informal planning, controlling, coordinating systems and informal relations within a firm and with its external environment (Tomer, 1987). Besides, a classification on tangible and intangible resources is also well-known in current literature. Physical, human and financial resources belong to the former, while intangible resources cover things like reputation, organization, knowhow and patents (e.g., Hall, 1992; Zahra and Das, 1993; Collis and Montgomery, 1995).
Sustainable Competitive Advantage in Transport by Road | 9 However, many studies in the resource-based area, including Barney (1991) and Rangone (1999), focus only on individual resources or capabilities, instead of focusing on combinations of the two. According to Newbert (2008), an individual resource (or capability) may have potential value, but this value can only be realized when it is combined with a corresponding capability (or resource). Therefore, this study pays attention to combinations of resources and capabilities rather than to single resources or capabilities.
External Analysis of the Firm’s Environment
The external analysis in this study will be done with the help of the Five Forces Model developed by Michael Porter (2008). By using this model, the attractiveness of the industry becomes clear. However, before this model can be executed, it is important to come up with a market definition.
This study is about the sector Transport and Logistics. Focusing on the former, the
transportation branch can be roughly divided in transport by road, transport by rail and transport by waterway (Buijs, 2017). This study focuses on transport by road, which can further be divided in the road freight industry (central in this study) and the road passenger industry (OECD, 2003).
According to Porter (2008), there are five forces that shape competition and influence a market’s attractiveness. These are (1) threat of new entrants, (2) bargaining power of suppliers, (3)
threat of substitutes, (4) bargaining power of buyers, and (5) rivalry among existing competitors. The treat of new entrants is about new firms that enter the market putting a cap on the profit potential of
the market. When this threat is high, existing firms could hold down their prices or boost investment to be ahead of new entrants (Porter, 2008). The bargaining power of suppliers has to do with suppliers capturing more value for themselves by charging higher prices or offering lower quality, thereby influencing the market’s profitability (Porter, 2008). The threat of substitutes includes products or services that perform the same or a similar function as those that already exist in the market and can therefore be detrimental for the market’s profitability (Porter, 2008). The bargaining power of buyers is the opposite of bargaining power of suppliers and refer to buyers capturing more value by forcing down prices, demanding better quality, and playing various firms off against one another in the industry (Porter, 2008). Lastly, the rivalry among existing competitors refers to current competing firms. Just like the other forces, the higher this force, the more it negatively affects a market’s attractiveness. The degree of rivalry depends on intensity (number of firms) and basis (price, product features, support services et cetera) on which they compete (Porter, 2008).
The Five Forces Model give a clear view on a market’s attractiveness, but does not give insight in how this attractiveness is shared among the competing firms (Grant, 2012). Therefore, key
success factors will be included in the external analysis. According to Andrews (1971), “key success
Sustainable Competitive Advantage in Transport by Road | 10 success factors are important in order to define a firm’s key performances. It does not say anything how these factors arise. Following Vasconcellos and Hambrick (1989), key success factors derive from underlying characteristics of the industry, for example buyer behaviour and regulation. For that reason, key success factors are contextually contingent.
Critical Resources & Capabilities
According to Rangone (1999), not all resources and capabilities that are possessed by a firm have to be considered in the resource-based theory. The focus should rather be on those critical resources and capabilities that influence a firm’s sustainable competitive advantage. At this point, a connection between internal strengths (resources and capabilities) and the key success factors of the market should be made (Vasconcellos and Hambrick, 1989). Only those resources and capabilities that affect the key success factors contribute to a firm’s sustainable competitive advantage. These are named critical resources and capabilities and represent a fit between the internal firm and its external environment.
Strategic Resources & Capabilities
Although above mentioned critical resources and capabilities contribute to a firm’s sustainable competitive advantage, those form not necessarily the true basis for a sustainable competitive
advantage. When analysing the critical resources and capabilities once more, strategic capabilities and resources may arise as a true basis for a sustainable competitive advantage if five conditions are fulfilled. The analysis of the critical resources and capabilities includes five tests (Rangone, 1999). Once passed all various tests, a resource or capability can be considered as strategic and contributing to a firm’s sustainable competitive advantage. However, it must be mentioned here that Rangone (1999) executed these tests on resources only, whereas the focus in this study is primarily on the unique bundles of both resources and capabilities.
The first test is called the Competitive Superiority test. According to Rangone (1999), this test “evaluates if and to what extent the resource contributes to differentiating the company from its competitors” (p. 234). The Imitability Test analyses actual and potential competitor’s difficulty in imitating the resource. This is caused by, for example, resource’s physical uniqueness, path
dependency, casual ambiguity or economic deterrence (Rangone, 1999). The third test is the Duration Test and assesses the long-term generation of benefits. The fourth test, the Appropriability Test, measures the firm’s ability to exploit the generated advantages in the market. Lastly, the
Substitutability Test deals with the ability for competitors to replace the resource with an alternative containing the same advantages.
Sustainable Competitive Advantage in Transport by Road | 11 resources and capabilities that pass the five tests directly contribute to a firm’s sustainable competitive advantage, offering a firm the ability to improve both short-term and long-term performance (Teece, 2007).
Strategic Options
As a result of the analyses, strategic options are presented based on the strategic resources and capabilities. The strategic value of these specific bundles of resources and capabilities enables firms to sustain and strengthen their strategic position in order to operate successfully in the near future.
Sustainable Competitive Advantage in Transport by Road | 12
Method
Research Approach
In this study, a link between theoretical and empirical inquiry will be made by theory
elaboration. The investigation starts with a research question that stems from a research gap, indicating its relevance. Thereafter, variables are developed with reference to existing literature to guide the investigation. To be able to come up with a proper answer on the research question, deep
understanding on underlying relationships and rich explanations are required. This typically asks for qualitative research, which will be executed including case studies. According to Ridder (2017), “cases offer insights into the phenomenon of interest”.
Data Collection
By conducting semi-structured interviews, primary data is gathered. These data will be added with secondary data which is retrieved by analysing relevant documents and observations. By
combining these different data collection methods, triangulation occurs, which provides stronger substantiation of constructs (Eisenhardt, 1989). According to Yin (2013), by conducting semi-structured interviews, researchers are able to target specific subjects of interest, which can be insightful due to perceived causes, inferences and explanations. The participating firms will be approached by illustrating the relevance of the topic of interest. When the participating firms are selected, an in-depth interview will be developed and prepared. The interviews will be executed among the business owners and top-managers and will approximately last 90 minutes each. The interviews will be semi-structured, meaning that a list of well-written questions is leading during the conversation. However, there is room to further elaborate on interesting subjects and to extend the list of questions during the interview. Besides, all interviews will be audio-recorded.
Regarding controllability, validity, and reliability, Van Aken, Berends and Van der Bij (2012) state that measuring for these items fosters inter-subjective agreements of research products. In the first place, controllability will be guaranteed by continuously tracking whether the study is replicable. Second, reliability will be confirmed by preventing potential biases. Since someone else besides the researcher will also code the data, a potential researcher bias is controlled. Furthermore, by applying triangulation, a possible instrument bias is controlled. In order to reduce potential respondents bias, each term will be introduced accurately to prevent any misunderstanding. Lastly, potential
Sustainable Competitive Advantage in Transport by Road | 13 Participants
In this part, the context of the firms under study is briefly illustrated.
Bakker Transport & Warehousing, started in 1991, is a logistic service provider based in Heerenveen, the Netherlands. Bakker is a family business and is specialized in the transportation, storage and physical distribution of high-quality dry, fresh, and frozen (mainly) food products, such as baby food, raw materials for bakeries, margarines, and oils. Bakker operates business-to-business and employs around 100 people. Its main clients are producers and trading companies, including Ausnutria (baby food), Yme Kuiper (dried fruits, nuts and seeds), and Smilde Foods (margarines and oils). Anne Bakker (entrepreneur and managing director) and Arjen Hoekstra (logistics manager) participated in the name of the firm.
Netko Koel- & Vrieslogistiek, started in 1999, is a logistic service provider with the head office in Raalte, the Netherlands. Besides, it has a warehouse in Coevorden and a site in Heerenveen. The main activities of Netko are the transportation, distribution, storage, transhipment, and order picking of dry, cooled and frozen (mainly) food products, such as meat products, salads, bread, and dairy (both semi-finished products as final products). Netko operates business-to-business and employs around 140 people. Its main clients are producers and trading companies, including
Groothedde Vaassen (meat products), Smilde Foods (salads), Qizini Losser (bread) and DMK Holdorf (dairy). Willy Horenberg (entrepreneur and managing director) participated in the name of the firm.
Müller Fresh Food Logistics, started in 1938, is a family business and logistic service provider based in Holten, the Netherlands. The core business of Müller is temperature-controlled warehousing (including storage, order picking, repackaging, packaging, and labelling) and physical distribution of food products, such as cheese, meat products, ice cream, and fish products. Besides its head office in Holten, the firm has subsidiaries in Nijkerk, Roelofarendsveen, Lekkerkerk (the Netherlands), and Cheb (Czech Republic). Müller employs around 800 people. Its main clients are producers, including Uniekaas (cheese), Zwanenberg (meat products), Unilever (ice cream), and Profish (fish products). Barry Stegeman (commercial director) participated in the name of the firm.
Measurements
This section provides information how the various concepts as illustrated in the proposed framework in figure 1 are measured and on what theory this is based. Before starting with the
concepts, some general information is beneficial in order to get a proper impression of the firms under study. The questions that belong to the introduction are not based on a particular theory, rather these are self-developed by the researcher. An operationalization of the concepts is presented in table 1, the associated interview questions can be found in the questionnaire in Appendix I.
Sustainable Competitive Advantage in Transport by Road | 14 aligned with the desired future state (Campbell et al., 1991). Goals are specific short- and long-term goals that guide managers and employees as they perform the work of the organization (Jones, 2013). In this study, short-term goals are defined as to be reached within twelve months, whereas long-term goals are set to be reached within 1-5 years. Strategic intent is built around a firm’s mission and vision and is defined as “a desired leadership position and criterion the organization will use to chart its progress” (Hamel and Prahalad, 1989, p. 64). The questions that belong to the concept of current business strategy are based on the above-mentioned definitions.
Internal Analysis: The internal analysis of the firm is measured with the help of unique bundles of resources and capabilities. This study follows the typology of Barney (1997), which has been used extensively in the literature (Newbert, 2008). To this typology belong four categories of bundles: Financial Resources & Capabilities (capital, cash, equity, retained earnings, financial skills and knowhow), Physical Resources & Capabilities (physical technology, plant and equipment, geographic location, raw materials, physical skills and knowhow), Human Resources & Capabilities (training, experience, judgment, intelligence, relationships of individual employees), and
Organizational Resources & Capabilities (relationships with partners, suppliers, buyers, creditors; distribution channels, corporate culture). The questions that belong to the internal analysis are self-invented, but based on the typology of Barney (1997).
External Analysis. The external analysis of the firm’s environment starts with defining the relevant industry, by asking questions derived from the theory of Porter (1980). After that, the external analysis is measured with the use of the Five Forces Model developed by Porter (1980), including the threat of new entrants, bargaining power of suppliers, threat of substitutes, bargaining power of buyers, and rivalry among existing competitors. Besides, the external analysis is measured by the industry’s key success factors, based on the theory of Vasconcellos and Hambrick (1989). The questions for both the Five Forces Model and the key success factors are based on above mentioned theories, but self-invented.
Critical Resources and Capabilities. This concept represents the fit between the internal firm and its external environment. With the help of self-invested questions, the external key success factors can be linked to the internal Resource and Capability bundles. After the first interview, the required data is collected to be able to analyse the Critical Resources and Capabilities. This analysis is executed by the researcher in the first place. Subsequently, the resulting Critical Resources and Capabilities are presented to the related firms for verification in a second interview.
Sustainable Competitive Advantage in Transport by Road | 15
Indicators Questions
Introduction -General information
-Firm size -Activities
1-4
Concepts Indicators Questions
Current Business Strategy -Mission -Vision -Goals
-Strategic Intent
5-13
Internal Analysis -Financial Resources & Capabilities -Physical Resources & Capabilities -Human Resources & Capabilities -Organizational Resources & Capabilities
14-21
External Analysis -Market definition -Key Success Factors
-Five Forces Model (i.e. threat of new entrants, bargaining power of suppliers, threat of substitutes, bargaining power of buyers, rivalry among existing competitors)
22-43
Critical Resources & Capabilities
-Resources & Capabilities that affect the Key Success Factors
44-45
Strategic Resources & Capabilities
-Resources & Capabilities that pass the five tests 46-50
Table 2 Main concepts, indicators and corresponding interview questions
Data Analysis
Following Eisenhardt (1989), partly overlapping between the data collection and data analysis phase is valuable, which will be done by taking field notes. After conducting the interviews,
transcripts will be made based on the audio tapes. The transcripts cover data that will be coded deductive (from the theory). A codebook will be used as a tool to help analysing the interviews. A codebook is a set of codes, definitions, and examples and is used as a guide to help analyse interview data. Every code has a code number, in a way that the specific data that is being coded in the
transcripts belongs to a specific code. The codebook that has being used in this study is shown in Appendix II. The coding results are available on request. Also, the key success factors will be
Sustainable Competitive Advantage in Transport by Road | 16 and transport-by-road companies. This is done to overcome potential respondent biases, since
respondents may possibly be not able to answer correctly or may be unwilling to provide honest answers. After the coding process has occurred, within-case analyses and cross-cases will be executed. According to Ridder (2017), within-case analyses reveal what firms have learned from process
experiences, while cross-case analyses expose emerging patters from which tentative propositions can be formed. Thereafter, the findings will be mirrored with existing literature to build internal validity, sharpen variables and increase the theoretical level. As a result of this qualitative research, strategic advice is given to the participating firms in the form of strategic options and initiatives for further research are presented.
Findings
The results of the core variables as presented in the proposed framework are stated in the same order here, starting with the Current Business Strategy from the three firms under study.
Current Business Strategy
Bakker Transport & Warehousing. The firm started in 1991 and developed itself into a specialist transportation company to South-Europe and North-Africa. Due to increasing competition mainly from East-European firms, Bakker decided to focus on the region the Netherlands, Belgium,
Sustainable Competitive Advantage in Transport by Road | 17 firm, since it establishes a criterion the organization will use to chart its progress (Hamel and Prahalad, 1989).
Netko Koel- & Vrieslogistiek. With the head office in Raalte, Netko started in 1999 as a logistic service provider, mainly specialized in fresh and frozen food products. Its core activities are the transportation and distribution of food products and it adds value with warehouse activities as picking orders, collecting, and combining products. Its main clients are producers and trading companies, including Groothedde Vaassen (meat products), Smilde Foods (salads), Qizini Losser (bread) and DMK Holdorf (dairy). Besides the location in Raalte, the firm has a subsidiary specialized in deep-frozen in Coevorden and a site in Heerenveen. The main activity in Coevorden is order picking and distribution of frozen food for 185 Aldi stores, whereas the activities in Heerenveen are focused on transportation only, in commission of Haarsma Foodimpuls, a wholesale company that delivers food products including meat, salads, cheese, and dairy to mainly butchers and caterers. The mission of Netko is to provide high-quality logistic services, which includes offering logistic solutions for its clients and to think along with them. The vision of Netko is to become the best of the world in its field. Mr. Horenberg states: “Netko wants to reach the highest scores on timeliness (deliveries just-in-time), quality of temperature-controlled conditions (0-7°C for fresh and <-18°C for frozen) and quality of services (answering client’s requests the same day)”. Besides, Netko strives to become the
‘gateway’ to the northern part of the Netherlands. For the short-term, Netko focuses on an
enhancement of its yield. Besides, it seriously wants to improve the internal processes. Mr. Horenberg subscribes: “to enhance the quality of our service provision, we are investing in the planning and customer service departments currently. In the old situation, both worked together in one office. Now, both work separated in other offices to focus more on their specific jobs. Besides, we invest in
extending the departments by hiring new people.” Netko also strives to retain current clients and to recruit talented people. The main goal of the long-term has to do with the location of the head office, which has become too small for the current operations. Therefore, the firm is going to invest in a new plant in the coming years. Regarding strategic intent, Netko wants to be the best in its field. To ensure this and the continuity of the firm, Netko will be taken over by the STEF Group in January 2019, which is one of the biggest logistic service providers in food products in Europe with a turnover of 2.976 billion euros in 2017 (STEF, 2018).
Sustainable Competitive Advantage in Transport by Road | 18 activities, Müller offers storage, order picking, (re)packaging, weighting, and labelling of products, administration of packing (empty crates and pallets), and washing of used crates. The firm handles a ‘buy-and-build’ strategy, meaning it wants to grow autonomously and by taking over other firms. The acquisition of Prins Transport Lekkerkerk at the beginning of 2018 is an example of the latter. The mission of Müller is to be a logistic service provider with a tight distribution network across the Benelux, a tight European distribution network in food retail with partner firms and massive
warehouse activities for its clients, all with a high grade of competence and quality awareness. On the one hand, Müller tries to reach a tight distribution network with various sites in the Netherlands. On the other hand, the collaboration with German and Belgian partner firms and its own site in Cheb (Czech Republic) enables Müller to possess a tight European network with a full focus on food products, such as meat, dairy, and fish. The vision of Müller is to become a full service logistic provider of conditioned food products in Northwest-Europe, that helps its clients in executing their core business by carrying out as many as possible logistic processes in an optimal way. Müller has not formulated any concrete goals for the short-term. For the long-term, its focus is mainly on sustaining relationships with clients. Besides, Müller strives to develop new services in order to exceed the current offerings for its clients, for example by adding streams of frozen products in its network. The strategic intent of Müller is to be a reliable and solid partner in the food supply chain. The firm tries to reach this by paying maximal attention to their stakeholders and improving the internal processes. According to Mr. Stegeman, “in order to improve our processes, Müller has made a separation in its daily operations between the customer service department and the operation. The former belongs to commerce now”. It also keeps innovating in their relationships by integrating information technology with close partners, such as providing data regarding accuracy of deliveries.
Sub-conclusion current business strategy. Bakker, Netko, and Müller all are specialized in
transportation, distribution and warehousing of (mainly) food products, under temperature-controlled conditions (dry, cooled or frozen). Bakker typically handles shipments bigger than ten pallets, whereas Netko and Müller benefit more from shipments from one to ten pallets, since their network is tighter. The strategic intent of Bakker is mainly focused on its warehousing activities, since it wants to become one of the biggest warehouse companies in the northern part of the Netherlands. Netko wants to become the best in the market regarding its services (just-in-time deliveries, guaranteed product quality). The strategic intent of Müller is to be a reliable and solid partner in the food supply chain.
Internal Analysis
Sustainable Competitive Advantage in Transport by Road | 19 realized with the help of the management’s capability of being fast and decisive. Mr. Hoekstra
subscribes: “we are able to decide in one morning to invest in an automation system, since the financial assets are on hand”. The physical resources of Bakker include 35 trucks, 45 trailers, an own fuel station, warehouses, shelves, warehouse equipment, IT-systems, software and hardware. These resources are required to run the daily operations. According to Mr. Hoekstra, specific skills and knowledge of the employees are the underlying factors that realizes the value of the corresponding physical resources. This is subscribed by Mr. Bakker: “our employees do not only possess
steersmanship and experience, but also professional equipment in order to provide the required quality always”. Examples of professional equipment are the warehouses with the highest insulating values. Also, as stated by Mr. Hoekstra, “we are a testing partner for Thermo King (a producer of
refrigerators) for many years now. Sometimes we possess prototypes of refrigerators that are not available on the market”. When it comes to human resources, Bakker pays attention to young people that run through internships. Bakker is also active in educating and training staff in general and truck drivers in particular, since a shortage of truck drivers is happening countrywide (ING, 2017; Tempo Team, 2018). The experience and expertise of the management team contributes to the selection of the right people for the right function in order to maximize the operating result. Regarding organizational resources, Bakker works together with employment agencies and invests in sustainable relationships with clients and suppliers. Mr. Hoekstra explains: “Mead Johnson is a client based in Nijmegen, the Netherlands, with a policy to search for warehouses in ten kilometres around its location. Our
investment in the optimization of our operations enabled us to bind this client, since we outperformed warehouses in their aspired area”. The long-term partnership with Thermo King, as described above, is an example of a sustainable relationship with a supplier. According to Mr. Bakker, “due to years of experience, I know how I must approach specific parties in such a manner that my result will be maximal”.
Financial Resource & Capability bundle
Manage retained earnings and bank loans with speed and decisiveness.
Physical Resource & Capability bundle
Combination of trucks, trailers, warehouses, software, and hardware and specific skills, knowhow and innovation capability.
Human Resource & Capability bundle
Educating and training of the staff and recruiting right people with the help of the management’s experience and expertise.
Organizational Resource & Capability bundle
Sustainable relationships with clients and suppliers with the help of management’s experience.
Table 2 Resource & Capability bundles Bakker Transport & Warehousing
Sustainable Competitive Advantage in Transport by Road | 20 complete takeover from January 2019. According to Mr. Horenberg, “I have always managed the firm in a way that it was profitable. I did this with the help of my skills and knowledge”. The physical resources are offices, warehouses in Raalte and Coevorden, 50 trucks, 40 trailers, refrigerators, internal equipment and IT-systems. Due to the entrepreneur’s long career in this field, the firm possesses specific knowledge and expertise regarding equipment and, for instance, refrigerators. With regard to human resources, Netko focuses on the individual employee by providing courses about subjects including communication and individual’s drive. Netko realizes that it has to bring more intellect into the firm, so the firm pays attention to the recruitment of talented people. As Mr.
Horenberg states: “It is also the experience of the management team that cares about the ability of co-workers to do their work in a right way. It is also about insights. If someone can handle more, we have to give him the possibility to do so”. The most important organizational resource is about relationships with clients, suppliers and with subsidiaries of the STEF Group. For example, by collaborating with subsidiaries of STEF in Bodegraven, Eindhoven (the Netherlands), and Saintes (Belgium), Netko is able to extend its network and it provides transportation destinations to clients that were not possible before. Besides, a long-term partnership with Nordfrost (German logistic service provider) enables Netko to offer transports to Germany. With regard to relationships with clients, Mr. Horenberg states: “with our insights in the supply chain, I know what clients of my own clients demand. My clients appreciate these insights. This is a way of getting closer to clients”. Also, the corporate culture of respect for all employees and honesty is an important organizational resource. These resources are exploited with the help of the owner’s experience: “It is about a joint importance. Expertise and many years of experience contribute to long-lasting relationships”.
Financial Resource & Capability bundle
Manage retained earnings, capital, bank loan and capital injection with skills and knowledge.
Physical Resource & Capability bundle
Combination of all assets and specific knowledge and expertise belonging to the conditioned food sector.
Human Resource & Capability bundle
Providing both task-related and mental trainings to the staff and recruiting right people with the help of management’s experience and insights.
Organizational Resource & Capability bundle
Long-lasting relationships with clients, suppliers and subsidiaries with a culture of respect and honesty based on many years of experience.
Table 3 Resource & Capability bundles Netko Koel- & Vrieslogistiek
Sustainable Competitive Advantage in Transport by Road | 21 As a result, they perform better”. This can be seen as a form of intrapreneurship, which indicates entrepreneurship within an existing organization (Antoncic & Hisrich, 2001). The main physical resources are 350 trucks, 400 trailers, four sites with warehouses in the Netherlands, IT-systems, refrigerators, and internal equipment. Müller tries to do as much as possible in-house, to make itself independent from other firms. The personnel learns the latest developments about software and vehicles internal. Regarding human resources, Müller has four truck drivers acting as mentors in order to train co-workers. The level of experience is function-dependent. Müller has started a driving school called OT&L together with eleven other transportation companies from the municipality Rijssen-Holten to educate potential employees a few years ago. According to Mr. Stegeman, “it is mainly about the knowhow how the firm performs the best. People are the most important asset. With our experience, we try to help people to perform even better”. The most important organizational resources are sustainable relationships with clients and suppliers and the corporate culture of a no-nonsense family firm. These are exploited with the management’s skills such as dare to invest and talent for entrepreneurship in seeing opportunities. The acquisition of Prins Transport Lekkerkerk is an example of a discovered opportunity, whereas the collaboration with Bieze Food Group has led to a recently developed logistic hub in Nijkerk (the Netherlands) in 2016.
Financial Resource & Capability bundle
Retained earnings, own and loan capital exploited with trust and intrapreneurship.
Physical Resource & Capability bundle
Trucks, trailers, warehouses, IT-systems and internal equipment are being used by employees that continuously learn about new relevant developments.
Human Resource & Capability bundle
Training people with mentors and an own driving school in combination with the experience of the management team.
Organizational Resource & Capability bundle
Sustainable relationships with clients and suppliers in a no-nonsense mood with talent for entrepreneurial activities.
Table 4 Resource & Capability bundles Müller Fresh Food Logistics
Sub-conclusion internal analysis. With regard to the financial bundles, all three firms reinvest
Sustainable Competitive Advantage in Transport by Road | 22 education of the employees. The practical implication differs, since Bakker provides task-related trainings to mainly truck drivers, whereas Netko also provides mental trainings to the whole staff (including office and warehouse co-workers), which has more to do with the psychological aspect of human beings. Müller has invested in an own driving school, which it owns with other companies in the neighbourhood. The human bundles are more or less the same across the firms under study. There only exist some differences with regard to the companies’ corporate values, including respect and honesty (Netko) and no-nonsense and entrepreneurship (Müller).
External Analysis
Bakker Transport & Warehousing. The relevant market of Bakker can be described as food logistics for the industry and retail with a focus on the Benelux and Northwest-Germany. The main activities in this market are the transportation, distribution and warehousing of high quality dry, fresh or frozen food products. Bakker is specialized in shipments typically bigger than ten pallets. The key success factors in this market are service, economy of scale, and location. The rivalry among the current competition is low, with two important competitors. Bakker Logistiek Zeewolde offers mainly the same services, while Portena Logistiek Heerenveen performs partly overlapping services. The threat of new entrants is low to moderate, since much capital is required to invest in equipment and warehouses to meet the economy of scale standards. However, a foreign existing firm might be a threat if it decides to expand its business in the Netherlands. The bargaining power of suppliers is low, since Bakker can change every supplier it has for another firm. The only supplier Bakker has no influence on, is the supplier of fuel, since the global refineries determine the price. The threat of substitutes is moderate, since transport by road can be taken over by transport by water or rail. On the other side, the whole service of Bakker is hard to replicate with alternatives, since it is very
specialized. The bargaining power of buyers is moderate. Bakker has around ten clients in its
warehouse division and around forty in its transportation division. A few clients are responsible for the main turnover, resulting in a direct influence on Bakker. However, both Bakker and its clients depend on each other. According to Mr. Hoekstra, “we perform all logistic activities of Ausnutria, in turn Ausnutria is responsible for 50% of our warehouse turnover”.
Sustainable Competitive Advantage in Transport by Road | 23 Kivits Drunen in cooperation with Dachser Group, and Müller Fresh Food Logistics, which is also analysed in this study. These firms all perform the same services. Bakker Transport & Warehousing does not belong to this market, since Bakker is relatively more focused on warehouse activities and typically handles bigger shipments including full truck loads (FTLs). The threat of new entrants is low, since capital is a real entry barrier. This is subscribed by Mr. Horenberg, who states that “big investment is the main barrier. To be able to build a firm with a significant format, one need many capital. Scale is very important to be competitive in this market”. The bargaining power of suppliers is low, since every supplier can be replaced by another supplier. The threat of substitutes is moderate. The transportation activity of Netko could be replaced by transport by rail. According to Mr.
Horenberg, “transport by rail is fast, reliable and constant. In our market, speed is very important due to the limited shelf lives of specific food products”. Also, automation of warehouse activities could be a form of substitution. The bargaining power of buyers is low to moderate. Netko has around hundred clients, which means that its operations do not depend on a few accounts. However, clients with a significant size have more influence on Netko than less important clients.
Müller Fresh Food Logistics. In fact, Müller acts in the same market as Netko does. Both firms compete directly with each other. Therefore, the key success factors are identical: service, scale, and location are required to be competitive. The rivalry among existing competitors is low to moderate for the same reason as for Netko. This is subscribed by Mr. Stegeman, who states that “if all four
competitors act in their own way, every firm is able to gain good returns”. Regarding the threat of new entrants, Mr. Stegeman states: “I evaluate this threat is limited, unless it is a big foreign firm that is not active in the Netherlands currently and wants to gain market share”. Also, the economy of scale that is required to be competitive asks for big investments. The bargaining power of suppliers is low, since Müller is not fully dependent of a few suppliers. There are more suppliers active in the market. The threat of substitutes is moderate for the same reasons as for Netko. Müller provides services for around 350-400 clients. Therefore, the turnover and risks are spread on many accounts, which results in a low bargaining power of buyers. As Mr. Stegeman states: “we try to limit the influence of buyers, which goes well, since we have so many clients”.
Sub-conclusion external analysis. Netko and Müller compete in the same market and typically benefit
Sustainable Competitive Advantage in Transport by Road | 24 buyers is low to moderate for Netko and low for Müller, since the latter has around 350-400 clients to spread the risks on. Service, economy of scale, and location turn out to be the most important
industry’s key success factors. The trade organisation Transport & Logistiek Nederland has been asked to verify whether the key success factors, as presented by the three firms, are correct and
complete. This has resulted in two additional key success factors, that is digitalisation and employment policy. The industry’s key success factors are highlighted in table 5.
Key Success Factor Explanation
Service Taking care of clients, including values as accuracy, decisiveness, timeliness, and reliability. Thinking along with clients in search of logistic solutions. Economy of scale An increase in number of vehicles and amount of storage room results in cost
advantages.
Location Firms located nearby highways are able to reach clients faster.
Digitalisation Services as Track & Trace, digital documents, automation and robotization of processes, real-time information services.
Employment policy A management’s policy to teach, invest in, and bind employees for the long-term. This is especially important in current economic conditions, since a shortage of logistic personnel in general and truck drivers in particular is growing (ING, 2017; Tempo Team, 2018).
Table 5 Elaboration on industry’s key success factors
Critical Resources & Capabilities
Sustainable Competitive Advantage in Transport by Road | 25 relationships with clients and suppliers belong to its organizational bundle, which directly affects the key success factor service.
Netko Koel- & Vrieslogistiek. The financial resource and capability bundle is critical, since it enables Netko to meet the required economy of scale. This asks for a significant extent of fleet of trucks, systems, employees and storage space, which typically requires high investments. The financial bundle enables Netko to invest in digitalisation also. Second, the physical bundle can also be marked as critical, since it directly affects the economy of scale (more capacity brings a cost advantage) and it also affects the key success factor service. The higher the capacity, the higher the likelihood to handle client’s requests. The human bundle is also critical to Netko, since it affects the service factor and it reflects the employment policy. For example, the task-related courses provided by Netko, which is an indicator of its employment policy, help to increase its level of service. Mr. Horenberg states: “Apart from training and enhancing the professionally performances of co-workers, we also want to address people’s line of thought”. Finally, the organizational bundle can also be marked as critical, since long-lasting relationships, as described in the internal analysis, correspond to the key success factor service. Besides, its sustainable relationship with an employment agency is crucial in times of shortage of personnel, so the organizational bundle also affects the key success factor employment policy.
Müller Fresh Food Logistics. First, the financial bundle of resources and capabilities is critical, since it enables Müller to meet industry standards (economy of scale) and investments in digitalisation are possible. According to Mr. Stegeman, “we continuously invest in warehouses, extensions, and acquisitions. We need the trust of our shareholder (family Müller) and the external financier. Without financial assets, we are not able to invest, so we need that disposal”. The physical bundle is critical as well, since the size of the company (800 employees, 350 trucks) meets the economy of scale
requirements. The physical bundle also contains the location. Müller has strategic locations close to the highways A1 in Holten, A1 and A28 in Nijkerk, A4 in Roelofarendsveen, and A15, A16, and A20 in Lekkerkerk. The human bundle is also critical, because the mentor co-workers and the own driving school affect the key success factor employment policy. Mr. Stegeman explains: “Müller has four mentor truck drivers providing courses and educating truck drivers. We also treat the latest
developments regarding software, track & trace et cetera in these programs”, so the human bundle also affects the key success factor digitalisation. In the last place, the organizational bundle of resources and capabilities is critical to Müller too, since it directly affects the key success factor service. In the vision of Müller is stated that the firm “wants to keep innovating by integrating IT with relations in the food supply chain”, as an extension of its current services. This subscribes the importance of
Sustainable Competitive Advantage in Transport by Road | 26
Sub-conclusion critical resources & capabilities. The three firms under study possess comparable
critical bundles of resources and capabilities. For all firms holds that the financial, physical, human, and organizational bundles of resources and capabilities contribute to a fit between the single internal firms and the industry’s key success factors. As a result, these four bundles of resources and
capabilities will be assessed on its strategic value in the next section.
Strategic Resources & Capabilities
The strategic value of the critical resource and capability bundles every firm possesses is presented below. An elaboration on these assessments can be found in Appendix III.
Bakker Transport & Warehousing. Competitive
Superiority
Inimitability Duration Appropriability Non-substitutability
Strategic Value Financial
bundle
High High High High High High
Physical bundle
Medium Low High High Medium Low
Human bundle Medium Low High High High Low
Organizational bundle
Medium Low High High High Low
Table 6 Assessment of Strategic Resources & Capabilities Bakker Transport & Warehousing
Netko Koel- & Vrieslogistiek. Competitive Superiority
Inimitability Duration Appropriability Non-substitutability
Strategic Value Financial
bundle
High Medium High High High Medium
Physical bundle
Low Low Medium High Medium Low
Human bundle Medium Low High Medium High Low
Organizational bundle
Low Low High High High Low
Sustainable Competitive Advantage in Transport by Road | 27 Müller Fresh Food Logistics.
Competitive Superiority
Inimitability Duration Appropriability Non-substitutability
Strategic Value Financial
bundle
High High High High High High
Physical bundle
High Medium High High Medium Medium
Human bundle High Low High High High Low
Organizational bundle
Medium Low High High High Low
Table 8 Assessment of Strategic Resources & Capabilities Müller Fresh Food Logistics
Sub-conclusion Strategic Resources & Capabilities. The assessment of the critical resource and
capability bundles offers the following results. In case of Bakker Transport & Warehousing, the financial bundle of resources and capabilities can be considered as ‘high’, indicating that this bundle directly contributes to the firm’s sustainable competitive advantage. The physical, human, and
organizational bundles are assessed as ‘low’, which means that there is room for improvement in order to contribute to the firm’s sustainable competitive advantage. In case of Netko Koel- & Vrieslogistiek, no single bundle of resources and capabilities directly contributes to the firm’s sustainable competitive advantage. The financial bundle is assessed to have medium strategic value, whereas the physical, human, and organizational bundles have low strategic value. In case of Müller Fresh Food Logistics, the financial bundle of resources and capabilities directly contributes to the firm’s sustainable competitive advantage, since it is assessed to have high strategic value. Next, the physical bundle currently does not have a direct influence on the firm’s sustainable competitive advantage, since it has a medium strategic value, indicating room for improvement exists. Finally, the human and
organizational bundles are assessed to have low strategic value, so these do not directly contribute to the firm’s sustainable competitive advantage.
Strategic Options
The strategic options focus on those bundles of resources and capabilities that have potential to become more important regarding its strategic value (i.e. from ‘low’ to ‘medium’ to ‘high’ or from ‘medium’ to ‘high’.
Sustainable Competitive Advantage in Transport by Road | 28 physical bundle is assessed to have low strategic value, mainly due to the imitability test. It turned out that, in fact, everyone with a significant amount of money is able to build a warehouse or buy trucks, trailers, and internal equipment. Therefore, improvement of the belonging capabilities is needed. Bakker should invest in technical knowledge, since even more processes become automated and the firm does not possess enough knowledge and expertise currently. This was also subscribed by Mr. Hoekstra, who stated: “If you look at our technical people (…), we definitely could make a step forward. Also, it is a risk that the knowledge regarding IT is possessed by only a few people, including me. Actually, the entrepreneurs should possess more”. In order to increase the level of technical knowledge, Bakker could do two things. First, its employment policy should be more focused on high educated people in general and technical knowledge in particular. This also contributes to responding the key success factor digitalisation. A collaboration with a technical university may be an option. Second, Bakker has a strategic partnership with Thermo King currently. Thermo King delivers prototypes of refrigerators and Bakker tests them, which is a perfect way to exchange knowledge. Regarding the automation and digitalisation systems and processes, Bakker could start a comparable partnership with a supplier of software, in order to increase its level of technical knowledge. These options will make the physical bundle of resources and capabilities less imitable, which results in a higher strategic value and therefore more contribution to the firm’s sustainable competitive advantage. Also, the options regarding strategic collaborations are ways to improve its organizational bundle, which is required due to its low strategic value currently. Bakker could further increase the strategic value of the organizational bundle by creating a new job totally focusing on customer relationship management. The aim of this job should be to invest more time in main clients and suppliers in order to optimize the relationships even more. This directly contributes to the level of service, which is an important key success factor, and also enables Bakker to increase its competitive superiority. Besides, an option to enforce the strategic value of the human bundle is to make use of non-competition clauses. This prevents the firm from knowledge spill-overs to competitors and directly increases the strategic value with regard to imitability.
Strategic option
Physical bundle Invest in technical knowledge by collaborating with universities and with a partnership with a software supplier.
Human bundle Introducing non-competition clauses to prevent knowledge spill-overs Organizational bundle Creating new jobs focusing on customer relationship management.
Table 9 Strategic options Bakker Transport & Warehousing
Sustainable Competitive Advantage in Transport by Road | 29 not that hard to be copied by (potential) competitors, but this can change by using the resources and capabilities of the STEF Group, which will take over Netko in January 2019. This could be a real option, since STEF is a financial decisive company, even possessing its own bank. As a result, the financial bundle becomes harder to imitate, leading to higher strategic value. With regard to the physical bundle, it turned out that the headquarters of Netko actually is not maintainable, since its capacity is too small, and the physical aspects of the building can be improved, such as the insulating value, which is very relevant when temperature-controlled conditions belong to the core activity of the firm. Therefore, a strategic option is to build a complete new warehouse, preferably at a location close to a highway, since location turned out to be a key success factor. Also, the location is especially relevant, because in the analysis is shown that Netko is outperformed by its main competitors on this aspect. Netko should search for an appropriate location in the area of Zwolle-Deventer-Almelo, to keep the commuter traffic feasible. Further, with regard to the human bundle, Netko should invest in long-term relationships with its own staff. A way to increase the chance of novice co-workers to stay at Netko for many years is to invest in learning time with the help of mentors. These mentors should provide all relevant information to the newcomer and help him in order to know the company, its clients and his own job. Such a learning period could last one or two weeks. Besides, this will not only contribute to binding employees to the firm, but also to increasing the quality of the service provision of Netko, which yields monetary benefits too. Therefore, Netko should invest in a few mentors, especially to bind newcomers in the current period of shortage of logistic personnel (ING, 2017; Tempo Team, 2018). Also, introducing non-competition clauses prevent Netko from leaking knowledge if trained and educated employees decide to leave the company. This makes it harder for competitors to imitate the human bundle of resources and capabilities. Finally, Netko could invest in its organizational bundle by hiring account managers in order to pay more attention to customer relationship management. Even though this might be imitable, it is important to be leading on this subject. Also, it may potentially yield first mover advantages.
Strategic option
Financial bundle Make use of the resources and capabilities of the STEF Group. Physical bundle Invest in a new warehouse in the area of Zwolle-Deventer-Almelo. Human bundle Focus on learning time by investing in mentors and prevent from knowledge
leaking by introducing non-competition clauses.
Organizational bundle Hire account managers in order to pay more attention to customer relationship management.
Table 10 Strategic options Netko Koel- & Vrieslogistiek
Sustainable Competitive Advantage in Transport by Road | 30 have low strategic value. First, regarding the physical bundle, it would be wise to take current
technological developments really seriously, since these may have an influence on the business model. A relevant example is platooning, which is a sort of road train of trucks that are connected with each other. The first truck determines the speed and route, the other trucks follow automatically without the human help of truck drivers (De Weerd, 2017). This directly influences the current role of truck drivers, so Müller should consider such issues and think about its effects on, for instance, the
employment policy and decisions whether to invest in these technological developments or not. As a result, this option enables Müller to increase the strategic value of both the physical as well as the human bundle. Further, since Müller is very active in educating and training its staff (Müller Academy, OT&L truck driving school et cetera), it has to prevent itself from spilling over crucial knowledge. This could be done by introducing a non-competition clause, which was also advised to the other firms under study. With regard to the organizational bundle of resources and capabilities, Müller should invest in its customer service department by adding jobs in order to focus on customer relationship management. Since the huge number of customers (around 350), it would be wise to hire various people managing their own portfolio of clients. These people typically should visit clients very often in order to share thoughts and knowledge, think along and work on shared advantages. Just because Müller’s firm size, the firm should be leading in this field, which directly increases its competitive superiority and inimitability, resulting in a contribution to the firm’s sustainable competitive advantage. Besides, according to TLN (2017), the demand for high educated personnel possessing knowledge about IT, innovation, and supply chain optimisation grows. Therefore, an option is to collaborate with universities, since Müller only has connections with Vocational Education schools currently, which will differentiate Müller from its competitors.
Strategic option
Physical bundle Consider technological developments, which will influence the employment policy and the use of physical assets.
Human bundle Keep focusing on education and training and prevent the firm from knowledge spill-overs by using non-competition clauses. Organizational bundle Increase customer service department and become leading on customer
relationship management. Also, collaborate with universities for high educated personnel.
