OPPORTUNITIES FOR EXPANSION IN NORTHERN POLAND
A B L o g i s t i c s P o l a n d
J.H. VAN MOSSEL, 2004
This research project has been executed for A B Logistics Poland, a business unit of A Logistics, completing my study at the Faculty of Management and Organisation of the University of Groningen.
The report offers recommendations about possibilities for expansion of the business unit in Northern Poland. Kwidzyn/ Groningen, 2004
©The author is responsible for the contents of this report; copyright belongs to the author.
Illustration on cover: Kaplan, Nata. 1992. Oil on canvas.
The illustration represents flying storks. Storks are the national symbol of Poland. The storks are flying somewhere, looking for new opportunities.
Author University Supervisors
J.H. van Mossel - S1147552 Drs. R.W. de Vries
A B Logistics Poland Drs. D.F.F.R. Maccow
International Business, Company Supervisor
Faculty of Management and Organisation K. Maryniewski
Rijksuniversiteit Groningen A B Logistics Poland, Director
CONTENTS
PREFACE... 9
EXECUTIVE SUMMARY ... 11
O
BJECTIVE AND GENERAL APPROACH... 11
I
NTERNAL ANALYSIS... 11
E
XTERNAL ANALYSIS... 12
P
OSSIBILITIES FOR EXPANSION... 13
1. INTRODUCTION... 15
1.1 O
RGANISATION ANDS
ERVICES... 15
1.2 H
ISTORY... 16
2. RESEARCH SET-UP ... 21
2.1 B
ACKGROUND... 21
2.2 P
URPOSE AND SIGNIFICANCE... 23
2.3 O
BJECTIVE... 23
2.4 T
HE SCOPE/
BOUNDARIES... 23
2.5 R
ESEARCH QUESTION... 23
2.6 R
ESEARCH MODEL... 23
2.7 S
UB-
QUESTIONS& M
ETHODS... 26
3. INTERNAL ANALYSIS... 33
3.1 I
NTRODUCTION... 33
3.2 P
HASE1: S
URVEYING POTENTIAL STRENGTHS AND WEAKNESSES... 33
3.3 P
HASE2: C
ATEGORIZINGO
RGANIZATIONALD
IFFERENCES... 49
3.4 P
HASE3: I
NVESTIGATING THES
OURCE OFC
OMPETITIVEA
DVANTAGE... 51
3.5 P
HASE4: E
VALUATING THEC
OMPETITIVEA
DVANTAGE... 52
4. EXTERNAL ANALYSIS: MACRO ENVIRONMENT... 55
4.1 I
NTRODUCTION... 55
4.2 T
HEI
NTERNATIONAL& N
ATIONALE
CONOMY... 55
4.3 T
ECHNOLOGY... 56
4.4 G
OVERNMENT... 58
4.5 I
NDUSTRIALG
EOGRAPHY... 62
5. EXTERNAL ANALYSIS: MESO/ MICRO ENVIRONMENT... 67
5.1 T
HES
TRUCTURALA
NALYSIS OF THEI
NDUSTRY... 67
5.2 T
HES
TRUCTURALA
NALYSISW
ITHIN THEI
NDUSTRY... 78
6. SWOT, SET-UP IMPLICATIONS ... 91
7. OPPORTUNITIES FOR EXPANSION ... 97
CONCLUSIONS & RECOMMENDATIONS ...109
REFERENCES...113
LIST OF DIAGRAMS
D
IAGRAM1: O
RGANIZATIONAL STRUCTUREA L
OGISTICS(
ADAPTED FROMA L
OGISTICS, 2003)... 15
D
IAGRAM2: T
HE DIFFERENT TYPES OF TRAILERS... 16
D
IAGRAM3: T
HE INITIAL TRANSPORT PROCESSES OFC. ... 17
D
IAGRAM4: T
HE PROCESSES OF INCOMING AND OUTGOING GOODS. ... 19
D
IAGRAM5: T
HE RESEARCH CONCEPT... 25
D
IAGRAM6: S
TRATEGIC DEMAND-
CATEGORIES FOR ANSBU (A
AKER, 1998)... 29
D
IAGRAM7: T
HE STANDARD MODEL OFP
ORTER’
SV
ALUEC
HAIN(P
ORTER, 1985)... 34
D
IAGRAM8: T
HE ADAPTEDV
ALUEC
HAIN... 34
D
IAGRAM9: O
RGANISATION DIAGRAM OFA G, K
WIDZYN. S
OURCE: A B L
OGISTICSP
OLAND, 2003... 35
D
IAGRAM10: F
LOW CHART OF THEL
OGISTICS SERVICES... 36
D
IAGRAM11: F
LOW CHART OF THEI
NTERNATIONALT
RANSPORT SERVICES. ... 39
D
IAGRAM12: F
LOW CHART OF THEW
AREHOUSING PROCESSES... 42
D
IAGRAM13: R
EFRAMING OF POTENTIAL STRENGTHS AND WEAKNESSES AS RESOURCE OR CAPABILITY... 50
D
IAGRAM14: Q
UESTIONS OF COMPETITIVE VALUE(B
ARNEY, 1995). ... 50
D
IAGRAM15: D
EFINITIONS FOR ASSIGNMENT OF ALTERNATIVE VALUES(D
UNCAN ET AL., 1998: 12)... 51
D
IAGRAM16: A
SSESSMENT OFI
NTERNALF
ACTORS FORS
TRATEGICA
DVANTAGE(ASSIST)... 51
D
IAGRAM17: S
TRENGTHS ANDW
EAKNESSES AS POTENTIAL SOURCES OFC
OMPETITIVEA
DVANTAGE ANDD
ISADVANTAGE... 52
D
IAGRAM18: S
TRENGTHS AND WEAKNESSES AS POTENTIAL SOURCES OF COMPETITIVE ADVANTAGE AND DISADVANTAGE. ... 53
D
IAGRAM19: D
EVELOPMENTS IN TRANSPORT(V
ANZ
UYLEN, 1999). ... 57
D
IAGRAM20: T
HE‘V
ALLEY OFT
EARS’
DUE TO OUTPUT DECLINE DURING THE TRANSITION(P
ENG, 2000: 31)... 58
D
IAGRAM21: M
OTORWAY CONSTRUCTION PROGRAMME. S
OURCE: A
GENCY FORH
IGHWAYC
ONSTRUCTION ANDO
PERATION, I
NSTITUTE OFG
EODESY ANDC
ARTOGRAPHY... 62
D
IAGRAM22: (
OVER-)
CONCENTRATION OF THE DIFFERENT BRANCHES OVER THE THREE VOJVODSHIPS... 65
D
IAGRAM23: F
ORCESD
RIVINGI
NDUSTRYC
OMPETITION(P
ORTER, 1980)... 68
D
IAGRAM24: E
CONOMIC GROWTH AND LOGISTICS OUTSOURCING. S
OURCE: D
ATAMONITOR, D
IET
OP100
DERL
OGISTIK, H
YPOV
EREINSBANKR
ESEARCH... 70
D
IAGRAM25: F
REIGHTT
RANSPORTF
ORECAST FORP
OLAND(1998-2020) – R
EFERENCE SCENARIO(
IN MILLION TONS PER YEAR) (S
UCHORZEWSKI, 2000: 540). ... 71
D
IAGRAM26: T
HE DECLINING IMPORTANCE OF LOGISTICS AND TRANSPORT IN OVERALL COSTS(K
EARNEY, 1999). ... 75
D
IAGRAM27: T
HE WORLD MARKET FOR HEAVY TRUCKS(
PRODUCTION2000
AND MARKET SHARES) (S
OURCE: I
NTERNATIONALO
RGANIZATION OFM
OTORV
EHICLEM
ANUFACTURERS)... 77
D
IAGRAM28: W
HETHER COMPETITORS DO FOCUS ON SPECIFIC MARKETS OR NOT... 79
D
IAGRAM29: L
EVELS OF SERVICE IN THE LOGISTICS INDUSTRY... 80
D
IAGRAM30: C
LASSIFICATION OF COMPANIES BASED ON HISTORICAL ROOTS... 81
D
IAGRAM31: C
LASSIFICATION OF COMPANIES BASED ON DIFFERENT SERVICES... 82
D
IAGRAM32: T
HE AMOUNT OF CATEGORIES OF SERVICES BESIDES THE‘
TRADITIONAL’
SERVICES. ... 82
D
IAGRAM33: D
EGREE OF GLOBALIZATION OF BUSINESS. ... 83
D
IAGRAM34: C
OMBINATION OF DIAGRAMS‘
DIFFERENT GROUPS OF CUSTOMERS’
AND‘
DIFFERENT GEOGRAPHICAL AREAS’. ... 83
D
IAGRAM35: 3-D
COMBINATION DIAGRAM... 84
D
IAGRAM36: C
OORDINATION POINTS OF COMPANIES WITHIN3-D
COMBINATION DIAGRAM... 84
D
IAGRAM37: C
URRENT NET TURNOVER OF COMPETITORS. ... 86
D
IAGRAM38: G
ROWTH RATE OF TURNOVER... 87
D
IAGRAM39: EBIT/O
PERATINGT
URNOVER... 88
D
IAGRAM40: C
ONFRONTATION MATRIX... 91
D
IAGRAM41: R
ESPONSE RATE IN EACH OF THE BRANCHES... 98
D
IAGRAM42: T
HE DISTRIBUTION OF THE AMOUNTS OF EMPLOYEES OF THE RESPONDENTS... 98
D
IAGRAM43: T
HE DISTRIBUTION OF THE AMOUNTS OF TURNOVER OF THE RESPONDENTS... 99
D
IAGRAM44: T
HE DISTRIBUTION OF THE RESPONDENTS OVER THE THREE VOJVODSHIPS. ... 99
D
IAGRAM45: C
ROSSTABULATIONT
URNOVER* V
OJVODSHIP...100
D
IAGRAM46: T
HE DISTRIBUTION OF THE RESPONDENTS OVER THE DIFFERENT TYPES OF ACTIVITIES...100
D
IAGRAM47: T
HE SHARE OF RESPONDENTS WHICH ARE PART OF A BIGGER CONCERN AND WHICH ARE PART OF A FOREIGN COMPANY. ...100
D
IAGRAM48: C
ROSSTABULATION PART OF A BIGGER CONCERN*
VOJVODSHIP. ...101
D
IAGRAM49: C
ROSSTABULATION PART OF A FOREIGN COMPANY*
VOJVODSHIP. ...101
D
IAGRAM50: C
ROSSTABULATION BRANCH*
VOJVODSHIP...102
D
IAGRAM51: T
HE PERCENTAGE OF RESPONDENTS WITH DIRECT SUPPLIERS AND CUSTOMERS IN FOUR ROUGH DESTINATIONS...103
D
IAGRAM52: C
URRENT LOGISTICS OPERATIONS OF THE RESPONDENTS,
WHETHER OUTSOURCED OR NOT. ...103
D
IAGRAM53: S
ATISFACTION AMONG THE RESPONDENTS ABOUT THE LOGISTICS ACTIVITIES...103
D
IAGRAM54: T
HE RESPONDENTS THAT INDICATED TO BE LESS THAN AVERAGE SATISFIED WITH ONE OR MORE LOGISTICS ACTIVITIES...105
D
IAGRAM55: C
ROSSTABULATION AMOUNT OF RESPONDENTS WHOSE PRODUCTS CAN BE TRANSPORTED BY MEGATRAILERS*
SWAPS...106
D
IAGRAM56: R
ECOMMENDATION ABOUT THE ORGANIZATIONAL STRUCTURE AFTER EXPANSION OF BUSINESS AT ANOTHER LOCATION INN
ORTHERNP
OLAND. ...109
D
IAGRAM57: T
HE COMPANIES THAT ARE UNSATISFIED WITH ONE OR MORE ACTIVITIES THAT COULD BE PERFORMED BYA G/L
OGISTICS...111
PREFACE
With this report I conclude my period of research at A B Logistics Poland, Kwidzyn, in order to graduate at the Faculty of Management and Organisation of the University of Groningen. The report is the outcome of a study seeking new ways for the business unit to look at its environment. Specifically, the report offers recommendations on the possibilities of expansion for A B Logistics Poland in Northern Poland.
Individuals with expert knowledge and experience in one or more subjects which are covered by this report, have contributed to the study, including representatives from A Logistics, A B Logistics Poland and D Industries Poland. Particularly, I would like to thank Mr. Maryniewski for his support during the research, both my supervisors at the university, Mr. De Vries and Mr. Maccow, and not to forget Mr. Officier and Mr.
Dobbelaere without whom I would not have been able to execute this research. Finally, I would like to thank Paulien for her critical review of this research.
J.H. van Mossel,
Groningen/ Kwidzyn, February 2004.
EXECUTIVE SUMMARY
Objective and general approach
More and more West-European companies are making the move to lower wage countries, such as the countries in Middle and Eastern Europe. A Logistics as logistics service supplier to major West-European companies has to follow its clients in this move. In this perspective, the value of A B Logistics Poland (G) for A Logistics is obvious, and its growth is important. For A G, growth is even necessary to secure its business, as the unit is currently virtually dependent on D Industries Poland (F).
Using a rich description of the company and its environment, the objective is to explore the possibilities that the company has in its environment as well as the actions that can be taken. Its purpose is to provide usable knowledge for policy, to rationalize the policy of the company concerning expansion. The objective of this research is to provide A B Logistics Poland with clear recommendations about the most suitable options for expansion in Northern Poland. The results of the research should lighten the current dependency on D Industries Poland and it will give direction to the general focus of A Logistics on Central and Eastern Europe.
The research question indicates the knowledge that is required to be able to achieve the objective: Which are the most suitable possibilities for A B Logistics Poland to expand its business activities in Northern Poland?
Based on the internal and external analyses, market opportunities have been researched, resulting in recommendations regarding possibilities for expansion.
Internal analysis
Through an internal analysis, the strengths and weaknesses of the business unit have been explored, and the strategic implications of these strengths and weaknesses analysed. A few conclusions can be drawn.
First of all, the integration of the different processes of A G generates important synergy advantages, enabling enhancement of service for the client and improvement of efficiency. The integration of warehousing, transport, and logistics processes within this unit creates advantages by sharing knowledge about, for instance, customers, processes, and competitors. This shared knowledge is fed by the fact that the outgoing store processes are on E’ site, so if needed A G can react fast at complaints and demands around these processes. Furthermore, the freight forwarding activities, and more specifically the allocation table increases the insight in preferences of other carriers as well as the capacity of other carriers. Besides these knowledge-related aspects, the swap system
1lightens the problem of a lack of space in the store, enhance efficient use of trucks, enhance efficient use of space and the relatively big volume of a swap body lowers the price per loaded unit: another example of advantages through integration.
As already mentioned, the outgoing store processes are closely related with E’ processes. A G has proofed that it is able to take advantage of this, and uses it to improve the efficiency and flexibility of the processes.
This means that A G’s close integration with and flexibility towards the client’s processes offers opportunities for differentiation.
Another strength, related to the fact that the unit is part of A Logistics: A Logistics and/or its business units provide A G with financial, organisational and operational backup in capacity. This increases the possibilities of A G, enabling differentiation. However, the business unit is still relatively independent. This has the positive consequence that they can give the right attention to the specific (region specific) problems that arise. Furthermore this independency provides A G the operational freedom that enables optimal flexibility towards the client. This flexibility provides A G differentiation opportunities, in a highly competitive industry where cost advantage is difficult to achieve, especially for smaller entities.
1 Swap bodies are exchangeable units to carry B. They can be disconnected from the (big volume) truck and moved independently from the truck. This means that the units can be (pre)loaded independently from the carrier.
Although C has been found to organise the logistics processes for F, the current situation of dependency on F’s processes is a major weakness. The dependency of A G on F is an issue that highly endangers the competitive advantage of the business unit. The lack of a marketing/sales manager confirms this status quo.
The internal analysis leads to the next two recommendations:
Recommendation 1: Expansion should not endanger the current competitive strengths of synergy of
activities and its attention and flexibility towards particularly F. To ensure this, the current organisation in Kwidzyn should be kept intact. The current managing director of A G has to stimulate synergy-advantages and learning effects between Kwidzyn and a new unit, while keeping the current advantages of the organisation in Kwidzyn.
Recommendation 2: In order to enhance the chances on a decrease of dependency on F, a
marketing/sales manager should be hired. This is in line with the current plans of A G.
External analysis
In general, the economic situation and foresights for (Northern) Poland are good. Despite the current low growth of the Polish GDP, a recovery of economic activities is expected. The costs of labor are relatively low and the country can be described as socially peaceful. A growth of trade with the candidate and current members of the European Union is expected, and the Polish government has set itself the goal of further flexibility of its economy through further liberalization. The pressures to build motorways are increasing. A few roads are particularly interesting for A G, namely the A1, but also the A2 and the toll road to Kaliningrad.
In opposition to these positive developments, some more negative issues can be reported. First of all, a contraction in output of the agriculture and industry branches is going on, except for the branch of mechanical and electrical appliances. Besides, Poland has to deal with a relatively high level of corruption, which seriously endangers the operation of the economy. Despite this, Poland has a stable institutional and political system (democracy). In contrary to the trade with candidate and current members of the European Union, trade with the countries at the east border of Poland, including Kaliningrad, is expected to stabilize or even decrease. The direct consequence of this for transport is that transport to and from Western Europe has more future at least in the shorter run, than transport to and from Eastern Europe.
Regarding the logistics industry, a few developments influence the possibilities for expansion of A G as well.
First of all, the development of environmentally friendly propulsion systems lightens the pressure from substitutes of road transport, particularly rail transportation. Another positive development for road transport is the fact that the waiting hours for trucks at the western/southern borders of Poland will be very limited, because of the disappearance of most of the border related obligations around the movement of goods to EU members. Furthermore, the chances for carriers from countries that become member of the European Union are growing, because there is no need for permits anymore to drive within the European Union.
Besides, the improvement of virtual warehousing applications increases the possibilities for warehouse consolidation. Warehouse consolidation offersUle advantages, which lead to lower costs. On the other side, value added activities, such as packing and labeling, have relatively high growth and profitability rates.
In order to increase the possibilities for expansion, developing a network of business contacts is important.
The creation of this network can be stimulated by the presence of clusters of related industries. Clusters can be constructed, or they are spontaneously originated (not controlled). Constructed clusters in Northern Poland are the Special Economic Zones in Słupsk, Gdánsk, Suwałki and Olsztyn. Although real spontaneous clusters cannot be identified, concentrations of branches are the electronic and electric equipment branch near Gdańsk/Gdynia, the industrial machinery branch within the quartet of cities Bytow, Słupsk, Gdynia and Gdańsk, the sugar industries in Kujawsko-Pomorskie, and the lumber and wood products branch in Warminsko-Mazurskie.
The logistics industry is a fragmented industry. Small companies can survive next to the big players of the
industry, which are consolidating in a high rhythm.
The entry barriers for companies from related industries are low, and these companies particularly participate in the consolidations. At the same time, the entry barriers in Northern Poland for new start-ups in transport are lowering because of the change of the concession system in a license system. Buyers, and particularly key-customers like F possess a considerable buying power. However, as A Logistics is an important supplier for F as well, the bargaining power is more balanced.
Within the logistics industry a few strategic groups can be identified. Three criteria have been applied to
‘divide’ the selected companies in strategic groups: different groups of customers, different types of services, and different geographical areas. Although not all companies could be pasted in one of the groups, four groups have been identified. The first group consists of the companies Frans Maas, Giraud, TDG, Norbert Dentressangle and A Logistics. The companies are all regionally focused (on Europe), and offer a limited amount of services next to the traditional ones. The companies also all focus on a certain amount of market segments. The second strategic group consists of Wincanton and Fiege. Both companies are merely focused on Europe, without focusing on certain market segments. The next group consists of Kühne &
Nagel, Ryder, Exel and Stinnes. These are globally operating companies, with no focus or a broad selection of markets, and all companies offering a relatively broad package of services. The last real group that can be identified is a group of historically connected companies in a strategic sense, these companies all have their roots in mail and express services: UPS, TPG, and DPWN. As well as the previous identified group, these companies are all operating globally with no focus or a broad selection of markets, and all companies offering a relatively broad package of services.
In general the turnover of the strategic group of A Logistics is relatively low, the growth in turnover is low to average and the EBIT/Operating turnover indicator, is generally low, except for TDG. TDG focuses on a small amount of segments, and this appears to be a good choice. A is taking another way to move up from this position: they want to provide a broader package of services (one-stop shop, as long as it has to do with logistics) to a wide range of customer segments within Europe. This means that A tries to make the move towards the direction of the second group. To reach this goal while upgrading profit potential it is important for A that, besides the needed knowledge and experience, they build up a strong presence or network in a wide range of markets to be able to serve every European customer.
Possibilities for expansion
Besides the ‘implications’ resulting from the internal and external analysis, the possibilities for expansion are dependent on the current capacity of A G (weight of trucks, size of trucks, B that can be transported by A).
The next recommendations came out of the research regarding the possibilities for expansion:
Recommendation 3: For a growth in size that makes up for the current size of business with F the
vojvodship
2Kujawsko-Pomorskie should be explored particularly.
Recommendation 4: As A G has experience within the electronic and electric equipment branch,
possibilities to expand exist particularly in the vojvodship with a relatively high percentage of companies of this branch, namely Pomorskie. Moreover the growth in this sector is in contrast with the general industrial growth in Poland, relatively high. Gdańsk and Gdynia are particularly centres of the electronic and electric equipment branch, thus the focus of a further investigation should lie on these cities.
Recommendation 5: Doing business with the companies that are/will be located in the Special Economic
Zones, namely H Sp. Z o.o and J provides more opportunities to expand the network of business contacts than elsewhere.
Recommendation 6 : The next companies provide direct opportunities for expansion of business : L SA,
PBHU M, N, I Sp. Z o.o, O Sp. Z o.o, and P SA. These companies are currently unsatisfied with one or more logistics activities that A G is able to deliver, on itself or in cooperation with A Logistics (Oss). However, among the respondents that indicated to be satisfied ‘on average’ with the logistics activities, opportunities
2 The vojvodships are the Polish provinces.
might exist as well. The respondents might be unwilling to unveil negative issues related to their organisation to the researcher.
Recommendation 7: In order to improve possibilities for expansion, A G should procure trailers/swaps that
can handle B with more weight than 22 tons.
Recommendation 8: Intermodal transport with the use of the railway system in Kwidzyn can offer cost-
advantages (in theory) and good opportunities to develop capabilities which can be used elsewhere.
Finally, of course the possibilities for expansion are not restricted only to the respondents of the
questionnaire session and neither to the selected vojvodships. Other methods, particularly personal
interviews with authorities and companies within the region, allow further exploration of the opportunities
inside and outside the selected region.
1. INTRODUCTION
1.1 Organisation and Services
A Logistics is one of the leading companies in transport and logistic services. It transports products for the business to business as well as the business to consumer markets. The goods are shipped by means of road, water, rail and pipeline, although the road transport is by far the most important for A. Besides transport, A Logistics focuses on a wide range of different logistic activities.
The company is divided into the clusters B, Bulk and Tank. A B Logistics is responsible for the logistics and transport of packed and unpacked products, while this cluster is specialized in the consumer electronics, automotive, and paper industries. A Bulk Logistics is specialized in goods such as granules, minerals, raw materials, and food products, and A Liquid Logistics has specializations in chemicals and liquid foodstuffs.
The individual A ‘companies’, the business units, are classified under one of the three clusters, according to their scope of service. For most of the business units, fleet management, planning, administration and invoicing are centralized, while the business units always handle customer contact and account management individually. The staff department ‘Management & Logistical Development’ (MLD), which functions as the ‘think tank’ of A Logistics, is also a centralised body. This department consists of some 40 IT specialists and logistic engineers and it plays a role in tender support, the development of concepts and managerial skills as well as collaborative projects with customers and other parties. However, in the near future this department will be dismantled and a new IT department and ‘Organising’ department will be created.
The business unit A B Logistics Poland (A G) is part of the cluster B. It is lead by a board consisting of three members with equal voting rights. One of them is at the same time the operational director of A G. Like the A organisation, de business unit provides logistics as well as transport services. However, the focus lies on logistics. This results in the ‘split-up’ of logistics activities into Logistics (mainly forwarding) and Warehousing, next to (International) Transport. ‘Logistics’ mainly consists of planning of loads and arranging carriers for the primary client and partner of A G, namely D Industries Poland (F), Kwidzyn. This factory produces televisions for the European market. The outgoing store (‘Warehousing’) is responsible for preparing the outgoing loads for transport and loading the trucks. The third area, branch of activities done by A G is International Transport. It is their task to arrange and transport loads, mostly internationally.
Diagram 1: Organizational structure A Logistics (adapted from A Logistics, 2003).
Board Finance
HRM MLD/Organising
B Bulk Tank
Business Units Business Unit: A B Logistics
Poland Sections:
- Logistics - Warehousing - International
Transport
1.2 History
A Logistics
In 1944 Q A established his transport company. Because of the post-war reconstruction in the Netherlands, the business activities of Q A were able to grow. It became one of the largest transport companies in the Netherlands and carried cross-border goods between the Netherlands and Belgium, Luxembourg, Germany, France and Italy. In the 1970s, Q A became a private limited company and was renamed Expeditie- en Internationaal Transportbedrijf Q A BV. During the 1980s, Q A began establishing offices abroad and taking over national and international companies. The development of new technologies and the pursuit of a more comprehensive range of services drove the company’s rapid growth. Q A changed from a carrier to a logistics service provider. The name of the company was changed to Q A Transport Group. Midway through the 1990s, the company conducted a customer satisfaction survey to re-examine its positioning in the market. The survey revealed that the market perceived A as a fragmented company. In 1998, Q A Transport Group decided to let all group companies operate in the market under the new name of A Logistics (Het Financieele Dagblad, http://www.Alogistics.nl, 28-06-2003). A B Logistics Poland is currently one of those group companies, now called business units.
A B Logistics Poland
The current A B Logistics Poland (G) has been taken over by A Logistics, on the 5
thof November 2002, although the take-over was more or less arranged one year before. Before the take-over the company was called C. This company was the logistics service provider and carrier for F. After the setting-up of F in Kwidzyn, E used different carriers for the transportation of televisions to Western Europe as well as for the transportation of components to the factory. R was one of these carriers (which drove around 15 % of the B), like A Logistics (Oss), and they already carried out services for E for a long period. In that period the organisation of the shipment coordination of the E factory in Kwidzyn was not adequate. First of all the planning of the carriers was inflexible. The reactions on changes in production schemes were inappropriate, which resulted in long waiting hours for trucks. Moreover, most of the trailers used by carriers were normal trailers (see diagram 2). The negative consequence of these is that they are relatively expensive per loaded television, so the common use of these trailers enlarged the total transport costs for E. A third problem existed as a result of the huge growth of the businesses of F. The infrastructure was not adapted to this growth, which led to chaos because of too many trucks on spare (parking) place.
Diagram 2: The different types of trailers.
Mainly because of these problems R, a relatively small company, proposed E an alternative way of organising the logistics. This meant taking over part of the logistics from F, Kwidzyn. After they received permission from E Eindhoven the plan was put into action. E was persuaded because of the following factors:
-
R had proven to be a good business partner for E;
-
R possessed good equipment;
MEGA TRAILER
2.95m
13.70m
2 M 85
2.85m
13.70m
NORMAL TRAILER 2.65m
13.70m
BIG VOLUME
3m
7.74m
Swap bodies
-
R was prepared to invest in the improvement of the infrastructure around E in Kwidzyn (they calculated an amortization period of 10 years);
-
R was willing to start without using a contract to provide E with the opportunity to reject R (and later on C) in case of failure. This was important to convince E of the good will of the investors;
-
R was able to specialize in logistics, while E could focus on their core business, developing and selling their products. As it was the trend in that period to put out to contract all that was not part of the core business, the proposal of R was well in line with that strategy of the E organisation.
-
The good-timing and personal conviction of one of the owners of R.
The proposal of R was:
-
To set up an organisation (C) for the organisation of logistics, planning of transports and advising.
-
Use swaps: exchangeable units to carry B. Instead of normal-, 2.85-, or mega trailers using big volume trucks with two swaps on it, which can be disconnected and moved independently from the truck (see diagram 2). They also planned to convince other carriers to use swap bodies. One of the advantages of swap bodies is that they can be (pre)loaded independently from the carrier, which provides efficiency advantages.
-
To use shuttle trucks in Kwidzyn to be able to move swap bodies independent from trucks and drivers.
-
To have daily line trucks between Pittem (Belgium, the home base of R) and Kwidzyn.
After the start of C in July/ August 1997, this company primarily became a logistics company, built up around E. They used sub-contractors for the transport. However, soon they bought 10 trucks, which became stepwise operational. Line trucks started operating between Pittem and Kwidzyn. For the destinations United Kingdom, France and Spain, in this way they transported the televisions from Kwidzyn to Pittem and from Pittem to elsewhere. Pittem also grouped components before they were transported to Kwidzyn. The destinations Sweden, Germany, Netherlands and Poland itself were reached directly from Kwidzyn. Diagram 3 shows the initial transport processes by C.
Still, the transport was only meant to support the logistics/ forwarding activities.
Diagram 3: The initial transport processes of C.
After three years of operation, C and E agreed on building a bonded parking for picture tubes. This is a duty free zone, meaning that the VAT duties only have to be paid by E after the end of the customs procedure when the goods are moved to the incoming store.
E AC
C
Kwidzyn
R
Pittem
SP FR
UK
= Swap body Incl. bonded
warehouse
NL SW
GE
= Big volume line PL truck
After the finishing of the parking for swaps to be exported as well as the bonded parking, the distribution of televisions to regional E distribution centers (like Dreux (FR), Acht (NL), Durham (UK)) could be done by C itself, as well as the import of components. Because of a lack of space next to the factory, the parking places were situated at C, one kilometer away from F. Because the parking places are situated at C, shuttle trucks are used to move swaps between the parking places and E. Concerning the incoming components a distinction can be made between picture tubes and other components. Regarding picture tubes in swaps, these components are normally first put at the bonded parking while the customs procedure is done, and at the moment the components are needed by E according to the JIT (Just In Time) process, they are moved by shuttle truck to the incoming store. If the components are not loaded in swap bodies, the truck moves, in case of international transports via the customs department (the official authority for customs clearance) to the incoming store and can be unloaded. In case of outgoing products (televisions or KITs
3), the sequence also depends on whether the truck to be loaded is a big volume truck (see diagram 2) with swaps or another model. If the truck is not a big volume truck (with swaps), the driver simply drives the truck to E at the moment that the load is ready and when the loading process is finished, the truck drives out. If the truck is able to carry swap bodies, the empty swap bodies are loaded when the load is ready. The bodies are further moved to the parking and wait there until the customs clearance is done (if applicable) and a big volume truck takes them to carry the load to the customer, which might be one of E’ distribution centers.
Polsped, a customs agent, manages the customs procedures for imported and exported goods from and to Poland on behalf of F. For exported goods, F uses a simplified customs procedure, which limits the waiting time for trucks, as they do not have to go to the official customs department, which is only restricted open.
Finally, the responsibility for the outgoing store/warehouse of F, including the personnel, has been taken over by A G. This responsibility covers all the processes from the products coming off the production line until the moment that the truck leaves E.
3 Sets of television parts, to be sent to another non-E factory where those parts will be put together and a television of brand X will be created.
Diagram 4: The processes of incoming and outgoing goods.
Nowadays, A G also developed business activities for other customers than E, nevertheless limited. For S, a manufacturer of circuits for televisions, they provide logistics service, make allocation decisions for carriers, and for import deliveries is A G the main carrier. For T Polska, a producer of cabinets and back covers as well as U, which is a producer of carton boxes, A G is coordinating and transporting deliveries of JIT components. S, T and U are all JIT suppliers of components for F.
Incoming Store
Outgoing Store Production lines
Process responsibility A G
Bonded carpark
Normal carpark (A G) Shuttle
Trucks
Office A G Polsped
Owned by A G, hired by E
E F
Incoming goods
Outgoing goods
Picture tubes on swaps
Components, not picture tubes on swaps
Big volume trucks with swaps
Mega, 2.85, Normal trailers and big volume trucks without swaps
2. RESEARCH SET-UP
2.1 Background
“More and more European shippers are choosing for contracting the European logistics out to a logistics service provider. This provider appears to be able to provide logistics services for a competitive price that cannot be equalized by the shipper itself. An attendant advantage for the shipper is that it can concentrate on his core business now” (Ministerie van Economische Zaken, 2001: 14).
Changing production philosophies whereby customers determine the rate and flow of goods, not producers, has driven much of the motivation for innovation in the logistics structure. New logistics requirements are for
‘just-in-time’ delivery that is co-ordinated with production schedules. Customers seek to reduce stock levels and this puts pressure on the logistics companies to respond. As this occurs, more-and-more transport and logistics activities will be outsourced as part of integrated co-operation and service level agreements.
According to Dantuma & Hawkins (2001), the logistics industry expects that these developments will lead to an increased focus on e-commerce in order to respond to growing pressures on prices and margins, progressively shorter lead times and quality improvements.
Because the industry (so also the company) is unlikely to be able to survive in the future by offering only standalone services, A Logistics is widening its focus beyond just solid expansion and growth. It believes that the development of all-embracing logistical concepts is one of the best ways of continuing to meet customers’ wishes in the long term. For that reason, A is specialising in supply chain management, making it possible for A Logistics to control, supervise and monitor the entire logistical chain for customers. The firm is further expanding its line of services in the area of third-party logistics (3PL) and fourth-party logistics, while remaining asset-based (A Logistics Oss BV, 2003).
Next to this focus on supply chain management A Logistics is looking for new opportunities to grow outside the so-called ‘old Europe’. They have to follow their clients, like E, Thomson, Michelin, Renault, Volkswagen, in the move to more Eastern regions. According to Nieuwsblad Transport (2003), A perceives Eastern Europe as the most important grow-market, especially because of the enlargement of the European Union.
The first opportunities will be in Middle Europe: Hungary, Czech Republic and most of all Poland (because it is the biggest of all markets). But sooner or later the focus will move further east: i.e. Russia, Belarus and Ukraine. A movement of activities to Eastern Europe also includes positive cost-related advantages.
According to V A (Nieuwsblad Transport, 2003): ”Polish drivers do not only cost less than half of the price than Western-European drivers, but they are also very professional, well-trained, well-disciplined, and very obliging. It is remarkable how much lower the damage course on those Polish trucks is”.
Therefore, it was worthwhile for A Logistics to take over the C organisation of that time. In this way they were able to enter the East-European market. Besides C (after the take-over the business unit was called A B Logistics Poland), they recently took over the fast growing company W. While C primarily focuses on logistics processes, W was purely a capacity company in transport with a fleet of 260 trucks. Next to transporting itself, the company has the objective to grow as an organiser of transports (Nieuwsblad Transport, 2003). The name of W has been changed into A Logistics Polska. The third current ‘Polish’
business unit is the former Simex, a small company (15 trucks) which business only concerns international and domestic transport.
As most of the business activities of A G are concentrated on F, the business unit is currently very
dependent on the activities of F. Meaning in times of better sales of televisions in Europe (normally in the
autumn but also in case of special events, such as the Olympic Games), the businesses of A G are rising. In
times of lower sales of televisions by E (during the spring), businesses of A G are quieter. In general, the
production of televisions has risen past years, but is now consolidating and even slowly decreasing. A
second (negative) aspect of the dependency on F is the chance of the factory closing down. As E is in an
ongoing reallocation process of the production of televisions, and moreover a reorganisation process of the entire division Consumer Electronics, the future for the factory in Kwidzyn is currently unknown.
Stimulated by the mentioned reasons of dependency, A G would like to know if there are any possibilities to expand their businesses, in Northern Poland. This will decrease its dependency on F Kwidzyn and it can offer new chances to increase profits. Now A G has asked me to provide them with advise about opportunities for expansion of this business unit in Northern Poland. As every business unit must work and decide very independently from A Oss and is responsible for making its own profits, it is A G which has the biggest stake in deciding about their own expansion. Nevertheless, A G will have to convince the cluster director B and the board of A Logistics, of the reasonability of their choices.
During this research ‘Northern Poland’ means the vojvodships Pomorskie, Kujawsko-Pomorskie, and
Warminsko-Mazurskie, as these are the regions surrounding Kwidzyn.
2.2 Purpose and significance
The purpose of the study is descriptive and exploratory. Using a rich description of the company and its environment, the objective is to explore the possibilities that the company has in its environment as well as the actions that can be taken. Its purpose is to provide usable knowledge for policy, and to rationalize the policy of the company concerning expansion. De Leeuw (1996: 207) defines ‘policy supporting’ as:
“Research of which the results increase the rationality of the policy process in terms of effectiveness, efficiency, and meaning for the actors”. As the research results can only be used for A G in Poland, it is a
‘site specific’ (Marshall, Rossman, 1999: 39) research. No organisation is the same organisation as A Logistics with exactly the same problem, thus the results can only be used for this situation.
2.3 Objective
The objective of this research is to provide A B Logistics Poland with clear recommendations about the most (theoretically) suitable options for expansion in Northern Poland. The results of the research should lighten the current dependency on D Industries Poland and it will give direction to the general focus of A Logistics on Central and Eastern Europe.
2.4 The scope/ boundaries
The project is subject to several restrictions. These restrictions influence the resources available and scope of the project, and therefore set the boundaries of the project.
•
There is a time limit of around 5 months to gather data for the research;
•
The strategy needs to be complementary to the overall corporate and business strategies of A Logistics, so far these are known to the researcher;
•
Limited budget is available for execution of the research.
•
As detailed financial information of A G and A Logistics is not available for me, a performance analysis can only be done very roughly;
2.5 Research question
The set-up of this research is default to the assumption that research is defined as deliberately and methodologically looking for new knowledge, in the form of answers to predetermined questions (Verschuren, P.J.M., 1988). This knowledge must be usable in the specific situation of the client and must satisfy a part of the total need for knowledge (Leeuw, de, A.C.J., 1990, p. 274). The research question indicates the knowledge that is required to be able to achieve the objective, set in the previous paragraph.
The research question is:
Which are theoretically the most suitable possibilities for A B Logistics Poland to expand its business activities in Northern Poland?
2.6 Research model
Taking the research question as starting point, the way of reaching the aim has been determined. A SWOT
(Strengths-Weaknesses-Opportunities-Threats) analysis has been chosen as the main framework and its
outcomes determine the implications that determine opportunities for expansion. Expansion of a company or
unit means that the current organisation increases, which happens in the (external) environment of the
organisation. Therefore it is important that the strengths and weaknesses of the (internal) organisation are
known, as well as the opportunities and threats in the environment, in order to be able to indicate
appropriate opportunities for expansion. The design school developed the SWOT model. In this model the
strengths and weaknesses of a company are exposed, together with the opportunities and threats in the market place. The data can be used to analyse various strategic options, which both exploit the internal opportunities and anticipate the market situation. Therefore, an internal and an external analysis form the basis for this SWOT. According to Mintzberg, Ahlstrand & Lampel (1998: 24), “at its simplest, the design school proposes a model of strategy making that seeks to attain a match, or fit, between internal capabilities and external possibilities.” Or in other words, “economic strategy will be seen as the match between qualifications and opportunity that positions a firm in its environment” (Christensen, Andrews, Bower, Hamermesh, and Porter in the Harvard policy textbook, 1982: 164). Concerning the implementation of strategy, the design school considers that “strategy should be made prior to any work of implementation”
(Rose, da, 1999: 31). This is equal to the process as formulated in the conceptual model of this research (see diagram five). A main part of the critics on this paradigm, therefore, has been located around the presumption of a separation of the work of thinkers from that of doers. This creates several risks. Andrews (Christensen et al., 1982: 553), one of the main representatives of the design school, acknowledges this:
“while the uncertainties of decision about new alternatives delay clear-cut major changes in direction, hundred of minor decisions incrementally may change the nature of the business and affect the character of the organisation.” Thus, next to the deliberate, formulated strategy, emergent strategies exist that influence the direction of the company as well. Therefore it is important that, also during the entire process of this research, there is room for “variation, extension and innovation” and a “sense of direction and responsiveness to changing opportunities” (Christensen et al., 1987: 84). The fact that this ‘design’ is created, while being present at the operational level of the business unit (A G), hopefully has resulted in the least distance between the process of ‘thinking and acting’. Ongoing discussions within the business unit have also contributed to this.
Thus the SWOT model is based on an internal and external analysis. To start with the external analysis, this consists of a macro environment as well as a meso/micro environment part. The macro environment is divided into several aspects, such as economic, social, and governmental. Paragraph 2.7, sub-question 2, will further look upon this. For the analysis of the meso/micro environment part (sub-question 3), the theories and models mainly developed by Michael E. Porter are used (but now and then further elaborated on by other theorists). Porter’s models have been chosen as cornerstone for these analyses, because of several reasons. First of all, Porter’s models were very useful for the aim of these analyses. Opportunities and threats can be easily derived through its tools: the five competitive forces model for the industry analysis (actually the aim of the model is to measure the attractiveness of the industry), and the strategic group analysis as competitor analysis, at the lower aggregation level. Thus the use of these models for this reason is valid. Moreover, the models of Porter have been tested often and thoroughly, which means that the reliability of the models is also high.
Porter’s models are part the positioning school. According to Da Rosa (1999: 57), “Positioning school of thought comprehends those strategic management models whose process of decision-making are based upon the selection of the most appropriate corporate and business levels strategies for maximisation of their competitive advantage”. This definition directly indicates one of the limitations of this school, namely it is based on the assumption that it is possible to make a selection. This implicates that the paradigm assumes more or less rigidity in its view of the world. Nevertheless, reality is dynamic. I have tried to treat it as such during the research process by continuously updating the report. For example half way the research project the licence system for trucks has changed. At that moment the internal analysis has been adapted to the new situation. This means as well, that the reliability of the outcomes of this research will eventually decline in time because reality stays dynamic while the report is finished.
On contrary to the external analysis, the models that are used for the internal analysis are mainly derived
from the resource based school. According to Grant (1991: 95), the basis of the resource based approach to
strategy is “the definition of the firm, not in terms of the needs it is seeking to satisfy, but in terms of what it is
capable to.” Using the resource based approach next to the positioning approach, I have tried to overcome
the inequality that the strategy for expansion would be mainly based on an external-oriented approach,
given the idea of the presence of a continuum with on one side an external oriented approach (positioning school) and on the other side an internal oriented approach (resource based school) (Da Rosa, 1999). More specifically, the tools originated in the resource based school enable a more comprehensive internal analysis, as the tools from the positioning school are not as developed regarding this aspect.
The internal analysis has been done through the use of a model created by Duncan, Ginter and Swayne (1998). Based on Porter’s value chain, which has extensively been tested as well, the strengths and weaknesses of the organisation are examined. Porter’s value chain describes business as a collection of interdependent activities, which in turn, form part of a continuous system that stretches back to suppliers and forward to channels and customers. The concept helps to clarify the kinds of values it offers to buyers and suppliers over the competition. Therefore it is very useful to determine the strengths and weaknesses of the company/unit. After the collection of strengths and weaknesses, they are tested on strategic relevance, which is the heart of Duncan et al.’s model, and the point where the resource based view goes further than the others. This makes the internal analysis more useful for latter parts of the research.
Thus based on the SWOT analysis, implications have been set which determine the possibilities of A G in the market. Combining the information from the market (collected in a database), and the implications, which were derived from the SWOT analysis, recommendations have been made. Questionnaires have been used to value the market and to improve market information, using the implications. This means that most of the recommendations about possibilities for expansion are derived from the questionnaire session. The implementation of the recommendations, as well as the necessary specification of these recommendations
4lies outside this research. Diagram 5 shows the contents and the sequence of these stages. Inside the boxes all sub-questions are related to each specific step in the research model.
Diagram 5: The research concept
4 More detailed examination of candidate companies for example in the form of interviews/discussions with the candidate, and examinations of results will be needed in the selection processes.
EXTERNAL ANALYSIS Opportunities and threats
(sub-questions 2, 3 & 4)
INTERNAL ANALYSIS Strengths and weaknesses
(sub-questions 1& 4)
Implications that determine the possibilities for A G
(sub-question 5)
Market opportunities in Northern Poland
(sub-question 6)
SWOT-analysis (sub-question 4)
Recommendations
Inside this research Outside this
research
Implementation2.7 Sub-questions & Methods
Sub questions and the related methods for unveiling the information
In this paragraph the different sub-questions are presented, including the methods that have been used to get the needed information, to analyse it, and the frameworks that have been used in this research. The several sub-questions are directly related to the different parts of the research model (diagram 5). Moreover, the sub-questions have been presented as well in diagram five in order to improve the comprehensibility.
This sub question is related to the internal analysis part of the conceptual framework, chapter three of this report. This internal analysis contains an assessment of strong and weak aspects of the company together with a valuation of these aspects.
Data
As (English) written information or data about the company was not available, except for two general presentations, I had to use interviews to get the information I needed to answer the question. I have had in- depth interviews and discussions with respectively the Director, the Load & Truck Planner, the Senior Store Supervisor, Transport Coordinator, Transport Dispatcher as well as one of the Internal Dispatchers. Apart from this, interviews with the former Managing Director, as well as the current Supply Chain Manager from F, A G’s key customer, have produced valuable information. In addition, articles from newspapers have helped me to get the closed organisation A Logistics known. In my opinion these methods, together with my observations during the period I have been at A G, were sufficient for reliable results concerning the internal analysis of A G.
Analysis
As mentioned before, the tools from in the resource based school enable a more comprehensive internal analysis, than tools from the positioning school. A model created by Duncan, Ginter and Swayne (1998) has been used for this investigation of resources and capabilities. The list of strengths and weaknesses generated by conventional techniques is usually little more than an initial impression of what a firm does well and where it needs improvement. The list is usually long, not very concrete, and agreed on by very few people. Duncan’s model does encourage thinking about strengths and weaknesses in terms of their strategic relevance, rather than merely auditing functional subsystems of the firm. The model contains four stages, namely:
1. Surveying Potential Strengths and Weaknesses (based on Porter’s modified Value Chain).
2. Categorizing Organizational Differences (what types of strengths and weaknesses does a firm possess in an absolute sense and relative to competitors). In this stage, potential strengths and weaknesses are categorized as strategic resources or capabilities. An ASSIST (an acronym for assessment of internal factors for strategic advantage) analysis is useful for systematically determining the competitive relevancy of the resources and capabilities.
3. Investigating the Source of Competitive Advantage (uniqueness driver versus cost driver as well as the location on Porter’s modified Value Chain)
4. Evaluating Competitive Advantage.
In my opinion, the technique is an efficient and affective aid for assessing an internal organisation. Its focus on the modified value chain does not overcome the possibility of long and (subjective) superficial lists of organisational characteristics, however it does encourage thinking about strengths and weaknesses in terms of their strategic relevance. Understanding competitively relevant resources and capabilities is important, even critical, for systematic strategic decision-making as this research intends to support. This means that
1. How can A G’s businesses be characterised and what are its distinctive resources and capabilities?
using this method, the amount of strengths and weaknesses is reduced to those that have considerable strategic relevance, and therefore can be used for answering sub-question 5 (setting up the implications which determine the way that possibilities for expansion are evaluated). After the investigation of the relevant strengths and weaknesses, discussions with the business unit have taken place in order to enhance the reliability of the results. Finally, the contents of the different parts of Porter’s value chain, which form the base for the method of Duncan et al., were discussed with several A employees in order to get a picture that is up-to-date and to increase the reliability of the results.
At a lower aggregation level, flow charts have been used to analyse the processes of A G. As this process approach makes it possible to clearly identify the strengths and weaknesses of the distinctive operations of the firm, each step within the ‘production process’ has been highlighted this way. Although the individual operations have been analysed, the comprehensive picture has not been excluded. As a flow-chart is originally a quality improvement tool, it is well usable to determine the quality of the processes and thus the strengths and weaknesses of it.
Furthermore, as the method of Duncan et al. has been based upon Porter’s value chain, each part of the (modified) value chain has been evaluated by use of Porter’s definitions. In a few cases the definition has been further elaborated in order to increase the validity of the used model. This is for example the case for the part “Organisational Infrastructure”, where this infrastructure has been interpreted twofold, namely the structure and culture of the organisation, while Porter itself does not mention this.
This sub question is related to a part of the external analysis share of the conceptual framework. This part is the analysis of the macro environment.
Data
Mostly secondary data sources have been used to obtain the needed information. These sources consist of written materials (books, newspapers, journals and magazines), multiple source data (area based as well as times series based, like country reports, industry reports, government publications and journals) as well as surveys (censuses, continuous and regular surveys as well as ad hoc surveys). In this way, enough data has been collected to do a thorough analysis.
Analysis
The macro environment can be divided into different aspects, namely the national/international economy, technology, government, social structure, demographic structure and the natural environment (Grant, 2002:
39).
2. Which are the important issues in the Polish macro environment and how is it evolving?
Source: Grant, 2002: 39
Alsem (1993: 106) mentions comparable aspects, and as this model suits well with the shape of this research (all forces influence the industry environment, which will be dealt with in the next chapter) I will apply it.
Thus all these aspects have some influence on the industry environment (so, also on the firm itself). Most of these issues are influenced by two important developments in the Polish macro environment, namely the fact that Poland is still a transition economy, and the fact that Poland will be part of the European Union’s internal market. Within the paragraph Government, special attention will be given to these two developments.
As the natural environment
5as well as the demographic
6and social factors
7of Poland are generally less- urgent factors for the logistics industry and only have some minor passive influence, I will leave these out of the analysis.
Analysis has been done based on the urgency of a certain development together with the influence of such a development on the industry. If the urgency as well as the influence is low, then the development only has to be followed limitedly. If the urgency is high, but the influence low, the area must be followed and analysed. If the urgency is low, and the influence high, the area might have to be followed and analysed more profoundly, and connected strategies can be considered, which, however, are not necessarily
5 The factors that I can devise are the presence of certain natural resources, which attract some businesses interested in those resources, as well as the influence the Polish climate with cold winters and mild/ warm summers can have on sales by their customers, thus as well on the business of the transport/ logistics companies. Climate also influences the way certain goods should be transported while avoiding spoiling of the goods, however this does not touch the contents of this research.
6 A ‘description of the people’ is mainly important for business to consumer markets, for the transport/ logistics market, this is only passively influential.
7 Social (/cultural) factors also only passively influence the market demand for transport/ logistics services. Moreover,
“less and less characteristics of customers and their buying behaviour can be coupled” (Alsem, 1995: 110).
The national/
international economy
Government Technology
Social structure Demographic
structure The natural environment
THE INDUSTRY ENVIRON-
MENT
developed and implemented. If the urgency and the potential influence are high, a thorough analysis should be done, together with the development of action plans or strategies (Aaker, 1998, see diagram 6).
Diagram 6: Strategic demand- categories for an SBU (Aaker, 1998).
This framework has been used implicitly, and will not be referred to anymore. However, it has guided the selection of specific subjects in the macro environmental analysis. In practice this means that subjects, based on the adapted model of Grant, with high influence and high urgency have been dealt with in this report, while subjects with low influence and urgency were left out.
Discussions with A employees have influenced the picture of the most influential and/or urgent issues and developments, as well as discussions within newspapers and industry related journals have done. This has increased the validity of the results as the most important (influential/urgent) issues for this research could be dealt with.
Apart from that, the success of a firm enhances the possibility of success for an industry, and the success of an industry enhances the competitive success of a country. The same is the case looking the other way around, namely, the success of an industry enhances the chance of success of a firm, part of that industry.
Porter (1990:73) writes additionally: “Nations succeed not in isolated industries, however, but in clusters of industries connected through vertical and horizontal relationships”. The presence of clusters or the creation of clusters of industries does be important for the success of A Logistics in Northern Poland. In the paragraph 4.5, Industrial Geography, attention has been given to this issue. Based on a definition of UNCTAD
8(1998) a distinction has been made between ‘constructed’ clusters and ‘spontaneous’ clusters.
Conclusions about the spontaneous clusters have been based on the business database (see annex VI), which is used for sub-question six as well. This database consists of the companies with 100 employees or more, which are present in the three selected vojvodships and which are part of branches, which are selected on appropriateness. The most interesting branches for expansion of business have been selected, based on the contents of the NACE codes (see annex V). Branches that purely deal with bulk, liquid and perishable products have been excluded as well as branches that do not deal with logistics in the way A Logistics is providing (such as banking and insurance companies). Branches in which the logistics is too marginal to make business have been excluded as well (such as education, or renting activities).
Based on this database the geographical concentrations of companies have been examined. As it is for example unknown which supporting institutions are present in the selected vojvodships for the selected branches, clusters could not be identified. Instead of this, concentrations of companies have been examined.
8 United Nations Commission on Trade and Development More thoroughly
following and analysing; consider connected strategies
Follow, in limited degree
Follow and analyse Thorough analysis, develop strategies High
Low
High Low
Influence
Urgency