Oligopoly Market Structure:

A study on
A.P. Moller-Maersk

Report on:

Oligopoly Market Structure:

A study on

A.P. Moller-Maersk

Submitted To
Md. Razib Alam
Lecturer
Department Of Marketing
University Of Dhaka

Submitted By
Md. Shariful Islam Bhuiyan
Roll No: 253
Section: B
11TH Batch

Department of Marketing, University of Dhaka

ii

Date of Submission
July 12, 2006
July 12, 2006

Md. Razib Alam

Lecturer
Department of Marketing
University of Dhaka
Dhaka
Subject: Submission of report on Oligopoly Market Structure:
Dear Sir:
My report is on Oligopoly Market Structure: A STUDY On
Communication-2 that you have: assigned me as part of the
Microeconomics course. I have tried to follow the instructions and
suggestions that you have given in every aspects of our study.
This report assists in making an insight into the idea, the technique of
providing most wanted sms services and and about the host company
. Communication-2.
I tried to make the term paper with relevent information and hqave also
submitted in due time. thank you for choosing me for working on this
topic.

Sincerely yours,

iii

Ummul Wara Adrita

Roll No: 082
Sec: B
11th Batch

iv

ACKNOWLODGEMENT
I am truly thankful to our course teacher, Md. Razib Alam, Lecturer, Department of
Marketing, University of Dhaka. Without whose heartfelt supervision and suggestions it
was extremely difficult for me to prepare the report.
The success of this project work depends on the contribution of number of people
especially those who take the time to share their thoughtful guidance and suggestions to
improve the reports contents. I want to thank and convey my heartiest gratitude to the
manager of Communication-2, Mrwho enthusiastically helped me in preparation of the
report.
I am also thankful to all concerned who shared information and opinions with me
regarding my question.

Contents
Page
Letter of Transmittal
Acknowledgement
Executive Summary

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PART - I
I

Introduction
1.1. Background of the Report
1.2 Objective of the Report
1.2.1 Broad Objective
1.2.2 Specific Objective

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01
01
01
02

PART - II
II

Methodology
2.1 Primary Data
2.2 Secondary Data

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PART - III
III

Literature Review

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04
04
05
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06
06
06
06
06
06
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07
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PART - IV
IV

Organizational Part
4.1 History of Instigation
4.2 Expansion
4.3 Continuous Growth
4.4 Management
4.5 Vision & Mission
4.6 Business Area of Maersk Group
4.6.1 Shipping
4.6.2 Oil & Gas
4.6.3 Maersk AIR
4.6.4 APM Terminal
4.7 Shipping Activity
4.7.1 MAERSK SEA LAND
4.7.2 MAERSK TANKERS
4.7.3 MAERSK GAS CARRIERS

4.7.4 MAERSK CAR CARRIERS

4.7.5 Maersk Supply Service
4.7.6 Maersk Brokers
4.7.7 Maersk Logistics
4.8 SWOT Analysis
4.8.1 Strength
4.8.2 Weakness
4.8.3 Opportunities
4.8.4 Threats
4.9 The Porters Five Forces Models
4.9.1 Rivalry
4.9.2 Threat of Substitutes
4.9.3 Buyer Power
4.9.4 Supplier Power
4.9.5 Threat of Entry
4.10 Value Chain Analysis
4.10.1 Primary Activities
4.10.2 Support Activities

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08
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PART - V
V

Findings

PART - VI
VI

Limitation of The Report

PART - VII
VII

Conclusion & Recommendation

PART - VIII
VIII

Appended Part

List Figures

Page

Figure 1: SWOT Analysis Figure

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Figure 2: Porters Five Forces Model

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Executive Summary
A.P.Moller Maersk, which is doing its business in oligopoly, market structure. As a
multinational shipping line and being the largest shipping company of the world,
A.P.Moller Maersk has been already practicing good management all over its operation.
Our objective is to get an idea about oligopoly market structure through the company
A.P.Moller Maersk. So we also have to know vision and mission, business area,
different models related to A.P.Moller Maersk.
Its vision and mission is to create opportunities in global commerce. It has a big business
area like shipping, oil & gas, MAERSK AIR. The shipping business includes MAERSK
SEALAND, MAERSK TANKERS, MAERSK GAS CARRIER, MAERSK CAR
CARRIER, MAERSK SUPPLY CARRIER etc. Here also a SWOT analysis.
It is understandable that A.P.Moller Maersk are compatible to handle any sort of trouble
to threat them. Here are few models, by analyzing, these models tries to find out some
strategies of company.
From the above discussion, we have seen that in any business, Maersk has been
successful in managing its position by developing and implementing structured policies
and procedures in several sea tours. Still the observation tells that Maersk needs to
improve itself in certain areas to face upcoming challenges.

1. INTRODUCTION
There are different markets structures are in place. Every market structure is different
from one another. Each has its own characteristics and the product, the consumer and the
producer of product of that specific structure are different and they act according to that
market structure. There are actually four kinds of market structure in place, which are
given below:

1.
2.
3.
4.

Pure competition
Pure monopoly
Monopolistic competition
Oligopoly market structure

As a student of the department of marketing it is very important to know about all this
different structure given and know how this system actually works in reality

1.1Background of the Report:

We are required to conduct a survey on any kind of market structure among four. I
have decided to conduct a survey on Oligopoly market structure based on company:
A. P. Moller-Maersk. So I have conducted this survey Oligopoly Market Structure: a
study on A. P. Moller-Maersk.

1.2 Objectives:
The objective of the report can be divided into two parts:

1.2.1 Broad Objective:

Get an idea about the Oligopoly Market structure through the company A. P. Mollermaersk.

1.2.2 Specific Objective:

To know about the vision and mission
To know about the business area
Study different models and relate those with A.P. Moller-Maersk.
Finally recommend how to improve those strategies.

2. METHODOLOGY
Two types of data sources are used for the study:
Primary source
Secondary source

2.1 Primary Data:

The report has been developed by taking some exclusive interviews with several persons of Maersk
Bangladesh Limited. I am very thankful to the respective authority of Maersk Logistics Bangladesh
Limited for helping me by giving their important time and support. I have used both structured and
unstructured interviews to collect data. Also, data has been collected through the website of Maersk. I tried
to gather the following types of data to construct the report:

What is A.P. Moller-Maersk?

What are Maersks different businesses?

What is their core business and position in the industry?

Different model analysis of Maersk.

Recommendations through analyzing the models.

2.2 Secondary Data:

To construct our research report, I have also taken help of various secondary sources like publication on
Shipping, Board of Investment, and also searched through the intranet & internet for various pertinent
information which has definitely enriched the research findings.

3. LITERETURE REVIEW

Extensive literature survey has been done to gather theoretical knowledge for the research
problem. The literature survey includes the academic journals, reports and books published. There
are some definition about oligopoly market structure. these are:
1. A market captured by a few large producers of a homogeneous or differentiated product is
Oligopoly market. . (page no.-467, Book-Economics, writer-Campbell R. McConnell,

Stanley L. Brue)

2.A market structure in which a few firms sell either a standardized or differentiated
product ,into which entry is difficult, in which firm has limited control over over product
price because of mutual interdependence, is oligopoly market.(page no.-G-17,BookEconomics, writer-Campbell R. McConnell, Stanley L. Brue )

4. ORGANIZATION PART

4.1

HISTORY OF THE INSTIGATION

It all began in the Danish town of Svendborg in 1904, when 28-year-old Arnold Peter Mller
together with his father, Captain Peter Mrsk Mller, established A/S Dampskibsselskabet
Svendborg (the Steamship Company Svendborg) and bought a second-hand steamer of 2,200
tons deadweight, which was named "SVENDBORG". The company had its first office in A.P.
Mller's childhood home, "VILLA ANNA", in Svendborg. Eight years later, A.P. Mller established
Dampskibsselskabet af 1912, A/S (the Steamship Company of 1912). In 2003 the two companies
merged under the name of A.P. Mller - Mrsk A/

4.2

EXPANSION

As early as 1914, the foundation of Maersk Broker was a reality, and the years 1917-18 saw the
establishment of the Odense Steel Shipyard, which in 1959 expanded further and moved to the
new yard at Lind.

In 1928, under the name of Maersk Line, A.P. Mller established a cargo liner service linking the
USA and the Far East. Today, these activities continue under the name Maersk Sealand, now one
of the largest liner shipping companies in the world.
The year 1928 also marked the beginning of the tanker business, as five tankers were added to
the fleet, which at that point counted 35 vessels.

4.3

CONTINUOUS GROWTH

Throughout its existence, the A.P. Mller-Maersk Group has continued to expand its operations,
which also includes numerous industrial companies such as Mrsk Container Industry,
Roulunds, DISA, and Rosti. Mrsk Data has offered IT services for more than 30 years and now
runs subsidiaries worldwide.

In some cases, the many oil activities have given birth to even more activities. One such example
is Maersk Supply Service whose 50 supply vessels are committed to serving the offshore oil and
gas industry at sea.
And since 1972, Maersk Contractors have operated a fleet of modern drilling rigs and mobile
production units.

4.4 MANAGEMENT
On the death of the 88-year-old A.P. Mller in 1965, his son Mrsk Mc-Kinney Mller assumed
the leadership of the A.P. Moller - Maersk Group and took over the senior responsibility for the
day-to-day management of A.P. Mller, including the chairmanship of the boards of the two Ship
owning Companies.
In 1993, Mrsk Mc-Kinney Mller withdrew from the daily management and handed over the
senior management responsibility to Jess Sderberg. Knud E. Stubkjr, Kjeld Fjeldgaard and
Tommy Thomsen assist Mr. Sderberg in this function. Mr. Mller continues as Chairman of the
Ship owning Companies.

4.5 VISION & MISSION

Vision of A.P. Moller - Maersk Group is:
To create opportunities in global commerce
Mission of A.P. Moller - Maersk Group is to fulfill our vision by:

Truly understanding the clients and their business

Offering second-to-none transportation solutions

Being profitable - and delivering sustainable, profitable growth

Continuously reducing costs and increasing efficiency

Offering colleagues personal growth and a motivating place to work

Being innovative

Being good corporate citizens

4.6 BUSINESS AREA OF A.P. MOLLER-MAERSK GROUP

The work that was started by A.P. Mller in 1904 has developed into a major international
enterprise with activities covering diverse areas as shipping, oil drilling, shipbuilding, aviation,
industry, retail and IT services. Below are the main business areas of A.P. Moller-Maersk Group.

4.6.1 SHIPPING
The company has been in shipping since 1904 and has developed into one of the largest
shipping companies in the world.
Today these activities cover liner shipping including Supply Chain Management, operation and
management of container terminals, transportation of crude oil, refined products and liquefied
gases, support to the offshore oil industry and operation of drilling rigs as well as ship broking
activities.
4.6.2 OIL & GAS
The A.P. Moller - Maersk Group has been involved in the oil and gas industry since 1962 when
ship-owner A.P. Mller was awarded the concession for exploration and production for oil and gas
in Denmark.
Mrsk Oil and Gas is involved in the direct research, exploration and production of oil and gas,
while other Maersk companies are engaged in maintaining, servicing, and securing these
activities. Offshore as well as onshore and in Denmark as well as internationally.
4.6.3 MAERSK AIR:
The Maersk Air Group of companies is engaged in European scheduled airline services and
charter airline operations. Other activities are aircraft leasing and purchase and sale of aircraft, air
cargo sales agency, contracted aircraft operation for parcel carriers, aircraft ground handling and
passenger handling as well as air cargo terminal operation.

4.6.4 APM TERMINALS

APM Terminals, which was established as an independent organization in 2001, has operations in
more than 30 ports all over the world, generating an annual throughput of about 18.5 million TEU.
4.7 SHIPPING ACTIVITIES IN THE A.P. MOLLER-MAERSK GROUP
Following business units are the main shipping concern in A.P. Moller-Maersk Group:
4.7.1 MAERSK SEALAND
As early as 1928 A.P. Mller established a cargo liner service under the name of Maersk Line,
linking the USA and the Far East. In 1956 ocean-borne containerization was introduced with the
shipment of a Sea-Land container from Port Newark, New Jersey, to Houston, Texas. Today,

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Maersk Sealand is one of the largest liner shipping companies in the world-serving customers all
over the globe.
More than 250 container vessels and 800,000 containers ensure a reliable and comprehensive
worldwide coverage. Maersk Sealand's feeder vessels, as well as its trucks and dedicated trains,
allow a unique concept of door-to-door services.
Advanced EDP systems ensure timely availability of cargo documents and provide customers
with accurate round-the-clock, on-line information on the position of any given container
anywhere in the world.
Maersk Sealand serves its customers through a network of its own offices and container
terminals in more than 100 countries, which secure consistently excellent service to customers in
all corners of the world.
4.7.2 MAERSK TANKERS
In 1928, A.P. Mller received its first tankers. Today, Maersk Tankers offers flexible, individual
solutions for the transportation of crude oil and refined products with one of the world's largest,
most modern and advanced fleet of tankers. Maersk Tankers participates in leading pool cooperations within the Very Large Crude Carriers and Coated Aframax and Handy-size product
carrier segments.
In total, Maersk Tankers and its partners operate a fleet of more than 100 vessels with
deadweight of approximately 17,000,000 tons. Contact with customers around the clock is
maintained through offices in Copenhagen, London, New York, Houston, Singapore, Tokyo and
Seoul.
Modern double-hulled supertankers of 300,000 dead weight transport crude oil from the oil
producers to terminals and refineries in Asia, USA and Europe.
The product carriers vary from 30,000 to 110,000 ton capacity and transport refined oil products
to customers worldwide
4.7.3 MAERSK GAS CARRIERS
A.P.Moller received its first gas carrier in 1972. Today, the fleet operated by Maersk Gas Carriers
has grown to 45 semi-refrigerated vessels ranging from 8,000 cubic meters to 22,000 cubic
meters. The fleet consists of technically advanced carriers with stainless steel tanks and
chemical/ethylene capabilities as well as more conventional LPG carriers.

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Maersk Gas Carriers is also the owner of 4 fully refrigerated vessels of 35,000 cubic meters.
The gas fleet operates all over the globe.
4.7.4 MAERSK CAR CARRIERS
The A.P. Mller fleet also includes several Pure Car Truck Carriers with variable deck height and
strengths, suitable for transportation of cars as well as high and heavy rolling material. The
capacities of these vessels vary from 2,500 to 5,500 cars.
4.7.5 MAERSK SUPPLY SERVICE
The fleet serving the offshore oil and gas industry at sea includes more than 50 supply vessels
with various specialties. Platform Supply Vessels handle the transportation of all necessary
equipment to offshore platforms and drilling rigs. Multipurpose Support Vessels, which have
engines of up to 23,500 BHP, can install production units; tow drilling rigs, crane vessels, and
pipe lay barges. With special equipment the vessels can, furthermore, work as fire-fighting
vessels and assist in combating oil pollution.
Other vessels are equipped for laying sub sea cables. The assignments vary from smaller coast
systems to intercontinental sub sea cable systems.
The vessels operate all over the world, engaged in various tasks.
4.7.6 MAERSK BROKER
As early as 1914 separate ship broking activities were established and today Maersk Broker KS
is among the leading international broking houses. Activities include chartering of container
vessels, bulk carriers and tankers, sale and purchase of second-hand vessels, contracting of new
buildings, as well as project-oriented business involving sale and purchase of ships in
combination with period employment and/or financing. Maersk Broker also undertakes ship's
agency work in Danish ports.
Ship broking services are offered on a worldwide basis. Besides the European offices in
Copenhagen, London and Athens, Maersk Broker focuses strongly on Far Eastern business with
own offices in Tokyo, Seoul, Beijing, Hong Kong, Shanghai and Singapore, operating jointly in
their local markets under the name of Maersk Broker Asia.
4.7.7 MAERSK LOGISTICS

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Maersk Logistics is represented through a network of more than 200 offices worldwide operating
in some 70 countries, offering Supply Chain Management solutions from manufacturer through to
retailer. Services offered include container stuffing and consolidation, documentation services,
airfreight services, as well as warehousing and distribution. Advanced information technology is
used to manage supply chains as well as in providing information
To find the competition for Maersk the study had analyze its present situation through few models.
This models help to find the genuine strategic position of A.P. Moller-Maersk. Also the models
would help whether theres scope to improve their strategies to cope with the current flow.
4.8

SWOT Analysis

A scan of the internal and external environment is an important part of the strategic planning
process. Environmental factors internal to the firm usually can be classified as strengths (S) or
weaknesses (W), and those external to the firm can be classified as opportunities (O) or threats
(T). Such an analysis of the strategic environment is referred to as a SWOT analysis.
The SWOT analysis provides information that is helpful in matching the firm's resources and
capabilities to the competitive environment in which it operates. As such, it is instrumental in
strategy formulation and selection. The following diagram shows how a SWOT analysis fits into
an environmental scan:
SWOT Analysis Framework

Environmental Scan
/
\
Internal Analysis
External Analysis
/\
/\
Strengths Weaknesses
Opportunities Threats
|
SWOT Matrix

Now lets find the SWOT for A.P. Moller-Maersk.

4.8.1 Strengths
A firm's strengths are its resources and capabilities that can be used as a basis for developing a
competitive advantage. Strengths of Maersk include:

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Strong brand names: From 1904 Maersk has a strong brand name in the industry. The
brand reflects quality and reputation.

Good reputation among customers: Maersk has its own customer service worldwide with
highly efficient educated workforce.

Cost advantages from proprietary know-how: By using their own manufactured vessel at
their own shipyard they have cost advantages.

Exclusively own port: Own port at Malaysia provide Maersk a genuine advantage.

Favorable access to distribution networks: Through their own logistic units Maersk have
favorable access to distribution network.

Huge diversified business: As Maersk has huge diversified business it has the advantage
of recover loss of any unit by others.

Number of representations: about 325 offices in more than 100 countries.

4.8.2 Weaknesses
The absence of certain strengths may be viewed as a weakness. Following may be considered
weaknesses of Maersk:

High cost structure: In shipping there is a high cost structure of Maersk. If theres any
sudden change in this sector theres a risk of great loss.

Plagued with internal operational problem: Maersk has their service center at Manila and
Bombay for saving expenses. But as they are out of mainstream theres mistake happens
quite regularly.

Lack of access to key small shipper: Maersk always go for the big accounts. They dont
have any strategy to attract the small shippers.

4.8.3 Opportunities
The external environmental analysis may reveal certain new opportunities for profit and growth.
Some examples of such opportunities include:

Unfulfilled customer need: Maersk has its own route depends on cost effectiveness. They
can use some small vessel to carry cargo in short distance within short time.

Arrival of new technologies: As Maersk have their own shipyard they might go for finding
new technologies to manufacture more efficient vessels.

Alliance or joint venture: Maersk may go for alliance or joint venture with some other
established companies.

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Removal of international shortfalls: Maersk dont have feeder vessel services in the
countries where sea width is not sufficient for mother vessel. Instead of using others
feeder vessel Maersk may use their own feeder vessel which would be cost effective.

Attracting small account: In the exporting countries like Bangladesh, India, China and
Indonesia theres some shipper who have some open cargo where Maersk can do
business.

4.8.4 Threats
Changes in the external environmental also may present threats to the firm. Some examples of
such threats include:

Increasing intensity of competition among the industry rivals.

Slowdown of market growth: Due to current war situation globally the cargo movement
slowdown.

New regulations: New regulations are imposing after September 11 in different ports of
US and Europe which create some difficulties in the shipping business.

Growing bargaining power of customer: Day by day the bargaining powers are increasing
because of the intensive competition in the

4.9

The Porters Five Forces Model:

Porter identified five competitive forces that shape every single industry and market. These forces
help to analyze everything from the intensity of competition to the profitability and attractiveness
of an industry.

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4.9.1Rivalry
If rivalry among firms in an industry is low, the industry is considered to be disciplined. When a
rival acts in a way that elicits a counter-response by other firms, rivalry intensifies. In pursuing an
advantage over its rivals, a firm can choose from several competitive moves:
Changing prices - raising or lowering prices to gain a temporary advantage.
Improving product differentiation - improving features, implementing innovations in the
manufacturing process and in the product itself.
Creatively using channels of distribution - using vertical integration or using a distribution channel
that is novel to the industry.
Exploiting relationships with suppliers The intensity of rivalry for shipping industry in Bangladesh is influenced by the following industry
characteristics:
o

A larger number of firms increase rivalry because more firms must compete for the same
customers and resources. In Bangladesh there are around twenty shipping companies exists
and the firms have similar market share and it leading to a struggle for market leadership.

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Slow market growth causes firms to fight for market share. In Bangladesh the main
commodity that used by shipping is garment or related items. As the garment industry is also
in a poor condition, firms are not able to improve revenues simply because of the low
expanding market.

High fixed costs result in an economy of scale effect that increases rivalry. Total costs of
shipping are mostly fixed costs; the firm must produce near capacity to attain the lowest unit
costs. Since the firm must sell this large quantity leads to a fight for market share and results
in increased rivalry.

High storage costs products cause a producer to sell goods as soon as possible. Here its
really expensive to store container empty at the port or a ship sail mostly empty.

Low switching costs increases rivalry. Here a customer can freely switch from one product
to another so there is a greater struggle to capture customers.

Low levels of product differentiation are associated with higher levels of rivalry. Brand
identification, on the other hand, tends to constrain rivalry.

High exit barriers place a high cost on abandoning the product. The firm must compete.
Here high exit barriers cause a firm to remain in an industry, even when the venture is not
profitable. A common exit barrier is asset specificity.

4.9.2 Threat of Substitutes

In Porter's model, substitute products refer to products in other industries. To the economist, a
threat of substitutes exists when a product's demand is affected by the price change of a
substitute product. A product's price elasticity is affected by substitute products - as more
substitutes become available, the demand becomes more elastic since customers have more
alternatives. A close substitute product constrains the ability of firms in an industry to raise prices.
The competition engendered by a Threat of Substitute comes from products outside the industry.
In this case, there is no close substitute of shipping industry. Only substitute is air cargo industry.
But in sense price it is never a genuine substitute, which might make a thread.
4.9.3 Buyer Power
The power of buyers is the impact that customers have on a industry. In general, when buyer
power is strong, under such market conditions, the buyer sets the price.

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In shipping industry there are two types of buyer exists. One is individual shipper who directly
contact with the shipping line and another is logistic company. Logistic companies are regular
customer and have huge purchase. So in some cases those have power.
6.9.4 Supplier Power
This industry requires containers, ocean-going vessel from supplies. This requirement leads to
buyer-supplier relationships between the industry and the firms that provide it the such items.
Suppliers, if powerful, can exert an influence on the producing industry, such as selling raw
materials at a high price to capture some of the industry's profits. But for Maersk they are in
advantage because they have a very good backward linkage. Say Maersk produces their own
container and through their own shipyard they produce their own vessels.
4.9.5 Barriers to Entry / Threat of Entry
It is not only incumbent rivals that pose a threat to firms in an industry; the possibility that new
firms may enter the industry also affects competition. In theory, any firm should be able to enter
and exit a market, and if free entry and exit exists, then profits always should be nominal. In
reality, however, industries possess characteristics that protect the high profit levels of firms in the
market and inhibit additional rivals from entering the market. These are barriers to entry.
Barriers to entry are unique industry characteristics that define the industry. Barriers reduce the
rate of entry of new firms, thus maintaining a level of profits for those already in the industry. From
a strategic perspective, barriers can be created or exploited to enhance a firm's competitive
advantage. Barriers to entry arise from several sources for shipping:

Asset specificity inhibits entry into an industry. Asset specificity is the extent to which the
firm's assets can be utilized. This industry requires highly specialized technology or plants
and equipment which make potential entrants reluctant to commit to acquiring specialized
assets that cannot be sold or converted into other uses if the venture fails. Asset specificity
provides a barrier to entry for two reasons: First, when firms already hold specialized assets
they fiercely resist efforts by others from taking their market share. New entrants can
anticipate aggressive rivalry. The second reason is that potential entrants are reluctant to
make investments in highly specialized assets.

Organizational (Internal) Economies of Scale. The most cost efficient level of production is
termed Minimum Efficient Scale (MES). This is the point at which unit costs are at minimum i.e., the most cost efficient level of production. Here as the biggest shipping line MES for

18

Maersk in the industry is known, then we can determine the amount of market share
necessary for low cost entry or cost parity with rivals

4.10

Value Chain Analysis

The value chain is a systematic approach to examining the development of competitive

advantage. It was created by M. E. Porter in his book, Competitive Advantage (1980). The chain
consists of a series of activities that create and build value. They culminate in the total value
delivered by an organization. The 'margin' depicted in the diagram is the same as added value.
The organization is split into 'primary activities' and 'support activities.'

6.10.1 Primary Activities

Inbound Logistics
Involve relationships with suppliers and include all the activities required to receive, store, and
disseminate inputs. For Maersk as they use their own supply source are in competitive
advantage.
Operations
Are all the activities required to transform inputs into outputs. Maersk has a genuine advantage
here as they are using their own facilities everywhere with high-tech.

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Outbound Logistics
Maersk has also advantage here as they are using supply chain management.
Marketing and Sales
Activities inform buyers about products and services induce buyers to purchase them, and
facilitate their purchase. Through a strong sales & marketing team Maersk is doing it efficiently.
Service
Maersk with their customer service team and highest level of customer support must get some
advantage here.
6.10.2 Support Activities
Procurement
This function is responsible for all purchasing of goods, services and materials. The aim is to
secure the lowest possible price for purchases of the highest possible quality. Maersk has huge
advantage here by using their in house purchasing.
Technology Development
Technology is an important source of competitive advantage. Companies need to innovate to
reduce costs and to protect and sustain competitive advantage. This could include production
technology,

Internet

marketing

activities,

lean

manufacturing,

Customer

Relationship

Management (CRM), and many other technological developments. Maersk is getting this
advantage.
Human Resource Management (HRM)
Employees are an expensive and vital resource. An organization would manage recruitment and
selection, training and development, and rewards and remuneration. The mission and objectives
of the organization would be driving force behind the HRM strategy. HRM is Maersk is really
competitive one.
Firm Infrastructure
This activity includes and is driven by corporate or strategic planning. It includes the Management
Information System (MIS) and other mechanisms for planning and control such as the accounting
department. Also by using TQM Maersk achieved the advantage.

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5. FINDINGS
Through this report,
we have got our required objective, the findings of our report. The findings include:

Vision and Mission of A.P. Moller-Maersk.

The business area of A.P. Moller-Maersk.
Elaboration of model, relate to the A.P. Moller-Maersk

6. LIMITATION OF THE REPORT

The study was not free from limitations. I had to face a number of problems in preparing
the report:
Firstly, there was lack of sufficient money for collecting data.
Secondly, I had to face some unwanted situation that hampered the objective
investigation like reference groups unhelpful attitude.
Thirdly, I have not got enough time, which hampered the related processes to some
extent. The time was not enough to prepare a formal and long business report.
Fourthly, financial bindings were another drawback in preparing the report.

7. CONCLUSION & RECOMENDATION

Conclusion
Starts A.P. Moller Maersks journey with a non engine ship in the year 1904, now after hundred
years of its journey, it has not only become the biggest shipping company in the world but also in
maintaining the leading position where ever A.P. Moller Maersk had kept its step. Companys
Chairmans view is not to be second in any sector. Its really appreciable that the companys
management skills which took the company in this position. Current in highly competitive
business world A.P. Moller Maersk never falls in danger so that they have never to think twice.
So far it is understandable that A.P. Moller Maersk is compatible to handle any sort of trouble to
threat them. After that the study tries to find out some comments on their strategies which come

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through analyzing through few models. Finally the study tries to provide some recommendations
which might be helpful for them to stick them in the leading position in the competitive field of
shipping.

Recommendations
From the above discussion, we have seen that in many cases, Maersk has been successful in
managing its position by developing and implementing structured policies and procedures in
several sectors. Still the observation tells that Maersk needs to improve itself in certain areas to
face the upcoming challenges. Following are some recommendation in this regard:

More emphasis on marketing: Although Maersk has made significant improvement with their
overall performance in terms of their revenue and output turnover, still they need to take some
measures in order to achieve long term sustainability with their performance. The specific
measures that could be to taken are emphasis more on marketing. As there are some shipping
companies like APL, P&O who are very close competitor of Maersk so any less concentration
would make a step backward.

Improvement of Security Measures: From the analysis we have found that Maersk has been
able to reduce the rate of accidents by developing and implementing various international
standard security measures. Since decreased number of accidents appeared to be the most
significant reason of increased productivity, this lowering rate has improved Maersk overall.
Besides this, accidents have multiple affects on other working conditions like smooth operation
etc, it seems that there is more scope for Maersk to ensure 100% security.

More concentration on forward or backward linkage: It has been found that Maersk has been
very caring about their distribution channels. Since theres a head to head competition within the
industry, Maersk should take some advance steps. Still they are not using custom brokerage. It
seems that now they should concentrate on customs brokerage as a part of forward or backward
linkages.

Grievance Handling Procedure: It has been seen that Maersk follows a strict grievance
handling procedures and as a result the ratio of grievance cases resolved has been increased at
a satisfactory level. But it seems that Maersk should be more careful in dealing with the sensitive

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grievance cases as its directly related with the reputation of the organization. And mostly the
customers switch due to this reason.

Training program for all employees: So far we found that Maersk has a huge investment for
training. Their MISE and other programs are mostly for management people. But the general
employees like customer service people should get some special training to be educated handing
the customers in the finest way. As this type of service business customer handling is a prime job.
Maersk should be more concentrated in this sort of low level employee training.

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8. APENDDED PART

8.1 Appendix

8.2 Bibliography
1. www.maersk.com
2. Muman Resource Management (Decenzo/Robbins)

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