Strategical Management of DP World - Essay Example

?DP World aims at selling its break bulk terminal: Critically evaluate: Company Profile: An international brand, that specializes in the container services. Established not so long ago, it has expanded its services across the continents and has its chain and services rendered on the main terminals. The company has made major investments and deals of multi billion dollars in recent times with the United Kingdom based business enterprises. It is a recognized brand and recent times have shown record profits (lloydslist 2013), however a decision of total surprise came when DP world decided to sell its break bulk terminal in Antwerp with bid to concentrate on the stream line function and servicing which is of container handling businesses. DP world is amongst the world’s largest port operating entities that has an established business base and considerable potential with the ventures expanded over different major ports of the world that are hub to the services, containers and shipping. Company specialization: It specializes in the ports and terminal operations. The company has enjoyed control over three major cargo terminals in this area and has recently decided to sell as high as 60 percent of its terminal stakes (portstrategy 2012). It facilities the functions of performing cargo terminal services across the major docks and primarily on the Belgian docks as in this particular case. This move of selling the shares comes as a result of agreement and settlement with a locally operated company in the name of Zuidnatie, which aims to overtake and purchase as many as 60 percent of the overall shares of the company that were owned by it previously. This decision has various repercussions ranging from business view point, to economic and strategic since the brand name is already established and also the services delivery infrastructure has been in place as well. Therefore understanding its long term, short term impacts is vital along with the possible angles and dimensions under which this move may have been initiated. Core idea: The idea behind selling its break bulk terminal is trigged by the move and motive to focus on the core services which is that of deep water container facility. This move is accompanied by that of expansion of its services and facilities usage in the Delwaide Dock terminal, which again is a front line terminal and would enable better focus on the core stream. The overall sales are worth around 60 million dollars. Repercussions: Since the decision is of major significance, it has both internal impacts and external, each of these need to be evaluated in terms of the possible impacts on DP world, this will be looked into with reference to the internal variables, internal facilities, the workers response, and on external front, it would be gauged against the supply chain factor, the market competition, the rivals response, the possible loss of customers and clients by giving up the terminal that has long been associated with DP world and other factors. All these need to be critically evaluated and observed in order to assess the impacts and determine whether this decision would augur any positives for the company or possibly lead to the negative impacts on the overall organization. It is potentially amongst the top three largest stevedores in the Port of Antwerp and its decision to abandon and sell its services will have impacts both on DP world itself and the overall terminal’s environment since it is an established entity and has been around and has earned the clients trust for considerable time (Barnard 2012). Under the law and rules and regulation of the porting industry, 70 jobs have to be cut off in lieu of this decision which would include 40 white collar jobs, and 30 blue collar jobs (Nobx 2012). The trend: DP world has exhibited similar behavior in recent times, and this is not the only and unique function being performed, the selling of its 20 percent shares to the Russian giants was one similar example. Another similar event came to forth in form of DP world’s selling of its shares and assets to the Australian based entity with total assets worth around 1.5 billion dollars Possible advantages: This decision will bring DP world in direct contact with the giants of the field namely Cosco Pacific and Duisport, CMA CGM, ZIM integrated Shipping Services. This will enable more competition, more open market scenario understanding, keeping a check on the market trends, enabling them to take opportunity of services which may not be provided by other firms and giants that are aforementioned. A possible advantage that may be served from it could be that of expanded and better supply chain services. With so many mega players involved in it and each incorporating the best services, it enables using the best machinery, best services and best decision in the due time. the overall move has another dimension and that is of restructuring the services, enhancing the outlook, improving the performances, reducing dependencies, focusing on the stream line operations, reducing overheads, and also the debts and low performance values that are incurred as a result on the non stream line services. The bigger picture participation: Hence it would allow for bigger picture participation, that will speed up the overall processing of the services, further allowing for focus on one area, which is the main stream area, and it will also enable better services delivery in return for the reason that core area has more margins (porttechnology 2012). Internal factors: While various factors would be weighed and would get affected, the most critical factor that must be evaluated and taken into account is that of the jobs cut. Since closing a terminal would directly mean cutting on jobs, this decision is no exception and it would lead to jobs cutting. According to a report and finding, over 70 jobs are to be cut as a result of this move; this is a seriously heavy number and can have impacts of negative trend. Cutting on jobs in such high concentration can lead to a negative trend with regard to the employees working behavior, their responses, their confidence, and the fresh employees interest in the incumbent entity due to lack of surety and survival in the long term in DP World. When the official announcement was made after months of rumors and speculation, the decision did result in the dropping of the company shares in the NAsdaq Dubai stock exchange market (arabianbusiness 2012). Another dimension that can be added to the overall sell and focusing on the stream line is that of the overall company’s policy to re maneuver its objectives which come in line with company’s parallel move of selling its over 20 percent stakes to the Russian giants in the field of porting and terminal shipping named Vostochanya Stevedoring Co (Hellenicshippingnews 2012). Another internal factor and the possible reason that could be attributed to this entire move is that of the rumors that were in the surroundings for considerable time regarding the top head resignation, in form of Managing director Eric Noterman. These rumors became reality when eventually he was replaced by the crisis manager who took charge in situations which were possibly trigged by the selling of these services and thereby deciding to focus on the core services and specialization. New Horizons and New adventures: This is not the end of servicing and aims, rather it is motivated by rejuvenating the overall spirit and working actions of DP world, with aim to bring about more unique and substantial services which will bring the company in better competition and position with the other giants that are operating in the Belgian hub of ports and shipping. This is being officially confirmed by the declaration the company DP world would establish 100 percent self invested and self initiated businesses on the Delwaide Dock Terminal. The official version: While much is being speculated about the possible reason apart from the focusing on core services, in form of the shuffle in the top ranks, the debts incurring in recent times, and with aim to reduce the dependencies, the official version as presented by the managing director of DP world is that the entire move is based on restructuring and refining the services base with focus and aim to bring about more productivity in the entity and targeting and exploring new horizons that would enable better yields in terms of marketing outputs and the services that being performed and delivered across multiple continents. Future impacts: With intentions and aims as presented by the company being that of focusing on the core services, this could be the best possible reason and action that was desired by the company for improving its overall outlook and making it further more effective in the longer run. This decision if implemented properly can lead to better functions and better outputs. With direct involvement and participation with the main players of the field that are mentioned in the earlier part of the paper, this will allow for better understanding of the scenarios and possible foreseeing of the actions and functions. References: Arabianbusiness, 2012. DP World restructures Belgian ops with $61m sale. [Online] Available at: http://www.arabianbusiness.com/dp-world-restructures-belgian-ops-with-61m-sale-473684.html [Accessed 7 May 2013]. Barnard, B., 2012. DP World Selling Antwerp Breakbulk Terminal. [Online] Available at: http://www.joc.com/port-news/dp-world-selling-antwerp-breakbulk-terminal_20120913.html [Accessed 7 May 2013]. Hellenicshippingnews, 2012. UAE: DP World sells stake in Russian container terminal to restructure its debts. [Online] Available at: http://www.hellenicshippingnews.com/News.aspx?ElementId=d20c85db-5811-4d60-bd55-704475ff4ac7 [Accessed 7 May 2013]. lloydslist, 2013. DP World delivers record operating profit margin. [Online] Available at: http://www.lloydslist.com/ll/sector/containers/article419248.ece [Accessed 7 May 2013]. Nobx, 2012. DPW Antwerp sells breakbulk division and cuts 70 jobs. [Online] Available at: http://www.portsandterminals.com/dpw-antwerp-sells-breakbulk-division-and-cuts-70-jobs/ [Accessed 7 May 2013]. Portstrategy, 2012. DP World to sell Antwerp break bulk stake. [Online] Available at: http://www.portstrategy.com/news101/world/europe/dp-world-to-sell-antwerp-break-bulk-stake [Accessed 7 May 2013]. Porttechnology, 2012. DP World planning Antwerp breakbulk terminal sale to focus on container operations. [Online] Available at: http://www.porttechnology.org/news/dp_world_planning_antwerp_breakbulk_terminal_sale_to_focus_on_container_ope/ [Accessed 7 May 2013]. Read More