SWOT Analysis of Dubai Port World - Case Study Example

Dubai ports world Table of Contents 1. Introduction 3 2. Current Industry Situation 3 3. SWOT Analysis 5 3.1 Strengths 5 3.2 Weaknesses 5 3.3 Opportunities 5 3.4 Threats 6 4. PESTLE Analysis 6 4.1 Political 6 4.2 Economic 7 4.3 Social 7 4.4 Technological 7 4.5 Legal 7 4.6 Environmental 7 5. Suggestions 8 6. Conclusion 8 References 9 1. Introduction Dubai Port World is the diverse container port operator in the world. It is a company that has 65 plus marine terminals in the six continents. The company operates in the three regions. The first region is the Asia Pacific and Indian Subcontinent, the second region is the Middle East, Europe and Africa and third region is the Australia and America. The core business of this company is the container handling and this business generates approximately 75% of the total revenue of the company. Currently, there are over 36,000 people working with the Dubai Port World[DPW15]. The chairman of the company is Sultan Ahmed Bin Sulayem and the vice chairman and non-executive director of the company is Jamal Majid Bin Thaniah[Boa15]. The mission of the Dubai Port World is to follow a global approach in which innovation, profitability and excellence can offer the best customer service. The vision of the Dubai Port World is to have a sustainable value through global excellence, services and growth. The values of the Dubai Port World are to have profitable global growth, innovation and excellence, commitment to the stakeholders and responsible behavior of corporate. The company is aiming to increase its gross capacity in the year 2020, by 100 million TEU[Dub15]. The company has won two awards in the year 2015, one is MEIRS Award for the leading corporate in the Middle East for investor relations and the second is SCATA Award for the outstanding achievement of the company[Awa15]. 2. Current Industry Situation The situation of the industry in the year 2014 was positive and the volume was increased by 5% in the last year. It was reported that the major growth in the port operator industry was due to the strongest economies of the Gulf States and the United States. It was also seen that the demand of port operators and their operations were highly demanded in the boundaries of Europe, even with the weak economy of that continent. The companies related to port operators are encouraged due to the quantitative easing of the industry. It is also contributing to satisfy the consumer demands. There are five powerful trends that are driving growth in the port operator industry. They are globalization, containerization, urbanization, customer demands and rapidly developing economies. Through globalization, worldwide trade is being supported by the connection of countries, which are lowering the barriers to trade and hence the per capita is increasing. The containerization is another powerful trend that is driving growth in the industry by its useful usage in several activities at the port and shipment. Urbanization is another factor that is stimulating the port operator industry to grow and expand. In the year 2050, it is expected that the population of urban areas will increase by 66%. Customer demands are also inspiring the industry to progress and meet the demands of the customers by using the latest technology and equipment. People who belong to the developing economies have an increasing purchasing power that they are able to import or export material, which is shipped in the containers[Ann14]. Following is the graph that shows the largest port container in the year 2014: Figure 1: Largest Container Ports Worldwide in the Year 2014 [Sta154]. In the year 2014, Shanghai has topped the list of largest container port. It was estimated that 35.3 million TEUs were handled by the Shanghai ports. Singapore was the second in this list with 33.9 million TEUs. Shenzhen was third in this list with 24.03 million TEUs. The ports of Dubai were numbered ninth with 15.24 million TEUs[Sta154]. 3. SWOT Analysis SWOT analysis is a type of analysis that is useful in the planning and decision making process. It is composed of internal and external environment analysis. The internal environment analysis is further classified into the strengths and weaknesses of the company. The external environment is divided into opportunities and threats to the company. The strengths, weaknesses, opportunities and threats of Dubai Port World are discussed as below: 3.1 Strengths I. It is operating in more than sixty terminals that are located on six continents. II. It has the ability to handle the capacity of 55 million TEU. III. It has a diverse workforce and they are 36,000 in number. IV. It is the only international port operator that is certified by US Customs for being the initiator to trade against terrorism. V. It has a good reputation among the customers. 3.2 Weaknesses I. 75% of the business is dependent on the handling of containers. II. The company is facing high levels of debt. III. The operations in DP World are fuel intensive and they affect the environment. IV. Bribery and commission payments to the third parties during the period of receiving or sending goods. 3.3 Opportunities I. The company can expand more by focusing on the emerging markets. II. By investing in the projects that are related to handling equipment, the company can increase its capacity and improve its operational efficiency. III. Dubai Port World can enhance its operations by having agreements with the owner of each port. The long-term concessions can play a vital role in this regard. IV. New strategic alliances, joint ventures and partnership can aid the company to expand more. V. The removal of the trade barriers is giving favor to the trade and so to the operations of the port operators. 3.4 Threats I. The obligations that are regulatory, contractual and legal can affect the company. II. The foreign rate exchange has also an impact on the company financial accounts. III. Sometimes, the trading environment becomes uncertain for the company to flourish. 4. PESTLE Analysis It is a tool to analyze the macro environment factors or the external environment factors that have an impact on the firm. It is composed of six different types of external marketing factors. They are political, economic, social, technological, legal and environmental factors. The following will be a discussion of the PESTLE analysis in the context of the Dubai Port World: 4.1 Political I. There is a political stability in Dubai. II. The next elections will be in the year 2019 and it means that the change in the government policy will be experienced after a long time. III. The government intervenes in the operations of the Dubai Port World and implies this intervention as the assurance of commercial success[Gul09]. IV. Political instability in the emerging markets, where the company is operating. 4.2 Economic I. Dubai has a stable and growing economy. II. The GDP of Dubai in the year 2014 was $64,000 per capita. III. The exchange rates are stable. They do not vary significantly. IV. The disposable income of the customers is rising, but with a slow pace. V. The unemployment rate in Dubai is 0.30% [Gov15]. 4.3 Social I. The societal evils like bribery, corruption and other crimes are practiced and they are directly and sometimes indirectly linked to the company. II. The growth rate of the population below poverty line in Dubai is 19.5% [CIA15]. III. The rate of population in urban areas is increasing. 4.4 Technological I. The usage of the latest technology in the equipment and the production of containers is the fundamental goal of port operators. II. The change in the infrastructure, such as urbanization, in the coming years will affect the company in expanding its capacity. III. There are different ways to target and communicate with the target market. 4.5 Legal I. The ports are vulnerable to the illegal activities, such as the shipment of drugs with other things[CIA15]. II. The equipment, such as containers, used for the shipment is safe to use. III. The laws of consumers and port operators are protected in this industry. 4.6 Environmental I. High consumption of fuel and fossil fuels. II. The increase in the emission of carbon dioxide. III. Waste and water usage reduction is the highlighted issue in the port operator industry. 5. Suggestions Dubai Port World is the diverse container port operator in the world. The company is aiming to increase its gross capacity in the year 2020, by 100 million TEU. In order to increase the capacity, this report will suggest the Dubai Port World to gain success in its objectives by emphasizing on the macro and micro environment factors. The situation of the industry in the year 2014 was positive and the volume was increased by 5% in the last year. This ensures the growth in the DP World. Following are the suggestions to the Dubai Port World: I. To enter and explore the emerging markets. II. To have an investment into the developing markets in order to get the lower operating cost. III. To compete and expand in the market by analyzing the competitor’s growth performance and their strategies. IV. To focus on the equipment area and stop depending much on the container business. V. To have agreements with the port owners and sustain the relationship on long-term basis. VI. To work on its marketing activities, so that the customer base increases. 6. Conclusion Dubai Port World is the diverse container port operator in the world. It is a company that has 65 plus marine terminals in the six continents. The company operates in the three regions. The vision of the Dubai Port World is to have a sustainable value through global excellence, services and growth. The situation of the industry in the year 2014 was positive and the volume was increased by 5% in the last year. It was reported that the major growth in the port operator industry was due to the strongest economies of the Gulf States and the United States. There are five powerful trends that are driving growth in the port operator industry. They are globalization, containerization, urbanization, customer demands and rapidly developing economies. The ports of Dubai were numbered ninth with 15.24 million TEUs in the world’s largest container ports. The company has strong strengths that can cover the effect of its weaknesses. If the company works on the opportunities, it can attain its goal of expansion. The macro environment factors influence the company and encourage it to achieve its goal by focusing on the technological and environmental factors. The company is suggested to invest in the emerging markets and to enhance its marketing activities. In addition, it is suggested that the Dubai Port World must emphasize on the other business units, such as handling of equipment instead of depending upon on the container business only. References DPW15: , (DP World, 2015), Boa15: , (Board of Directors, 2015), Dub15: , (Dubai Port World, 2015), Awa15: , (Awards, 2015), Ann14: , (Annual Report, 2014), Sta154: , (Statista, 2015), Sta154: , (Statista, 2015), Gul09: , (Gulf News, 2009), Gov15: , (Government of Dubai, 2015), CIA15: , (CIA, 2015), CIA15: , (CIA, 2015), Read More