Strategic Analysis of Taiwan Liner Shipping Companies by Using the Sustainable Growth Model

A successful company must have a comprehensive financial and investment plan, and the growth rate is important information to formulate its future development strategies. Although rapid growth may gain more market share, on the other hand, rapid growth may exhaust most of a company’s resources, which will probably result in financial distress or bankruptcy. With slow growth, a company may not fully utilize its resources and it will also miss the opportunity to enlarge its scale and benefits. In view of sustainable growth, both excessive growth and slow growth will not lead to a company continuing future development. A company has to balance its strategic plan between rapid and slow growth rates, whereas, the optimal solution is to derive its suitable growth rate to make decisions for future investment and capital budgeting. The growth in container demand did not have a positive impact on freight rates. The container transportation market has been tense throughout recent years, with freight rates remaining volatile and struggling to rise. Overcapacity leads to low freight rates and low returns with which carriers had to struggle throughout these years. Furthermore, large liner companies ordered extra-large size container ships to reduce their operating cost by achieving economies of scale. Large container ship deployment strategy may not work for each company and careless, excessive capital investment may lead the poor companies to bankruptcy way. To manage liner shipping company’s growth more effectively, this paper investigates three major liner companies in Taiwan, Evergreen Marine Corp., Yang Ming Marine Transport Corp. and Wan Hai Lines Ltd. and the authors applied sustainable growth model (Higgins, 1977) to examine the sustainable growth rate (SGR) of these companies and to analyze their development strategies. While coordinating the growth rate with its financial resource condition, the authors propose the suitable development strategies to achieve sustainable growth for each company. The results show that the SGR model is effective and applicable. The proposed approach contributes to the liner shipping industry in both academic and business operations, even strategy formulation as well.

Language

  • English

Media Info

  • Media Type: Digital/other
  • Features: Figures; References;
  • Pagination: pp 265-272
  • Monograph Title: Proceedings of the International Forum on Shipping, Ports and Airports (IFSPA) 2015: Empowering Excellence in Maritime and Air Logistics: Innovation Management and Technology

Subject/Index Terms

Filing Info

  • Accession Number: 01609495
  • Record Type: Publication
  • ISBN: 9789623677967
  • Files: TRIS
  • Created Date: Aug 8 2016 3:23PM