The Operational Activities of Maersk Line - Report Example

Transportation: Freight by Sea

Author Note

Introduction

Maersk Line has the largest operational division in container shipping of the world. The Headquarter of this shipping company is at Denmark. Maersk has approximately 374 offices across the world and has been operating in 116 nations. The company was established in the year of 1928. Maersk Line is popular for its logistic operations across the global market. The objective of the company is to provide reliable and sustainable services to the key markets. It has been operating in two main divisions such as energy and transportation, and logistic department. This paper will highlight how the external factors such as political, economic, and technological and the social factors affect the performance of the organization.

PEST analysis

Political: The political factor of Denmark is multi-party structure. The Danish government is characterized by the minority administrations. The government of the country has a stronger influence in the logistic operations. According to De Borger and De Bruyne (2011), the governmental policies of the country affect the business from the local level to the federal level. More specifically, it can be mentioned that with the increase or decrease of tax rate, the organizational operations are affected.

It is known that the government of Denmark sets higher tax rate for increasing its revenue earning. The gains and the profitability are taxed to the federal level. Nonetheless, higher tax rate reduces the gross profitability level of the businesses. As a result, this can directly affect the net profitability earning. Hloch, Tozan, Yagimli, Valíček and Rokosz (2011) opined that government interventions or the shift in the rate of interest negatively affect the demand pattern of the organization. On the other hand, political decisions of Denmark indirectly affect the economy of the country. Moreover, the re-election process of the Danish democratic governments used to change every year. Therefore, each of the parties has several rule and influence on the business. This changing rule of the political parties has a negative effect on the business. As a result, it can be inferred that the political environment of Denmark is the most unpredictable element in the business environment.

If the government of Denmark will increase the transportation cost, operational efficiency of Maersk Line will be declined. Strang (2011) cited that this will rise the coordination cost along with the supply chain infrastructural cost. However, terrorist attack across Europe and Middle East markets has an adverse effect on the business performance of Maersk Line.

Economic: Denmark, which is a smaller sized nation, has been participating in the international trade and boosting up its economy. In the opinion of Nativi and Lee (2012), export has been playing a major role in the growth of the economy. As a result, the trading policies and the environment of Denmark are liberal and encourage the economy in foreign investment. More specifically, Donald Trump has motivated in the rising of trade protectionist policies of the economy. The economy of the country is at stable position, therefore, can inspire the operations of Maersk Line. On the other hand, the rate of unemployment of the country has been decreasing, which has a positive effect on the growth rate of the economy (Strang, 2011). As a result, it can be inferred that the company will not suffer from the problem of shortages of employees. Higher rate of employee engagement in the organizational operations can increase the productivity of the company.

According to Cohen, Dimick, Bilimoria, Ko, Richards and Hall (2009), the economy of Denmark seeks to increase the price level for maintaining the inflation rate of the country. On the other hand, the monetary policy of Denmark aims to support the exchange rate policy. Transport and shipping industry of the country has been playing a major role in the international trade and approximately 9% of total GDP has been accounted from this sector. Conversely, 7% of total employment rate of the country is engaged with the logistic industry.

Social: The social rules and regulations of Denmark are favorable for stimulating the business of Maersk Line. In the opinion of Van Belle et al., (2011), the pay structure of the logistic and transport industry of Denmark is highly attractive, so a larger number of people is willing to work with this sector. On the other hand, the working culture of this country is diversified and multi structured, and therefore, it is favorable to the foreign employees to come and work in this country.

The educational level of the country is supposed to be of very higher quality, which refers that the employees of Denmark are highly educated and are also eligible to be recruited in the operational activities of the organizations (Strang, 2011). They are capable to provide greater quality of services. As per the business law of Denmark, the management of Danish companies is not permitted to recruit the children for the organizational operations. Moreover, the employees of the organizations are not required to be abused in the work place. De Borger and De Bruyne (2011) cited that the employees are not forced to work more than 48 hours in a week. The companies need to allow the employees to provide minimum 11 hours rest in between 24 hours. Conversely, the business transparency strategy, which is followed by the organizations, can make the business successful.

Technological: According to Hloch et al. (2011), being a more economically developed nation, Denmark use to encourage in the implementation of technology during the organizational operations. In addition, the country encourages the companies in the implementation of quality innovation skills. It is known that higher uses of technology during the organizational operations can increase the efficiency level of the employees. As a result, it can be inferred that the performance level of the employees can be improved and the organizational productivity can be increased. On the other hand, Denmark has adopted data driven analytics tool, with which the company can boost up the vessel productivity. The companies like to recruit the expertise, who have the essential knowledge in science and IT and can increase the organizational performance. However, Strang (2011) argued that the technology of Denmark has been improving compared to the United States. As a result, it can be concluded that technological advancement accelerates the growth of the Danish organizational activities. Moreover, implementation of technology in the organizational performance helps the logistic operations in achieving higher service level and reducing the inventory and the cost of supply chain operations.

Issues faced by the company

Political: Terrorism and the political unrest condition of the country has a negative effect on the business of Maersk Line. In the opinion of Nativi and Lee (2012), terrorism has a direct impact on the buyers and their purchasing behavior and the demand for the services can be shifted. Terrorism made an interruption in the supply chain management as well as the flow of policies gets disrupted. Therefore, the effect of terrorism in the business is vital and the consumers find themselves in fear, which would in turn change the spending pattern of them.

The terrorist attack in London affects the business both in direct and in indirect way. Additionally, the economic process of the country has been disrupted. The terrorist groups usually target the private and the public companies. As per the London Chamber of Commerce and the Industry report of 2005, the IMF had downsized the economic growth of the United Kingdom by 0.6%, since the initial rate was 2.4% and it was declined to 1.8%. Cohen et al., (2009) cited that it was the weakest growth of the decade. On the other hand, Van Belle et al., (2011) mentioned that after the terrorist attack, 20% private organizations of the Europe had increased the security in business. Apart from this, 52% companies focused on the risk assessment for assessing the liability of the businesses.

Economical: Exit of Britain from European Union has a negative effect on the countries and also on the economies. Brexit has massive influence on the logistic industry of Europe, and therefore, the business of Maersk Line has affected. As per the statement of Maersk Line manager, Simon Smith, the government of the country needs to keep focus on the Britain trading even after Brexit (Strang, 2011). However, De Borger and De Bruyne (2011) added that if tariffs are imposed on the logistics chain, opportunity for the short sea operators would be opened up and the association among Europe and Ireland would be stronger. Apart from the effect of Brexit, the economy of Europe and the Eurozone has been facing challenges from economic outlook. Trade policy has emerged as the possible crisis in the EU during the past years. With the passage of time, the protectionism policies of trade have declined the logistics and the transportation business of the EU, therefore, it can be inferred that the performance of Maersk Line would also be affected. As a result, the logistics cost has increased. On the other hand, due to the fluctuation of demand, the market share of the company has declined.

Social: The transportation and the logistics organizations of Europe are utilizing a contingent workforce than the employees with the traditional employment association. The IRS and the Labor Department have been engaged in the joint initiative and the employers of this department use to classify the employees based on their operations. On the other hand, Hloch et al., (2011) opined that the employees engaged with the logistics and the transportation organizations generally suffer from the health care issues.

During the time of transportation, the employees of the logistic organizations are facing the problem of safety. The report of Compliance, Safety and Accountability (CSA) highlights that the truck monitoring approach is helpful to decrease the commercial motor vehicle related accidents. Therefore, it can be inferred that for reducing the accidents and providing safety to the employees, carriers need to understand the technologies, and components of loading compliance.

Technological: Maersk Line has been facing the problem regarding the poorly planned wireless warehouse implementation. Therefore, due to malfunctioning of the networks, the company is not able to meet the demands of the warehouse. On the other hand, for reducing the cost, Maersk Line chooses the wireless solution, but it is not favorable for the warehouse environment. According to Strang (2011), sometimes the Maersk Line has been facing the problem of printing shipping labels. The printers are not available in the system of Warehouse management System (WMS)/ Transportation Management System (TMS), and therefore, the company has been facing the problem of printer alignment. If the WMS and TMS grow, the performance of the logistic system would be degraded, since the database would not be properly designed.

Readiness to compete in business environment

Political: The government of Denmark encourages Maersk Lines by conducting the verification, inspection of products and by developing the customs authority. On the other hand, the government of the country also allows the company to participate in the global business by carrying of products during the export. Moreover, government is licensing the logistics operators as well as provides commission. As a result, it can be inferred that the transporters allow to participate in trade by following the laws and regulations.

Economical: It is known that the rate of unemployment of Denmark as well as other European countries have been decreased over the years. Therefore, it can be inferred that the operations of the Maersk Line would not be affected due to the shortages of employees. Therefore, the productivity of the company would not be declined. Nativi and Lee (2012) opined that the company get the wider market base and the economies of scale of the company can be improved.

Social: Business transparency strategy is effective to increase the organizational performance by improving the association among the management level and the employees. As a result, this is helpful to increase the collaboration and understanding among the employees. On the other hand, the quality financial reports of the Maersk Line is benefitted for the informative fundamental analysis. Moreover, the investors will like to invest in the business after having the entire information and they can avoid the problem of bankruptcy risks.

Technological: Information technology specialists influence the company in the specialized solutions. As a result, it can be inferred that the GPS mapping software helps the company to identify the traffic between the scheduled route and between the shipping destinations. Strang (2011) opined that Maersk Line has the competitive advantage in the implantation of innovative technologies for the operations.

Conclusion

The operational activities of Maersk Line can be improved by the influence of PEST analysis. After the analysis, it can be observed that the trade protectionist policies influence the organization to improve the performance, and the organization has global network in the logistic business. However, the terrorist attack of London has a negative effect on the business apart from the already existing adverse effect of Brexit. On the other hand, the usage of analytical tools has been continuously boosting up the vessel productivity. As a result, it can be inferred that these four external factors are helpful to analyze for accelerating the organizational performance.