bachelor thesis in international marketing

Bachelor Thesis in International Marketing

II

Executive Summary Marine Technologies (MT) are expanding their operations in South-East Asia through a

newly established sales office located in Singapore. The aim for the expansion is to gain a

foothold in the market, after experiencing interest for their Dynamic Positioning and

communication systems. With the establishment of a sales office, MT aim to achieve sales for

their flagship product the Bridge Mate™ Integrated Bridge System. The purpose of the thesis

is to provide MT with relevant analyses and strategies to utilize in order to achieve a

successful launch of their IBS in South-East Asia.

The thesis includes primary data collected by the authors as well as extensive secondary data.

The secondary data focuses on the external analysis, where a deeper look on the selected

countries and industry attractiveness was done. The paper also includes substantial

information on MT, as well as the IBS product category. The primary data focused on

mapping the perceptions of some of the relevant players in the market. The purpose was to

map the current awareness and perceptions of MT, their IBS and its attributes, as well as

general perceptions on the offshore industry. The data was collected through in-depth

interviews, as the survey created failed. Findings from the data set were very consistent from

all interview subjects.

We have found that the offshore industry is attractive for MT‟s IBS, mainly due to few

competitors with similar high-quality positioning focus, and the industry growth. MT should

focus on Singapore in their entry strategy. Singapore is a good starting point for MT as it

holds a position as an industry hub with a substantial number of both local and global decision

makers. A key success factor will be to overcome the cultural differences that will occur. In

order for MT to avoid the potential cultural risks, the thesis covers cultural understanding in

depth.

Based on the findings from the analytical part we have crafted a strategy that will enable MT

to succeed. We have ended the thesis with a recommendations section, where we present

concrete measures to undertake in order to be successful in the South-East Asian offshore

maritime engineering industry. The conclusion we have arrived upon is that MT has the

capabilities and resources to overcome internal weaknesses and the external threats that exists

in the market.


III

Acknowledgements The group would like to express our appreciation to everyone that has generously helped us

on this project. We will especially like to give our attention to some key persons.

First of all, we want to thank Mr. Frode Klepsvik, Vice President of Business Development in

Marine Technologies, for giving us the opportunity to write this project, as well as the

guidance and support given to us in this period. We also want to thank other Marine

Technologies key employees, such as Ole Morten Husøy, Paal Liseth and Bill McKinnell, as

well as their strategic partners, represented by Rick Abassi from Intelsat, who have helped us

a great deal by sharing their knowledge.

We want to thank our interviewees who have shared their knowledge with us. They are all

experts within their fields, and have provided us with valuable insight we would not been able

to collect without them.

Lastly, we want to thank our supervisor, Assistant Professor Brian Tan, for his excellent

guidance, supervision and patience. His input has been invaluable to us.

Singapore, April 2010

--------------------------------- --------------------------------

Henrik Holen Jan-Ove Hagen Røssevold

--------------------------------- ---------------------------------

Ådne Skålid Andreas Oddane Gundersen

---------------------------------

Thomas Storheill


IV

Strategic Overview

Recommendations

Strategy

SWOT-Analysis

Internal Analysis

External Analysis

Theory Review

Research Findings

Research Methodology

The Maritime Industry and Marine Technologies

Introduction


V

Table of contents

Executive Summary ............................................................................................. II

Acknowledgements ........................................................................................... III

Strategic Overview .............................................................................................. IV

Table of contents .................................................................................................. V

Index of Figures and Tables ........................................................................... X

Acronyms ................................................................................................................. XI

1. Introduction ....................................................................................................... 0

1.1 Background to research ...................................................................................................... 1

1.2 Timeline ............................................................................................................................. 2

1.3 Research Objective ............................................................................................................. 3

1.3.1 Research Questions ............................................................................................................... 3

1.3.2 Research Limitations .............................................................................................................. 3

2. The Maritime Industry and Marine Technologies ........................ 5

2.1 Maritime Industry ............................................................................................................... 6

2.2 Offshore industry .............................................................................................................. 7

2.3 Edison Chouest Offshore ..................................................................................................... 7

2.4 Marine Technologies LLC ..................................................................................................... 8

2.5 Integrated Bridge Systems ................................................................................................ 10

2.5.1 Unique features of MT’s Bridge Mate™ IBS ........................................................................ 14

3. Research methodology .............................................................................. 18

3.1 Analysis Purpose ............................................................................................................. 19

3.2 Research Questions .......................................................................................................... 19

3.3 Design and Data Requirements ........................................................................................ 20

3.4 Data Collection ................................................................................................................ 20

3.4.1 Secondary Data .................................................................................................................... 20

3.4.2 Primary Data ........................................................................................................................ 21

3.4.2.1 Interview Process ........................................................................................................................ 21

3.4.2.2 Survey Process ............................................................................................................................ 22

4. Findings .............................................................................................................. 24

4.1 Survey Analysis ................................................................................................................. 25

4.1.1 Preliminary work .................................................................................................................. 25

4.1.2 First deployment .................................................................................................................. 25

4.1.3 Second deployment ............................................................................................................. 26

4.1.4 Analysis ................................................................................................................................ 26

4.1.5 Survey evaluation and Findings ........................................................................................... 27


VI

4.2 Interview Findings ............................................................................................................ 28

4.2.1 Findings from the Nanyang Technological University Library Department ........................ 28

4.2.2 Findings Farstad Shipping Pte. Ltd. ...................................................................................... 29

4.2.3 Findings Marine Technologies LLC ....................................................................................... 30

4.2.4 Findings Cultural Associate Professor from Nanyang Business School ............................... 31

4.2.5 Findings Swiber Kreuz Pte. Ltd............................................................................................. 32

4.2.6 Findings Jaya Holdings Ltd. .................................................................................................. 34

4.2.7 Findings Keppel Singmarine Ltd. .......................................................................................... 35

4.2.8 Findings Nordic Marine Pte. Ltd. ......................................................................................... 37

4.2.9 Interview process analysis ................................................................................................... 38

5. Theory review .................................................................................................. 41

5.1 Introduction ..................................................................................................................... 42

5.2 Internal analysis theories .................................................................................................. 42

5.2.1 VRIN - model ........................................................................................................................ 42

5.2.2 ACE – model (Attitude – Competence – Embodiment) ....................................................... 44

5.2.3 Value Chain Analysis ............................................................................................................ 44

5.3 External analysis theories .................................................................................................. 45

5.3.1 PESTEL analysis .................................................................................................................... 45

5.3.2 Cultural Theories .................................................................................................................. 46

5.3.3 Purchase Process ................................................................................................................. 47

5.3.4 Porter’s Five Forces.............................................................................................................. 47

5.3.5 Competitor analysis ............................................................................................................. 48

5.4 SWOT – analysis................................................................................................................ 48

5.5 Strategic analysis theories ................................................................................................. 49

5.5.1 Segmentation ....................................................................................................................... 49

5.5.2 Business level positioning strategy ...................................................................................... 50

5.5.3 Marketing mix ...................................................................................................................... 51

6. External analysis ........................................................................................... 52

6.1 The Regulation of the Maritime Industry ........................................................................... 53

6.1.1 The regulatory role of the classification societies ............................................................... 53

6.1.2 The regulatory role of the flag state .................................................................................... 54

6.1.3 The International Maritime Organization ............................................................................ 54

6.2 External environment in our selected countries ................................................................. 55

6.2.1 Singapore External Overview............................................................................................... 56

6.2.1.1 Singapore and its offshore market ............................................................................................. 58

6.2.2 Indonesia External Overview ............................................................................................... 58

6.2.2.1 Indonesia’s offshore market ....................................................................................................... 60

6.2.3 Malaysia External Overview ................................................................................................ 61

6.2.3.1 Malaysia’s Offshore Markets ...................................................................................................... 63

6.3 Cultural aspects of working in South-East Asia ................................................................... 63

6.3.1 Communication ................................................................................................................... 64

6.3.2 Long-term and short-term focus ......................................................................................... 65

6.3.3 Advantages and disadvantages with being Western in a Eastern dominated culture ........ 65

6.3.4 Power distance and uncertainty avoidance in South-East Asia ........................................... 66


VII

6.3.5 The Cultural Factors of Singapore ....................................................................................... 67

6.3.6 The Cultural Factors of Indonesia and Malaysia .................................................................. 69

6.5.6.1 Chinese businessmen’s influence in Indonesia and Malaysia ..................................................... 69

6.3.7 The GLOBE Project ............................................................................................................... 70

6.4 Purchase decision process ................................................................................................. 73

6.5 Industry Analysis .............................................................................................................. 76

6.5.1 Introduction ......................................................................................................................... 76

6.5.2 Market growth ..................................................................................................................... 76

6.5.3 Mandatory ECDIS – The Start of a Digital Revolution? ........................................................ 77

6.5.4 Competitive Environment .................................................................................................... 78

6.5.5 Customers ............................................................................................................................ 80

6.5.6 Suppliers .............................................................................................................................. 81

6.5.7 Industry Attractiveness ........................................................................................................ 82

6.6 Competitor analysis .......................................................................................................... 84

6.6.1 L-3 Communications ............................................................................................................ 84

6.6.2 Furuno Electric ..................................................................................................................... 85

6.6.3 Raytheon Company.............................................................................................................. 86

6.6.4 Kongsberg Maritime ............................................................................................................ 88

7. Internal Analysis ............................................................................................ 90

7.1 Relevant Resources and Capabilities .................................................................................. 91

7.1.1 Financial ............................................................................................................................... 91

7.1.2 Location ............................................................................................................................... 91

7.1.3. Information ......................................................................................................................... 92

7.1.4 Human Resources ................................................................................................................ 93

7.1.5 Innovation ............................................................................................................................ 94

7.1.6 Reputation ........................................................................................................................... 95

7.1.7 The Bridge Mate™ IBS .......................................................................................................... 96

7.2 Value Chain Analysis ......................................................................................................... 98

7.2.1 Primary Activities ................................................................................................................. 98

7.2.1.1 Inbound logistics ......................................................................................................................... 98

7.2.1.2 Operations .................................................................................................................................. 98

7.2.1.3 Outbound logistics ...................................................................................................................... 99

7.2.1.4 Marketing and Sales.................................................................................................................... 99

7.2.1.5 Service ....................................................................................................................................... 100

7.2.2 Support Activities ............................................................................................................... 101

7.2.2.1 Procurement ............................................................................................................................. 101

7.2.2.2 Technological Development ..................................................................................................... 101

7.2.2.3 Human Resource Management ................................................................................................ 101

7.2.2.4 Firm Infrastructure .................................................................................................................... 101

7.3 ACE - model ..................................................................................................................... 102

7.3.1 Attitudes ............................................................................................................................ 103

7.3.2 Competence ....................................................................................................................... 104

7.3.3 Embodiment ...................................................................................................................... 104

7.4 Marine Technologies’ strategic partners ........................................................................... 105

7.4.1 Relationship with Intelsat .................................................................................................. 105


VIII

7.5 Conclusion ....................................................................................................................... 106

8. SWOT-Analysis ................................................................................................ 107

8.1 Strength Matrix ............................................................................................................... 108

8.2 Weakness Matrix ............................................................................................................. 110

8.3 Opportunity Matrix .......................................................................................................... 112

8.4 Threat Matrix .................................................................................................................. 113

9. Strategy .............................................................................................................. 115

9.1 Strategic Problem Definition ............................................................................................ 116

9.2 Goals ............................................................................................................................... 116

9.2.1 Operative: 1-2 Years .......................................................................................................... 116

9.2.2 Strategic: 3-5 Years ............................................................................................................ 117

9.3 Critical success factors ..................................................................................................... 117

9.4 Market selection .............................................................................................................. 117

9.5 Business level positioning strategy ................................................................................... 121

9.6 Marketing Mix ................................................................................................................. 122

9.6.1 Product .............................................................................................................................. 122

9.6.2 Price ................................................................................................................................... 123

9.6.3 Promotion .......................................................................................................................... 124

9.6.4 Place ................................................................................................................................... 125

9.7 Build and maintain relations ............................................................................................ 125

9.7.1 Establishing and managing relationships with strategic partners ..................................... 125

9.7.2 Establishing and managing relationships with customers ................................................. 126

9.8 Human Resources Management (HRM) ............................................................................ 127

9.8.1 Recruiting and/or training the right people ...................................................................... 127

9.8.2 Motivating the employees ................................................................................................. 128

9.8.3 Overcoming cultural differences within the organization ................................................. 128

9.9 Alternative Strategy ......................................................................................................... 129

10. Recommendations .................................................................................... 129

10.1 Focus on the offshore segment ....................................................................................... 131

10.2 Overcome cultural barriers ............................................................................................. 131

10.3 Promotional activities .................................................................................................... 132

10.4 Sales Strategies .............................................................................................................. 132

10.5 Innovative activities ....................................................................................................... 133

11. Bibliography ................................................................................................. 134

11.1 Books ............................................................................................................................ 134

11.2 Published Articles .......................................................................................................... 135

11.3 Internet ......................................................................................................................... 135

11.4 Databases ...................................................................................................................... 142

12. Appendixes .................................................................................................... 144

12.1 Appendix 1 – Mailing list for survey deployment ............................................................. 144

12.2 Appendix 2 – Offshore Petroleum Market in South-East Asia Survey ............................... 146

12.3 Appendix 3 – Introduction mail used in survey deployment ............................................ 150

12.4 Appendix 4 - Interview with Farstad Shipping Pte Ltd - 12.02.2010 .................................. 151


IX

12.5 Appendix 5 - Interview with Associate Professor Ng - 2010.18.03 .................................... 155

12.6 Appendix 6 – Interview with Swiber Pte Ltd - 22.03.10 .................................................... 158

12.7 Appendix 7 - Interview with Jaya Shipyard - 22.03. 2010 ................................................. 160

12.8 Appendix 8 - Interview with Keppel Singmarine Pte Ltd - 23.03.2010 ............................... 161

12.9 Appendix 9 - Interview with Nordic Maritime PTE LTD - 03.04.2010 ................................. 164

12.10 Appendix 10 – Geert Hofstede’s Five Cultural Dimensions ............................................. 166

12.11 Appendix 11 – GLOBE Project Graphs ............................................................................ 167


X

Index of Figures and Tables

Figures

Figure I – Timeline

Figure II – Overview of Marine Technologies

Figure III – Integrated Bridge Mate Overview

Figure IV – VRIO Framework

Figure V – Porter‟s Value Chain

Figure VI – Porter‟s Generic Strategies

Figure VII – Purchase Decision Process

Figure VIII – Industry Attractiveness

Figure IX – ACE-model

Figure X – Strength Matrix

Figure XI – Weakness Matrix

Figure XII – Opportunity Matrix

Figure XIII – Threat Matrix

Figure XIV – Positioning Perceptual Map

Tables

Table I – Strength Table

Table II – Weakness Table

Table III – Opportunity Table

Table IV – Threat Table


XI

Acronyms AIS: Automatic Identification System

ARPA: Automatic Radar Plotting Aid

BM™: Bridge Mate™

BM™IBS: Bridge Mate ™ Integrated Bridge System

CCTV: Closed Circuit TeleVision

DNV: Det Norske Veritas

DP: Dynamic Positioning

ECDIS: Electronic Chart Display and Information System

ECO: Edison Chouest Offshore

ENC: Electronic Navigational Chart

FPSO: Floating Production Storage Offloading

IBS: Integrated Bridge System

ICAS: Information, Control and Alarm System

IMC: International Maritime Centre

IMO: International Maritime Organization

MFW: Multi functional Workstation

MPA: Marine Port Authority

MT: Marine Technologies

OME: Offshore Maritime Engineering

OSV: Offshore Support Vessel

PSV: Platform Supply Vessel

SOLAS: Safety of Life at Sea

TEU: Twenty-foot Equivalent Unit

UN: United Nations

VSAT: Very Small Aperture Terminal

0

1. Introduction


1

1.1 Background to research

After being active in the Asian market through use of agents for their sales and service

operations in the region, Marine Technologies has recently established their own sales office,

Marine Technologies Asia Pte Ltd, in Singapore.

On 22nd

of September 2009, one of our group members met with MT‟s Vice President of

Business Development Frode Klepsvik in Singapore and sent an e-mail the following day

with a proposal on whether the group could write their diploma project for MT, focused on an

aspect of the company‟s involvement in the Asian market. This proposal was received

positively by MT, and after consulting with Runar Framnes at the BI Norwegian School of

Management, the group was given approval to write the bachelor thesis for MT.

Backround to research

TimelineResearch Objective


2

1.2 Timeline

Figure I - Timeline

22.09.09• Initial meeting with Marine Technologies

23.09.09•Agreement on groupwriting of Bachelor thesis

22.01.10•First official meeting with MT

01.02 •Meeting with staff at Lee Wee Nam Library to gather offshore data

25.01•Problem definition established

12.02• Interview with Farstad Shipping Pte Ltd

16.02• Survey on the South-East Asian offshore market first deployment

20.02•Second deployment of survey & Second interview with MT

28.02•Situation analysis completed

18.03• Interview with Associate Professor Ng Kok Yee

22.03 • Interview with Swiber Pte Ltd & Jaya holdings

23.03• Interview with Keppel

24-26.03

•Asian Pacific Maritime exhibition

03.04• Interview with Nordic Maritime Pte Ltd

09.04 •Strategic section completed

22.04 •Thesis handed in


3

1.3 Research Objective Based on Marine Technologies position in South-East Asia and the interests of MT`s Vice

President of Business Development Mr. Frode Klepsvik, the authors have developed the

following problem statement for this thesis:

“How can Marine Technologies LLC succeed in launching their Bridge Mate™ Integrated

Bridge System (IBS) for the offshore segment in the South-East Asian region?”

1.3.1 Research Questions

In order to determine the aspect and goals of this diploma project it is relevant to summarize

these in some fundamental research questions that should help us acquire more knowledge

and information on Bridge Mate™ IBS opportunities in the South-East Asia offshore market.

Hence, the following research questions needed to be answered:

1) What are the specific characteristics/features of the offshore market in South-East

Asia?

2) What is the brand awareness towards MT/Bridge Mate™ IBS amongst shipyard

owners/decision makers in the South-East Asian offshore industry?

3) In terms of integrated bridge systems, what characteristics or product attributes are

the most valued in the offshore industry?

4) How can MT establish a foothold and increase their market share with the new Bridge

Mate™ IBS in South-East Asia?

1.3.2 Research Limitations

MT is a global company with a worldwide customer base. The focus of this thesis will

exclusively be on the South-East Asian market, with an emphasis on the offshore market. The

paper will more precisely address Singapore, Malaysia and Indonesia as considerable nations

within the offshore industry. This region has been chosen to facilitate MTs establishment of a

sales office in Singapore, which lies roughly in the centre of South-East Asia surrounded by

Malaysia and Indonesia. In addition, there were limited funds available for travelling outside

the region.


4

The decision on focusing on the offshore industry was mainly due to MT`s prior knowledge

of the industry. They have experienced success in the offshore industry, both in America and

Europe.

In order to provide sufficient amount of sources, there was conducted both primary and

secondary research. The primary research was initially based on a thorough survey in the

above-mentioned countries. However, conducting these surveys proved to be very difficult, as

the recipients were reluctant to answer. In addition, the team decided to use in-depth

interviews. This was initially to get a basic understanding of the industry and market, as well

as provide information that had not been satisfactory answered in the survey. Due to a fairly

tight budget, conducting in-depth interviews outside of Singapore‟s borders was not possible.

Thus, sufficiently expedient data was gathered in Singapore.


5

2. The Maritime Industry

and Marine Technologies


6

2.1 Maritime Industry The objective for this part is to provide a general introduction to the maritime industry and

explain which part of the industry Marine Technologies (MT) operates in.

The maritime industry is a fascinating, sophisticated and complex business. The maritime

industry has enabled import and export of goods on the massive scale necessary for the global

world. Approximately 90% of world trade is carried by the international shipping industry.

During the last 50 years the cost of transporting commodities by sea has fallen steadily. But

even though merchant shipping is accounted for roughly a third of the total maritime activity,

there are other maritime activities, which support these core activities. Martin Stopford

(2009)1 divides the maritime businesses into five groups. These groups are:

Vessel operations – those directly involved with ships

Shipbuilding

Marine resources - including the businesses which are concerned with offshore oil and

gas, renewable energy and minerals.

Marine fisheries – including aquaculture and seafood processing

Other marine related activities – mainly tourism and services

These five categories are interdependent. The ship owners of the merchant fleet, offshore and

fishing vessels needs the shipbuilders to provide them with their ships, and the shipbuilder

need the services and technology provided from suppliers in the other marine related activities

category in order to meet demands from their customers. MT falls under the other marine

related activities category, more specific the marine equipment industry or shipbuilding

supply industry. The company‟s products supply the commercial, naval and offshore

shipbuilding companies with navigation, communication and safety technology.

1 Stopford (2009) p. 48-49

Maritime Industry

Offshore Industry

Edison Chouest

Marine Technologies

Integrated Bridge System


7

2.2 Offshore industry

As the thesis will focus on the offshore segment in South-East Asia, this section will provide

basic information of the global offshore industry. To ensure the right focus on our project, this

thesis has chosen the following definition of the offshore market:

“The offshore market consists of the following activities: exploration, development,

production, and the supply and maintenance of offshore oilrigs. The transportation of oilrigs

to its drilling position and the process of pipe laying and anchor handling are also included

because this is where the main customer base is found. This means that this report will focus

on the upstream2 sector in the petroleum industry.”

The first offshore oil platform was constructed in 1897 at the end of a wharf in California.

The first platform to be built in open waters in open waters was located in the Gulf of Mexico

in 1947.3 Some of today‟s notable offshore fields are found in the North Sea, the Gulf of

Mexico, and Santos Basins off the coasts of Brazil. There are also significant offshore fields

in South-East Asia.

Offshore oil and gas production is even more

complex and challenging than land-based oil and gas

production. The reason for this is the remote and

harsh environment, a specific example being the

North Sea, which frequently endures inclement

weather. This makes the offshore industry a very

demanding industry that needs highly technological

solutions, and the innovation in the offshore industry

is therefore concerned with overcoming these challenges.

2.3 Edison Chouest Offshore In order to provide sufficient information, the following section will provide an

organizational chart, which shows an overview of Marine Technologies, and

where they are placed in relation to the parent company Edison Chouest

2 (Upstream is a term which describes the exploration and production sectors within the oil and gas industry.)

(http://www.offshore-technology.com/glossary/upstream.html : “Upstream” 3 http://science.howstuffworks.com/offshore-drilling.htm :“Offshore Drilling”

http://www.offshore-technology.com/glossary/upstream.html

http://science.howstuffworks.com/offshore-drilling.htm


8

Offshore.

Edison Chouest Offshore (ECO) was founded in Galliano, Louisiana in 1960. Since 1993 the

company has more than tripled its size, making it the fastest growing offshore vessel service

company in the world.4 With their in-house design and building capabilities, ECO has become

unique and very successful in the offshore boat service industry. Reasons for this are the

company‟s ability to design, build and operate vessels at a competitive price. The company

also owns and operates the largest independently owned fleet of seismic and research vessels

in the world.5

As a conglomerate with over 8000 employees operating within the shipping and offshore

industry, ECO‟s sphere of companies are able to offer a variety of products and services.

Examples are logistic support, staging and storage, vessel repair, tank cleaning, and vessel

sharing services. It also develops control systems, dynamic positioning systems, joystick

solutions, integrated bridge systems, and telephone and satellite communication solutions for

offshore vessels.6 Marine Technologies LLC are the main provider of these services.

2.4 Marine Technologies LLC

As a part of Edison Chouest Offshore (ECO), Marine Technologies

LLC (MT) provide the ECO fleet with up to date control and

communication systems based on the latest technologies available

in the market. ECO is MTs‟ main customer, contributing approximately 40% of MTs‟ annual

revenues. Established in 2002, MT started with development of control systems, especially

Dynamic Positioning (DP) Systems for offshore vessels. 16 months after the company was

started the first vessel with a DP-system from MT received its DPS-2 safety notation from the

classification society American Bureau of Shipping.7 Today MT produces and deliver type

approved DP systems of all International Maritime Organization (IMO) classes, as well as

less complex DP and Joystick solutions. MT also delivers telephone and satellite

communication solutions. This is enabled through a strategic partnership with Intelsat, the

world‟s biggest operator and provider of satellite communication services. MT now produces

4 http://www.louisianaeconomicdevelopment.com/opportunities/success-stories/edison-chouest-offshore.aspx :

“Edison Chouest Offshore” 5 http://www.subsea.org/company/listdetails.asp?companyid=2847 “Edison Chouest Offshore”

6 http://investing.businessweek.com/research/stocks/private/snapshot.asp?privcapId=4291932 “Edison Chouest

Offshore, LLC” 7 http://www.marine-technologies.com/Index.aspx?PageID=97&Language=en-US : “About MT”

http://www.louisianaeconomicdevelopment.com/opportunities/success-stories/edison-chouest-offshore.aspx

http://www.subsea.org/company/listdetails.asp?companyid=2847

http://investing.businessweek.com/research/stocks/private/snapshot.asp?privcapId=4291932

http://www.marine-technologies.com/Index.aspx?PageID=97&Language=en-US


9

Integrated Bridge Systems (IBS) fully compliant with IMO regulations and appurtenant

standards such as International Electrotechnical Commission and International Organization

of Standardization. The Bridge Mate™ IBS has received the “Det Norske Veritas” (DNV)

type approval of “NAUT-AW”, the most comprehensive bridge class notation in the industry

today. This is a strong indication of MT‟s commitment to high quality and performance in

their products.

The company‟s main office is located in Mandeville, Louisiana, focusing on the Central and

North American market. Marine Technologies AS is located in Egersund, Norway and serves

as the base of operations for the European market. Sales and Service in Asia is covered

through Marine Technologies Asia Pte Ltd in Singapore. The company is also established in

Rio de Janeiro as MT Brazil. MT Brazil is responsible for all communications services being

offered in Brazilian waters and to Brazilian flagged vessels.

MT‟s vision is to be an industry reference for reliability, user friendliness and cost efficiency

in Integrated Bridge, Dynamic Positioning and Communication solutions for offshore and

commercial shipping worldwide. The company aim to utilize the differentiation potential in

their products and services by being technologically advanced but at the same time being

modular and flexible in design. This enables MT to target both the more advanced segments

of the shipping market asking for technically advanced and sophisticated ship control systems

because of high safety, security and functionality requirements, as well as the “commodity”

market where medium to low cost solutions are asked for. MT does not focus on the very low-

cost end of the market that only installs the bare minimum as required by IMO regulations.

Figure II – Overview of Marine Technologies

Marine Technologies LLC,

(USA)

Marine Technologies AS,

(Norway)

Marine Technologies Asia

Pte Ltd (Singapore)MT Brazil

Edison Chouest Offshore


10

As a part of ECO, MT originates from the offshore market, which still constitutes the main

market for all of the company‟s products and services. Other market segments for MT are:

The merchant ship fleet trading internationally

The international fishing fleet

The domestic fleets or merchant and fishing vessels

The world leisure “fleet”

2.5 Integrated Bridge Systems The thesis is focused on the market potential for the Bridge Mate™ Integrated Bridge

Systems (IBS) in the South-East Asian market. This section will describe the product in

depth, as well as the unique attributes of the Bridge Mate™ IBS.

The International Maritime Organization (IMO) defines IBS as: “[...] a combination of

systems which are interconnected in order to allow centralized access to sensor information

or command/control from workstations, with the aim of increasing safe and efficient ship's

management by suitably qualified personnel.” 8

The idea behind the IBS is to make the bridge more streamlined and easier to operate. Prior to

the IBS, the bridge on a tanker or containership could consist of as many as 12-16 screens and

controls over a length of 10-12 meters. The IBS makes it possible to reduce this to 3-4

screens, which contains all navigational information and other relevant information.

IBS are meant for reducing the complexity of the bridge controls and to make it more

efficient. This eases the operation of the vessels, because of the reduction in screens and

analogue gauges. The IBS also improves safety and fuel consumption because route planning

is made much easier and more effective. IBS can contain the bare basics, which IMO and/or

classification societies demand as a minimum or it can be much more complex. This depends

on the customer needs and the nature of the business the vessel is designed for. A standard

IMO layout for IBS is shown in Figure III.

8 www.imo.org Performance standards for integrated bridge systems were adopted by IMO in

1996 (Resolution MSC.64(67))

http://www.imo.org/


11

The following sections will describe

the basic functions of an IBS.

An Electronic Chart Display and

Information System (ECDIS) is an

electronic map of the sea, as well as

depth and current information. This

system has audio and/or visual alarms

when the vessel is in proximity to

navigational hazards, like other vessels or shallow water.

The system is connected through satellite internet- connection, which makes it possible to

download new maps as well as keep track of position.

Automatic Radar Plotting Aid (ARPA) works together with the Automatic Identification

System (AIS), this makes it possible to track and adjust course compared to other ships in the

vicinity. This system can handle 100 different radar plottings at the same time, showing

information such as ship name, course and speed.

Conning display with track information is a customised screen, which shows general

information during long haul sailing. The different

information is chosen by the Captain or whoever is

responsible on the bridge. The user can create a

personal layout, and quickly retrieve it in case of an

emergency. The purpose of the Conning display is

to feed the person responsible on the bridge with the

most relevant information, and avoid overload of

information.

Route Management enables smart route planning aided by the ECDIS, weather and current

information. Route Management makes fuel and time savings possible.

Heading control system provides the user with information on the course, speed, direction,

and Estimated Time of Arrival.

Figure III – Standard IMO IBS


12

Wind information provides the direction and speed of the wind and Gyro compass values

determines the direction of the ship‟s bow in relation to the geographic true north.9

All this information can be gathered in three or four screens, with a customized layout done

by the people who are responsible for handling of the ship. On long haul freights or time-

consuming operations there are several people working in shifts on the bridge. MT‟s IBS has

the opportunity to save several different layouts so each person could find his own customized

layout within a few seconds. This function will be useful in an emergency situation, because

the captain would quickly be able to find his layout, which he is familiar working with.

Most of the companies who provide IBS use 5-6 screens, where two are used for ECDIS. This

is due to the lack of integration between the screens, and one screen could be used for backup.

The most common layout is: ECDIS, Radar, Conning, Radar, and ECDIS. The AIS is

designed to show its information on the ECDIS charts. A multipurpose chair is placed next to

these controls. These chairs have usually some controls on the armrests, such as steering of

the vessel or other functions such as cranes etc. The complexity of these chairs is of course

related to the complexity of the IBS and the needs of the captain.

It is also possible to customize the screen for different operations. This gives the Captain an

opportunity to customize the screen layout in terms of what he needs to control when docking,

such as thruster and propulsion control. This feature makes it easier because all unnecessary

information is removed, avoiding information overload.

This multi functional workstation (MFW) provides the captain with information from many

different sources to a single workstation. Available on all MFW you will find:

o ECDIS

o ARPA radar

o Conning Display

o Autopilot

o Thruster controls

o ICAS

o CCTV

o Window wiper, washer, heating

o Deck, navigation & search lights

9 http://www.tc.gc.ca/marinesafety/TP/Tp3668/6Standard.htm :“Standards for gyro-compasses”

http://www.tc.gc.ca/marinesafety/TP/Tp3668/6Standard.htm


13

The following features can also be offered on the MFW:

Information, control & alarm system (ICAS) consists of several alarm systems. There are a

vast number of sensors onboard such as; smoke detectors, gas detectors, infrared and heat

detectors. These advanced sensors are mainly found in the engine room, but smoke and gas

sensors can be found all over the ship.

The Cameras makes it possible for the captain to switch to the Closed Circuit Television

(CCTV), and get live feed from operations or the engine room. This is useful in certain high-

risk operations such as handling of goods/ supply, pipeline laying, or handling of anchor

operations offshore.

The thruster/ propulsion control helps large vessels to dock and to increase rate of turn. The

thrusters are located in the front and middle of the ships, dependent on the ship size.

Thrusters make it possible to manoeuvre the ships sideways. On larger ships this is made

possible with a tunnel thruster that makes it feasible to manoeuvre sideways both starboard

(right) and Port- side (left). Turning the ship is now possible with a much smaller radius.

Propulsion control makes it possible to control the main engine torque and the thruster from

one station.

Dynamic Positioning (DP) enables the Captain to hold the ship at the

exact position within centimetres, which is absolutely necessary in

pipeline laying and supply operations. During such operations the

ship is a few meters from the oilrig, and a crash would be a

catastrophe. DP systems are separated into 3 different classifications

(1-3), depending on the complexity and the safety necessity. DP 1 is

the simplest system with one closed circuit and no redundancy if the

computer fails. DP2 contains a backup computer or one individual

computer at starboard and one at port side. This gives the system a

higher level of security. The highest level of DP is the DP3, most

commonly found on Offshore Construction Vessels (OCV). These vessels are in charge of

drilling a hole, which can be several hundred meters under water. This makes it extremely

important that the drilling vessel is located at the exact position during the operation.

Therefore they use the DP3, which consists of the same equipment as a DP2. In addition,

there is a third system located at another place on the vessel with a fireproof wall between

them. The third DP operates as the DP1, separated from the two on the bridge. This is used if

Bridge Mate™ DPS


14

there would be an emergency on the bridge or if the two other crashes. Typical vessels

demanding DP include:

Drill ships

Crane vessels

Diving support vessels

Floating Production Storage Offloading

Pipe laying vessels

Platform supply vessels

Supply vessels10

These systems have to be approved by the international maritime organization (IMO) because

of the hazard of hacking and unwanted “entry” (via internet) of the bridge system on a ship,

which could lead to severe accidents. Therefore these systems are specially designed to ensure

that only authorized personnel could remotely enter and alter the system. Since the ECDIS

and a few other systems could be remotely updated they need an Internet connection onboard.

2.5.1 Unique features of MT’s Bridge Mate™ IBS

MT‟s system uses a normal Windows based computer, which has been stripped down to the

bare essentials in order to run the IBS system. These computers have no moving parts such as

fans or hard disc. The reason for this is the high frequent vibrations and rough sea on board

ships, and this would give a normal computer a lifetime of 5-6 months maximum before they

would crash.

MT uses Ethernet cables in their installation of their system, this because such an installation

would not require that each sensor and application would need their own cable. The result is

10

http://www.km.kongsberg.com/ks/web/nokbg0240.nsf/AllWeb/14E17775E088ADC2C1256A4700319B04?O

penDocument :”Dynamic Positioning, DP-systems”

Bridge Mate™ IBS

http://www.km.kongsberg.com/ks/web/nokbg0240.nsf/AllWeb/14E17775E088ADC2C1256A4700319B04?OpenDocument



15

reduced installation time and the amount of cables on the boat, reducing costs and time used

for malfunction searching.

By using Ethernet cables it is also possible to use all the screens for all applications as well,

reducing the risk of malfunctions. This is a huge advantage compared to other suppliers were

the bridge is not as integrated as the Bridge Mate™ IBS. Many of these suppliers use normal

cabling and require a lot more cables, which complicates the installation.

MT is able to integrate 3rd

party supplies such as CCTV, echo sonar, sonar, main propulsion,

and thrusters. This is a big advantage compared to other suppliers who are using other

platforms such as Linux, because it reduces the compatibility with other systems. MT‟s

Brigde Mate™ is very flexible in terms of integrating 3rd

party products and services. Many

of the competitors are delivering IBS that contains a fixed set of applications. If a customer

requires additional applications, these would not be able to be integrated. These would

therefore be “stand alone” system on the IBS itself, making it deferred to faults and

malfunctions.

The different modules on the Bridge Mate™ are not wider than 60 cm (23,62 inches) so that

the modules can easily be transported to the bridge. This also eases the installation since these

systems are normally installed late in the process of building. Some of the other suppliers

deliver their IBS in one or two modules, making it necessary to remove windows and doors to

get them inside the bridge and installed.

For any online transmission, like update of charts, the computer easily connects to MT

Headquarters. In the event of any fault of the system, MT can conduct a remote search of the

system which demands that the Captain and MT exchange codes. In addition to exchanging

codes, the Captain has to physically switch two keys to allow access to the IBS. These remote

fault searches enable MT to do an exact diagnosis of the entire system and find which part of

the system has failed. Many other systems do not offer this service, so they have to send a

technician to the ship and search the system and then get the part ordered. This would require

significantly more time and the opportunity cost to the owner of the ship will be great.

MT‟s IBS has multiple redundancies on the entire system, which means that if one part of the

system fails, the system will announce this on the IBS screen. This will lead to the multiple

redundancies getting activated, which will enable the system to continue to work as usual.


16

MT has made their system so the service and replacement of essential equipment such as

screens/ monitors are easy to replace, even at sea. This is essential to maintain the safety at

sea, because the screens can be changed in few minutes, as long as they have spare parts

onboard. The screens that MT uses costs about 1000 US$, making it quite affordable to have a

few in stock onboard each ship to ensure a contingency of sailing even after a system failure.

Even if there are no spare parts on board, the system is designed so that all screens have the

capability to display any information. This ensures that safety is always maintained, even if

some screens crashes.

Human/machine interfacing is a key subject in order to safeguard stress free working

conditions. To ensure a one-man-operation of the aft, MT supplies a unique aft control

system. The system contains a MFW with a specialized operator chair, and a MFW for the

operation of the DP in backup. Each armrest includes a 15-inch TFT Touch screen monitor

for DP, CCTV, conning, radar or other selectable functions. This simultaneously enables the

operator to keep track of all the navigational

equipment such as ECDIS, radar/ARPA, and main

Conning display. The chair is mounted on rails

allowing the operator to electronically move the

chair back and forth; this ensures that the operator

can keep control of multiple MFW‟s. The chair is

also fully adjustable to ensure ergonomically fit

and comfort.

MT has designed the entire product to ensure that it does not take up much space. Some of the

competitors have their screens 30-50 cm in front of the windows, whereas MT has their

screens in an angle in front of the windows, which gives an increased view angle. This is

made possible by reducing the number of analogue switches and gauges in front of the

screens. The increased view angle is a great advantage if any work should take place on the

bow of the boat.

The ClearPoint Weather is an extra service from MT, which delivers an accurate weather

forecast in high quality. It is also the only commercial weather service certified by the Det

Marine Technologies Operating Chair


17

Norske Veritas AS (DNV).11

The service is possible to customize for each customer, and they

have 24 different modes on their forecast to choose from. The service ranges from normal

forecasts containing wind, air temp, waves, currents, and fronts to more advanced forecasts

containing all relevant information to assess the current and forecasted situation.

11

http://www.clearpointweather.com/products/commercial-marine/commercial-marine/ : “Commercial Marine”

http://www.clearpointweather.com/products/commercial-marine/commercial-marine/


18

3. Research methodology


19

This section explains the purpose of the study, and how the group collected the data set

necessary to answer the projects research questions. The following four steps are used to

describe this process, based on a research model by Gripsrud, Olsson and Silkoset (2007)12

:

The conclusions of this process can be found in the next section “Findings”.

3.1 Analysis Purpose

The purpose of this research is to provide market insight for Marine Technologies LLC of the

offshore petroleum industry in Indonesia, Malaysia and Singapore, focused on their Bridge

Mate™ IBS. Based on this information the authors will suggest a strategy MT should apply in

order to take advantage of the opportunities in these markets.

3.2 Research Questions

The research questions are very useful to guide the researcher through the research process,

and help acquire more knowledge and information in order to fulfil the research purpose. The

group decided upon these four following research question for the research study:

1) What are the specific characteristics/features of the offshore market in Singapore, Malaysia

and Indonesia?

2) What is the brand awareness towards MT/ Bridge Mate™ IBS amongst decision makers in the

Singaporean, Malaysian and Indonesian offshore industry?

3) In terms of integrated bridge systems, what characteristics or product attributes are the most

valued in the offshore industry?

4) How can MT establish foothold and increase their market share with the newly introduced

Bridge Mate™ IBS in Singapore, Malaysia and Indonesia?

12

Gripsrud,Olsson & Silkoset (2007) p. 53

Analysis PurposeResearch Questions

Design and Data

requirementsData Collection


20

The group decided upon a few subjects that would give the information needed to fulfil the

research purpose, and the research questions cover these subjects. The questions narrow down

the scope of the project, yet they are still open enough to give the project the depth it needs to

be useful to MT. The answers to these questions will:

Explain the market situation of the offshore market in the region (RQ1)

Clarify the markets current perception of MT (RQ2)

Explore the possibilities for MTs current product portfolio in the industry (RQ3)

Recommend strategies for successful market entry (RQ4)

3.3 Design and Data Requirements

To answer our research questions we initially adopted an exploratory approach, which

allowed us to get a better understand of the industry. This exploratory stage was relevant as

we had little or no prior knowledge or experience in this industry or market, and findings

would answer RQ1. This stage consisted of interviews with relevant people within the

research area and data collection from secondary sources like web pages and books. This is

explained in detail in the following section.

Once we completed the exploratory stage and had gathered enough knowledge on the offshore

industry, we moved to the second stage which focused on the collection of qualitative, as well

as quantitative data, in order to answer our remaining research questions (RQ2-4).

3.4 Data Collection

Our data consists of two types of data: secondary data and primary data.

3.4.1 Secondary Data

During our exploratory stage, we realized that we needed to look at relevant external sources

of data. This would provide an objective point of reference and allow us to triangulate any

data we collected ourselves. This would facilitate the quality of our analysis later on, by

enhancing the quality and type of data analyzed. Our external data sources were Internet data

bases made available through NTU including official secondary sources such as The Maritime

and Port Authority of Singapore, books such as Strategic Asian Marketing and other

independent internet sources such as Datamonitor. We also received some internal secondary

data from MT, such as product specification documents created for potential customers.


21

In order to better understand the offshore petroleum industry in Singapore, Malaysia and

Indonesia, we realized that secondary data sources like internet, books or company brochures

did not give sufficiently accurate or at times relevant information. One main problem with

these secondary sources was that the data was collected for other purposes13

, or it was not

very objective. As such we decided to conduct our own primary data set in addition to the

secondary data collection. In addition, since there were no secondary data available to answer

research questions two to four, we had to create a data set which would enable us to answer

these questions.

3.4.2 Primary Data

Our primary data set consists of interviews of people who were able to help answer some or

all the research questions, and a survey which was given to relevant businesses within the

industry (the list of companies can be found in appendix 1).

3.4.2.1 Interview Process

In the early stage of the project, the group had a meeting with the VP of Business

Development of MT who was our contact person, Mr. Frode Klepsvik, so we could better

understand their current situation and define our project. This meeting took over three hours,

and the group received a very thorough brief of MTs‟ activities, specifically concerning the

Bridge Mate™ IBS. This allowed us to define the scope of our project.

As a part of the primary data collection, and we decided to conduct several short, semi-

structured interviews with relevant people in the industry to get a more accurate and updated

image of the industry. Such interviews are easy to arrange for both parties, and there was

more room for in-depth details and “loose talk”. Our group members conducted the interviews

on the subjects listed below:

Mr. Akbar Hakim bin Haji Harun and Mr. Lim Kong Meng, Nanyang Technological

University Library Department.

Mr. Henrik Fitinghoff, General Manager, Farstad Shipping Pte. Ltd.

Mr. Frode Klepsvik, VP Business Development, Marine Technologies LLC.

Mrs. Kok-Yee Ng, Associate Professor in Organizational Behavior and Human Resource

Management in the Division of Strategy, Management & Organization at Nanyang Business

School.

Mr. Steve Ho, Senior Manager, Swiber Kreuz International Pte. Ltd.

13



22

Mr. Koh Kin Siah, Project Manager, Keppel Singmarine Pte. Ltd.

Mr. William Chou, Shipyard Manager, Jaya Holdings Ltd.

Mr. Markus Kvaerneng, Marketing and Chartering, Nordic Maritime Pte. Ltd.

The interviews were semi-structured, meaning we had chosen a few areas we wanted to cover

and just a few specific questions prepared for the respondent. All interviews were with

relevant people within the study area, and all meetings were pre-booked. We will discuss the

findings from these interviews later.

In addition, the group spent three days attending the Asian Pacific Maritime 2010 trade fair14

,

which we received invites to from MT. At this expo we met three other MT employees, and a

few important strategic partners of MT. The group spent many hours talking loosely with

these, and learned many things we did not know of, such as a few competitive advantages of

the BM™ IBS. The learning from observing MTs‟ sales people in action was also very

valuable. We seized this opportunity to learn as much we could about MT, their employees

and partners, many of their competitors who also attended, customers who visited MTs stand

and get a general feeling of the maritime environment in the Asian pacific region. As this was

an invited occasion, we had no opportunity to take quotes or establish all the findings, but

some of the information in this paper was gathered at the expo.

3.4.2.2 Survey Process

For our quantitative data collection a survey was created to answer all our four research

questions. A great deal of time was spent on constructing this survey, as we felt it was a

crucial one-chance opportunity to collect the data necessary for our study conclusions. We

used internet sources like The Maritime and Port Authority of Singapore15

to locate potential

respondents within the offshore industry in Singapore, Malaysia and Indonesia. The goal was

to map the perceptions of these respondents in their dealing with offshore vessels, whether

they bought/ sold/ leased/ built or used them. We used software called Confirmit16

to design

and deploy the survey using the mail addresses collected from company websites. A complete

list of all companies who received the survey can be found in appendix 1. The survey had 28

questions, most of them based on statements were the respondent answered how much he

14

http://www.apmaritime.com :”Asia Pacific Maritime 2010” 15

http://www.mpa.gov.sg/ ”The Maritime and Port Authority of Singapore” 16

See http://www.confirmit.com/ for more information

http://www.apmaritime.com/

http://www.mpa.gov.sg/

http://www.confirmit.com/


23

would agree with such a statement from 1-7, and three open ended questions. The complete

survey can be found in appendix 2. The findings of the survey will be addressed and discussed

in the next section of the paper.


24

4. Findings


25

4.1 Survey Analysis

This section will explain how the survey was created and describe the process of finding

respondents and deploying the survey. The section will conclude with an evaluation of

findings.

4.1.1 Preliminary work

The better part of two weeks were spent on finding relevant respondents for the survey using

Internet databases, in order to ensure that relevant people, who were able and interested in

completing the survey, were reached. 91 unique e-mail addresses of companies and

employees who fulfilled our responded criteria‟s were collected. The criteria‟s were that they

would buy/ sell/ lease/ build or use offshore vessels, and the company had a base in

Singapore, Malaysia or Indonesia. Some of these companies were Norwegian companies with

offices in the region. It would have been preferable to find more, but it proved hard as the

biggest databases of addresses became depleted. A draft of the survey was sent as a test

survey to our supervisor for review and asked for any advice. A checklist of things that could

be changed was received, and complied with all these. After this the completed survey was

sent to a few other independent test subjects to ensure the feasibility of the test. They all

understood the language and statements in the survey, even though they were not familiar

with the offshore business.

4.1.2 First deployment

The final version of the survey was deployed on the 16th

of February using a Gmail account

created specifically for this project.17

The introduction mail text can be found in appendix 3.

Immediately problems occurred, as instant replies informed that some of the addresses had

blocked the incoming mail. This was most likely because the companies were afraid of virus

infections and a Gmail account, which is not known for its security, was used. Viruses are one

of the biggest weaknesses of using a web-based survey.18

Despite the fact that 73 of the e-

17

[email protected] 18


Survey AnalysisInterview Findings


26

mails reached their destination, only five people actually pressed the survey link sent to them,

and none of them completed the survey.

4.1.3 Second deployment

It was decided to use another mail account. Instead of a Gmail account, Confirmit‟s own

deployment system was used, as it would be easier to send reminders as well. This way one of

our group members‟ BI mail 19

was used. The intention was to make the mail look more

credible to the receiver. The survey was deployed to the same respondents on the 20th

of

February, but the result was the same: no respondents. One invite was included to one of the

group members to ensure nothing was technically wrong with the survey, but the survey

worked perfectly. A reminder was also sent to all respondents on the 26th

of February, but still

no one completed the survey.

4.1.4 Analysis

In retrospect we have identified what went wrong, and why we did not get a single reply.

Our respondents were all active in the petroleum offshore industry, so the survey is within

their area of interest. A few of the companies were also of Norwegian origin; something we

believed would work in our favor. As the respondent can choose the time and place for

completing the web-based survey themselves, one would believe this was something positive.

However, research shows that the respondent often delay doing the survey, and ultimately

ignores it completely20

. This is something that may have happened in our case, as we

deployed the mails during regular office hours. The fact that our mail address was from a

gmail account and later a student account may have caused the e-mails to be blocked because

of potential viruses.

The team included several incentives for the respondent, including the offer to share the data

(not the findings) collected, and the fact that Marine Technologies would receive a list over

the respondents and “look favourably” on those who participated. This was suggested by

Marine Technologies themselves. We introduced ourselves as students working with a project

within the respondent‟s industry and geographical area, which should create some sort of

goodwill. It was informed that the survey would only take between 6-8 minutes, something

we did not consider to be an unreasonable amount of time. A wish was also included for the

respondent to relay the survey link to anyone he/she thought were relevant, in order to help us

collect more data, and at the same time showing trust towards the respondents judgment. We

19

[email protected] 20



27

believed that if a person received an invitation from a colleague, this might make him/her

more likely to answer the survey. The perceived risk of any coverage errors was thought to be

acceptable in this case, considering the benefits of more respondents. For the reminder we

even changed the subject of the mail, removing the word survey and including diploma

project, in order to lure the respondent to read the mail.

4.1.5 Survey evaluation and Findings

As we did not manage to collect data from the survey, there will not be an analysis of the

survey itself. However, this survey experience has given us some useful perspective and

findings.

At the start of the project we were told by our supervisor that using web-based survey had

some obvious limitations, and that we would need people to relay the survey to other people.

We misinterpreted this advice, and thought that if we just include a request for relays, we

would increase our respond rate. In retrospect, we realized that we should in fact take the

advice more literary; relationships are of high importance in Asia. We should have gathered a

few contacts, maybe through MT/NTU/Norwegian embassy/Innovation Norway to mention a

few options. These could have helped us deploy the survey to relevant people within their

network, creating a snowball effect.

Another issue was that our status as students was much lower than the managers we

approached here in Asia, whereas in Norway people would be more open minded and helpful.

Once again our cultural background clouded our judgment. We should have added some

“seniority evidence” in our e-mails, like school logos, recommendations or letters from

NTU/BI professors or senior MT employees etc. as evidence for our genuineness. Gathering

this would not be a problem, and it would definitely have increased our credibility, and in turn

the responsiveness. We found that the middle management we contacted was afraid to say

something their boss may not approve of, so they did not say anything at all. They were also

afraid to give out “sensitive” information they believed would harm the company, even

though we did not request any such thing. We also realized how substantial the limitations of

web-based surveys really are; people rarely find time to participate without proper rewards.

Although these findings revolve around a survey, they can be used as a learning example for

MT. It really demonstrates how important network, seniority and cultural understanding are in

this region and industry.


28

4.2 Interview Findings This section will present the findings from eight interviews and analyze the interview process.

The interviews are presented chronologically.

4.2.1 Findings from the Nanyang Technological University Library Department

The first of February, at the start of our project, the team booked a meeting with two

employees from Nanyang Technological University‟s‟ library department. The purpose was to

seek help for the secondary data collection, as the team believed the amount of data on the

offshore industry to be significant, and we wanted to find the most relevant information as

early as possible in the research process. One of the employees was Mr. Akbar Hakim bin

Haji Harun, Head, Business Library & Senior Assistant Director. Mr. Akbar has a deep

knowledge of the research services available at the library, and the team hoped he could help

us find relevant secondary sources for our research. The other employee was Mr. Lim Kong

Meng, Head, Engineering Library & Senior Assistant Director, Engineering Librarian (Civil

& Maritime Studies). Mr. Lim is an educated civil engineer, and has worked many years in

the maritime industry in Singapore, as well as a researcher for the library. Our hope was that

Mr. Lim could give us some information on the maritime offshore industry in Singapore, as

well as suggest good secondary sources for further studies within this industry.

The group received a short brief on the maritime industry and different vessels operating

within it from Mr. Lim. He told us that Singapore was a very important participant in the

global offshore industry, and gave some hard facts to support this statement: 60% of all new

build oilrigs are built in Singapore making Singapore the number one rig builder in the world.

Singapore is also the world‟s third largest oil refinery nation, as well as the busiest port in the

world in terms of total shipping tonnage. In addition, Singapore is the fifth largest owner of

ships in the maritime industry. These were all facts that supported our impression of

Singapore as a global marine, offshore and shipping hub.

They suggested big Singaporean companies we could contact ourselves, like Keppel and Jaya

Holdings, which later proved helpful. We received many examples of useful internet data

bases we had access to from NTU library portal, such as Factiva, Fairplay24 and

Datamonitor, governmental sites such as The Maritime and Port Authority of Singapore, and

book such as “Of hearts and minds”. This was especially helpful to our research process,

because it gave us a starting point for data collection.


29

Some general advice was also given, such as to identify main players in the industry which in

turn would help us to define the industry. It was important not to confuse the offshore

maritime segment with the offshore banking segment (which is very big in Singapore), and to

read up on the different types of offshore vessels.

4.2.2 Findings Farstad Shipping Pte. Ltd.

Farstad Shipping ASA is a major international supplier of large, modern offshore support

vessels. The company's fleet consists of 30 anchor handling tug supply vessel, 24 platform

supply vessels and 3 subsea vessels. Farstad has its headquarters in Norway, and an office in

Singapore (Farstad Shipping Pte. Ltd.) whose purpose is to further strengthen their position

in the Far East region.21

The aim for the interview was to collect information about the

offshore industry in South-East Asia. As Farstad supplies ships to the offshore segment, the

team wanted to get an impression of Farstad’s attitudes towards IBS. Another aspect was to

get an idea of the differences between western companies and Asian companies. The interview

was conducted with Henrik Fitinghoff, General Manager of Farstad Shipping Pte. Ltd.

located in Singapore. The actual interview can be found in appendix 4.

Our interview with Mr. Fitinghoff was started with questions regarding the South-East Asian

Offshore Market. Farstad currently has an office in Melbourne, Australia. He provided us

with three factors that were decisive for the decision to set up an office in Singapore: 1. Tax

Benefits 2. Singapore‟s position as a shipping hub 3. Using Singapore as a base for operations

in Asia. Farstad does not operate in Indonesia or Malaysia at this time, but have been involved

in these markets in the past. Mr. Fitinghoff gave three main reasons for this: 1. The

competitive environment in these markets, 2. The fact that these markets are dominated by

more “shallow-water offshore activities” while Farstad‟s ships are created for “deep-water

offshore activities” due to Farstad‟s position as a supplier of high-end technically

sophisticated ship services. In “shallow-water offshore” there is less need for the latest

technological ship solutions. 3. Only 10% of Farstad‟s fleet is currently employed in Asia, and

they have found other markets where these ships are more applicable. Mr. Fitinghoff used

Vietnam and the Philippines as examples of markets they are currently involved in. Fitinghoff

continued by stating that Farstad‟s main market nowadays is Australia (nearly 50% of

Farstad‟s total revenue), which has quite recently discovered large fields containing natural

gas.

21

http://www.farstad.no/default.asp ”Farstad Inngangsider”

http://www.farstad.no/default.asp


30

When asked about his view on the South-East Asian offshore market he stated that it is a very

interesting market with very high growth. There has apparently been an increase in drilling

projects of 100% over the last two years as according to Mr. Fitinghoff. The reason for the

increase is that large portions of the Asian continent are now experiencing an “energy

crunch”, meaning that Asia are currently using more energy than they are able to produce. To

illustrate the petroleum market in Malaysia, he used the state-owned company PETRONAS as

an example, as it is listed among Fortune Magazine‟s list of the 500 biggest companies in the

world.

Regarding Integrated Bridge Systems, Mr. Fitinghoff had a number of interesting remarks on

the South-East Asian offshore vessels market. We asked him what product attributes Farstad

values most when it comes to IBS. His top three characteristics was the quality of the product

(stability, user-friendliness, up to date technological solutions), after-sale service (service,

repairs, updates etc) and how reliable the supplier is (delivery time, trustworthiness,

seriousness etc). Price was not a deciding factor for Farstad. His opinion of Asian companies

was that they are much more cost conscious, and they tend to go for cheaper alternatives in

the market. However, there is a rising trend in Asian companies indicating that they are

starting to value more technological solutions in their vessels. To quote Mr. Fitinghoff:

“Asian companies are looking for the latest technological solutions, the main difference

however is that while we (Farstad) are building a Mercedes, Asians are willing to settle for a

Hyundai. It gets the job done at a lower price.”

We were also interested in Farstad‟s view on retrofitting in order to upgrade existing vessels.

Mr. Fitinghoff stated that Farstad rarely use retrofitting. If a vessel is starting to get outdated

they will be looking to offload the vessel and rather start a new building project. He did

indicate that there may be a market for retrofitting among the companies that are willing to

buy older boats, as this can be a cost-saving strategy for them, compared to building a new

boat from scratch.

Mr. Fitinghoff had heard of neither Marine Technologies nor Edison Chouest Offshore.

4.2.3 Findings Marine Technologies LLC

On the 26th February we had a new second meeting of one hour with our contact person

within Marine Technologies (MT), Mr. Frode Klepsvik. Mr. Klepsvik is Vice President of

Business Development in MT, and head of the Singaporean office. The purpose of the meeting


31

was to clarify issues we were uncertain of. Unlike our first meeting, this interview was

structured and the group came prepared with many questions. The questions revolved around

different topics which were divided amongst ourselves, most of which we could not find

answers to through external sources. The questions included topics such as purchase process,

business attitude, distribution, financial situation, service, market shares and competitive

environment. The findings from this meeting were many, and we have not gathered them

here. Instead they are proliferated in different sections of the thesis, although the majority can

be found in the second section about the maritime industry and Marine Technologies, as well

as in the internal analysis, which is represented in section seven.

4.2.4 Findings Cultural Associate Professor from Nanyang Business School

In order to address the external environment and its inherent cultural element, the team found

it necessary to assess this through an interview with an expert in the area. Hence, the team

sought the help of associate professor in Organizational Behaviour and Human Resource

Management in the Division of Strategy, Management and Organization at Nanyang Business

School (NBS) Dr. Ng Kok Yee who agreed to share her expertise with the team. The goal with

this interview was to explore the specific features of the offshore market in Singapore,

Malaysia and Indonesia in terms of cultural characteristics. Secondly the team wanted to

collect cultural information that can be implemented in the strategic part of the paper, since

we know that cultural barriers can be an impediment for MT working in South-East Asia.

Thus, Ng Kok Yee`s cultural references would be helpful in the latter part, when concrete

proposals with strategies of how to increase foothold with the Bridge Mate™ IBS will be

implemented. The interview itself can be found in appendix 5.

Initially, Prof Ng stated that there are many important differences between South-East Asian

culture and US/Scandinavian culture. However, she said that there are no researches that

establish “the most prominent cultural difference” between the regions. That being said, she

highlighted communication as a difficult milestone for westerners to overcome in a South-

East Asian context. Singaporeans, Malays and Indonesians tend to use a higher context when

communicating. The actual meaning can therefore often be hard to interpret for westerners, as

they use a low context style when communicating with their counterparts.

Moreover, she said that relationship was an essential part of doing business here. As Asians

often value the relationship over the actual agreement, they also tend to focus their future


32

more towards a long-term perspective. Due to the emphasis on relationship building and

networking, there isn‟t always as much emphasis on contracts and other external terms and

conditions. This constitutes a big challenge, as westerners tend to put a lot more emphasis on

the contractual elements of the agreement. Hence, trustworthiness, harmony and relationship

focus is something every western company should devote more time to develop when entering

South-East Asia.

Another element that is pertinent to take into consideration is the power distance that is

displayed in South-East Asian. Both in Singapore, Malaysia and Indonesia it is common that a

very high ranking employee, often a CEO, is the final decision maker, as “his word is law”.

Nonetheless, several influential people usually characterize the South-East Asian decision-

making process. Thus, the culture is therefore seen upon as highly collectivistic.

Consequently, this also constitutes a great challenge for western companies operating in the

region, as these companies are the contradictory, namely individualistic. In addition,

collectivistic cultures tend to have lower tolerance for uncertainties, referred to as uncertainty

avoidance. Thus, these dimensions will be closer elaborated later in the paper.

Prof Ng mentioned both cultural advantages and disadvantages for westerners doing business

in South-East Asia. Amongst the most prominent advantages she highlighted the “quality

stamp” that western products possess from an Asian point of view. In addition, she pinpointed

that Asians have a higher tolerance for westerners doing social mistakes rather than

themselves in the same environment. On the other hand, disadvantages could occur based on

the fact that westerners put much more emphasis on contractual matters. This often results in

misinterpretations, as the local part feels neglected and thereby thinks that the western doesn‟t

value the relationship in a sufficient way.

In conclusion, professor Ng mentioned relationship building, collectivism, power distance,

communication style and uncertainty avoidance as the most illustrious cultural attributes to be

aware of in Singapore, Malaysia and Indonesia. Hence, these dimensions will be implemented

and assessed in the strategic part later in the paper.

4.2.5 Findings Swiber Kreuz Pte. Ltd.

Swiber offers a spread of Offshore Support Services that are complementary to its overall

offshore business. These services include marine offshore services, yard facilities with

capability for ship repair, conversion and construction, subsea support services and a wide


33

range of engineering design, fabrication and offshore engineering services22

. We initially

defined Swiber as a user of vessels within the offshore industry, so this interview was to give

us some understanding of what a user values from an IBS. Our aim for this interview was to

collect information about the offshore industry as well as finding out about Swibers attitudes

towards bridge systems and IBS. We were able to get an interview with Mr. Steve Ho Sze Tee

who is a senior manager of Swiber pte ltd. The actual interview itself can be found in

appendix 6.

When first initiating the interview with Mr. Steve Ho Sze Tee we aimed to find out his or the

company‟s perceptions towards IBS system. However, the company turned out to have a

greater presence on the ship owners‟ side instead of on the shipbuilders` side. Consequently,

this lead us to talk more about safety requirements onboard a ship, as Mr. Steve Ho and the

rest of Swiber had little or no knowledge towards IBS.

Mr. Ho‟s thoughts around safety were that their company practiced a rather high safety

routine on their vessels. However, they do not intend to meet the highest safety demands such

as Det Norske Veritas (DNV) requirements. They were more focused on meeting the demands

of the SOLAS (Safety Of Life At Sea) convention and International Maritime Organization

(IMO) standards. Nonetheless, Mr. Ho said that they were very much focused on quality on

their vessels. That‟s why they change/sell their ship every 4th

year, even though the market

norms were to upgrade ships when they were approximately 15 years.

Due to little knowledge of the IBS we did not examine this with Mr. Ho any further.

However, he highlighted that most of Swibers fleet (50 vessels) contained IBS on the bridge.

“We buy vessels; hence, we do not influence the required equipment on the vessels.”

We wanted to know Mr. Ho‟s perception of the Malaysian, Indonesian as well as the

Singaporean offshore market. He said that Malaysia has oil, and they already operate a few

vessels there. However, because of government regulations, they had to cooperate with local

firms through joint ventures to get access to the market. Indonesia had higher entry barriers

for Swiber, as government regulations hindered companies drilling for oil. Indonesia has also

gone from an oil exporting to an oil importing country. In Singapore he pointed out that they

had no oil or other natural resources, so Singaporean companies had to focus on knowledge

and know-how for the industry. He also emphasized that Singaporean companies could offer

much higher quality in their services than the two other countries.

22

http://www.swiber.com/kreuz.html :”Profile”

http://www.swiber.com/kreuz.html


34

When asked of any differences between the offshore market in South-East Asia and Europe or

America, he said he perceived the market as very global, and that there were no big

differences; the big companies like Shell and Exxon Mobile operate everywhere.

To conclude we asked about the prospects of the offshore market on a short and long term

basis. He said that 2010 would be a very busy year because of the growth in demand after the

financial crisis, and many companies have started drilling again. The most important factor

would be the oil price itself, and as long as it stays above 60 USD per barrel, the market

would still be very profitable.

4.2.6 Findings Jaya Holdings Ltd.

Jaya Holdings Ltd. services include: Offshore marine vessel owning and chartering,

shipbuilding and shiprepair, as well as conventional vessel owning and chartering. Today,

Jaya owns and operates a fleet of approximately 19 Offshore Supply Vessels. We were able to

get an interview with the manager of Jaya Shipyard, Mr. William Chou. The background of

this interview was multilateral. The authors wanted to address Jaya`s brand awareness

towards MT and IBS, in addition to their view on IBS and various characteristics this system

should contain. However, the team decided to end the interview relatively early due to lack of

expertise from the interviewee towards IBS. Hence, it was early decided to focus more upon

safety requirements and delivery time. The actual interview can be found in appendix 7.

Mr Chou highlighted that the buyers focus solely on SOLAS and IMO classifications in order

to fulfil the necessary safety requirements. He emphasized that to go beyond the minimum

requirements from SOLAS and IMO is highly unusual in this part of the world. Furthermore,

he linked safety requirements to the amount of functions that was displayed at the bridge

system. Superfluous procurements were not beneficial for anybody.

Regarded retrofitting, Mr Chou stated that this is not a common activity to commence in the

offshore industry. Firstly it is time consuming and secondly it is very costly to implement. In

Asia it is not that much emphasis on the environment to implement retrofitting of vessels to

“save the environment”. The focus lies exclusively on cost savings amongst ship-owners in

this part of the world.

Mr Chou was not very familiar with IBS, although he knew the basic details about the system.

When asking him about various attitudes towards the IBS he was very sparse with the


35

information. This was mainly due to his lack of expertise on the area. Nonetheless, Mr Chou

stated that he thought the reduction of screens (make the system easier to handle) and cut in

personnel on the bridge, was the main advantages of the IBS.

Jaya holdings ltd usually spend 2 months on implementing an IBS system. Even though they

haven‟t implemented an IBS for a long time (due to industry trends), he believed that 2

months was the industry norm regarded delivery time; hence, they were required to fulfil this

“deadline of installation”.

In conclusion, Mr Chou constituted little knowledge on IBS and he was unfamiliar with MT

and their operations. Nonetheless, he highlighted that both Jaya`s and the industry norm is to

implement minimums requirements such as SOLAS and IMO safety classifications on the

vessels. Anything beyond that is considered unnecessary and waste of capital. In addition, the

industry norm is to install the IBS within two months on the bridge of the vessel, thus, the

goal for Jaya is to comply with this deadline.

4.2.7 Findings Keppel Singmarine Ltd.

Keppel Offshore & Marine is one of the largest offshore and marine groups in the world.

Keppel Singmarine has a track record of around 400 specialized new-buildings of diverse

types and sophistication. Its portfolio of customized vessels includes Anchor Handling

Tug/Supply vessels, multi-purpose Offshore Support Vessels (OSVs) and tugboats for a

worldwide clientele23

. This makes Keppel a very exciting interview target for our project, as

Keppel could be able to answer all our research questions. We were able to conduct an

interview with Mr Koh Kin Siah. Mr Koh is the senior project manager at Keppel Singmarine

Pte. Ltd., which is a subdivision of Keppel Offshore & Marine Limited. The interview was

semi structured, meaning we had prepared some subjects and questions, but we strived to

have the conversation flowing. The actual interview can be found in appendix 8.

First of all he emphasized that Keppel Singmarine were only shipbuilders, and that the

product they delivered were the product that the customer demanded. We tried to steer the

conversation towards the issue of safety, and he said that Keppel fulfilled the international

regulations required of them regarding safety, but our perception was this was only the bare

minimum. Mr Koh identified price as the biggest issue with safety; that any higher

23

http://www.keppelsingmarine.com/corporate/aboutus.asp :”About Us”

http://www.keppelsingmarine.com/corporate/aboutus.asp


36

classifications than the minimum would be very costly, and no company would accept a

higher price.

Keppel did not perform retrofit of navigational equipment on vessels, and Mr. Koh did not

understand why anyone would need retrofitting, unless it was required by international

regulations.

When we asked about potential suppliers, he said that all suppliers will say they can deliver

all important characteristics like product quality, service or price better than anyone else in the

market. We got the impression that Mr. Koh did not trust the messages suppliers were trying

to sell. He did say that all these characteristics are important and the high quality is

appreciated, but it all boiled down to price. We wanted to discuss his perceptions regarding

the size of suppliers, as MT is a relative small company. His reply was that size did not

matter, as long as they delivered what had been promised. Big brand names did not mean

competent personnel. He also said that bigger companies often outsource to China, which

negatively affects the quality. His experience was that the level of service was often better

with smaller companies.

Mr. Koh had interesting views regarding Integrated Bridge Systems. He said that IBS was a

real hype 10 years ago, but it is now “out of fashion” due to the suppliers inability to identify

the reason to why companies should purchase IBS. Mr. Koh and Keppel SingMarine focuses

on delivering ships that fulfill customer‟s needs. These needs rarely include IBS, as the

customers are very cost conscious. Safety and quality is only measured on whether it does or

does not meet IMO standards. When asked to identify strengths and weaknesses of the IBS,

Mr Koh responded that it is only the ones who offer these systems who know its strengths. He

did however identify the main selling point as a reduction in operating cost due to reduced

need for manpower on the bridge. His main point on the weaknesses of IBS was the start-up

costs, which are higher than non integrated systems. It is clear that Mr. Koh and Keppel‟s

customers in Singapore are very cost conscious, as he clearly stated: “At the end of the day,

it‟s all about costs. And as long as cheaper systems are enough to fulfill IMO regulations, the

IBS won‟t be considered necessary in the market.”

Mr. Koh had not heard of either MT or Edision Chouest Group.


37

4.2.8 Findings Nordic Marine Pte. Ltd.

Nordic Maritime Pte. Ltd. is a Singapore based ship-owner and management company. They

offer specialized vessels such as seismic survey vessels, chase boats, Platform Supply

Vessel/Anchor Handling Tug Ship vessels, crew boats, diving support vessels and offshore

construction vessels. Nordic Maritime’s main areas of operations are the Middle East, India,

China, South-East Asia, Australia and Russia. The aim for the interview was to gain insights

in how Nordic Maritime, as a ship owner in South-East Asia, regard MT, the IBS in general,

and the prospects of the offshore industry in the region. We were able to conduct an interview

with Mr. Markus Kvaerneng who is in the marketing and chartering department in Nordic

Maritime. The actual interview can be found in appendix 9.

The interview started with questions regarding the industry‟s safety requirements, Nordic

Maritime‟s general attitude towards quality and the company‟s purchase behavior. Mr.

Kvaerneng characterized the safety requirements as “very good and necessary”, he

highlighted international bodies such as the International Maritime Organization (IMO) and

the classification societies as important factors. Although the safety requirements can mean

higher costs, it is a cost the industry in general has accepted.

Nordic Maritime has very high quality standards. They are of the opinion that it is better to

build a vessel with a long life span rather than building a number of lower quality ships more

rapidly. Regarding retrofitting, Kvaerneng stated that Nordic focus more on high quality

newbuilds. When asked whether retrofitting was common in the industry, he stated that

although he did not have the complete overview, the number of low quality newbuilds will

result in an increase in retrofitting. Nordic oversees both the design process and the

construction process when expanding their fleet. In Nordic‟s opinion there are a lot of shady

newbuilds being built in Asian shipyards. Nordic will never buy such ships. Regarding the

quality of operations Nordic emphasize a high quality throughout the operation, on shore as

well as on the vessels. The bridge personnel are mostly Norwegian and Russian, and are

highly qualified for the job.

Regarding purchase behavior, Mr. Kvaerneng listed the most important characteristics in a

supplier as: Product quality, delivery reliability, price, before/after sales service and payment

terms.

The interview then moved on to cover IBS in general as well as MT and their Bridge Mate™

IBS. When asked about the number of navigational systems they employ, Mr. Kvaerneng


38

stated that they use the minimum requirements for the relevant classification, and satellite

communications. Nordic does not have IBS on all their vessels, since they also have smaller

ships that do not require an IBS. Mr. Kvaerneng identified streamlined navigation system, and

increased safety as the two biggest advantages. The biggest weaknesses with an IBS are the

initial costs, and the personnel training required to operate the system. When asked whether

an easy user interface will help reduce the weakness, he pointed out that training and

experience is more important. Nordic Maritime prefers to use large well-known suppliers of

IBS, as they perceive them to be more reliable. Nordic Maritime were not familiar with

Edison Chouest Offshore, but had heard of MT through word of mouth. The products they

were familiar with were communication systems, not the IBS.

The final section of the interview addressed the offshore industry in the region. Mr.

Kvaerneng was highly optimistic on behalf of the industry. An increase in exploration and

production will lead to an increase in demand for offshore supply vessels. He concluded his

view by stating:” I see a lot of indicators pointing towards growth, such as the increase in

exploration and production, the incredible growth in consumer demand and more permissive

governments. I really don’t see any factors leading towards decline in this region.”

4.2.9 Interview process analysis

The group decided early to conduct in-depth interviews in addition to the survey. We did

however have problems finding subjects to interview. There were enough interesting

candidates, but no one seemed to have time to meet us, with the exception being an Australian

from Farstad Shipping. We believe that being an Australian, with a different cultural

background than local Singaporeans, was an important reason why we successfully got an

interview. This conclusion is similar to the findings from the survey.

The survey gave no results. Therefore, our interview findings needed to answer research

questions 2-4 in addition to research question 1. As a result, the group approached a list of

approximately 30 companies, in an attempt to find relevant people who had time for an

interview. Still the response was the same. No one was willing to meet with us. There was a

positive response from Swiber Pte. Ltd. but we believe the person who agreed to meet us

thought it was a professor from Nanyang Business School who had contacted him. This

shows that we were lacking authority in our approaches towards companies, and that the


39

status and credibility of students were not valued. These findings are very similar to what we

found in the survey analysis.

After the interview with Swiber we asked if the interview subject, Mr. Ho, knew any other

people that he believed could be relevant to our research. Mr. Ho had previously worked at

Jaya Holdings, and knew the manager of human resources there. This resulted in an interview

with the manager of the shipyard at Jaya. He provided us with the contact information for Mr

Koh at Keppel Singmarine Ltd., who we interviewed a few days later. We interviewed

Associate professor Ng about the importance of culture, the reason for her acceptance may be

that she was our tutor in one of our classes at Nanyang Business School, and therefore felt

obligated since she already was a part of our network. Mr. Markus Kvaerneng who we

interviewed is a social acquaintance of the group, and part of the groups‟ existing network.

These are all examples that show networks are very important if one wants to accomplish

anything in this business and culture. This rationale also supports why we had difficulties with

our survey attempts.

The group identified several patterns through these interviews. Asian companies, like Jaya

and Keppel, seemed to value low costs higher than high quality, an obvious threat to MTs

high-quality high-price BM™ IBS and its entry into the market. On the other hand, the

Norwegian company Farstad and its Australian employee Mr. Fitinghoff, as well as Mr.

Kvaerneng from Nordic Maritime, valued high quality more than low price. This cultural

distinction was also discovered through the interview with Professor Ng Kok Yee. The

awareness and understanding of the IBS can also be linked to this cultural distinction, as

Keppel and Jaya did not see the value of the IBS, while Farstad valued the quality an IBS

provides. We also got the impression that reduced operating cost, something MT can offer

through one-man bridge classification, was not valued, maybe because of low wage costs in

the region.

None of the interview subjects had previously heard of MT, or Edison Chouest, so the brand

awareness in the region is very low, as expected for a newly established company in this

region. When asked about safety, the Asian interview subjects all agreed that fulfilling the

international classifications was enough. We also discovered that retrofitting was something

no one ever did, the exception being if the company would have to upgrade their vessels

because of international regulations.


40

Finally we want to look at our primary data set from the interviews are valid and reliable24

. As

the questions asked to the interview subjects were very specific, and all subjects were from

the relevant industry, we believe our data to be valid. Although the findings differ from one

subject to the other, we can trace this to different characteristics such as culture. As our

subjects were only individuals from each company, it is uncertain if the data would be exactly

the same if other individuals were asked the same questions. On the other hand, we have

found clear patterns in our interview findings, which support the reliability of the data.

24



41

5. Theory review


42

5.1 Introduction In order to implement the internal and external analysis, it is relevant to explain some basic

details about the theories and models that are chosen for the analytic part of this thesis.

After careful examination, we found out that the VRIN-model, Porter‟s value chain analysis

and the ACE-model were the models that reflect the company‟s internal attributes best.

Furthermore, we recognized PESTEL and Porter‟s Five Forces as the most pertinent models

to elaborate in connection with the external analysis. In order to clarify some circumstances,

the purchase process and cultural aspects of doing business in the South-East Asia was also

implemented in this part. Of the strategic models, we included the SWOT-analysis,

segmentation variables and Marketing Mix.

The theories and models are selected that best describes the industry and Marine Technologies

LLC.

5.2 Internal analysis theories The internal analysis is based on MT capabilities to succeed with its internal organization.

These are the attributes that MT possesses great control over and has a great impact to change

or restructure. To provide the customers and key dealers with their requirements, MT must

have a market-oriented viewpoint that reflects values and trends in different regions.

5.2.1 VRIN - model

The VRIN model is used to determine which resources and capabilities that reflects upon

strengths and weaknesses within the company. According to this framework it is usual to

implement strategies that exploit strengths and avoid weaknesses25

.

25

http://www.ecofine.com/strategy/RBV%20of%20the%20firm.htm ”The Resource-Based View of the firm

(RBV)”

IntroductionInternal Analysis Theories

External Analysis Theories

SWOT-Analysis

Strategic Analysis Theories

http://www.ecofine.com/strategy/RBV%20of%20the%20firm.htm


43

The resources and capabilities that concerns around VRIN include:

- Value (valuable resources and capabilities)

Valuable capabilities allow the firm to exploit opportunities and neutralize threats in

their external environment. By using capabilities to exploit opportunities, a firm

creates value for customers.

- Rare (scarcity of resources and capabilities)

Rare capabilities are capabilities that few, if any, competitors possess. Capabilities

possessed by many rivals are unlikely to be a source of competitive advantage for any

of them.

- Inimitable (inimitability of resources and capabilities)

These are capabilities that other firms cannot easily imitate or develop.

- Non - substitutable (resources and capabilities have no substitutes)

These are capabilities that do not have any strategic equivalents. The strategic value of

capabilities increases as they become more difficult to substitute.

The VRIO framework – Features of resources and capabilities

Figure IV – VRIO Framework

Valuable

No

Yes

Yes

Yes

Rare

No

No

Yes

Yes

Inimitable

No

No

No

Yes

Non-substitutable

No

Yes/No

Yes/no

Yes

Competitive Consequnce

Competitive disadvantage

Competitive Parity

Temporary competitive advantage

Sustainable competitve advantage

Performance Implications

Below-average returns

Average returns

Average returns to above-

average returns

Above average returns


44

It is important to develop and maintain consistently strong resources and capabilities. In this

sense it is important to both differentiate and position the product in the right way. By

exploiting resources and capabilities such as their brand equity, MT can develop and enhance

strategies to meet the market demand to a greater extend. The general idea throughout this

theory is to enable knowledge towards their existing resources and capabilities so one can

develop new and improved strategies for the future, as well as filling in the gaps of the

missing qualities.

5.2.2 ACE – model (Attitude – Competence – Embodiment)26

The ACE-model in this paper is mainly added to reflect on MT`s attitudes, competence and

embodiment. Researchers have studied the characteristics of successful exporters compared to

unsuccessful exporters. Hence, the purpose is to analyze the international organizational

culture of MT. In order to succeed internationally, these attributes must be implemented and

accomplished in a sufficient way.

5.2.3 Value Chain Analysis

The analytic tool is used to better understand the activities through which a firm develops a

competitive advantage and creates shareholder value. Thus, it is useful to separate the

business system into a series of value-generating activities. The value chain consists of five

primary activities that include a products physical creation, its sale and distribution, and after-

sale service. These activities are inbound logistics (receiving/storage of raw materials, and

distribution to manufacturer as they are required), operations (transforming inputs to finished

products), outbound logistics (warehousing and distribution of finished goods), marketing and

sales (identification of customer needs and generate sales) and service (after sales support).27

The value chain also explains four support activities that provide the assistance necessary for

the primary activities to take place. These are Procurement (activities completed to purchase

the inputs needed to produce a firm‟s product), Technological Development (activities

completed to improve a firm‟s product and the process used to manufacture it), Human

Resource Management (Activities involved with recruiting and training all personnel), and

Firm Infrastructure (activities that are required to support the work of the entire value chain.)

26

Solberg (2009). p. 138. 27

http://www.netmba.com/strategy/value-chain/ “Value-Chain”

http://www.netmba.com/strategy/value-chain/


45

The model is popularly graphically displayed like this:

Figure V – Porters Value Chain

5.3 External analysis theories The external analysis reflects on the attributes that MT has little or no control over. However,

it is important to elaborate on these factors in order to implement improved and enhanced

solutions that can benefit the customer and the market.

5.3.1 PESTEL analysis

To map the external environment the authors found it relevant to make use of a PESTEL-

analysis. By using PESTEL one can derive theories and analysis on the many different factors

in a firm‟s macro environment28

. The influences on PESTEL will affect the decisions of the

managers of any organisation29

. In MT`s case these factors can have different degree of

influence on decision making in the South-east Asia countries. Furthermore, we found it

pertinent to divide the PESTEL analysis into three separate parts. This was due to the fact that

we are exploring market opportunities in three different countries. As such, the PESTEL

analysis must reflect on the distinct difference in characteristics of those individual countries.

28

http://www.oup.com/uk/orc/bin/9780199296378/01student/additional/page_12.htm “PESTEL-analysis of the

firm” 29

http://www.oup.com/uk/orc/bin/9780199296378/01student/additional/page_12.htm ““PESTEL-analysis of the

firm”

http://www.oup.com/uk/orc/bin/9780199296378/01student/additional/page_12.htm



46

The PESTEL analysis is derived from the following elements: political factors, economic

factors, social factors, technological factors, environmental factors and legal factors.

After conducting the PESTEL analysis, MT will acquire stronger knowledge to regulations,

values and trends in the different countries. Hence, they can be able to implement a more

efficient strategy that provides bigger opportunities to meet market demand and comply

governmental restrictions. In addition, PESTEL should be considered rather crucial for MT,

mainly because operating in South-East Asia is significantly different from operating in USA,

Europe and South America.

5.3.2 Cultural Theories

To be able to describe the different cultural aspects MT will face in south-east Asia we have

used cultural dimensions. These dimensions consist of specific term that describes cultural

differences or similarities between cultures. The ones we have used in this paper are from

Hofstede,30

Trompenaars‟31

and Gesteland32

. These include: power distance, uncertainty

avoidance, individualism, masculinity, time orientation, deal or relationship focused, high/low

context and achievement/ ascription.

Power distance describes the cultures management and communication style, and also

whether a flat or hierarchical organization is most common. Uncertainty avoidance describes

the cultures acceptance to risk, view on new ideas and the importance of rules and regulations.

Individualism (or its opposite collectivism) describes whether individual interest prevail over

groups interests, and whether individual initiative is encouraged. Masculinity describes

whether career overshadows family, and success is measured by material wealth. A masculine

culture has a “work to live” mentality, while its opposite, femininity, has a “live to work”.

Time orientation describes if a culture has a long or short term perspective, or their valuation

of punctuality. Time orientation is often related to whether a culture is deal or relationship

focused. Deal focused is more task-oriented, while relationship focused is more people

oriented. High or low context describes if a culture values direct or indirect communication,

and whether the communication is implicit or explicit respectively. The ascriptive versus

30

http://www.geert-hofstede.com/ “Geert Hofstede Cultural Dimensions” 31

Browaeys & Price (2008) p.82 32

http://home.arcor.de/katrin4u/downloads/Gesteland.pdf “Patterns of Cross-Cultural Behavior”

http://www.geert-hofstede.com/

http://home.arcor.de/katrin4u/downloads/Gesteland.pdf


47

achievement dimension describes whether a person is rewarded for what they do and how

they perform, rather than who they are and what seniority they have.

5.3.3 Purchase Process

The purchase decision process (PDP) is implemented due to the importance the different

stages in the process have on MT and the decision maker. The process is implemented in the

external analysis because it is outlying factor that determines the pace and direction of the

process. The PDP is illustrated throughout seven stages. Assessing the PDP through seven

stages, a transaction perspective is being revealed. Thus, every stage can be viewed as a

separate action or transaction with a beginning and an ending.33

In MT and the decision-

makers occasion, the PDP is extremely relevant to assess due to a very complex and

demanding buying process. In addition, the purchase is to be considered as a high

involvement product, which eventually complicates the process.

The PDP is divided into following seven stages: Product identification, solution development,

search for potential supplier, proposition collection, evaluation of proposal, order and delivery

of product and service, and post-purchase evaluation. In the external analysis each of these

phases will be closely assessed.

5.3.4 Porter’s Five Forces

Porter‟s five forces are derived on the basis of five distinctive forces that determine the

industry‟s overall attractiveness. The five forces model of competition expands the arena for

competitive analysis.34

Thus, to enhance knowledge of industry it is important to perform an

analysis of the five forces, to determine whether to continue in the same industry or withdraw.

Whereas many companies only do this when they initially enter a business, it is equally

important to perform this kind of analysis consistently, in order to stay competitive.

The first force that the model comprises is existing rivalry. A segment will be less attractive

of the existing rivalry is intense. Therefore, it is pertinent to emphasise the existing rivalry

when entering a new segment or region. Moreover, the threat of new entrants will also

constitute a threat for established companies. Accordingly, if the barriers to entry are low,

33

Biong & Nes (2003) p.75 34

Ireland, Hoskisson & Hitt (2009) p.48


48

such as governmental or lack of intellectual property protection, the industry will lose its

attractiveness.

Further on, the threats of substitutes would also be emphasised. For example if the switching

costs are low, there are much more likelihood that customers will switch to substitutes that are

vastly cheaper.

Additionally, the industry attractiveness will also concern the power of customers/buyers.

Thus, if the customers hold a high bargaining leverage, it will also decrease the overall

profitability of the industry. Low switching cost will also provide the customers with great

power. The last force is the bargaining power of suppliers. The bargaining power of suppliers

will increase if, for example, they are well organized or if there occur significant cost to

switch supplier.35

5.3.5 Competitor analysis

Competitor analysis is based upon how companies gather and interpret information about

their competitors. Understanding its competitors will affect the outcomes MT and its

competitors achieve as they engage in marketplace competition. Elaborating on MT`s closest

competitors we want to examine what driving forces they possess, current strategy they use,

what are their assumptions of the future, and what capabilities they possess.36

Through this set

of data and acquired competitive intelligence, the company (MT) can gain the insights needed

to make effective strategic decisions about how to compete against its rivals.

5.4 SWOT – analysis The SWOT analysis provides information that is helpful in matching the company‟s resources

and capabilities to the competitive environment in which it operates.37

The SWOT analysis is

basically a merged tool that comprises the company‟s strengths and weaknesses, as well as its

threats and opportunities. In order to elaborate on the strengths and weaknesses we will make

extensive use of the information found in the internal analysis, and merge this into concrete

suggestions. The threats and opportunities will be based upon the findings in the external

analysis.

35

http://www.quickmba.com/strategy/porter.shtml ”Porter‟s 5 forces” 36

Ireland, Hoskisson & Hitt (page 58) 37

http://www.quickmba.com/strategy/swot/ “SWOT”

http://www.quickmba.com/strategy/porter.shtml

http://www.quickmba.com/strategy/swot/


49

In order to establish and enhance foothold in the South-East Asian market, it will be crucial to

make a basic understanding and familiarizing of the main strengths and weaknesses, as well

as the threats and opportunities in the offshore market.

5.5 Strategic analysis theories

5.5.1 Segmentation

In order to identify the target segment of MTs‟ IBS entry into the region, the group used the

following segmentation variables:

What industry?

Who is the end-user?

Do they want MTs‟ product specifications?

What geographical location is most suited?38

How is MTs‟ market coverage?39

The criteria for the segment are40

:

Customers within the segment respond equally to marketing measures

MT is able to identify and quantify the size of the segment

The segment is sufficiently profitable

MT are able to reach and serve the segment

The segment fits MTs current capabilities and resources

The market segment has high expected growth

MTs current position relative to its competitors within the segment is acceptable41

These criteria make sure the segment is adapted to MTs‟ current situation, and that a focus on

this segment will improve MTs‟ performance in the long run.

38

Ireland, Hoskisson & Hitt (2009) p. 128 39

Solberg (2009) p. 233 40

Keh & Chiang (2004) p. 80 41

Kerin, Hartley, Rudelius, & Theng (2009) p. 256


50

5.5.2 Business level positioning strategy

A business level strategy is, according to Ireland, Hoskisson and Hitt (2009) is “an integrated

and coordinated set of commitments and actions the firm uses to gain a competitive

advantage by exploiting core competencies in specific product markets.”42

There are five alternatives when a company is going to choose a business-level strategy43

:

Cost leadership

Differentiation

Focused cost leadership

Focused differentiation

Integrated cost leadership/differentiation

Each of these business level strategies can help a company to establish and exploit a particular

competitive advantage within a particular competitive scope. Michael Porter has argued that a

company's strengths fall into one of two categories: cost advantage or differentiation. By

applying these strengths in either a broad or narrow scope a company can choose how it will

perform the value-chain‟s primary and support activities to create unique value.

The model is can be graphically illustrated like this:

Figure VI – Porters Generic Strategies

42



Cost leadership Differentiation

Focused Cost leadership Focused Differentiation

Integraded Cost Leadership/Differntiation


51

5.5.3 Marketing mix

The term ”Marketing Mix” was first introduced in 1953 by Neil H. Borden in his presidential

address to the American Marketing Association, and the concept was explained further in his

“Note on Concept of the Marketing Mix” from 1957.44

E. Jerome McCarthy developed the

framework further by introducing the “4 P‟s” in 1960. The “4 P‟s” consists of Product, Price,

Promotion and Place.45

The marketing mix is defined by Philip Kotler and Kevin Lane Keller

as a “set of marketing tools the firm uses to pursue its marketing objectives and are strategic

tools a company can utilize in its marketing.”46

Product: The product tool refers to more than just the physical product and includes services

and capabilities like product variety, quality, design, packaging, brand name, and warranties.47

Price: The price tool refers to the different pricing strategies a firm can utilize. Examples of

pricing strategies are premium (prestige) pricing, value pricing, geographical pricing,

promotional pricing, optional pricing and product line pricing.48

Promotion: The promotion tool refers to ways of delivering information regarding brands

and products to the market. Promotion can in essence, be referred to as market

communication. Firms will aim to achieve preferable perceptions of the company and its

products.49

Place: The place tool refers to how the customer can buy and receive the product. The

marketing channel and place are two closely related terms; in addition it can include ways to

optimizing your supply chain.50

44

Borden (1957) 45

McCarthy (1960) 46

Kotler & Keller (2005) p. 19

47

Kotler & Keller (2005) 48

Keh & Chiang (2004) 49

Kotler & Keller (2005) 50

http://www.marketingprofs.com/5/barsch3.asp Barsch, Paul. “The demise of the 4 P‟s has been greatly

exaggerated”

http://www.marketingprofs.com/5/barsch3.asp


52

6. External analysis


53

6.1 The Regulation of the Maritime Industry

Shipping is concerned with international trade and therefore it operates within a complicated

pattern of agreements between shipping companies, understanding with ship-owners and the

policies of governments. Martin Stopford (2009) identifies six participants in the regulatory

process of the maritime industry51

:

The classification societies

The United Nations

The flag states

The coastal states

The International Maritime Organization (IMO)

The International Labour Organization (ILO)

Of these six we find the classification societies, the flag states and the IMO most relevant for

our report and we will therefore go into detail on these three.

6.1.1 The regulatory role of the classification societies

The classification societies were formed because insurers needed to have confirmation that

the vessels which they were insuring for were sound. Today, a ship-owner must class his

vessel to obtain insurance, but the classification certificate also functions as an industry

51

Stopford (2009)

The Regulation of the Maritime

Industry

External Environment in

selected Countries

Cultural Aspects of working in South-

East Asia

Purchase Decision Process

Industry AnalysisCompetitor

Analysis


54

standard indicating whether a vessel is properly constructed and in good condition. The

International Association of Classification Societies defines a classification society as:

“organizations that establish and apply technical standards in relation to the design,

construction and survey of marine related facilities including ships and offshore

structures”.52

There are currently more than 50 classification societies operating worldwide. Some of the

major classification societies are Lloyds’ Register, Nippon Kaiji Kyokei, American Bureau of

Shipping and Det Norske Veritas. According to Martin Stopford (2009), the main function of

the classification societies is to:

“Enhance the safety of life and property at sea by securing high technical standards of

design, manufacture, construction and maintenance of mercantile and non-mercantile

shipping.” 53

6.1.2 The regulatory role of the flag state

For a ship-owner there are four principal consequences of choosing to register a ship in one

state rather than another, these are:

Tax, company law and financial law

Compliance with maritime safety conventions

Crewing and terms of employment

Naval protection and political acceptability

These four factors may be sufficient to motivate ship-owners to seek a commercial advantage

by changing their flag of registry.

6.1.3 The International Maritime Organization

Because of the global nature of the maritime industry, ships will move between many

different jurisdictions, often far from its country of registry. Because of the complex and

impractical situation which would occur if each nation was to make own laws on matters such

as safe ship design, collision avoidance, load lines and pollution to mention a few. The IMO

52

http://www.iacs.org.uk/document/public/explained/WHAT_WHY_and_HOW_2009.pdf IACS –

“Classification Societies – What, Why and How?” Page 3. 53

Stopford (2009) p, 660

http://www.iacs.org.uk/document/public/explained/WHAT_WHY_and_HOW_2009.pdf


55

has, since its establishment in 1958, sought to bring the regulation of the safety of shipping

into an international framework. Put simply, the IMO is a United Nation agency responsible

for safety, the environment and the security of international shipping. The organization has

been responsible for developing a large number of conventions, the most known and

important being:

The Convention for the Safety of Life at Sea (SOLAS), which came into force in 1965

and covered a wide range of measures, designed to improve the safety of shipping.

The Convention on the International Regulations for Preventing Collisions at Sea,

which substantially reduced the number of collisions between ships.

The International Convention for the Prevention of Pollution from Ships, which is the

main international convention covering the prevention and minimization of pollution

of the marine environment by ships from operational or accidental causes.54

A new amendment in the SOLAS convention will require ECIDS (Electronic Chart Display

and Information System) as a mandatory requirement for all ships sailing in accordance with

SOLAS regulations in the period July 2012- 2018.55

This is due to the safety that these

systems provides because of the ability to download new updated versions, instead of

manually modify old maps. Consequently, this could mean that ECIDS will have to be

installed in approximately 35 000 ships, according to industry players at the Asia Pacific

Maritime exhibition.

6.2 External environment in our selected countries To elaborate on the external environment in our selected countries, we find it pertinent to use

the PESTEL analysis tool as a basic framework. In that sense, we do not solely intend to

follow PESTEL, but rather use it as guidance tool. The general environment is composed of

segments that are external to the firm56

:

The Political and Legal segment

54

http://www.imo.org/Conventions/contents.asp?doc_id=678&topic_id=258#1 ”International Convention for

the Prevention of Pollution from Ships, 1973, as modified by the Protocol of 1978 relating thereto (MARPOL)”

55 http://www.hydro-international.com/issues/articles/id505-Towards_ECDIS_Mandatory_Carriage.html

“Towards ECDIS Mandatory Carriage” 56

Ireland, Hoskisson & Hitt (2009) p. 39

http://www.imo.org/Conventions/contents.asp?doc_id=678&topic_id=258#1

http://www.hydro-international.com/issues/articles/id505-Towards_ECDIS_Mandatory_Carriage.html


56

The Economic segment

The Technological Segment

6.2.1 Singapore External Overview

The position of Singapore, located at the southern tip of the Malaysian Peninsula, has enabled

the city-state to echo the success of the city-states of Antwerp and Amsterdam in the North

Atlantic and Venice and Genoa in the Mediterranean. Due to its location it was fast

recognized as a shipping nation because of its location on the shipping route binding the east

and west Asian regions together, and because of the route to the western parts of the world

went past Singapore. The deep waters around Singapore are also an important reason for its

significant role in the shipping and marine industry. Singapore is located in very well

protected seas, so the water is seldom rough, and it is protected by land in all directions in

case of any Tsunami or other natural disasters.

Because of Singapore‟s global connectivity the shipping industry grew enormously, especially

the cargo segment of the shipping industry. Singapore‟s government has been proactive and

they are continuously monitoring the technological changes in the industry. Since the new

standard for container shipment was launched as the twenty-foot equivalent unit (TEU)

Singapore rapidly changed and specialized their harbours to handle this type of freight. Many

other countries did not follow this change and soon lost a lot of business since the TEU

became a global standard for containership freight.

Since 1886 Singapore has been the busiest port in the world, with an average of 140 000

vessel calls and with over 29 million TEU handled in 2008, with the ability to handle over

2000 TEU per vessel and with an average turnover time of less the 12 hours57

. This has made

Singapore a marine and shipping hub, globally known for its fast service (turnaround) and hi-

technological harbours.

Singapore‟s government are also playing an important role in the development of its strong

position in international business. The government is making it easy to set up business in

Singapore for foreigners as well, this is due to the Corporate Tax is only 18 % (2009) for 2010

the government decided to reduce this to 17%58

. This is very low compared to other countries

57

http://www.mpa.gov.sg/sites/port_and_shipping/port_and_shipping.page “Port and shipping page” 58

http://www.innovasjonnorge.no/Internasjonale-markeder/Kontorer-i-utlandet/Singapore/Market-Information/ :”Singapore Market Information”

http://www.mpa.gov.sg/sites/port_and_shipping/port_and_shipping.page

http://www.innovasjonnorge.no/Internasjonale-markeder/Kontorer-i-utlandet/Singapore/Market-Information/


57

in this region. For example, Indonesia has a corporate tax set at 28% (2009)59

. Singapore has

also been rated as number 5 in a ranking of the least complexity of the payment of taxes.

According to the ranking by Transparency International on the current level of corruption,

Singapore scored 9,2 60

points of totally 10 points. This puts Singapore as the highest scoring

country in Asia. It also has the rank as number 3 worldwide, so it is considered as one of the

“safest” place to do business in the world, in terms of corruption level.

Another important factor is the focus on technological development. Singapore has changed

their harbour to serve TEU containerships. Since then, the Marine Port Authority (MPA) has

been fronting the use of new technology, both to make the harbour more effective, as well as

ensuring the safety the safety in Singapore waters.

The MPA has fronted the use of Electronic Chart Display and Information System (ECDIS)

even before they hosted the first International ECDIS Conference and Exhibition in 1998 61

.

An example of Singapore‟s technological initiative is the ECDIS. ECDIS is a newer version

of the ENC‟s (electronic navigational charts), which basically is more of a paper chart

digitalized. The ECDIS system on the other hand is a more sophisticated system, which is

capable of advanced route planning and provides more accurate ship location, and most

importantly is capable of updates. MPA has worked together with the Hong Kong port

authority to produce the first high-density ENC, with detailed seabed topography of channels

in both Hong Kong and Singapore10

, in order to ease the transformation towards the legal

changes for 2012 when the ECDIS is mandatory.

Because of Singapore‟s status as an International Maritime Center (IMC) they find it

important to follow and to lead the technologically changes and improvements in the maritime

industry. Singapore and the MPA played an important part of the improvements of the

Automatic Identification System (AIS), when they tested this system in 199962

. AIS systems

serve to prevent collisions and to save time in the identification process the Vessel Traffic

before entering the port. The MPA saw the potential in this system as well and arrange for this

system to be implemented and mandatory for larger vessels.

59

http://www.worldwide-tax.com/index.asp#partthree : “Tax Rates Around The World” 60

http://www.transparency.org/policy_research/surveys_indices/cpi/2009/cpi_2009_table : “Corruption

Perceptions Index 2009” 61

http://www.mpa.gov.sg/sites/global_navigation/news_center/mpa_news/mpa_news_detail.page?filename=nr09

1019.xml “Mr Lam Yi Young, Chief Executive of MPA” 62

www.uais.org/CompuShip%20Page%2039.pdf “AIS at last?”

http://www.worldwide-tax.com/index.asp#partthree

http://www.transparency.org/policy_research/surveys_indices/cpi/2009/cpi_2009_table

http://www.mpa.gov.sg/sites/global_navigation/news_center/mpa_news/mpa_news_detail.page?filename=nr091019.xml


http://www.uais.org/CompuShip%20Page%2039.pdf


58

All these factors contribute to the strong position Singapore has gained in the global market.

6.2.1.1 Singapore and its offshore market

The oil & gas market in Singapore as a whole will give an insight in the industry growth and

predictions of its future growth since the level of activity in this industry will affect the

business level of potential customers of the IBS Bride Mate. The term for this industry sector

is Offshore and Marine Engineering, also known as the OME sector.

The OME sector in Singapore has undergone a tremendous growth and transformation since

its establishment in Singapore some 40 years ago.63

Singapore is currently a major worldwide

provider of this sector and has a major part of the global market share.

70% of the global market share of Floating Production Storage Offloading vessel

conversion.

70% of the global market share for jack-up rig building.

20% of the global market share for ship repair.64

As mentioned above the pro-business government policies in Singapore has implemented

several incentives towards foreign companies to establish business in Singapore. A result of

this is the establishment of over 5000 maritime businesses in Singapore, with more than 100

international shipping groups. The government has streamlined the registration process and

made this very easy and affordable. The whole application process is done in about 15

minutes and registration fee is only SG$ 130 in total.65

6.2.2 Indonesia External Overview

Indonesia is the world's largest archipelagic state with a coastline that stretches 54,716

kilometres. It occupies a strategic location and controls important shipping lanes from the

Indian Ocean to the Pacific Ocean, in particular the Strait of Malacca situated between the

western Indonesian island of Sumatra and Malaysia.

63

http://www.sedb.com/edb/sg/en_uk/index/industry_sectors/

transport_engineering.html “Singapore Economic Development Board – Transport and Engineering” 64

http://www.innovasjonnorge.no/Internasjonale-markeder/Kontorer-i-utlandet/Singapore/Market-

Information/Key-sectors/ :”Singapore Market Information Key Sectors” 65

http://www.mpa.gov.sg/sites/business_and_enterprise/setting_up_your_maritime_business/setting_up_a_busin

ess_in_singapore.page “Setting up a business in Singapore”

http://www.sedb.com/edb/sg/en_uk/index/industry_sectors/transport_engineering.html

http://www.sedb.com/edb/sg/en_uk/index/industry_sectors/transport_engineering.html

http://www.innovasjonnorge.no/Internasjonale-markeder/Kontorer-i-utlandet/Singapore/Market-Information/Key-sectors/


http://www.mpa.gov.sg/sites/business_and_enterprise/setting_up_your_maritime_business/setting_up_a_business_in_singapore.page



59

After the civil unrest that followed after the fall of Soeharto, the dictator who ruled Indonesia

for 30 years, Indonesia has returned to politically stability after the country‟s first presidential

election in 1999. Indonesia is today a multiparty presidential democracy. The current

administration has gradually been reforming the business environment, particularly by

strengthening the legal system and fighting corruption.66

If these reforms are sustained and

enforced, the result could be an increase in investor interest in Indonesia. However, the

country is still in transition-phase to becoming a democracy and still has work to do when it

comes to reforming the political system to increase participation of Indonesians‟ freedom of

expression and association. The Economist Intelligence Unit‟s 2008 democracy index ranked

Indonesia 69th out of 167 countries, putting it among the 52 countries considered "flawed

democracies". 67

The 2009 result of Transparency International ranked Indonesia at 111th

place with a Corruption Perception Index of 2.8.68

This is a poor ranking, but the country has

shown improvement from 2008, when Indonesia‟s rank was at 126.69

With regards to economical factors the economy of Indonesia has great potential, but the

country needs to deal with challenges such as poverty and unemployment. Indonesia‟s

unemployment rate for 2009 was estimated to be 7.7%.70

It is also very important to deal with

the inadequate infrastructure, which has been neglected since the 1997-98 Asian financial

crisis71

. However, even with these challenges in mind, Indonesia‟s economy is the largest

economy in South-East Asia. Reliance on domestic consumption as the driver of economic

growth resulted in a relatively good handling of the recent global financial crisis, leaving

Indonesia as one of three G20 members posting growth during the crisis.72

All the major sectors in Indonesia play an important role in the country‟s economy. The

industry sector is the largest contributor to GDP due to rich mineral resources and the

country‟s oil and gas resources. The country has been East Asia‟s only member of OPEC

(Organization of the Petroleum Exporting Countries) and, according to the June 2009 British

Petroleum Statistical Review of World Energy, it had proven oil reserves of 3.75billion

66

Business Monitor Online – “BMI Industry view – Indonesia – Q1 2010” 67

Economist Intelligence Unit Democracy Index 2008, Page 14, Table 4 68

http://www.transparency.org/policy_research/surveys_indices/cpi/2009/cpi_2009_table “Transparency

International CPI table 2009” 69

http://www.transparency.org/news_room/in_focus/2008/cpi2008/cpi_2008_table “Transparency International

CPI table 2008” 70

https://www.cia.gov/library/publications/the-world-factbook/geos/id.html “Indonesia” 71

Economist Intelligence Unit “Country Profile 2008 – Indonesia” p. 14 72

https://www.cia.gov/library/publications/the-world-factbook/geos/id.html “Indonesia”


http://www.transparency.org/news_room/in_focus/2008/cpi2008/cpi_2008_table

https://www.cia.gov/library/publications/the-world-factbook/geos/id.html



60

barrels at the end of 2008 and proven natural gas reserves of 3,184bcm.73

The service industry

has also experienced a rapid expansion in recent years, boosted by the tourism industry.

Agriculture used to be the dominant sector but the industrialization of Indonesia the share of

GDP contributed from this sector has declined. However, it is still an important source of

export earnings and employment.

With regards to technological factors it appears that the country is depending on foreign

companies‟ to provide technological solutions to the shipping and offshore industry. A

challenge for Indonesia‟s technological environment is that there is a low level of

innovation.74

This issue has to be addressed and improved if Indonesia wants to compete

effectively in the global shipping industry.

6.2.2.1 Indonesia’s offshore market

As a former OPEC member, Indonesia‟ oil and natural gas resources has attracted many

foreign companies in the oil and gas industry. However, Indonesian oil production has been in

decline for several years.75

The majority of existing oil fields are in the central and western

regions of the country, but according to Business Monitor Online, eastern Indonesia may

provide longer-term oil production potential. 76

In an effort to combat the falling oil

production, the Indonesian state owned oil and gas company Pertamina has increased its

investment in the sector. In 2009 the company bought a 46% stake in the Offshore North West

Java (ONWJ) Block from British Petroleum. This ONWJ Block covers 8,300sq km and

contains 314 production wells and 218 offshore structures. 77

There is also still an interest from foreign companies. Among these are the Norwegian

company Statoil, the biggest offshore oil and gas company in the world. Statoil has

agreements which give the company interests in the deepwater Kuma and Karama blocks off

Indonesia.78

73

Business Monitor – “Indonesia Oil & Gas – Industry Forecast – Indonesia – Q2 2010” 74

Datamonitor – “Country Analysis Report – Indonesia, In-Depth PESTLE analysis (2009)” p. 21 75

http://www.eia.doe.gov/emeu/cabs/Indonesia/Oil.html :”Indonesia Energy Data, Statistics and Analysis- Oil,

Gas, Electricity, Coal” 76

Business Monitor – “Indonesia Energy Market Overview Q2 2010” 77

Business Monitor - “Industry News – Pertamina buys Offshore North West Java Block Stake from BP” 78

http://www.statoil.com/en/about/worldwide/indonesia/pages/default.aspx “Indonesia”

http://www.eia.doe.gov/emeu/cabs/Indonesia/Oil.html

http://www.statoil.com/en/about/worldwide/indonesia/pages/default.aspx


61

6.2.3 Malaysia External Overview

Malaysia is situated on a peninsula, with borders to Singapore and Thailand. The northern

third of the Island of Borneo is also a part of Malaysia, bordering Indonesia, Brunei, and the

South China Sea, south of Vietnam. There are 11 states in the peninsula of Malaysia, and two

states on the northern part of Borneo.79

Malaysia is a federal constitutional elective monarchy, which reached its independence in

1957, when the country liberated itself from Great Britain. Since gaining independence,

Malaysia has been ruled by coalition governments dominated by the principal Malay party,

the United Malays National Organization.80

The Economist Intelligence Unit‟s 2008

Democracy Index ranks Malaysia 68th out of 167 countries, putting it together with Indonesia

among the 54 countries considered “flawed democracies”.81

Corruption is also a key concern.

Malaysia was ranked 56th

among 180 countries in Transparency International‟s Corruption

Perception Index 2009.82

This is a poorer rank compared to the 2008 index, where Malaysia

was ranked 47th

. 83

The government has yet to ratify the UN Convention Against Corruption.

The legal system in Malaysia is based on English common law and judicial review of

legislative acts in the Supreme Court at request of the supreme head of the federation. In

addition, an Islamic law is applied to Muslims in matters of family law and religion but this

has not been accepted as a compulsory UN International Court of Justice jurisdiction.84

The

country has also made major progress in reducing corporate taxes and increasing labor

flexibility85

. However, a large number of licenses and approvals are required for any company

who wish to establish and maintain business in Malaysia. Consequently, this presents a

regulatory burden for investors and the preference accorded to ethnic Malays poses a further

deterrent. Nonetheless, Malaysia is viewed as an attractive destination for foreign investment,

after the economic growth it has attained following the Asian financial crisis.

Any foreign company intending to participate in a tenders or contract in the upstream sector

of the oil and gas industry in Malaysia would need to have a license from PETRONAS.

PETRONAS was incorporated on the 17th

of August 1974, as the national oil company of

79

http://www.tourism.gov.my/en/about/default.asp “About Malaysia. Truly Asia” 80

Economist Intelligence Unit – “Country Profile 2008 – Malaysia” p. 4 81

Economist Intelligence Unit - “Democracy Index 2008” Page 14, Table 4 82

Business Monitor - BMI. “Malaysia business forecast report Q2 2010” 83

http://www.transparency.org/news_room/in_focus/2008/cpi2008/cpi_2008_table “Corruption Perception

Index” 84

www.cia.gov/library/publications/the-world-factbook/geos/my.html CIA World Factbook -“Malaysia” 85

Datamonitor - “Malaysia. Country Analysis Report. In-depth PESTLE Insights” p. 24

http://www.tourism.gov.my/en/about/default.asp

http://www.transparency.org/news_room/in_focus/2008/cpi2008/cpi_2008_table

http://www.cia.gov/library/publications/the-world-factbook/geos/my.html


62

Malaysia, vested with the entire ownership and control of the petroleum resources in the

country.86

To qualify for a license, a foreign company would need to form a local joint-

venture company with a Malaysian equity partner(s). Within the Malaysian equity there are

requirements for minimum local investments, also known as “bumiputera” equity.87

However,

foreign investors may find the Malaysian corporate tax rates favourable. The tax rate a

medium-size company must pay or withhold in a given year in Malaysia, is 16,5 %.88

With regards to the economical factors in Malaysia, the country has transformed itself from a

producer of raw materials into an emerging multi-sector economy. Malaysia‟s new economic

policy was first announced in 1970 as the principal policy response to the post-election race

riots of May 1969, which also resulted in a significant regime change.89

GDP per capita

(Purchasing Power Parity) was in 2009 estimated to be 14 700 USD (number 77 by country

comparison). This was lower than the two previous years, and the reason for this was mainly

due to the worldwide financial crisis, which led to a 2.8 % decrease in Malaysia‟s economical

growth rate.90

However, Malaysia is forecasted to reach a 4.3 % annual growth in 2010. The

World Bank refers to Malaysia as a country of upper middle income91

. Nonetheless, 5.1 % of

the population is living beneath poverty line.92

However, this is considered to be quite low.93

Regarding the technological segment in Malaysia, research indicates that countries which

emphasises on innovation and R & D often scores high on technological development and

reinforcement. Malaysia has not been able to make much progress on these parameters in

previous years. To improve the situation, the government has started the second Science and

Technology policy, which provides a roadmap for R & D growth. With the implementation of

these policies, it is expected to be a greater emphasis on human resource enhancement in the

coming years. The availability of human resources is a concern and very much needed in

order to transform Malaysia from a production-based into a knowledge-based economy.

Consequently, Malaysia must improve to match the standards of other fast- developing Asian

86

www.petronas.com.my/about_us.aspx Petronas - “About Petronas” 87

Data Monitor – “Market opportunities Deepwater Oil & Gas Sector in Malaysia” (2006) 88

http://www.doingbusiness.org/ExploreTopics/PayingTaxes/Details.aspx?economyid=119 “Paying Taxes in

Malaysia” 89

http://www.unrisd.org/80256B3C005BCCF9/(httpPublications)/A20E9AD6E5BA919780256B6D0057896B?

OpenDocument&panel=seriespapers UN Research – Institute for Social Development “The new Economic

policy and interethnic relations in Malaysia” 90

https://www.cia.gov/library/publications/the-world-factbook/geos/my.html CIA World Factbook –

“Malaysia” 91

http://info.worldbank.org/etools/kam2/KAM_page5.asp “KEI & KI Indexes” 92

https://www.cia.gov/library/publications/the-world-factbook/geos/my.html CIA World Factbook - “Malaysia” 93

http://www.globalissues.org/article/26/poverty-facts-and-stats “Poverty Facts and Stats”

http://www.petronas.com.my/about_us.aspx

http://www.doingbusiness.org/ExploreTopics/PayingTaxes/Details.aspx?economyid=119

http://www.unrisd.org/80256B3C005BCCF9/(httpPublications)/A20E9AD6E5BA919780256B6D0057896B?OpenDocument&panel=seriespapers


https://www.cia.gov/library/publications/the-world-factbook/geos/my.html

http://info.worldbank.org/etools/kam2/KAM_page5.asp


http://www.globalissues.org/article/26/poverty-facts-and-stats


63

nations, such as China, India, South Korea and Taiwan. These nations have been steadily

increasing their global presence in various technology-dominated sectors.94

6.2.3.1 Malaysia’s Offshore Markets

Malaysia has proven oil reserves of 5.5 billion barrels. Nearly all of this oil is located in

offshore fields. These activities get administrated from Malaysia‟s 31 different ports.95

However, there are only 4 ports that allow registration of vessels.96

PETRONAS has embarked on an international exploration and production strategy. Hence,

PETRONAS has invested in oil exploration and production projects in the Middle East and

Asia, and has taken in Rosneft, the Russian oil producer. This means that they are focusing

more on the upstream segment, which enhances the presence of offshore vessels in the region.

A specific example here is the finalization of a production-sharing contract between

PETRONAS and ExxonMobil in 2009 for the development of seven mature offshore oil

fields.97

Barring major new oil discoveries, the country may still become a net oil exporter in

only a few years.98

Having elaborated on the respective countries‟ political, economical, legal and technological

macro environment, the thesis will address cultural aspects in the following sections.

6.3 Cultural aspects of working in South-East Asia This section will address cultural aspects of working in South-East Asia. Some of the

information is derived from secondary sources as well as the interview conducted with

Associate Professor Ng Kok Yee from Nanyang Business School.99

In order to attract customers working in the Business-to-Business market in South-East Asia,

it is very important to be familiar with the culture that is representative for the region. MT as

an USA originated company has to take specific precautions before they venture into foreign

markets.

94

Datamonitor - “Malaysia. Country Analysis Report. In-depth PESTLE Insights” p.70 95

http://www.portsworld.com/main/ports.htm “Malaysian Ports” 96

http://www.internationallawoffice.com/Newsletters/Detail.aspx?g=1a8e700a-159d-4c0f-83fd-4644718a7810

“Ownership, Registration, Transfer and Mortgage of Malaysian-Flagged Ships” 97

Business Monitor – “Contract News – Petronas and Exxon Finalise PSC” 98

Business Monitor – Industry News 99

APPENDIX 5 Interview with Assoc Prof Ng Kok Yee

http://www.portsworld.com/main/ports.htm



64

Hofstede (1980:25) refers to culture as “the collective programming of the mind which

distinguishes the members of one human group from another”. Furthermore he says, “this

includes systems of value; and value are among the building blocks of culture”.100

As such,

MT must be able to adapt to local culture, concerning value systems and norms, as to attract

local customers.

As a measure to the cultural values in Singapore, Malaysia and Indonesia, the most relevant

dimensions have been identified in an attempt to elaborate on the importance and presence of

the different cultural aspects in the region. Even though these countries are often generalized

as South-East Asia, it is important to remember that culture varies between countries,

subgroups and even individuals. Subjects like religion can have a significant impact on a

individual‟s perceptions. Because of this, culture is no exact science and should not be

interpreted as one.

One similarity above all is to do with the way relationships are managed. Unlike the West,

business has as much to do with the relationship between the parties, as the actual transaction.

This entails paying considerable attention to build trust and establish respect while displaying

the utmost courtesy, particularly to those in senior positions. A key factor of this aspect is

harmony. If harmony is maintained, confidence and trust will build and this in turn will form

the basis of consensus and eventual agreement on a deal.101

Westerners usually build trust

upon “objective” competence, while Asians build trust through relation- and partnerships

6.3.1 Communication

A general misunderstanding that can occur when Asians and Westerns interact is

misinterpretations of the message. Communication can often be hard for Westerners to

perceive, as Asians tend to communicate in an indirect manner. The meaning is found more in

the context surrounding the words, rather than in the words themselves.102

Consequently,

misinterpretation of communication is a very likely scenario, as South-East Asian

communication style is very different from Scandinavian and American communication style.

100

Browaeys & Price, (2008) p. 10 101


Appendix 5 Interview with Ng Kok Yee


65

6.3.2 Long-term and short-term focus

Another aspect that is important to take into account is the short term versus the long-term

relationship focus.103

The short-term cultures value quick results and short-term gain. On the

other hand, long-term cultures are more likely to give up short-term gains when there is a

prospect of more substantial long-term benefits.104

Whereas westerners tend to focus on the

short-term commitment and do not spend considerable amount of time in building a

relationship, Asians tend to emphasize this as a major part of the deal. This can be viewed in

the light of relationship commitment. Countries with a long-term focus (such as Singapore,

Malaysia and Indonesia), also try to establish a good relationship before committing to a deal.

On the other hand, countries with a short-term focus put emphasis on the deal, and therefore

see the extensive social bonding as an unnecessary burden. Thus, as a company originating

from the western part of the world, it will be of particular importance for MT to establish and

maintain relationships.

6.3.3 Advantages and disadvantages with being Western in a Eastern dominated culture

For westerners operating in Asia, there tend to be more room for cultural mistakes or

misunderstandings, than if an Asian would have done the same “mistake”. In other words,

Asians tend to be more patient with foreigners. This constitutes an advantage for westerns

doing business in the Asian environment. Professor Ng also mentioned that there is a popular

belief that western products are of a higher quality than Asian products.105

This can also be

considered as an advantage for MT, which offers complex products. MT should be more

capable of competing on quality in the South-East Asian market because of their experience

from the demanding western offshore market.

Inconveniences or disadvantages can also occur when westerners operate in the South-East

Asian environment. One common incident that often occurs is misunderstandings during the

negotiating process. Whereas westerners often put more effort in negotiating a contract,

Asians people put most of the effort in enhancing the relationship. Cultural differences enable

westerners to “rush into conclusions”, long before its Asian counterpart is considered ready.

This often results in less trust from the Asian side, as Asians very much depends on a

developed relationship before venturing into the actual agreement.106

Asians also consider the

103

Appendix 10 Cultural Dimensions 104


Appendix 5 Interview with Ng Kok Yee 106

Appendix 5 Interview with Ng Kok Yee


66

high quality products from the west to be more expensive, which is true in MTs‟ case. This

fact combined with the apparent cost sensitivity in South-East Asia constitutes a potential

threat for MT.

6.3.4 Power distance and uncertainty avoidance in South-East Asia

The offshore industry is considered a global industry. There are nevertheless a more

prominent top-down hierarchy in Asian organizations. Singapore, Malaysia and Indonesia

have relatively high power distance.107

Power distance is a cultural term for the hierarchical

difference in organizational structures, and is important when identifying who the actual

decision makers in a company are. When MT interacts with companies within South-East

Asia, they have to be aware of who the decision makers are in order to improve their

strategies. In high power distance countries like Singapore, Indonesia and Malaysia, the top

management often have the final say. As USA and Norway has low power distance, MT top

management would likely send product managers or similar middle management experts to

negotiate a deal. This is because the Western companies often perceive these to be more

capable of making that particular decision. Their Asian counterparts on the other hand, would

prefer to negotiate with the top management because of their high power distance. Sending a

low ranked employee to talk to a high ranking individual in South-East Asia can be

considered rude, and might send a signal that you du not value the relationship. The Asian

might even feel that the counterpart has insulted him by sending a low ranking employee to

negotiate. This can somewhat be seen upon as less convenient for western companies as it

complicates the approach to some extent. Initiating contact with the wrong person in a firm

might be unfortunate, as it can harm a potential collaboration, and consequently make the

relationship-building process more difficult.

Another factor to consider is uncertainty avoidance. This is defined as the degree of tolerance

for uncertainty or instability.108

On one hand Singapore tend to be very open for new ideas

and innovation, as they are placed remarkably low on uncertainty avoidance in Geert

Hofstede`s cultural dimension comparison.109

Looking at other companies in the South-East

Asian region, especially Malaysia and Indonesia, it clearly shows a pattern of relatively high

107



http://www.geert-hofstede.com/hofstede_singapore.shtml “Cultural Dimension - Singapore”

http://www.geert-hofstede.com/hofstede_singapore.shtml


67

risk averse.110

A potential risk for MT can be that Asian companies are less familiar with the

integrated bridge solution. When they are less familiar, they also will try to avoid any

interactions, as the product constitutes uncertainty. Hence, the potential benefit from the

product may not weigh up to the uncertainty that the new product constitutes. Being as cost

conscious as they are, Asians do not value safety as highly as westerners. One of the reasons

to why safety is so important in the West is the individualistic valuation of each human life,

and also the fact that a lawsuit can be more costly than an actual safety upgrade. This can be

traced back to the degree of uncertainty avoidance. Not all Asian companies choose to invest

in improved safety, but Singaporean companies are much more westernized in this regard. An

example Professor Ng mentioned was the increased demand for safe cars in Singapore. Thus,

one can clearly see a pattern that Singapore value human life more then its neighbours. Higher

standards, and the fact that they are the industry leader in shipping increases the expectations

and demands from external authorities. Despite this trend, the interviews with Singaporean

companies indicate that safety is perceived to be merely a cost, rather than a virtue as it is in

western countries.

The next sections will go more in depth on the three selected countries with regards to

specific cultural factors. The main focus is on Singapore, as this is where the MT sales office

is located.

6.3.5 The Cultural Factors of Singapore

MT has recently opened up an office in Singapore. Since the Singaporean culture differs

greatly from western culture, MT needs to acquire knowledge of the culture. Hence, this

section will address Singaporean attitudes to work. It is essential to be aware of these attitudes

when MT looks to recruit locals for their Singapore sales office.

Singaporeans are considered to be very efficient and task oriented. To quote professor Ng,

who is a Singaporean herself: “The perception is that Singaporeans are more efficient, and

Indonesia and Malaysia perceive us as too efficient, making them look slow.” This gives a

good impression of the Singaporean work mentality compared to its neighbours. In the article

Psychological Contracts in Singapore, Ang, Tan and Ng (2000) had presented a model where

they describe Singaporean workers‟ beliefs concerning the reciprocal obligations between

110

Appendix 10 Cultural Dimensions


68

themselves and their employers. In the article, Ang, Tan and Ng describes Singaporeans‟

struggle for fixation on excellence as a kiasu psyche.111

The two traits of this psyche are:

Drive for competitive excellence

Fear of failure

The characteristics of the kiasu psyche have shaped three major employee obligations in the

psychological contracts in Singapore:

Conscientiousness

Cost consciousness

Broad role orientation

Conscientiousness means that a Singaporean employee is willing to work overtime and

produce as much as he or she is capable of, while cost consciousness refers to the employee‟s

actions to conserve an organization‟s resources. With regards to broad role orientation, Ang,

Tan and Ng explain this term with the following statement:

“Singaporean workers are usually flexible and willing to undertake tasks and responsibilities

beyond their formal job requirements because taking on such extra-role responsibilities

distinguishes an excellent worker form an ordinary one.”112

This means that Singaporeans often take time out of their personal life to work, which can be

traced back to their high scores in masculinity especially compared to Norway.113

Singapore

is therefore more westernized considering the valuation of work, where a person is rewarded

for what they do rather than who they are. This can be related to the term meritocracy, which

entails that a talented person is chosen and promoted, purely based on achievements.114

On

the contrary, Indonesia and Malaysia emphasize status, such as what family background they

come from. This difference is described as the “ascriptive versus achievement” cultural

dimensions.115

Singaporeans are also very obedient because of their high power distance and

the strict law enforcement in the country. Singaporeans are globalized, as the country is an

important global business hub. For this reason, it is safe to assume that Singaporeans have a

111

Ang, Tan and Ng. (2000) p. 217. 112

Ang, Tan and Ng. (2000)p. 219 113


http://www.merriam-webster.com/dictionary/meritocracy “Meritocracy” 115

Browaeys & Price (2008) p. 83

http://www.merriam-webster.com/dictionary/meritocracy


69

high cultural intelligence, meaning they are aware of many of the barriers culture can create,

and how to overcome them. This will certainly make MTs‟ operations in the country easier.

6.3.6 The Cultural Factors of Indonesia and Malaysia

Appendix 10 indicates that Indonesia and Malaysia are very similar on relevant cultural

dimensions. Therefore this section has combined the two countries‟ cultural factors. Indonesia

is one of the countries with the largest Muslim population worldwide. With 88% of their

population practicing the Muslim faith, religion enters into decision making on a more

subjective basis than in most Western cultures. 60% of the Malayan population practice the

Muslim faith116

. Research has indicated a high correlation between the Muslim religion and

the Hofstede Dimensions of Power Distance and Uncertainty Avoidance.117

This establishes

an authoritarian structure where rank and position are very important. Also, since the

Uncertainty Avoidance ranking is relatively high, one can expect business people from

Indonesia and Malaysia to rely on social norms and procedures to alleviate the

unpredictability of the future. In such societies, factors as career stability, formal rules and the

development of expertise tend to be valued. Uncertainty Avoidance has an impact on the

characteristics associated with outstanding leadership and leaders‟ typical career patterns. It

also influences the expectations leaders have of subordinates and customers have of

businesses. When dealing with cultures with high Uncertainty Avoidance, contexts, planning

and detailed agreements are the norm, whereas in low Uncertainty Avoidance cultures

contexts flexibility and innovation are more prominent.

6.5.6.1 Chinese businessmen’s influence in Indonesia and Malaysia

“The “overseas Chinese” are one group that has successfully put together efficient firms in

South-East Asia.”118

With regards to the business-culture in Indonesia, this is to a great extent influenced by

Chinese business-culture. The reason for this is that during the Suharto‟s regime the

Indonesian Chinese had difficulties entering the civil services and many other professions,

forcing the majority of the ethnical Chinese to choose a career in business.119

As a result, in

Indonesia, Chinese became an “ethnic minority who constitute only 3 percent of the

116

https://www.cia.gov/library/publications/the-world-factbook/geos/my.html CIA World Factbook “Malaysia” 117

Taylor (2003) 118

Granovetter (1995) 119

Wanandi (1999).



70

population but holds a disproportionate share of Indonesia’s corporate wealth, often said to

be around 70 percent.” 120

Ethnic Chinese constituted 28 percent of the Malayan population in 1990, but owned

approximately 45.5 percent of the corporate wealth of Malaysian companies.121

The Chinese

businessmen in Malaysia have been managed under the leadership of the Malaysian Chinese

Association, then negotiating for their political and economic interests. Hence, Malaysian

Chinese businessmen “allowed the Malaysian Chinese Association to act as their vanguard in

the development of Chinese capital in Malaysia”. Thus, the ethnic relationships in Malaysia

are more a kind of “group to group”, not “individual to individual”.122

The structure of the

political-business relationship in Malaysia is in other words complex, but business wise, the

major efforts in companies, are ruled by Chinese businessmen.

6.3.7 The GLOBE Project

The Chinese business culture is a dominant factor in all three countries. As a part of the

cultural insights highlighted in the previous chapters there are some factors worth a closer

review. To take a closer look at these factors the Global Leadership and Organizational

Behaviour Effectiveness (GLOBE) research programme has been applied.

The GLOBE Research Project was done by The Wharton Business School of the University

of Pennsylvania. This survey is one of the most thorough and lengthy studies ever done on

culture. The study was done over a period of 11 years and was first publicized in 2004 by

Sage Publications as a full-length book report. The GLOBE project is a relevant study when

looking into cross-cultural interactions. The study is based on responses from 17, 000

managers from 951 organizations functioning in 62 societies worldwide123

.

The GLOBE study evolved 9 cultural dimensions. These dimensions are: Performance

orientation, institutional collectivism, gender egalitarianism, uncertainty avoidance, in-group

collectivism, future orientation, humane orientation, assertiveness, and power distance.

120

Mackie (1999) 121

Keng & Lin (2008) p. 7 122

Keng & Lin (2008) p. 10 123

House J, Robert et al. (2004)


71

In the survey they identified ten “social clusters”, these clusters contains societies that are

identified as similar. As we have identified previously, the Chinese businessmen dominate the

business culture in the South-East Asian region, and we choose to focus on Confucian Asia

because of this. The relevant clusters for this paper include:

Confucian Asia consisting of: Singapore, Hong Kong, Taiwan, China, south Korea,

and Japan

South Asia comprises India, Thailand, Malaysia, Indonesia and the Philippines

Anglo: Canada, USA, Australia, Ireland, England, South Africa (white sample), and

New Zealand

Nordic Europe: Denmark, Finland, and Sweden124

Each cluster is given a score ranging from 1 to 7 on each cultural dimension. The survey

indicates that there are differences between practises and values. Appendix 11 shows the

results of the four social clusters mentioned above.

The next part focuses on the Confucian Asia cluster and the major differences and possible

problem areas that might occur. A greater understanding of this culture will ease the process

of doing business in the Confucian Asia cluster. This is because there are many high ranked

business men in Confucian countries like Singapore, Malaysia and Indonesia.

Confucius (551-479 B.C)125

was a Chinese philosopher who has influenced Chinese society

and culture with his ethical principles. The Confucian principles of harmony, hierarchy,

collectivism, and reciprocity (bao) have influenced the Chinese people and are still very

important, and influence the way they do business as well.

Confucius developed three main concepts to follow, these are: Ren, Li, and Yi.126

Ren, which directly translated means benevolence, this is similar to the Christian “golden

rule” (“And as ye would that men should do to you, do ye also to them likewise” Luke 6:31).

This concept would affect the cultural dimensions institutional collectivism and in-group

collectivism found in the GLOBE study. The reason for this being the importance of the

124

Gupta, Hanges & Dorfman (2002) 125

http://plato.stanford.edu/entries/confucius/ Stanford Encyclopedia of Philosophy – “Confucius” 126

http://cero11.cise.ufl.edu/~webmaster/Learning_Modules/BUS_web/content/BUS_confucian_ethics_harmony

.html Chinese Cultural Dimensions “Confucian Business Ethics –Harmony”

http://plato.stanford.edu/entries/confucius/

http://cero11.cise.ufl.edu/~webmaster/Learning_Modules/BUS_web/content/BUS_confucian_ethics_harmony.html



72

relationships inside the groups. If the relationship is broken, the person/company could be

excluded from the group. As mentioned in the cultural section and findings, the importance of

relationships in the Chinese culture is strong. This is also due to the high uncertainty

avoidance, which would generate a risk aversion. This could also be linked with doing

business with unfamiliar companies, which is considered to involve a higher risk. As a result

the importance of relationships in this culture is quite clear. Confucianism also emphasizes

the importance of maintaining a harmonious relationship with each other. Living after these

three concepts would ensure this.

The principle of reciprocity known as “bao” plays an important role in business relations. The

“bao” principle stresses the importance of mutual respect and generosity between business

people. If you show respect, you will be shown respect. The concept of “guanxi”(the Chinese

expression for relationship building and networks), would also relate to this concept.

Yi, meaning “justice in human interactions”, conceptualize the importance to strive for the

common good over the individual. This would affect the in-group collectivism in the GLOBE

study. In a Confucian mindset it is important to serve accordingly to the common good in

contrast to many western societies where the individual is most important. Hofstede‟s

collectivistic dimension mentioned in previous sections supports this finding.

Li, meaning etiquette, gives direction to proper manners and protocols; these are meant to be

followed in all situations, including business. The Li concept will especially affect

institutional collectivism, power distance, uncertainty avoidance, and performance orientation

in the GLOBE study. The Chinese culture has a high power distance, which means that there

is a strict top-down hierarchy. This promotes societal stability, the importance of hierarchical

relationships, and is a crucial factor to consider when business is conducted in a Confucian

society. Therefore, it is essential to send senior officials to a business meeting and avoid

sending low- or mid-level employees, Chinese could even see this as a sign of disrespect. The

Li concept would also affect the way business meetings are conducted, because of the

protocols to follow. An example being the importance of establishing relationships before

business is conducted. This is one of the thesis‟ consistent findings, which further emphasize

the importance of relationships.

This concept will also affect MT when hiring new employees. Potential new employees could

be an opportunity to expand the business network. An acceptance to such a network would be

an opportunity to build relationships and gain trust, which in the future could generate


73

customer loyalty. One of the external contributors to this thesis said in an informal setting,

that he would rather employ people based on network rather than pure skill sets. These

findings show that it is possible to draw linkages between the GLOBE study, Confucianism

theories, our findings in the surveys, as well as other cultural findings.

6.4 Purchase decision process

In order to clarify the picture dealing with the purchase process, we find it appropriate to

highlight this in the next section. The purchase process to make a decision to purchase an IBS

is a complex, high-involvement process. This is due to a complex, technologically advanced

product with multiple areas of importance. The emphasis lies on specifications and other

qualitative aspects. As such, considerable time, thought, energy and other resources need to be

devoted to the purchase process, in order to address the many factors crucial in the buying

decision.

Different businesses purchase products and services to satisfy the needs within the

organization. MT‟s customers purchase the Bridge Mate™ IBS to facilitate the daily

operations on their vessels. The purchase is done exclusively on behalf of the organization.

For some products, relationship building is more likely after purchase then others. Bridge

Mate™ IBS can be considered a high involvement product and a long-term investment, so

trust between the two (or more) parties is important for the after sales process.

Normally, the purchase process is divided into seven stages, from problem identification to

after purchase evaluation. The elaboration of the seven stages will be made specifically to the

purchase of an IBS. To simplify the purchase decision process, we assume that a customer

needs a new ship for the offshore industry for deep-water drilling, and will be looking for an

appropriate IBS.

The figure below illustrates the various stages of the purchase process127

. The following

purchase process has been adapted to suit a typical purchase of an IBS.

127

Biong & Nes (2003): p. 77


74

Figure VII - Purchase decision process

1. Problem identification:

The problem normally occurs when a ship owner/user identifies an absence, or a product that

does not meet certain requirements for the operation. The ship-owner in the example realise a

need for a new offshore vessel for deep-water drilling.

2. Solution development:

Now that the company have recognized a problem, they need to find a solution to the issue.

The customer initiates contact with a ship design company. This company can be a design

department within a larger company who have their own shipyard, like Keppel. The other

possibility is to contact an independent design company who finds a shipyard to build the

vessel. The following will not separate the two, as the purchase process functions the same

regardless of who represents the ship design company.

The designers will develop a concept for the customer that satisfies the identified customer

need. As the designers often have more knowledge of the solutions to a problem, they will be

very influential in the process of choosing product specifications. These specifications will be

chosen to meet the requirements for the ship. An example can be the stringent requirements

for stability in deep-water oil-drilling operations, which a DP-3 system offers.

3. Search for potential supplier:

The design concept will be relayed to shipyards, who build the actual ship. The shipyards

often have a maker‟s list, meaning they have a set of suppliers of bridge systems they can

offer as suppliers. This is an option when the customer has no preferences for supplier. An

Problem identification

Solution development

Search for potential supplier

Proposition collection

Evaluation of proposals

Order, and delivery of product and

servicesEvaluation


75

alternative is that the customer/designers have identified a specific supplier, such as MT, who

offers solutions that meet their requirements. This is often the case when the solution requires

complex products, such as in the deep-water drilling example.

4. Proposition collection:

The customer and the potential suppliers will now discuss the final agreement. This concerns

issues like pricing, delivery terms, and product specifications. MT uses this stage to offer

value-added solutions, in addition to the previously developed proposition. An example of

such value added customizations is MT‟s ability to fully integrate the DP-3 into the IBS. MT

offers to demonstrate their IBS for the customer at their offices in Norway or USA.

5. Evaluation and selection of proposal:

This stage is also referred to as the customers decision phase. The proposals of both MT and

competitors are being evaluated at this stage. Important factors that influence the evaluation

will be pricing, delivery terms, value added product attributes, service delivery, reputation and

relationship to mention a few.

6. Order and installation:

The customer has now chosen their supplier of IBS, in our example MT. The two companies

agree on a legally binding contract. MT will then fulfil certain elements in the contract, such

as installation and training of crew. Under the supervision of MT, the IBS will be installed on

the shipyard where the ship is built,

7. Evaluation:

This is the last stage in the purchase process and it elaborates how the purchase has solved the

problem. Furthermore, the company will evaluate whether the purchase has delivered

according to the promise presented by the supplier prior to the purchase.128

If the process has

functioned painless and all the predetermined criteria‟s are fulfilled, there can be room for

future cooperation between the companies. Such cooperation can be referred to as customer

loyalty. Customer loyalty is defined as the totality of feelings or attitudes that would incline a

customer to consider the re-purchase of a particular product, service or brand.129

Customer

loyalty is likely, as the offshore industry is very relationship/network focused, as previously

established.

128

Biong & Nes 2003 p. 76

129

http://www.iclp.ch/?q=customer-loyalty ICLP – “Customer Loyalty Definition”

http://www.iclp.ch/?q=customer-loyalty


76

It is important for MT to be aware of the purchase process‟s opportunities and threats, and be

involved in the relevant stages. By doing this, MT may acquire a loyal customer that will

purchase more Bridge Mate™ IBS or other products within the MT product portfolio in the

future.

6.5 Industry Analysis

6.5.1 Introduction

An industry is a group of firms producing products that are close substitutes.130

Michael

Porter expanded the competitive landscape with his Five Forces Model. Traditionally firms

where only looking at the firms they were in direct competition with. Porter‟s five forces

looks at it from a broader spectrum and the forces include competitive rivalry, threat of new

entrants, threat of substitutes, bargaining power of buyers and bargaining power of

suppliers.131

We have discarded the threat of substitutes, as the closest substitute traditionally

was purely analogue systems. Higher technical demands have made these systems obsolete.

An example is the Electronic Chart Display and Information System (ECDIS), which the

SOLAS convention has made mandatory from 2012. Non integrated bridge systems consists

mainly of the systems that can be found in the IBS, and the companies who provide IBS

systems can also provide non integrated systems. We found it natural to not make a separation

between integrated bridge systems and non integrated systems, since it often consists of the

same players in the market.

6.5.2 Market growth

In order to determine the industry‟s attractiveness we must look at a number of variables. A

natural starting point is to look at the growth rate of the market. This is especially interesting

for Marine Technologies, as they are a new entrant in the South-East Asia market. The market

looks promising at first glance, but we have to keep in mind the recent credit crunch which

was not taken into account by earlier forecasts. The credit crunch caused a decline in growth

in the offshore industry in South-East Asia in 2009.132

However, the future looks brighter. The

compound annual growth in the global oil and gas industry in the period 2008-2013 is

130

.Ireland, Hoskisson and Hitt (2009) p. 48 131

Porter (2008) p. 86 132

http://www.offshore-mag.com/index/article-display/2495467064/articles/offshore/volume-70/issue-

2/departments/comments/asia-pacific-offshore.html Offshore Magazine “Asia Pacific Offshore pace to grow”

http://www.offshore-mag.com/index/article-display/2495467064/articles/offshore/volume-70/issue-2/departments/comments/asia-pacific-offshore.html



77

predicted to be 7.8%.133

The Asia Pacific region is expected to grow 77% in the period 2009-

2013, compared to the previous five-year period.134

It is clear that industry analysts have faith

in the South-East Asia offshore market.

Statistics provided by MT indicate that there are around 4000 offshore vessels in operation

worldwide today. At present the new-building rate is in the range of 125 to 250 ships per year.

Firms delivering equipment to players in another industry need to look at the customers

driving market, since there often is a case of derived demand. A growth in the offshore

industry will lead to an increase of offshore vessels to support the growth. An increase in

offshore vessel demand will lead to an increase in new-builds from the ship yards. And

finally, that increase will naturally lead to an increase in demand for bridge systems. This is

further demonstrated by the report released by Association of Singapore Marine Industries:

Singapore Shiprepairing, Shipbuilding & Offshore Industries Directory 2009. The report

states that the offshore construction sector has been quite resilient throughout the credit

crunch, and is now experiencing further growth.

As the technical requirements have increased over the last years, newbuildings are needed to

replace older ships. This is shown by the increase in demand for more technically advanced

ships. “In terms of numbers, Anchor Handling Towing Supply Tugs are the highest in the

order book, as two or three of these vessels are needed to support every rig in operation.

Singapore yards have also harnessed their experience and expertise to pitch and win contracts

for heavylift derrick pipelaying vessels, subsea operation vessels, emergency response and

rescue vessels and offshore construction vessels.”135

6.5.3 Mandatory ECDIS – The Start of a Digital Revolution?

IMO has passed regulation making ECDIS mandatory for new builds ranging from 2012-

2014, and existing ships ranging from 2014-2018 depending on type of ship136

. The vast

majority of ships are currently using paper maps, according to Frode Klepsvik. ECDIS was a

hot topic on this years‟ Asia Pacific Maritime Expo, and the ships needing retrofit was

estimated to be in the range of 30 000 to 40 000 ships. In addition newbuilds will include

133

Datamonitor Industry Profile - “Global Oil & Gas Equipment & Services, March 2009” 134

Infield System - “Regional Perspectives Asia Pacific Market Update Report 2009/13” 135

Association of Singapore Marine Industries – “Singapore Shiprepairing, Shipbuilding & Offshore Industries

Directory 2009” 136

http://ecdis.com/ecdis-regulations.aspx “ECDIS - Regulations”

http://ecdis.com/ecdis-regulations.aspx


78

digital maps. Digital solutions are met with some scepticism in the market, but with the

introduction of ECDIS, it will be an opportunity for operators, owners and shipyards to get

familiar with such solutions. As ECDIS is an important part of the IBS, a linkage between the

demand for ECDIS and the IBS can be established. The industry is quite rigid, so increased

experience with digital solutions can lead to a better understanding of the benefits of these

solutions. It is a bit farfetched, but if used properly as a marketing tool, the mandatory ECDIS

can contribute to an increase in demand for IBS. The following picture shows when ECDIS

becomes mandatory on different ship types, giving an illustration of the great opportunity.

6.5.4 Competitive Environment

A market in growth will always be attractive for other companies delivering similar solutions,

the competitive rivalry and the possibility of new entrants coming in for a share of the market

must be considered. The intensity of competition may balance out the market growth if we

have a situation where supply has become larger than demand due to the number of

competitors.137

Marine Technologies‟ main competitors are Kongsberg Maritime, Furuno,

JRC, Raytheon Anschutz, Sperry Marine, Atlas and L3 Mapps. None of the main competitors

are Asian, demonstrating the global scope of the industry. It is clear that the competitors MT

face in their home market will be competitors in the Asian market.

As Marine Technologies are employing a niche strategy targeted towards high end customers,

many of these companies becomes partly irrelevant due to their inability to provide solutions

similar to what MT is capable of. Examples of such companies are Furuno and JRC which

employs a low cost strategy, delivering basic solutions in order to achieve economies of scale.

137



79

The same can to some degree be said about Kongsberg Maritime and Raytheon Anschutz,

although they are on a higher scale than the before mentioned companies. Sperry Marine

currently has a vast number of products in their product portfolio, and do not have the same

focus on integrated bridge systems as other players in the market. Economies of scale are not

a variable that is important for MT, since flexibility and innovative solutions are their main

selling point. Although many competitors don‟t share the same positioning as MT, they are

still a major factor in the market. Both Furuno and Kongsberg have massive brand names, and

are preferred in the market. Although they lack the technical capabilities and innovativeness

MT has, they have a tremendous financial backing and can leverage on their well established

brand names. L3 Mapps differentiate from the rest and is a competitor that is quite similar to

MT. L3 Mapps focuses on user friendliness with multifunctional workstations that can be

configured by the duty officers to fit their needs. In addition, L3 Mapps also deliver remote

diagnostics through satellite communication to their customers.138

Competitors will be

discussed further in our competitor analysis.

When determining the market attractiveness we need to look at factors that could favour or

disfavour potential new entrants. The degree of threat from new entrants is essentially derived

from two angles; the existing companies‟ strategic efforts and potential retaliation, and the

political and legal environment in the market.139

As mentioned earlier in the external analysis,

Singapore stands out as the obvious option for potential companies looking to establish

operations in South-East Asia. Compared to Indonesia and Malaysia, Singapore has a much

lower corporation tax and little corruption. In addition, it is a business hub in South-East Asia.

In essence, there are no political or legal implications creating entrance barriers for potential

new competitors.

The existing competitors have a number of ways to establish entrance barriers for new

entrants. As mentioned earlier when discussing existing competitors there is a division

between companies focusing on low cost strategies and companies focusing more on

differentiation. Both strategies are integral when creating barriers. Low cost strategies based

on economies of scale makes it harder for cheaper alternatives to not only enter, but to be able

to compete on equal ground with the companies that have more experience. Differentiation

strategies based on offering more than the low cost companies can offer is also a part of

creating barriers. Innovativeness offering superior solutions and flexibility in implementing

138

http://www.mapps.l-3com.com/datasheets/ibs.pdf :L3 Mapps ”IBS” 139


http://www.mapps.l-3com.com/datasheets/ibs.pdf


80

these solutions are not easily copied by new entrants. The strength of the brands is also a

factor to consider. Brand loyalty is often high in the Business-to-Business market due to the

advantages of having a reliable and sustainable partner on the supply side of the value chain.

6.5.5 Customers

On the other end of the industry; the potential customers leverage against the firms offering

bridge solutions. Naturally firms aim to maximum their profits. On the selling side, the firm

wishes to gain the highest possible return on invested capital, while the buyer will aim to limit

their costs. In order to achieve this, the buyer will bargain for lower prices, higher quality and

beneficial after sales solutions.140

Again there are many factors to consider.

The switching cost is an important factor in this relationship. Switching costs are the costs

customers face when they buy from a different supplier.141

There are two aspects to consider:

The relationship aspect of the change and the initial monetary cost of the product (including

purchase price and employee training costs). Bridge systems are often considered as a long

term investment, where supplier-buyer relations are important. The tendency to switch is

considered low, as the customers prefer to use the same supplier on their entire fleet in order

to achieve economies of scale. The after sales service is also vital, and loyalty to suppliers of

bridge systems are considered important due to the need for problem solving and bridge

system updates as time goes by. In essence the relationship factor weighs highly towards an

increase in bargaining power for the customers.

The second aspect to consider is the financial cost of switching. The South-East Asian

offshore supply market is more price sensitive than the European market. The trend is that the

demand for newer technological solutions is growing. However, the price/quality equation is

central in the decision making process. Suppliers of bridge systems have to justify their higher

price level by delivering higher quality than the cheaper alternatives. However, the integrated

bridge system is a relatively small investment, when taken the entire cost of the ship into

consideration. The price alone is not contributing to high switching costs. A number of

potential buyers are worried about the transition period, which incurs when substituting

suppliers. They fear not only the employee training costs, but also the possibility of a decrease

in safety as the personnel is taking time to get used to the new system. In most cases the

140




81

supplier of bridge systems will be an integral part of the employee training, and reduces the

buyers training costs by offering the service for free or at a low price. The transition period

varies from supplier to supplier, but by focusing on user interface and modification, MT

promises their customers a short transition period. In conclusion, the switching costs are high

on the relationship side leading to a low tendency to switch, but relatively low on the pure

financial and transition phase side. On the other hand, Integrated Bridge Systems is a

differentiated product if you go beyond the standard packages delivered. By offering flexible

solutions suited to customers‟ needs, suppliers of bridge systems are able to differentiate and

thereby convince customers to buy; effectively decreasing bargaining power of buyers.

A potential threat when approaching customers is the dilution that has occurred with the IBS.

A number of players in the market are selling subpar IBS, which in essence is not really

integrated in the true sense of the word. This has hurt the category need for IBS. As Mr. Koh

in Keppel SingMarine stated: “[..] the fact that the suppliers of IBS have not been able to

clearly define what it is. There are a number of different systems, but no one has been able to

truly state why customers should buy it.” There is a sense of distrust in the market since

below-standard suppliers of IBS has made promises in their sales pitch that has not been

upheld.

6.5.6 Suppliers

The firms in the industry need to have focus on their costs no matter what strategy they are

following in order to stay competitive in the market. A way of controlling costs is to have

leverage against your suppliers. Typically, manufacturers of bridge systems will be solely

responsible for the core technology in the system. The main parts of the software are

developed by the bridge system provider. As the software is the basis of the product this

makes perfect sense. However, it is possible to add many applications to the core software.

Examples of such applications are weather forecast, automation systems and Dynamic

Positioning. Most of the players in the industry will choose to outsource what we refer to as

commodities in the product. Typical commodities are the monitors to display the software, the

cables needed to wire the bridge system and the chairs that go on the bridge. These are

products with a low level of differentiation. Monitors, cables and chairs are products that are

widely available, where the suppliers have a low bargaining power due to the number of

available alternatives. The main threat from suppliers can be found in the technological


82

section, where there are a few major players dominating certain areas. Marine Technologies

are currently countering this threat by developing the applications in-house. One example of

such an operation is their decision to develop an ECDIS system in order to liberate themselves

from suppliers.

6.5.7 Industry Attractiveness

The factors described above are all strong indicators when determining industry

attractiveness. The market growth is crucial, and the fact that the market seems to have

sustained fairly well through the credit crunch, and is now on the rise again is very positive.

The competitive environment is a serious threat since it can diminish the market growth.

Interestingly, Marine Technologies have managed to differentiate themselves from most of

the competitors, making them less of a threat. If we look at the industry as a whole, they do

have to face a number of competitors. By employing a niche strategy, a lot of these

competitors will be distanced by MT. However, MT needs to recognize the threat the

competitors pose in terms of strong brand names and financial resources. MT must also be

aware of the threat from L3, which share many of MT‟s characteristics. In conclusion, the

competitive environment does not constitute a high threat.

The threat of new entrants is present, but there are factors limiting the industry‟s availability.

The limitations do not come from the government, but from the companies already competing

in the market. It is an industry where the demand for innovation is high, start up costs are

moderate and relationship building is crucial. At the same time it has become harder to find

niches to serve, as companies like MT and L3 are delivering flexible solutions to every

possible need. At the same time, the “mass market” is occupied by low cost strategy

companies such as Furuno, JDC and to some degree, Kongsberg, Sperry Marine and

Raytheon Anschutz. In conclusion the threat of new entrants is low, which is positive for the

players already established in the market. It is also interesting to note that the entrance of MT

has limited the possibilities for other new entrants.

The customers do have power in this market as the switching costs and the tendency to switch

comes into the play. The switching costs are not very high in dollars and cents, but the loss of

personal relationships are considered a high cost; especially in South-East Asia where

relationships plays a key role in business. Due to the high value of relationships the tendency

to switch is considered to be low. In addition, the price/quality equation is essential as the


83

market is price sensitive. However, the cost of a bridge system compared to the total cost

structure of a new build is relatively low, making it possible to charge a justified premium

price. In conclusion, the bargaining power of customers should be considered to be in the

range between moderate and high.

Companies providing IBS tend to have the upper hand when dealing with their suppliers. The

only real threat can be derived from software and service providers. However, by vertically

integrating these services companies eliminate their bargaining power. An example of this is

MT‟s development of an ECDIS system. The rest of the suppliers are dealing with

commodities which are easy to find in the market. In conclusion, the bargaining power of

suppliers is low.

In conclusion, the industry for IBS in South-East Asia is attractive. There are a number of

factors in favour for firms delivering IBS; the only concern is the bargaining power of buyers.

However, with sustained market growth and a limited number of firms to compete with, MT

should be able to fare quite well in the industry provided they make the proper strategic

choices.

This is illustrated in the following figure:

Figure VIII – Industry Attractiveness (adapted from Porter‟s Five Forces)


84

6.6 Competitor analysis

Marine Technologies has a number of competitors. We have identified four prominent

competitors that Marine Technologies LLC competes with. These four competitors are:

L-3 Communications

Furuno Electric

Raytheon Company

Kongsberg Maritime

This competitor analysis will not contain any financial data, because of the lack of this

information from MT. Therefore this information would not be relevant since a comparison to

MT will not be possible. The following is a brief overview of these four competitors.

6.6.1 L-3 Communications

L-3 Communications is as mentioned one of the main competitors to MT and their Bridge

Mate IBS. This company is a leading supplier of a broad range of high technology products

and services to serve both governments in defence and warfare products to navigation systems

for the commercial shipping market. They have through many years served several

governments with their products and services, but they heavily depend on the American

market, which accounts for approximately 86% of company revenues142

and the US

Department of Defence contribute to 81% of total revenue. This makes L-3 highly dependent

on this one market, which could potentially be a threat for L-3.

L-3‟s main markets are the defence and military products, and these sectors are forecasted to

rise in the future, because of the high level of insecurity and the rising tensions on the global

scale. These industries are not affected by recession or cyclical downturns or upturns. Despite

the financial crisis these markets grew worldwide by 9,2% and reached the total value of

$1.260,5 billion143

, and the USA alone represents 58% of the global spending.

The company comprises of several business divisions, and they have a diversified product

portfolio. The business divisions are: specialized products, government services, aircraft

142

DataMonitor – “L-3 Company Profile”

143



85

modernization and maintenance, command, control, communications, intelligence,

surveillance and reconnaissance. L-3‟s IBS are from their specialized products division,

which contribute to 36,6% of L-3‟s total revenue.

L-3 Navigation Integrated Bridge System (IBS) NACOS platinum

This system contains all the functions found in

MT‟s IBS system, and they have the same

focus as MT in improving the man-machine

interaction. L-3 NACOS has integrated all

navigational sensors and radar functions into

Multi Functional Workstations (MFW), which

all could be used to show the information

needed. The different MFW‟s can also be configured

in accordance with the current operation, such as docking, just like MT‟s IBS.

In addition to the standard navigational systems as ECDIS, radar, ARPA, Conning display,

and track control system, multipilot, and AIS, the L-3 system could be delivered with other

features such as Closed Circuit Television operation and presentation, Advanced Position

Prediction and Voyage Data Recorder.144

Their Dynamic Positioning can also be integrated in

the IBS, and their Conning display is customizable. L-3 can deliver complete packages

containing all periphery sensors, components and automation systems. These are delivered on

a common used platform, making the integration and instalment easy and cost efficient.

One of L3‟s apparent weaknesses of the NACOS is the wide range of analogue gauges and

the extensive use of manual buttons, compared to MT. They only integrate their own products

and applications.

6.6.2 Furuno Electric

Furuno is a Japan-based company founded in Nagasaki in 1938, and their first products where

fish sonars. Today, Furuno‟s main focus is marine electronic equipment such as navigation

devices, fishing devices, global positioning system devices, wireless communication devices,

and factory automation devices.145

Furuno‟s primary markets are Japan, Germany, USA, and

144


145

Datamonitor – “Furuno Company Profile”

L-3 NACOS IBS


86

Singapore.

Furuno Integrated Navigational System (INS) Voyager

Furuno‟s bridge system, called Integrated Navigational System (INS) Voyager consists of

three different components. These are Radar/ARPA, chart radar and ECDIS. Furuno‟s INS is

a standardized product delivered with these functions; this is the main difference from MT‟s

Bridge Mate™ IBS, which is fully customized.

Furuno‟s system consists of five screens:

ECDIS, Radar/ARPA, Conning Display,

Radar/ARPA and ECDIS. The reason for the two

screens for Radar/ARPA information is that the

two screens could show different information.

The company delivers a more simplified and less

technical system compared to MT. This can be a more suited product for Asia because it is a

more standardized and affordable system than MT‟s IBS. It is clear that Furuno employs a

low cost strategy. Since they mainly operate in the price sensitive South-East Asian market,

they are able to achieve significant market shares.

The most obvious weakness of Furuno Voyager is the lack of integration and low degree of

innovation. They still use a vast range of manual and analogue gauges. Furuno supplies

Automatic Identification System (AIS), Echo sounder, and alarm systems, but these are not

integrated in the system. The AIS could be interfaced with the ECDIS and Radar but this

solution is not as integrated as MT Bridge Mate™ IBS. Furuno do not supply their own

Dynamic Positioning system; if a customer demand this type of equipment, this will be

installed as a”stand-alone” system. This will create a vast number of information sources and

can create a relatively complex workstation. Furuno does not offer remote diagnostics to their

customers.

6.6.3 Raytheon Company

Raytheon is one of the world‟s leading defence contractors in the world, and they are

specialized on advanced aviation technology. Raytheon‟s key markets are the USA and parts

of Europe. Raytheon, as well as L-3, are heavily dependent on the USA market, and the US

Department of defence, where 87% of total revenue derives from. Raytheon is the largest

Furuno INS


87

supplier of missiles, which counted for 21,4% of total revenue FY2008146

, and small jet

aircrafts.

Raytheon Integrated Bridge System “Bridge Control”

The system consists of Multi Functional Workstations

where any navigational system could be controlled.

Their system are standardized interface containing

radars, ECDIS, conning, alarm system, AIS, Voyage

Data Recorder, compass, gyro compass, and steering

control.

In addition to the standard equipment on an IBS they

deliver their system with an extra function called “SeaScout”147

, which is a unique collision

avoidance tool. This tool enables the navigator to see all the “no-go areas” with a single

button function. Raytheon‟s NautoConning, which is their conning display, has many

similarities to MT‟s Bridge Mate™ IBS. NautoConning displays the normal conning

information during sailing, but this can be changed to a conning display for docking, when

needed. It is also possible to retrieve information from the bridge wings to the centralized

conning display. Raytheon‟s system also enables retrieval of all navigation information to all

of the screens at any time. Alarm management is also integrated in their IBS. A weakness of

the system is the lack of a Dynamic Positioning system and the vast use of analogue gauges

and manual switches.

Raytheon can integrate customer-specific equipment in their IBS, but to what degree this is

integrated is not stated. Because of the vast use of manual gauges and switches, it is most

likely that these 3rd

party equipments are fitted into the IBS control panel, but not integrated

into the system.

Their main competitive advantage compared to MT is their service stations, which are spread

all over the world in impressive numbers. However, their lack of focus on IBS is an advantage

for MT. Raytheon is relying on old technology, while MT is in the forefront of innovation.

146

Datamonitor – “Raytheon Company Profile” 147

Datamonitor – “Raytheon Company Profile”

Raytheon IBS


88

6.6.4 Kongsberg Maritime

Kongsberg Maritime was founded in 1997 as a part of Kongsberg Group, consisting of:

Kongsberg Simrad, Kongsberg Norcontrol, Kongsberg Norcontrol Simulation and Simrad.

The Kongsberg Group was formerly known as Kongsberg Våpenfabrikk (Weapon factory),

but they restructured the company and formed the Kongsberg Group to separate the weapon

industry and the commercial industry.

Brief technological achievements from the Kongsberg Group:

1959 first Auotronica fire system

1969 first computerized radar/ARPA system

1975 develops the first Dynamic Position systems

1996 IAS-Integrated Automation System concept in the market

Kongsberg Maritime has always been an innovative and progressive player in the industry,

and focuses a lot on R&D.

Kongsberg’s IBS the K-Bridge

Kongsberg‟s K-Bridge148

is an IBS that offer a similar range of attributes to MT‟s Bridge

Mate™ IBS. The K-Bridge meets all the regulations of IMO and it meets all classification

societies‟ regulations all the way up to one-man bridge, which is the highest of all

classifications. K-Bridge focuses on user-friendliness as MT does on their Bridge Mate™

IBS. The K-Bridge is designed to reduce the analogue gauges and manual switches, as these

are a part of the digital interface.

Kongsberg manufacture their own navigational

equipment, and these are seamlessly integrated

in the K-Bridge. They also supply their own

Dynamic Positioning (DP) system149

, which

can be integrated in the K-Bridge. This DP

system can also be delivered as an independent

148

http://www.km.kongsberg.com/ks/web/nokbg0240.nsf/AllWeb/F1D483785AD54752C1256F250029FDE3?O

penDocument “Integrated Bridge System, K-Bridge”

149http://www.km.kongsberg.com/ks/web/nokbg0240.nsf/AllWeb/14E17775E088ADC2C1256A4700319B04?O

penDocument “Dynamic Positioning System, DP Systems”

Kongsberg K-Master

http://www.km.kongsberg.com/ks/web/nokbg0240.nsf/AllWeb/F1D483785AD54752C1256F250029FDE3?OpenDocument





89

operating station, as an aft-bridge control system. It is a completely new innovative product

from Kongsberg Maritime. The K-Master is a multifunctional chair where a single operator

can control and steer the ship‟s aft operations. With various controls and two adaptive touch

screens the operator can control the DP system and the manually control the thrusters, while

simultaneously keeping track of the navigational equipment such as ECDIS, radar/ARPA, and

conning display.

This product was honoured with the prestigious Norwegian Award for Design Excellence

Year: 2010150

. This was due to its innovativeness, advanced functionality, user-centred

interaction design, which increases both efficiency and safety. Kongsberg focuses a lot on

the aesthetic and user-friendly design on their K-Bridge as well as for the stand-alone

operation units (ECDIS, Radar/ARPA, DP, and Conning)

A few weaknesses of the K-Bridge are the lack of a good weather solution, only able to

integrate their own products, and no remote diagnostics.

150

http://www.norskdesign.no/industridesign/k-master-operatoerstasjon-for-skip-article13915-287.html “K-

master operatørstasjon for skip”

http://www.norskdesign.no/industridesign/k-master-operatoerstasjon-for-skip-article13915-287.html


90

7. Internal Analysis


91

When conducting an internal analysis, all relevant factors that create value in the company

itself have been considered. Without a thorough identification of these factors, the authors

will be unable to suggest an effective strategy for Marine Technologies. The goal is to

identify Marine Technologies core competencies, and discuss whether these can become

sustainable competitive advantages. The following part will start by discussing different

internal factors of Marine Technologies, and how they contribute to the value creation.

All information used here is given to us as secondary information from MT, obtained through

the briefing and interview with Frode Klepsvik or informal talks with other MT employees,

unless stated otherwise.

7.1 Relevant Resources and Capabilities

7.1.1 Financial Since MT is a relative small company, they have relative small financial resources compared

to bigger companies. They do however have a steady safe revenue stream (40% of annual

revenue) from the Edison Chouest Offshore, and since MT is growing steadily it is safe to

assume they have a growing awareness in the market as well. Since it has not been possible to

access any budgets for MT, the authors can only trust Frode Klepsviks‟ word that “MT is

doing fine financially”. Innovation and Research and Development (R&D) is very costly as it

is often difficult to estimate the return, especially for MT who develops premium quality

products where the actual demand for these niche products is difficult to measure. As

innovation is one of MTs main focuses, they appear to have the financial resources to do this,

and they accept the obvious financial risks of doing R&D as a small company.

7.1.2 Location

Marine Technologies Pte Ltd new location in Asia has strengthened MTs presence in the

global marketplace. Singapore is a hub for global marine activity, both for shipping and

offshore vessels. Singapore is therefore a decision-making center, as many companies have

regional offices located here. This is useful for MT as they are closer to the decision makers,

Relevant Resources

and Capabilities

Value Chain Analysis

ACE ModelStrategic Partners

Conclusion


92

and contact with possible new customers can more easily be achieved. Also Singapore, and

South-East Asia, build and repair many ships. Since MT delivers IBS for both new ships and

retro-fits, their presence simplifies the distribution, physical assembly and maintenance of the

systems. MT also has an office in Norway, a country known for its high quality in the

maritime and offshore industry. Here the customer can observe demonstrations and test the

IBS. Norway has deep innovative traditions in both industries, and many innovative regional

clusters can be found. This helps MT build a trustworthy brand name in South-East Asia as

well.

MT will be able to conduct their after sales service to a much higher degree with their

physical presence in Singapore. MTs‟ remote diagnostics may often indicate that a vessel

needs service quickly, and MT will have proficient employees stationed in Singapore to cater

this need. The company has the possibility to hire in a local repairman as a short term solution

before they have hired one of their own in Singapore, provided that the local representative

has sufficient training in the advanced technology. MT has the service responsibility of their

delivered systems, as they simply cannot afford to rely on others, like shipyards, to do this. If

a system malfunctions, and an incapable technician who cannot solve the problem is provided,

MT will be indirectly responsible for the customers‟ loss. Even if they did not provide the

technician, this will hurt MTs reputation severely as bad news travel fast. The speed of the

service is key, as it is not only expensive for the customer to pay for the actual repair, but one

have to add in the lost income which often surpasses the repair cost by a fair amount. As MT

will be able to react fast because of their presence in Singapore, they will strengthen their

safety and reliability brand equity, two of the most important characteristics for MT.

However, MT is far from the only supplier in the region and local competition is intense from

both domestic and international companies. As stated in the external analysis, it is relatively

affordable to open an office in Singapore. Based on this the geographical presence of MT is

only a competitive parity, and not a competitive advantage151

.

7.1.3. Information

MT is a customer-focused company, where the customer needs are the basis for production,

and ultimately value creation. Because of this customer focus, it is safe to assume MT has

sufficient information on the customer needs and demands in their respective segments. MT

151

http://www.ecofine.com/strategy/RBV%20of%20the%20firm.htm “The Resource-Based View of the firm

(RBV)”



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has technical savvy people in their staff, which also has experience as users of navigational

equipment. This means they can cater to customer needs, because some product designers

have been customers themselves. The information MT gathers from their customers may be

unavailable to their closest competitors, giving MT a competitive edge. This closeness with

the customer has resulted in MTs‟ product portfolio, highly differentiated from other bridge

system suppliers. The customer-needs information, combined with MTs‟ ability to cater to

them, gives them a competitive advantage towards certain segments. The information in

question is in most cases available to others at some point, and it is not very costly to acquire

such information. Because of this, the competitive advantage of information is only temporary

at best. However, although competitors may acquire the same knowledge of customer needs,

does not mean they will be able to cater them. As MT is fairly new in the South-East Asia

market, they do not have sufficient information to understand the market fully yet.

“The aim of marketing is to know and understand the customer so well the product or service

fits him and sells itself.” – Peter Drucker (1909-2005)

7.1.4 Human Resources

MT employs over 80 people over four different continents. This is the distribution: 50 in

Mandeville LA USA, 25 in Norway, five at the sales office in Rio de Janeiro Brazil, and as of

today, one in Singapore. However, MT is constantly looking for talented employees who can

contribute to the value creation and enable them to keep up with their sustainable growth. MT

employees are very good at what they do and MT‟s growth and rapid success is proof of this.

This makes MT an attractive workplace for talented people and there have been applications

from highly qualified people looking for a job, which is a promising sign for MT‟s future. The

maritime industry employs many talented engineers as the business is very lucrative. These

engineers are all highly knowledgeable, so the degree of differentiation between them will

most likely be how they operate within each company. MT engineers work in a very

innovative environment, and the engineers will increase they knowledge as a result of this.

This knowledge is protected by employee contracts, meaning engineers cannot use what they

know with other employers. There is also an ethical issue regarding company secrets when

employees change employer in the same industry, but we have seen indications that such

exploitation is highly frowned upon in the maritime industry. Such exploitation will often

backfire in the long run, as business-to-business rely heavily on trust between partners, and

the news of misused trust travels fast. It is safe to say that MT would not be able to deliver the


94

level of quality they do today without their talented engineers. MT sales force, which we

observed during the Asian Pacific Maritime trade fair, is also very talented and professional.

They were able to create interest and awareness with their customers, while still being able to

explain the complex products and convey their value message. Our impression of the general

management is also very good, as MT have a clear strategy for the years to come, and they

work focused towards their goals.

MT offers complex products at an above average price in a price conscious market, so the

obstacles are obvious, and in turn the requirements of the employees are equally high. Our

impression of MT employees through our meetings is, although not a hundred percent

objective, that they are highly qualified for the job. Based on this we conclude that MTs‟

human resources are a competitive advantage.

“The employer generally gets the employees he deserves” - J. Paul Getty (1892-1976)

7.1.5 Innovation

As previously mentioned MT focuses a great deal on innovation, research and development.

Proof of this is MT‟s product portfolio. Their Bridge Mate™ IBS have few equals in the

market because of its characteristics: full redundancy, user friendly application manager, and

remote diagnostics to mention a few. In addition, their satellite communication and dynamic

positioning solutions are unique. As MT‟s Bridge Mate™ IBS became a reality because of

technology derived from Dynamic Positioning (DP) systems, and DP is offered as an

integrated part of the IBS, it is clear that MT are more than capable to let knowledge and

innovative ideas flow throughout the organization. MT‟s ability to innovate by using their

knowledge and competent employees is a highly valuable capability for the customer. MT

offer highly adapted products for their customers, and the capability to continuously cater

these needs require a deep innovative mindset. MT possesses this mindset, and this is

reflected in the positioning MT has established in the market. This kind of mindset cannot be

easily imitated as the new product itself, and by the time MT launch a new product it may be

too late for imitation as the market is captured. As a part of the Edison Chouest Group, MT

has over 200 vessels that can be used for testing of new equipment at their disposal. This

gives them a unique and simple opportunity to test equipment before making it available for

the customer. MT has the ability to exploit niche opportunities in the market, a good example

being their ability to integrate software from any platform into the IBS which few other


95

companies can offer. Another example of MT‟s innovation is the newly developed ECDIS,

which combines mapping and weather forecast in a completely new and integrated way.

Research shows that improved ECDIS is the most effective way to improve safety and avoid

accidents at sea.152

Without this innovative capability, MT‟s current technology could be

quickly imitated and MT would not survive on its current portfolio over a long period of time

because of other companies‟ innovations and size.

The maritime market is very open, meaning if something new is launched in the market,

competitors will know of it very quickly. Competitors will then want to copy the new

solutions in order to offer them as well. However, the market is also driven by long time spent

on production, and reverse engineering will in turn be time consuming and difficult. Products

like the IBS are costly and complex and the level of imitation from competitors will reflect

this fact. Although technology itself can be patented, it is rarely so exclusive that competitors

cannot create a similar product, as has happened with the remote diagnostics. Software

however, like the application manager, can more easily be patented and protected.153

Based on this the market can be classified as a Standard-Cycle Market154

. This means that

MTs‟ innovations as a competitive advantage are moderately shielded from imitation.

Because of imitation, MT has to continuously upgrade their product portfolio through R&D in

order to retain their competitive advantage and the unique position in the mind of the

customers. MT has to carefully control their innovative operations, and build positive brand

equity focused on innovative capabilities, in order to continuously deliver the same positive

value to their customers. Innovation is clearly one of MTs‟ most important competitive

advantages, and it is somewhat sustainable.

“Innovation is the ability to see change as an opportunity - not a threat”

– Steve Jobs (1955- )

7.1.6 Reputation

MT is today a small company compared to its main competitors, and they are serving a small

segment in the market. Despite this fact, MT has a good reputation among its clients. Previous

customers are very satisfied with the products and services MT offer, and it is likely they will

152

http://www.imo.org/ “International Maritime Organization” 153

http://www.wipo.int/patentscope/en/patents_faq.html “World Intellectual Property Organization – FAQ” 154


http://www.imo.org/

http://www.wipo.int/patentscope/en/patents_faq.html


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remain loyal. The maritime market is mainly driven by reputation and human relationships, as

with most business-to-business markets. This becomes even more important when operating

in South-East Asia, because of the cultural aspects previously discussed. It is safe to assume

that the word of mouth effect play an important role in the promotion process. MT has a

positive, but limited reputation in this sense. They are still small, but offer a unique product

that could create interest and word of mouth effect in the market. The fact that MT is a part of

the Edison Chouest Offshore (ECO), who is a very significant player in the maritime market,

is helping MTs‟ reputation in some degree. The problem here however, is that we have still to

meet anyone who have heard of ECO as they have a low profile. MT could inform potential

clients of this strength, to create further trust. Because MT has a credible product, the have to

emphasize this in their South-East Asian presence, as legitimacy and credibility is seen upon

as very important aspects in this region.

As an innovative and rapidly expanding player, MT also creates awareness of its own. Our

interviews indicate that none of the ones we talked with have heard of Marine Technologies

as of today. MT has a high quality focus in their IBS, and they pay their suppliers a premium

for this quality. This makes MT an important customer for their suppliers. Reputation is a

highly intangible asset, that even MT themselves will have a hard time measuring. It is

however, easier to measure reputations‟ effect on the actual sales by talking with customers,

and MT‟s conclusion is that they are little known in the market overall, but the ones who

know of them have a positive perception. This ability to create good reputation can be copied

to the South-East Asian region. Reputation is perhaps the most fragile of any companies‟

resources or capabilities, MT should strive to continue the positive trend, and be aware of any

threats that may harm it. Reputation building strategy will be addressed later in this project.

“It takes many good deeds to build a good reputation, and only one bad one to lose it” –

Benjamin Franklin (1706-1790)

7.1.7 The Bridge Mate™ IBS

The IBS product specifics have already been discussed previously, but here we will see if the

IBS product itself can be a competitive advantage for MT. The IBS is a result of technology

from the DP system, and MT realized they could expand their product portfolio to include

bridge systems.


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The fact that the IBS reduces the amount of screens on a bridge, and makes the information

readily available through integrated solutions in the software and display is proof of the

superior solution compared to a regular bridge system. The BM™ IBS has multiple solutions

that focus on safety, one of the most important characteristics for modern maritime

companies. With a BM™ IBS the navigator will have exactly the information he needs for a

certain situation, for example operations on deck where safety is a big concern. If a screen

should malfunction, it is easy to simply replace it because the screens themselves are generic.

If a computer should malfunction, another computer will take over the work of said computer,

the navigator will never lose the information he needs, and the broken computer can also

easily be replaced. The fact that screens and computers are generic saves replacement costs

for the customer. The BM™ IBS also requires substantially less wiring than regular bridge

systems, saving the customer installation-time and money. The most important competitive

advantage of the BM™ IBS is the fact that the engineers can integrate any software in the

application manager. The BM™ IBS has received massive positive feedback from customers

for its user interface; even seasoned sailors, although not positive at first, adapt quickly to the

touch-screen technology and integrated solutions. The fact that the BM™ IBS can fulfil the

most stringent classifications in the market is a good indication of the level of quality the

product itself represent.

These are only a few of the advantages of the BM™ IBS; more can be read in detail in “2.5

Unique features of MT’s Bridge Mate IBS“ All these advantages are valuable to MT as they

cater to different important needs of the customer, meaning MT can exploit opportunities if a

certain demand should arise. There are only a few other companies that have the same product

attribute portfolio as MT, some mentioned in “6.8 Competitor Analysis”. Even though some

competitors can offer these solutions, it does not make MT less unique in the huge global

market. In order to imitate the BM™ IBS attributes, a company would have to budget a

substantial amount of money to be able to develop a similar product-attribute portfolio as MT.

Not only does MT have an innovative culture and mindset, but also highly skilled employees

with much knowledge and long market experience. The trade secrets that MT has are

protected through patents, trademarks and employee contracts, making it difficult to copy.

Although the BM™ IBS is a tangible product, it will still be difficult to copy the attributes

and ideas behind it. If a customer need is identified, there are no other means to satisfy the


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need than to offer a proper product; meaning the BM™ IBS attributes are nonsubstitutable.

All these factors suggest that MTs‟ BM™ IBS is a competitive advantage.155

“Promotion doesn't create a product advantage. It can only convey it.” – William Bernbach

(1911 – 1982)

7.2 Value Chain Analysis A value chain analysis lets a company know which parts of its operations that create value

and which do not. This is important to identify as the value creation of an activity has to be

higher than the costs of creating it156

. The Value Chain was first described by Michael Porter

in 1985157

, and we will be using Ireland, Hoskisson and Hitts‟ (2009) interpretation.

7.2.1 Primary Activities

Primary activities include a products physical creation, sale and distribution, and after-sale

service.

7.2.1.1 Inbound logistics

MT buys most of their physical equipment from external sources, examples being display

screens, joysticks, cameras or chairs. In addition they offer information like Clear Point

Weather forecast, radar or ECDIS as a part of their product. MT is now developing their own

ECDIS better suited to their portfolio, which demonstrates a wish for vertical integration of

operations. Today materials are sent to both Norway and USA where they are stored, ready

for assembly. To conclude, MT purchase most of their physical equipment and little unique

value is created from inbound logistics.

7.2.1.2 Operations

The BM™ IBS is first and foremost a compilation of hardware and software. As MT do not

produce hardware themselves; they adapt it to the specific requirements of the customer. This

is an area where MT engineers exceed, as they can take any technology or hardware and

integrate it in the “standard” IBS and its application manager. The result is a fully integrated,

redundant and customized solution. MT produces their own Dynamic Positioning (DP)

system, as DP is a product sold separately from the IBS. One of the most important aspects of

the application manager is the display, which is customized by MT to fit the needs of the

customer. These are easily customized, and include all information available to the navigator,

155



Porter (1996) p. 61-78


99

from smoke alarms to thruster power or weather forecast. MT tests the final product at the

operation site (for example in Norway), with the customer supervising, before assembling the

IBS on the vessel itself at any shipyard worldwide. As of today, MT only delivers one IBS a

month at average, but this capacity can be increased should the market demand require it. This

is because MT can acquire capital and resources from other regions, for example Norway

produce more IBS because of high demand in USA. Although information on competitors‟

similar operations activities is unavailable, we will conclude that Operations is a primary

activity that creates high value relative to its costs, probably superior to competitors‟ less

customized alternatives.

7.2.1.3 Outbound logistics

MT can deliver a finished IBS at any region in the world, as long as there is a possibility for

installation. Although BM™ IBS is newly launched in Asia, MT has previously delivered

BM™ DP systems in the region. Some experience may be extracted from this fact, both

concerning order-processing and physical logistics. MT also has global distribution

experience doing business in Europe, USA and South-America. Edison Chouest Offshore

takes care of the majority of the distribution, as they have a vast global distribution network,

and 40% of all BM™ IBS is delivered to ECO. As with inbound logistics, no significant value

is created by the outbound logistics activity and the focus is more on cost efficiency.

7.2.1.4 Marketing and Sales

MT has a simple and user friendly webpage158

, with sufficient information to get a potential

customer interested, and of course the necessary contact information. However, there is a lack

of focus on MT‟s unique differentiating features. MT is an active global trade fair attendee;

although the companies‟ size limits the visibility on said fairs compared to bigger competitors

like Furuno or Kongsberg. As of today, MT says they have contact with enough potential

customers to keep them occupied and steadily growing in the near future, but this may change

rapidly. One possibility is that MT delivers such quality that customers will contact MT and

they do not have to conduct significant self marketing, but their size suggest otherwise even in

a small niche market. MT‟s expansion to the Asian market suggests they perceive it as

promising, but their brand awareness in the market is limited even in such a global market.

MT also has information packages on the IBS ready for potential clients. We consider MTs‟

marketing and Sales as sufficient for their small size, but it is inferior compared to bigger

158

http://www.mtllc.us/ “Marine Technologies LLC”

http://www.mtllc.us/


100

competitors like Furuno. We conclude that no significant value is created from Marketing and

Sales, although it is probably sufficient for today‟s situation.

7.2.1.5 Service

Some of MTs‟ core values are trustworthiness and Service and Quality orientation; this

should be reflected in their devotion to the service activity. Service and maintenance of an

installed IBS is important for its impact on ship safety. Delivering safety is one of MTs‟ main

goals; MT appreciates their obligation to deliver sufficient service. As previously mentioned,

MTs‟ remote diagnostics is a good example of a unique offering that simplifies the

maintenance and service process, and also reduces the service costs for both MT and the

customer. MT has very competent employees who can install the IBS anywhere in the world.

Another important competitive advantage is that it only takes MT a minimum of only two

weeks to fully install and adapt the IBS on a ship. This often takes up to two months for

competitors, as we found through the interviews with Jaya Holdings and Mr. Klepsvik. The

reason for this is that the BM™ IBS uses significantly fewer wires than other bridge systems

because of the integrated and redundant solution, and this saves both MT and the customer

valuable time and money. The Farstad findings show this is highly valued. Since the BM™

IBS and its application manager is focused on user friendliness, the display is designed and

customized in cooperation with the customer, making it simple to teach users how to operate

the system.

Bigger competitors often see service as a business area separated from the other primary

activities. In other words, their size and subsequent power allows them to organize their

companies this way. MT does not have this luxury, and their small size obligates them to

follow up on the customer, as it‟s a strong part of their image. The customer would react

strongly if the service was inadequate, and the price of ignoring the service need would

simply be too high. MT has however received very positive feedback on their service delivery

on previous occasions. MT has also said themselves that they want to reward customers who

trust them enough to buy an IBS despite MTs‟ current size through service delivery.

We consider MT‟s service delivery to be superior to competitors, proving that service, as a

primary activity is important for the value creation done by MT. Moreover, we feel that the

company should highlight the importance of after sales service, and use this as one of their

sales pitches. Getting potential customers to understand the importance of the value added


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service will be a key essence for MT in this region. This will be elaborated more thoroughly

in the strategic section.

7.2.2 Support Activities

Support activities provide the assistance necessary for the primary activities to take place.

7.2.2.1 Procurement

Procurement is the activities completed to purchase inputs that are fully consumed during the

manufacture of products including fixed assets. MT purchases much hardware commodities

from suppliers, which they in turn adapt to fit the IBS. As we have previously established the

bargaining power of these suppliers are low, so procurement is an activity where MT saves

costs rather than create value. Because of little information, we will assume we can conclude

the same regarding their fixed assets, as we do not believe much unique value can be created

from the physical equipment.

7.2.2.2 Technological Development

As previously established, high technological quality is the core of MT activities. The BM™

IBS product itself, MTs‟ ability to innovate and MTs‟ servicing procedures have all been

identified as sustainable competitive advantages for MT. Strategic partnerships, such as with

Intelsat, are important competitive advantage, since this gives MT access to unique technical

competence and resources. These are all superior relative to competitors, meaning

technological development is a key factor in MT‟s value creation.

7.2.2.3 Human Resource Management

As previously established MT are able to attract many talented employees to their company.

These are trained in an environment where quality and safety are important virtues. MT says

themselves that: “MT is committed to principles of the welfare, continuous development, and

trusting and empowering all employees”. MT cares for its employees, and appreciates their

importance for the success of the young company. As previously concluded, human resources

is a competitive advantage for MT, and therefore of superior value compared to most

competitors. MT‟s employees are the ones who create the unique value that MT offers, and no

competitors are able to offer the same value. However, there is not enough objective

information on both MT as a whole or their competitors. This kind of internal information is

hard to come by, and are often inflated or overrated.

7.2.2.4 Firm Infrastructure

Firm infrastructure includes activities that are required to support the work of the entire value

chain. MT‟s finances are somewhat limited compared to competitors. Besides this, it is


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difficult to conclude anything regarding issues like general management, accounting or legal

support. Based on this we assume that MT perform equivalent to their competitors.

One element that strikes as dominant is MT‟s strategy planning and implementation. MT has

adopted a unique position in the market, serving a segment few others can. This can only be a

result of accurate identification of the external market, its needs and demands, as well as the

opportunities and threats. Based on this, MT has developed a product portfolio with a great fit

to the opportunities. They have also successfully identified their valuable resources and

capabilities, much like we have done, and supported and further developed these into

sustainable competitive advantages.

These are all activities that any company who survives in the market does, and it is hard to

compare MT‟s firm infrastructure to that of their competitors. Taking MT‟s rapid success in

consideration, we will conclude that their firm infrastructure is equivalent to that of

companies within their niche segment. Regardless of the comparison with their competitors,

MT has created great value through their firm infrastructure.

“I conceive that the great part of the miseries of mankind are brought upon them by false

estimates they have made of the value of things” - Benjamin Franklin (1706-1790)

7.3 ACE - model International business is complex and difficult, and success depends on several factors.

Research has studied the characteristics of successful exporters compared to unsuccessful

exporters. These characteristics can be summarized in the ACE-model by C. A. Solberg.159

ACE is an abbreviation for Attitude, Competence and Embodiment. Put together these

elements constitute “the good export circle”. The reason we have applied this model is to

analyze MT‟s probability of success regarding export of their products.

159

Solberg (2009) p. 132-138.


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Figure IX – ACE-model

7.3.1 Attitudes

It is important that the management and the employees of MT have the right attitudes for

international business. The important attitudes we have analyzed is market orientation and

attitudes to other cultures.

A market orientated company will make decisions based on information from the market and

customers. Companies that emphasize and actively act on information gathered from the

markets perform better as exporters.160

As we mentioned in the introduction section, Marine

Technologies is owned by Edison Chouest Offshore, which is also the company‟s biggest

customer. This means that MT‟s product is developed to meet the needs and demands of ECO

as well as other customers.

When it comes to attitudes to other cultures, it is a fact that different culture is an important

factor that companies have to be aware of and overcome if they want to be successful in

international business. MT is not new to interacting with other cultures and they respect the

local customs, laws and regulations when they interact with different cultures, as long as this

does not come in conflict with the company‟s values. Frode Klepsvik has stated that MT

refuses to pay bribes and engage in corrupt business practices, which is a common practice in

Indonesia and Malaysia, but not in Singapore.

MT recognizes the potential difficulties they will have to overcome in the Asian market. The

company expects to encounter difficulties such as cultural differences and negative

160

Solberg (2009) p. 133.

A

EC


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perceptions of IBS. Instead of considering this as an excuse to not perform well, MT have

developed promotion strategies and plans to overcome these difficulties in order to succeed.

7.3.2 Competence

Sufficient competence is required if a company is to be successful in its international

operations. The areas analyzed here is the company‟s skills, knowledge and marketing.

Regarding the company‟s skills to operate internationally, it is correct to conclude that MT

has considerable experience since they have been active in the USA and Europe before their

entrance in the Asian market. However, even though the company has sold DP systems in the

Asian market for a time they have little concrete knowledge of the market for IBS. However,

according to Solberg (2009), skills and knowledge may be necessary, but it is not a decisive

factor to determine success in foreign markets.161

MT has since it was established had a strong focus on developing high quality products based

on customer needs. Their Bridge Mate™ IBS is a technologically sophisticated product which

has high price, and continued product development and customer relationship is very

important for the company. According to Solberg (2009), this is another feature that many

successful exporters have in common.162

Regarding the sales activity MT is actively involved relative to its size. Among other efforts

the company has increased their activities when it comes to attending trade fairs and

exhibitions.

7.3.3 Embodiment

This is the most important aspect of the model. Even with the right attitudes and competence,

the support of the top management is crucial for success in international business. 163

It is

therefore important that the top management is focused on the strategy and progress in new

market.

MT wants to have a worldwide presence and has already been active in the US and Europe

with their products. The company intend Marine Technologies Asia Pte Ltd in Singapore to

161

Solberg (2009) p. 136 162

Solberg (2009) p. 136 163

Solberg (2009) p. 137


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become a hub for the Asian and Australian market. This expansion is a clear indication of

MT‟s top management commitment to expand internationally. One can therefore say that the

internationalization of the company is given sufficient attention and involvement, and plays

an important role for the company‟s strategy. Nonetheless, MT has not established any

foothold in the South-East Asian market yet. Moreover, intention and willingness to commit

does not equate to guarantee success. Therefore, it will be significantly important to

implement deliberate strategies that highlight their commitment and sincerity to the customer,

in order to reap the benefits from the sale. This will be closer assessed in the strategic

analysis, were more concrete suggestions will be derived.

7.4 Marine Technologies’ strategic partners Because of the highly technical aspects of an IBS, it would be very difficult if MT was to

develop all the applications on their own, as each application require technological knowledge

and resources. In order to be able to deliver their technologically advanced solutions, MT has

been constantly seeking out global alliances to achieve synergy effects.

7.4.1 Relationship with Intelsat

Intelsat is the world‟s leading provider of fixed satellite services. The company offers various

services that include transponder, managed, channel, and mobile satellite services. The

company also provides network services that enable the transmission of video, data, and voice

to and from any point on the surface of the earth. On this area, Intelsat‟s satellite, teleport and

fiber infrastructure is unmatched in the industry, setting the standard for transmission of

video, data and voice services.

In order to understand the way both parties benefit from the strategic partnership, we asked

Intelsat‟s Senior Product Marketing Director for Network Services, Rick Abbasi. He

explained that Intelsat is primarily a wholesale communications provider and that they rely on

service partners / sales channels like MT for retail of the maritime broadband service to the

end users. Intelsat brings the standardized satellite communications solution including satellite

coverage, teleport infrastructure, global network management systems, automatic beam

switching and other enhanced service features that are important for maritime mobility. MT,

on the other hand, brings a rich suite of existing value added services, applications and

associated technology that are being enhanced by integration with Intelsat proprietary


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capabilities to create the new product options. MT has developed their C-COMM™ satellite

communication system together with Intelsat.

7.5 Conclusion The goal of this internal analysis was to identify MT‟s core competencies, and see whether

these could become sustainable competitive advantages. We have concluded that human

resources, innovation and the Bridge Mate™ IBS product itself are the most important

competitive advantages of MT today. The pattern here is clear; MT has talented employees

within an innovative environment, which in turn results in creating superior products for their

customers. Value is created in operations where the product is created, and the after sales

service to follow up the high quality delivery. This is in turn supported by the technological

capabilities of the engineers and strategic alliances, and the overall strategy developed by the

management. In addition, MT shares many of the characteristics of successful exporters, and

has come very far in their internal internationalization process. According to the ACE-model,

the company seems to have the right set of attitudes and sufficient competence, as well as

support from the top management. We therefore find it correct to conclude that MT has a

solid foundation and potential to be successful in their international operations. MT has many

internal strengths they can exploit in the market.


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8. SWOT-Analysis


108

The SWOT‟s purpose is to arrange MT‟s internal capabilities and MT‟s external environment

in an intuitive matter, where strengths, weaknesses, potential opportunities and potential

threats are outlined and evaluated. The following four matrixes indicate the

importance/attractiveness of the issues discussed, as well as MT‟s ability to deal with them, or

probability of an event taking place.

8.1 Strength Matrix The competence matrix charts MT‟s strengths and weaknesses,

164 effectively giving an

indication of where MT should allocate resources in order to be even more competitive.

Strength Criteria

Importance Score

Solid Financial Backing 4 3

Customer Focus 5 3

Human Resources 5 4

Innovative Capabilities 5 5

Solid Strategic Alliances 4 4

Differentiated Product 4 5

Table I – Strength Criteria

This table is summarized and illustrated in

Figure X. The blue coloured square is

where a company should strive to be. MT

should focus efforts on the strengths in the

blue square in order to maintain and

exploit them.

164

Framnes & Thjømøe (2006)

Strength MatrixWeakness

MatrixOpportunity

MatrixThreat Matrix

Figure X – Strength Matrix


109

Marine Technologies is a subsidiary of the Edison Chouest Group which currently is

responsible for approximately 40% of MT‟s revenues. In addition, the ECO is a solid

conglomerate that is able to invest further in MT. In an industry where economic cycles are

almost a natural law, it is important to have a solid financial backbone. However, we don‟t

give MT a higher score than 3 on this strength, because of their dependence on Edison

Chouest.

The customer focus is strong in MT, where all the products are designed to benefit the

operator of the vessel. Having Ole Morten Husøy, a former vessel operator, designing the

bridge system is an example of MT‟s focus. Ole Morten Husøy stated: “I never was satisfied

with the bridge systems I used, so I thought - I guess I have to design the bridge systems

myself.” Although satisfying the end users (the operator), they are not the decision maker.

Decisions are made elsewhere in the buying process, and they will often have another focus

than the operator (for example costs, especially in South-East Asia). This has led us to a score

of 3 on this strength.

Human Resources are a key factor in this business, enabling MT to produce and sell their

innovative solutions. MT score high on both production and sales, with truly talented

engineers and top qualified management, and a background in both engineering and business.

The only thing stopping them from a top score is the lack of people to support Frode Klepsvik

in the Singapore sales office. This is something MT is addressing and is currently going

through job applicants to find suitable people. When the Singapore office is bolstered, this

strength could go from a 4 to a 5.

MT‟s Innovative Capabilities are closely linked with the criteria Human Resources, we have

included it as an own point due to its importance in creating sustainable competitive

advantage. We have covered MT‟s product in great extent, and the score of 5 is a proof of this

fact.

MT‟s strategic alliances are a major factor in creating competitive advantages; an example has

been given of the alliance with Intelsat, where a clear win-win relation has been established.

As it is impossible to produce every aspect of an IBS in-house, the quality of the partners

becomes a main factor in the product offered. Although in-house capabilities are key areas of

strength, we find partnerships very important. Since legitimate and credible partners are able

to transfer some of their brand equity to MT due to the partnership. This leads to MT‟s choice

of partners deserve a score of 4.


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The Bridge Mate™ IBS is differentiated from the rest, by offering more than what

competitors can offer in a number of ways. In a market where there are a number of

competitors offering similar products, differentiation should be a key factor. However, as the

cost focus is so central in the market, many potential customers tend to look at differentiated

solutions as unnecessary expensive. That is why we have to scale down the importance of

differentiation to a 4 instead of a 5 in the South-East Asian market. In any case; MT score a 5

on this strength as they clearly stand out from the rest of the suppliers of IBS.

8.2 Weakness Matrix

Weakness Criteria

Importance Score

Size of the Company 3 2

Low Brand Awareness 5 1

Price 5 1

Lack of Relations with Local

Players in the Market

5 2

Table II – Weakness Criteria

The table is summarized and illustrated in

Figure XI. The red coloured square is

where a company should strive not to be.

MT should focus resources on eliminating

the weaknesses in the red square, as these

are the most dangerous ones.

An obvious weakness is MT‟s relatively modest size compared to their main competitors. We

do not consider it a major weakness since it enables MT to be more flexible compared to the

more rigid operations of larger corporations. It is natural to be small when you are a newly

Figure XI - Weakness Matrix


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established company. The growth potential is in any case high, and there are signs of further

development already. A score of 2 reflects our opinion.

MT‟s low brand awareness became apparent after our meetings with players in the market,

but MT is a young company, especially in the South-East Asian region. Considering that MT

was established in 2002, while Kongsberg for instance, sold their first DP-system in 1975165

,

it is no wonder that Kongsberg is much more renowned than MT. In order to be taken into

consideration by decision makers it is essential to be one of the names to first pop up in the

decision maker‟s mind. That is why brand awareness is crucial, and it needs to be addressed

in order to gain a higher score than 1.

Our research has shown that price is an essential factor in the highly cost sensitive South-East

Asian market. Price is often the single most important characteristic for decision makers,

creating a real challenge for MT. MT scores a 1 on this weakness, since they are offering a

product way above the minimum cost available in the market.

South-East Asia is very relationship focused and MT will have to face the challenges this

brings. Being newly established in the region, they have yet to establish a solid business

network that is needed to succeed. We do have strong belief in the human capabilities in MT,

leading us to believe that MT will be able to build such a network. This belief enables us to

give MT a score of 2.

165

http://www.km.kongsberg.com/ks/web/nokbg0237.nsf/AllWeb/03E4EADBA358FC78C1256A55004648C0?

OpenDocument “Kongsberg Maritime History”

http://www.km.kongsberg.com/ks/web/nokbg0237.nsf/AllWeb/03E4EADBA358FC78C1256A55004648C0?OpenDocument



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8.3 Opportunity Matrix

Opportunity Criteria

Attractiveness Probability

Attractive in the Job Market 4 5

Market Growth 5 4

Mandatory ECDIS 4 5

Singapore‟s attractiveness 4 4

Table III – Opportunity Criteria

The table is summarized and illustrated in

Figure XII. The opportunities in the blue

square are the most promising ones, and MT

should focus resources on these in order to

seize and exploit them.

MT has already started the search for new employees to strengthen the Singapore office. They

have already received a staggering number of highly qualified applicants, just a few weeks

after running an ad in the local newspaper The Straits Times. The number of applicants is a

clear indication of attractiveness. The probability score of 5 reflects these two factors.

We discussed the market growth in our industry analysis and reached a conclusion of a

positive forecast. We do keep in mind that forecasts are uncertain, but we cannot ignore the

signals of the players and the reports available. Market growth is obviously highly desirable,

but we cannot give it a higher probability score than 4 due to the uncertainties surrounding

forecasts.

The change of IMO regulations regarding the ECDIS were discussed in the industry analysis.

The probability of this incurring is ranked 5 as it is unlikely that IMO will make a last minute

Figure XII - Opportunity Matrix


113

change. The attractiveness is rated as a 4 since the ECDIS can be used as a stepping stone to

further growth of digital systems, contributing to an increase in demand for IBS.

Singapore‟s attractiveness was discussed in detail in the PESTEL analysis, and it is clear that

Singapore is a very attractive place to do business. Singapore holds a position as a business

hub in South-East Asia, making it easier for MT to reach potential customers. Almost every

company we have looked at has either head quarters or a regional office in Singapore. We

rank a 4 on both variables, due to the limited number of shipyards in the region. This is

however compensated by the number of decision makers situated in Singapore.

8.4 Threat Matrix

Threat Criteria

Seriousness Probability

Cultural Differences 5 5

Competitor Actions 3 4

Trade Barriers 2 3

Scepticism towards IBS 4 4

Table IV – Threat Criteria

The table is summarized and

illustrated in Figure XIII. The red

square illustrates the most

dangerous threats, and MT should

focus efforts on these in order to

avoid and diminish them.

MT‟s business culture is predominantly Norwegian albeit heavily influenced by American

business culture. The Asian culture with its focus on in-group collectivism is a far stretch

from the environment MT has previously operated in. We have discussed the importance of

Figure XIII - Threat Matrix


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adapting to culture in depth earlier in this paper, and have rated the seriousness and

probability of cultural differences at 5 to reflect the importance of this threat.

MT can currently offer a product that delivers more than what the competitors are able to

deliver. When operating in Asia it is always necessary to look at the possibility of another

firm copying your product as copyright laws are not enforced in the same degree as in western

countries, however Singapore is enforcing this stricter than their neighbouring countries. MT

is confident that competing companies will not be able to copy their solution, and we agree

due to three major factors: 1. The strategic partnerships MT has built up; 2. The cost involved

with restructuring the firm (in essence discarding all old technology and replacing it with new

solutions); 3. The lack of flexibility as every IBS delivered by MT is custom made in

accordance with the buyers needs. MT‟s competitors are able to leverage on three factors: 1.

Brand name 2. Perceived size 3. Price. These are the competitive actions MT must be aware

of. The seriousness has been ranked at 3, and the probability at 4 to give an indication of how

the team has assessed this threat.

In our external analysis it became clear that Malaysia and Indonesia has much higher trade

barriers than Singapore. The seriousness of the threat becomes minor however since MT will

be using Singapore as a centre for operations in South-East Asia. We have also discovered

that many of the Malayan and Indonesian offshore companies have decision centres in

Singapore. This gives the threat a seriousness of 2, and probability of 3.

Our research has revealed a high uncertainty and scepticism in the market when it comes to

the IBS. As long as cheaper alternatives can fulfil the IMO regulations and SOLAS standards,

there is an attitude towards preferring these alternatives. IBS is by some viewed as “hype” and

even worse, a term that seems like it has been developed by the marketing department. We

believe this is a serious issue ranking it at 4. We must keep in mind that there are several

companies in the market, and not everyone will share this view, leading to a probability

ranking of 4.


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9. Strategy


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9.1 Strategic Problem Definition The strategy section will consist of a strategic problem definition, the specific short and long-

term goals and an overview of the critical success factors needed to achieve these goals.

Based on these criteria we will present the strategic tools MT can utilize in order to reach the

goals presented.

The strategic problem definition is based on MT‟s main strengths and weaknesses, and

opportunities and threats in the South-East Asian offshore vessel market.

“How can Marine Technologies best utilize their innovative solutions, flexibility and

customer focus to achieve increased brand awareness and trust in the South-East Asian

offshore vessel market through an increase in demand for bridge systems, while reducing the

disadvantages of being a newly established western company in Asia? “

9.2 Goals

The authors have divided the goals into operative and strategic goals.166

The operative goals

are meant to present the goals on a short-term basis (1-2 years), whereas the strategic goals

are meant to highlight the long-term goals which are equivalent to 3–5 years.

9.2.1 Operative: 1-2 Years

Achieve sales of at least 1 IBS in 2010 and at least 2 IBS in 2011.

Successful expansion of the Singapore office.

166

http://www.projectsmart.co.uk/smart-goals.html “SMART-Goals”

Strategic Problem

DefinitionGoals

Critical Success Factors

Market Selection

Business Level Positioning

Strategy

Marketing MixBuild and Maintain Relations

Human Resources

Management

Alternative Strategy

http://www.projectsmart.co.uk/smart-goals.html


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9.2.2 Strategic: 3-5 Years

Achieve a substantial part of Marine Technologies total revenues (ECO subtracted)

from the South-East Asian market.

Increase brand awareness, reputation and trust in the South-East Asian market.

Build loyal customer relationships leading to brand retention.

Utilize the Singapore office as a further expansion in the Asian market.

9.3 Critical success factors Here we have listed several success factors that are critical for MT‟s achievement of the

operative and strategic goals.

Build brand awareness and image of MT and Bridge Mate™

Change attitudes to IBS

Continuously strive to offer innovative solutions

Maintain strategic partnerships

Build relationships and trust

Overcome cultural barriers

Hire and retain additional people to support the expansion in the Asian market

9.4 Market selection Segmentation is the process of identifying groups of buyers with similar characteristics that

marketers may effectively serve with the same set of marketing efforts. The better a company

is able to understand and satisfy their customers‟ needs, the higher the chances are of

capturing and retaining customers.167

We have limited the scope of this project because of limited time and resources. The reasons

for this limitation were many of the same reasons we are basing this segmentation section on;

it gave a good fit to MTs‟ current situation. To identify a more precise segment for MT, the

group used the following segmentation variables:

What industry?

Who is the end-user?

Do they want MTs‟ product specifications?

167

Keh & Chiang (2004) p. 70


118

What geographical location is most suited?168

How is MTs‟ market coverage?169

The following criteria will help us make sure the segment fits MT‟s current situation, listed

below170

:

Customers within the segment respond equally to marketing measures

MT is able to identify and quantify the size of the segment

The segment is sufficiently profitable

MT are able to reach and serve the segment

The segment fits MTs current capabilities and resources

The market segment has high expected growth

MTs current position relative to its competitors within the segment is acceptable171

The most important segmentation variable is what industry MT should focus on. The reasons

for choosing the offshore industry are that MT comes from the offshore market, which still

constitutes the main market for all their products and services. They have experienced a

strong growth in all segments of this market in recent years, and today MT has a significant

market share in the Dynamic Positioning (DP) market. MT is also gradually establishing a

market share in the IBS and Communication segments of the offshore market. This

experience is very useful in their new unknown Asian market. Both Norway and the state of

Louisiana have big interests in the offshore market, which can explain this success. It is also

very helpful to have the positive Norwegian offshore industries brand equity which is known

throughout the world, when doing business in unfamiliar locations. We found that the

offshore industry in the Asian pacific region has a high forecasted growth of 77% in the

period 2009-2013, compared to the previous five year period, which is very positive

considering recent events such as the financial crisis.

Inside this offshore petroleum segment, the focus is on the upstream value creation. This

includes search, recovery and production of crude oil, but not the processing or transport of it.

This means MT focuses on the Offshore Support Vessel (OSV) segment with their Bridge

Mate™ IBS. As we have previously established, the new-building rate is somewhere between

168


Solberg (2009) p. 233 170

Keh & Chiang (2004) p. 80 171

Kerin, Hartley, Rudelius & Theng (2009) p. 256


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125 to 250 OSVs per year. The OSVs have higher safety requirements and require higher

functional and flexible solutions due to their complex daily activities. These requirements are

regulated by stringent international classifications like IMO. In our interview with Farstad

Shipping we realized that “deep-water drilling” requires a higher standard of equipment than

“shallow-water drilling”, which makes the segment more attractive for MT‟s products.

These high requirements are exactly what MT can offer through their current product

portfolio. MT can deliver products that fulfil the most stringent classifications in the market

through their advanced redundant solutions. It is important to add that even though MT can

deliver one of the most advanced systems in the industry, they can also offer products that

serve less quality-conscious customers who only want the bare minimum. These customers

are of course also of interest to MT. MTs‟ Bridge Mate™ IBS not only delivers what the

customer may be required to have on their vessels through classifications, but they also

deliver value added solutions the customer appreciates. A few good examples are their ability

to integrate any system into their own IBS, or the unique application manager design. As we

have established there are a few competitors offering similar IBS solutions to that of MT, but

we believe MT have differentiated themselves enough from these, on important and relevant

product characteristics that add value for the customer. Most competitors are larger and more

known than MT, and there are a few players with very similar positioning as MT.

Nonetheless, we believe that MT‟s solutions are unique and something a quality conscious

customer will value higher than that of competitors.

The offshore industry consists of many big and wealthy companies, who have the finances to

pay for the solutions they would desire. Because of the stringent requirements for OSVs,

customers of IBS‟s have to be quality conscious. Our research however, shows that many

Asian shipbuilders are very cost-conscious. As a consequence, we need to keep this in mind

when choosing a geographical segment.

As previously stated, we have limited our project to Singapore, Indonesia and Malaysia. After

thorough research on the countries, we have a clear picture of all three. Based on our findings

through this research we conclude that the Singaporean market itself is large enough for MT

to focus on. Singapore is a major worldwide provider of services and has a major part of the

global market share within the offshore and marine engineering industry. This means

Singapore is a hub for decision makers in the offshore industry, and is perfect as a launching

pad for further activity into Asia. Although Indonesia and Malaysia have potential as


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customers for MT, because of offshore and shipyard activity, we realize that MT cannot cater

to every potential customer yet. This does not mean we exclude these two markets customers,

but we feel there are enough potential customers located in Singapore for MT to focus on for

now. Many decision makers are located in Singapore, included Indonesian and Malayan, and

also Japanese, American or European to mention a few. These include companies that build,

lease, operate, sell or buy OSVs. The barriers of doing business in Singapore, like cultural or

governmental barriers, are also much lower than in other countries in the region, especially

within the offshore industry.

Because Singapore is a very international country, many Western companies have offices

located there, and these are just as interesting for MT as the Singaporean companies. As we

have determined, the purchase process is often driven by derived demand, or in other words,

the customer decides what the shipyards offer, and ultimately what MT offer the shipyards.

We believe that these Western companies have a higher quality requirement than the typical

Asian one, and Western companies are not as cost-fixed in their assessment of options. Many

western companies build their ships in Asia, so a local office in Singapore will be helpful in

reaching these as well as Asian companies.

MT will adopt a very concentrated strategy towards this segment, because they offer segment-

of-one172

in which products are customized according to each consumer‟s exact requirements.

These customer requirements “forces” MT to stay innovative if they want to hold their current

position as a unique innovative market driving force for products. This segment-of-one

approach gives MT unique understanding of customer wishes and needs, which other

competitors may not acquire. When cooperating this closely with their customer, the customer

may feel a kind of ownership with the product, and this creates a close relationship between

the customer and MT, which in turn will likely result in customer loyalty and repurchase.

Segment-of-one do have some limitations; there will likely be few and small customers which

may fit MTs current capacity, but is not sustainable in the long run. MT will become

dependent on each individual customer, as they contribute to a substantial amount of MT‟s

income, increasing the customer bargaining power. This kind of approach creates no mass

brand awareness for MT, so they will never have the same brand awareness as Kongsberg or

Furuno by exclusively using this segment strategy.

172

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9.5 Business level positioning strategy A business level strategy is, according to Ireland, Hoskisson and Hitt (2009); “an integrated

and coordinated set of commitments and actions the firm uses to gain a competitive

advantage by exploiting core competencies in specific product markets.”173

In order to

compete in an industry or industry segment, a company needs to make choices about its

products or services with the intention of creating differences between the company‟s

competitive position relative to the competitive positions of its rivals. The goal is that the

company‟s competitive position leads to a competitive advantage over competitors.

MT has chosen a narrow competitive scope, meaning that the company intends to serve the

needs of a narrow target customer group. Their competitive advantage is their ability to

differentiate. This is what Michael Porter calls a niche strategy. This means that MT has

selected segments in the industry and customizes the company‟s strategies to serve these

selected segments to the exclusion of others. MT‟s target group in the offshore market are the

more advanced segments of the market, asking for technically advanced and sophisticated

ship control systems because of high safety, security and functionality requirements. MT also

has the capabilities to cater to the needs of less quality-conscious segments, and should not

exclude this opportunity from their strategy. Such a quality focused positioning may help

attract customers who do not want to buy complex systems, but value the quality of the

system delivered.

As an illustration of this high quality- high price positioning, we have created a perceptual

map to visualize MTs positioning relative to their competitors.

Figure XV – Positioning Perceptual Map

173



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The limitations of this map are obvious; low quality does not mean bad quality, low price

does not mean cheap, and the size of the bubbles only tries to illustrate that there is a

difference in the size of the companies, but this is by no means an accurate description of how

big. This is merely a “guesstimation” of competitors positioning and size relative to each

other. This is based on our knowledge of the market and the information available, such as

Internet, Asia Pacific Maritime week 2010, and MT‟s employees.

As one can see, we perceive MT‟s strategy is of slightly higher quality and price than all

competitors, because of a few unique product offerings. Although closely positioned, we

found that L3 and Raytheon focus a lot of their attention on defensive and warfare contracts,

with only sporadic service of the offshore segment, leaving room for MT‟s products.

Kongsberg is a threat, as their product is of good quality and more affordable, but their size

makes them less flexible, which is one of MT‟s key selling points. Kongsberg also only

sporadically service the offshore segment. Furuno and JRC have adopted a more cost-focused

strategy, and is therefore less of a threat to MTs high quality niche.

Overall we believe MT‟s positioning relative to their competitors is very good, as this strategy

is a great fit between the opportunities in the market and MT‟s resources and capabilities.

9.6 Marketing Mix The marketing mix is defined by Philip Kotler and Kevin Lane Keller as a “set of marketing

tools the firm uses to pursue its marketing objectives and are strategic tools a company can

utilize in its marketing.”174

In this section we have come up with some concrete suggestions

on how MT can utilize their marketing mix to improve market performance.

9.6.1 Product

As of today, the product characteristics of the Bridge Mate™ IBS are MT‟s most important

selling point and competitive advantage. In order to retain this advantage, MT has to continue

to innovate and renew their product portfolio. MT has to continue to leverage on their close

relation with customers, so they can deliver superior value-adding products compared to their

174

Kotler & Keller (2005) p. 19


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competitors. We have already established that MT has the necessary resources and

capabilities to stay ahead of competitors, and we believe MT can grow to become a strong

innovative market driving force by continuing this strategy.

9.6.2 Price

The MT Bridge Mate™ IBS has been priced in the high-end of the market. The reasoning

behind the high price is mainly the complexity and quality of the product. Another factor that

comes into play is the production costs as the finished product is assembled in Norway, where

the costs of production (e.g. wages) are high. The high price is reflecting the quality of the

product, and can be linked to a form of prestige pricing strategy.

In a global market the price setting is quite difficult, the dilemma often consists of having a

standardized price in all markets or a customized price to different markets. Both strategies

have its strength and weaknesses. MT is currently using geographical pricing, which means

that the price may vary from market to market175

. The differing purchasing parity power is the

main reason for choosing such a strategy. Purchasing parity power is an indicator of

commerce power of a country or company. The pricing strategy has its weakness in a global

market where companies are represented in several markets worldwide. If MT would get two

price quotes from a company represented in two different markets and the quotes differ they

would have something to explain to the customer.

MT are currently using a form of product-line pricing, which means that they use one low

priced product to get more interests toward their brand.176

The product is doing well in the

market and they have a decent market share. MT use the Dynamic Positioning system to

attract customers, and then try to induce purchases of more expensive products such as C-

Comm™ and the Bridge Mate™ IBS after the customer has gained experience with MT.

MT also employs a sort of bundle pricing, where they make a cheaper package if the customer

orders more than the basic IBS. One of MT‟s sales pitches is based on the more applications

and equipment you add to the IBS, the cheaper the product gets in terms of the price/quality

equation. The “standardized” Bridge Mate™ is quite expensive, but the extra equipment does

not cost as much as what the competitors can offer. One example is the satellite

175

Keh & Chiang (2004) p. 194 176

Keh & Chiang (2004) p. 195


124

communication, where the customer is paying a fixed cost, compared to competitor‟s services

where they are charged per mega bit downloaded. That way it is easier to control the costs. In

case of a needed update on the ECDIS or a remote diagnosis would require a lot of internet

connection, a fixed price will add value compared to a “usage based price”.

MT has to continue this high-price strategy, as a justified high price communicates high

quality. The higher price MT can get for their products and services, the more profitable they

will be. Their current price strategies, like bundling price, should be continued to attract

additional customers. Another price strategy to consider is a low start price towards large

customers, in order to increase the possibility of large and long-term commitments.

9.6.3 Promotion

MT needs to focus more on the special features of their product in their marketing. MT has a

broad selection of brochures, which they hand out at exhibitions and are also available for

download on their website.177

There is too much focus on points of parity (POP) in MT‟s

brochures. Since it is a market where the potential customers are normally quite familiar with

these products, they should focus more on points of difference (POD). A shift in focus toward

POD‟s and unique buying reasons (UBS) of the Bridge Mate™ IBS would increase the

interest of this product as well as its brand awareness. The most important product feature in

the South-East Asian market is low-price, so there should be a higher focus on the product

characteristics that are unique for the Bridge Mate™ IBS, rather than the price. MT must gain

acceptance for the higher price level, and need to communicate the reasons for the higher

price. One strategy is to utilize “future proofing”, which means that they could use the new

IMO regulations on mandatory ECDIS from 2012, to induce sales. This would apply to new-

buildings in the region.

Being present at international industry exhibitions is a vital part of the promotional activities

MT can utilize. An example of such exhibitions is the Asia Pacific Maritime (APM) which

was held earlier this year. MT should continuously attend such industry exhibitions, as it

gives MT a great opportunity to meet potential customers and build relationships.

177

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During the 2nd

quarter of 2010 MT is opening their new office in Singapore. The office should

have its own showroom where MT can present their products and services to potential

customers. This would be a very useful promotion measure.

9.6.4 Place

Today, MT assembles their IBS in Norway and the USA, and ship the product to the Asian

shipyard. However, when they have grown large in the South-East Asian market, they should

explore the possibility of starting assembling their IBS in nearby low-cost countries. This will

allow them to cut costs, decrease delivery time and increase customer proximity. This will

allow the customer to test their IBS, as would be possible in Norway.

9.7 Build and maintain relations This chapter will discuss how MT can utilize relationship management with customers and

partners and HR management in order to establish lasting, effective and profitable relations in

the Asian market. An important aspect that has been emphasized is the focus on how MT can

overcome cultural differences.

Strategic relations may include customers, marketing channel members and suppliers. The

relationships with the customers, strategic partners and the employees are very important

aspects which often determine a company‟s success. The driving force underlying these

relationships is that MT can improve its ability to satisfy their customers and deal with

competition and changing business environment through collaboration with strategic

relationships.

9.7.1 Establishing and managing relationships with strategic partners

The strategic partnership with Intelsat is an example of MT‟s important competitive

advantage, since this gives MT access to technical competence and resources. Maintaining

strategic partnerships will not only enable MT to continuously offer innovative solutions, but

it will also contribute to building a strong brand name, where the result will be a less

perceived risk for the potential customers considering to purchase a Bridge Mate™ IBS.

Since both parties are expected to contribute with their unique resources and capabilities,

common goals are important for the relationship to be successful. Therefore the activities and

decisions should be coordinated so that the parties are motivated to do their part. In essence,


126

MT has to go for a win-win situation with their partners in order to successfully maintain and

further develop this competitive advantage. We also recommend MT to search for new

strategic partners in the South-East Asian region to further expand their presence in the

market. A South-East Asian partner can contribute to improve areas such as distribution and

promotion.

9.7.2 Establishing and managing relationships with customers

As MT has been selling Dynamic Positioning systems in the Asian market, they already have

a base of customers, and it is important that the relationships with these customers are

maintained. To be successful in retaining existing customers and acquire new customers, MT

should focus on building long-term relationships. From a Western point of view the logic

behind this is that it will cost a company less to maintain an existing costumer than acquire

new customers. Put simply, it is good business to take care of your customers.

However, in Asian business-cultures it is not the cost-advantage that is the main reason for

aiming for long-term relationships with customers. As discovered through the interview with

Associate Professor Ng Kok Yee, a company must have the right connections in order to

reach the right people when operating in Singapore. The same goes for Malaysian and

Indonesian customers. The focus on building relationships and trust with business partners is

a very important part of Asian business cultures, and Singapore, Malaysia and Indonesia is no

exception. Now that MT is going to be present in Singapore with their own sales office,

meeting and listening to their customers would contribute to establishing and maintaining

long-term relationships and further understanding of the customers‟ needs. This also includes

meeting business associates for informal dinners and occasionally exchange gifts in order to

build trust and mutual respect. Once a relationship is established it is also important that MT

maintain a regular contact with the existing customers.

In conclusion we can say that developing good relationships is not only good business, it is a

crucial factor which determines a company‟s success in Asian business-cultures.


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9.8 Human Resources Management (HRM)

“Administrative activities associated with human resources planning, recruitment, selection,

orientation, training, appraisal, motivation, remuneration, etc.”178

In order to support the increased activity in the Asian market, MT will have to hire additional

people for their Singapore sales office. As we have discussed in the internal analysis, MT has

a very competent management and staff, and it is important that the sales office in Singapore

also has effective HRM to ensure that MT‟s stays successful. As the objective for MT should

be to achieve long-term relationships with their customers, an important role of the

Singaporean sales force should be to contribute to customer satisfaction and loyalty. In order

to ensure that the sales office has the right people at all times, the management has to be

involved in these areas in order to ensure a highly qualified workforce:

Recruiting and/or training the right people

Motivating the employees

9.8.1 Recruiting and/or training the right people

In order to ensure a solid foundation for a competent workforce, MT should be very thorough

when they recruit people for their Singapore sales office. The company will benefit from

hiring people with the right set of personality traits, skills, talent and experience to

successfully carry out their responsibilities. However, if a person does not possess the right

skills or experience, it is possible for this person to attain this through training. As each

person often has different set of skills and personality traits, it will be up to the MT

management to decide whether the company should train the person.

In addition to making sure a person is qualified with regards of skills and experience, MT

should also pay close attention to the applicant‟s references. By hiring a person with good

connections to potential customers, MT can expand their business network in Singapore and

gain access to potential customers. Because of the collectivistic business-culture MT has to

adapt to this when operating in South-East Asia. Hiring people with connections can speed up

the process of building relationship with the customers.

178

http://www.businessdictionary.com/definition/human-resource-management-HRM.html “Human Resource

Management (HRM)”

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128

9.8.2 Motivating the employees

“Singaporeans generally do not have a nine to five job, meaning work often takes time out of

their personal life. Work is very important to Singaporeans.”179

In order to retain a talented workforce it is important that the MT management ensures a

highly motivated workforce at the Singapore sales office. In order to achieve this it is very

important to understand the incentives which motivate a Singaporean employee.

In the article Psychological Contracts in Singapore, Ang, Tan and Ng (2000) highlight three

important factors which Singaporean workers expect from the organizations which employ

them: high pay, rapid advancement and provision of generalized training. 180

Belonging to a

status-conscious culture, job titles and job designations are extremely important for

Singaporeans. Ang, Tan and Ng (2000) highlights that even though the motivation to advance

is not unique to Singapore, the notion of advancement in Singapore is unique in that sense that

it is expected to occur rapidly.181

The authors also quote a statement from a HR manager from

a multinational precision tools company which stated: “The young engineers expect to be

managers in 5 years! A more realistic expectation would be for them to contribute to the

company and to take on a supervisory role only in 8 to 10 years time.”

Also, in accordance with the “kiasu” psyche, Singaporean workers recognize the importance

of training to ensure that they remain competitive. However, the Ang, Tan and Ng (2000)

claims that Singaporeans prefer a more general form of training instead of firm-specific

training because this enables them to become more attractive in a tight labor market.

With these expectations in mind, MT should consider to motivate their employees by offering

their employees attractive wages and the opportunities to advance in the company. MT should

also recognize that Singaporeans are motivated by the opportunity to receive additional

training, and therefore they should consider offering their Singaporean employees some form

of training programs.

9.8.3 Overcoming cultural differences within the organization

There are bound to be many differences between MT‟s Norwegian and American staff when

they interact with the Singaporean staff. As Norwegians and Americans are more

179

Appendix 5 Interview with Assoc Prof Ng Kok Yee 180

Ang, Tan and Ng. (2000) p. 221 181

Ang, Tan and Ng. (2000) p. 221


129

individualistic and usually have a lower power distance compared to Singaporeans, they will

regard the relationship between the management and the staff to be interdependent. Therefore,

Norwegian and American managers often consult employees in the decision-making process.

In contrast, Singaporean employees may consider the relation between superior and

subordinate as more formal and expect to be told what to do from their superiors because they

consider each other as unequal. Understanding these differences and adapting them will

enable MT to effectively recruit, develop and manage cross-cultural talent. A way to

overcome these differences is by having the Norwegian/American MT management give clear

and explicit direction to their newly hired employees. Over time, the employees can be

integrated in MT‟s organizational culture and will feel more comfortable to offer their opinion

and show initiative.

9.9 Alternative Strategy An alternative strategy for MT could be to continue to sell their Bridge Mate™ DP and C-

Comm™ in the Asian market, but not launch the Bridge Mate™ IBS yet. The market is

showing signs that it is not yet ready for the high-quality high-price IBS that MT offer, as

Asian customers are not as quality conscious, but focuses more on costs. The threat of bigger,

more powerful competitors is evident, and a launch of Bridge Mate™ IBS in the market may

cause them to react aggressively. MT may not have the needed resources and capabilities to

retaliate to this provocation, because of their small size, low market power (low brand

awareness and purchase intentions). The pattern here is clear; the alternative strategy will only

become relevant if MT‟s weakness becomes too decisive, and the market threats to

overwhelming.

10. Recommendations


130

This section will give recommendations that will answer the following objective of this paper:


131

“How can Marine Technologies LLC succeed in launching their Bridge Mate™ Integrated

Bridge System for the offshore segment in the South-East Asian region?”

These recommendations explain how to reach the strategic goals by exploiting the critical

success factors.

As MT is relatively new in the Asian market the company will find themselves at a

considerable disadvantage because of the lack of brand awareness, credibility and reputation.

Building a brand takes time, and therefore MT should be prepared and determined to

sacrifice short-term gains in order to reap long term rewards. It is important for MT to realize

that short-term objectives can conflict with long-term goals.

10.1 Focus on the offshore segment We recommend that MT continue to focus on the offshore segment, because it is very relevant

to the region they have entered. As previously established, the offshore market in Singapore is

attractive, and the segment is suitable for MT‟s resources and capabilities because of high

product requirements. In addition, MT should position themselves on high quality-high price,

as none of the competitors with a similar positioning focus on this segment. However, we

suggest a change in the sales approach in order to counter the cost consciousness in the

market further down in the recommendations section.

10.2 Overcome cultural barriers We recommend that MT focus attention on understanding cultural differences, because of the

considerable differences between South-East Asia and the West. Understanding these cultural

differences is important for successful interaction with both customers and employees. When

MT aims to establish a relationship with potential customers the company should send senior

managers to signal respect towards their Asian counterparts. In addition to showing proper

respect, meeting business associates for informal dinners and occasionally exchange gifts will

build trust and mutual respect. This will strongly contribute to successfully build and maintain

relationships and trust with potential and existing customers.

It will also be beneficial to hire local employees for the sales office, to reduce cultural risk, in

addition to expand capacity and network. Higher cultural awareness throughout the


132

organization will also contribute to a more efficient work force. With regards to motivating

the local employees it is important to understand the factors which motivate Singaporeans:

high pay, rapid advancement and generalized training.

10.3 Promotional activities A good starting point to promote MT is to be present at exhibitions; an important meeting-

place for relevant industry players. In addition, MT needs to adapt an increased focus on

point-of-differences in their promotional activities. Examples are through their own website,

their product brochures and alternatively through advertising in industry related magazines.

The negative perception of the IBS in the region has to be changed through credible

communication of the actual benefits of the Bridge Mate™ IBS. This will be achieved

through close relations with potential customers, where the actual benefits of an IBS is

highlighted, such as safety and lower operating costs. In order to further promote the MT

brand, it is important to differentiate the brand from competitors, by communicating the

superior product and service benefits offered, such as the ability to integrate any component

into the IBS.

10.4 Sales Strategies With regards to pricing strategy we recommend MT to take advantage of the “Kiasu” psyche

in Singapore, by expanding their value proposition. As the region is highly cost conscious it is

a challenge to maintain the current prestige pricing strategy while at the same time providing

the customer with additional value (price/quality equation). The way we see it, the most

beneficial way for MT to increase value without reducing price is to offer “freebies”. Even

though offering “freebies” can hurt short-term revenues, it will benefit MT in the long-term

since MT will experience a faster penetration of the market. Especially in South-East Asia,

the first customer is essential to create a point of reference and achieve a “snowball effect”. A

natural starting point is to contact the larger players in the market, as they will have a stronger

point of reference and is more likely to create word-of-mouth advantages compared to smaller

players. Examples of “freebies” can be divided in two categories – time limited subscription

based offers and one-time application based offers. Subscription based offers can be a one-

year deal for free ECDIS-updates or broadband services. Subscription based offers can also be

given on a longer term basis in order to induce additional purchases of the IBS, creating a


133

long-term commitment to MT. Application based offers can for instance be a free weather

reporting application if you buy a Bridge Mate™ with a decent number of applications. Since

every purchase has some level of customization, MT can offer special deals to larger

customers without losing the general price/quality perception in the market. It is important to

note that this is purely a short-term strategy, in order to experience a faster growth. After

obtaining a significant increase in sales, MT must turn their attention back to maximizing

profits to obtain long-term sustainability. Another sales strategy MT can utilize is to further

develop the relationship with existing DP system or satellite communication (C-COMM™)

customers in the region, or use the products as a launching pad to attract potential customers.

The purpose of this approach is to lower perceived risk and induce a Bridge Mate™ IBS

purchase. Another element that can be utilized to lower perceived risk is to establish a “show

room” in the new sales office were potential customers can get a demonstration of the IBS.

10.5 Innovative activities In order to stay competitive, we recommend that MT continuously strive to offer innovative

solutions and state-of-the-art products. In order to do this, engineers need to be customer-

oriented to identify new opportunities in the market. An essential part of this innovation will

be to build and maintain strategic relationships, and create mutual benefits for the parties. It is

however important to note that MT should not innovate solely for innovations sake, but

innovate to fulfil identified customer needs.


134

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http://www.tc.gc.ca/marinesafety/TP/Tp3668/6Standard.htm

http://www.uais.org/CompuShip%20Page%2039.pdf

http://www.wipo.int/patentscope/en/patents_faq.htm%20last%20downloaded%2016.04.2010




143

Market Overview - Malaysia - Q2 2010

Malaysia business forecast report Q2 2010

Datamonitor

Country Analysis Report – Indonesia, In-Depth PESTLE analysis (2009),

Country Analysis Report – Malaysia, In-depth PESTLE insights (2009)

Industry Profile: Global Oil & Gas Equipment & Services (2009)

L3 Company Profile (2009)

Raytheon Anschutz Company Profile (2009)


144

12. Appendixes The appendixes are organized in order of appearance.

12.1 Appendix 1 – Mailing list for survey deployment

Singapore:

Amsbach Offshore

ASL Marine Holdings Ltd.

Baker Marine

Britoil

CH Offshore Ltd.

Chevron Asia Pacific Exploration and Production

Chevron Downstream Singapore

DMC Offshore Pte. Ltd.

Drydocks World-Singapore

GLM Marine & Offshore Pte. Ltd.

Go Offshore (Asia) Pte. Ltd.

Gulf Marine Fr. East Pte. Ltd.

Jaya Holdings Ltd.

Keppel Offshore & Marine

Keppel Singmarine Pte Ltd

Marina Offshore Pte. Ltd.

Miclyn Express Offshore Pte. Ltd.

Neptune Orient Lines

Nor Offshore

Nor Offshore Ltd.

Offshore Support Services

Penguin Int Ltd

PPL Shipyard

Seatrade Ship Management Pte Ltd

Sembawang Shipyard

SembCorp

Sinanju Marine Services Pte. Ltd.

Singapore Ship Technologies Ltd

Sinwa


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SMOE Pte Ltd

Swiber

Swissco International Limited

SSC Ship Management Pte Ltd

Tiong Woon

Malaysia:

M3Energy

Maju Geohydro SDN BHD

North Blaze (M) Sdn. Bhd.

Perdana Marine Offshore Pte. Ltd.

Petra Perdana

Petra Perdana Berhad

Scomi Marine

Subsea Explore Services (M) Sdn Bhd

Tioman Drilling Company Sdn. Bhd.

Indonesia:

Aibel Holdings Pte Ltd /Aibel AS

AJM Ship Pte Ltd

Aker MH (S) Pte Ltd

Aldaberta

Beta Drilling Pte Ltd - a subsidiary of Sinvest ASA

Boa Offshore Far East Pte Ltd

BW Offshore Singapore Pte Ltd

Chevron IndoAsia Business Unit

Dolphin Drilling Pte. Ltd. - Fred. Olsen Energy Group

Eidsiva Shipping Pte Ltd

Energi Mega Persada

Marine Services & Engineering Pte Ltd

Nordic Maritime Pte Ltd

OSM Ship Management Pte Ltd

Pertamina

PetroJack

PGS Asia Pacific Pte Ltd

Premier Oil


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Prosafe Production Services Pte Ltd

PT Apexindo Pratama Duta

PT Berlian Laju Tanker Tbk Merak Branch

Acergy Singapore Pte Ltd

Salamander Energy

Sea Engineering

Seadrill Offshore Singapore Pte Ltd

Tailwind Shipping Pte. Ltd.

TDW Offshore Services - Smart Pipeline Solutions

Thome Ship Management Pte Ltd

Uniscan Far East Pte Ltd

12.2 Appendix 2 – Offshore Petroleum Market in South-East Asia Survey

OFFSHORE PETROLEUM MARKET IN SOUTH-EAST

ASIA SURVEY

Our survey is focused on the offshore petroleum industry in Singapore, Malaysia and Indonesia. The focus is on

the offshore vessels involved in the up-stream petroleum value creation. We want to map your perceptions in

dealing with offshore vessels, whether you buy/sell/lease/build or use them. Please select the option that best fits

your evaluation of the statement. There is also the option to select "N/A" if you do not feel you can anwer

accurately.

Offshore Market

Strongly

Agree Agree Neutral Disagree

Strongly

Disagree N/A

I perceive the market future as promising.

(1)

I perceive the off shore market in South -

East Asia to have high growth. (2)

The South-East Asia off-shore market differs

from the European/US market. (3)


147

Strongly


Strongly

Disagree N/A

Price is the most important factor in the off

shore market. (4)

The competition in the off shore market in

South-East Asia is very tough (5)

My Company

Strongly


Strongly

Disagree N/A

My company/our customers uses many types

of navigational functions on our bridge

systems. (1)

My company /our customers often change

personnel on the bridge. (2)

User friendly interface is important for

navigators on a bridge. (3)

My company generally prefers large/well-

known companies as our suppliers. (4)

My company considers human abilities more

trustworthy than automatics. (5)

Integrated Bridge Systems

Strongly


Strongly

Disagree N/A

I know many of the advantages/disadvantages

with using an Integrated Bridge System. (1)

The main weakness of the Integrated Bridge

Systems is its lack of focus on safety. (2)

I consider Integrated Bridge Systems to be

more user friendly than regular bridge systems.


148

Strongly


Strongly

Disagree N/A

(3)

Price is not the most important factor when

purchasing bridge systems. (4)

Stringent international classifications are

important for bridge systems. (5)

Please select which of these attributes you consider the three most important for an Integrated Bridge System:

Customized Service (1)

Easy Maintenance (2)

Durability (3)

User Friendliness (4)

International standards/classifications (like IMO) (5)

Price (6)

Safety (7)

Innovative Solutions (8)

Cost Efficiency (9)

Marine Technologies

Strongly


Strongly

Disagree N/A

I am familiar with the Edison Chouest

Offshore Group. (1)

I am familiar with Marine Technologies

LLC. (2)

My perception of Marine Technologies is

positive. (3)

I am familiar with the Integrated Bridge

System. (4)

I am familiar with Marine Technologies

Integrated Bridge Systems. (5)


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Introduction to Bridge Mate Integrated Bridge SystemIn order to complete the survey, we want to inform you

about Marine Technologies product, the Bridge Mate Integrated Bridge System (IBS), in case you do not know

of it. This is because we want to know your thoughts and perceptions of the product.The idea behind the IBS is

to make the bridge more streamlined and easier to operate. Before the IBS was introduced, the bridge on a

supply-boat or anchor handling towing ship could consist of as much as 12 – 16 screens over a length of 10 – 12

meters, the IBS makes it possible to reduce this to 3 – 4 screens. What differentiate Bridge Mate IBS from other

IBS system is the start-up screen for the IBS. This allows the users to customize the appearance and information

needed for different operations, like docking or pipe lying. Here are some basic functions can be present in the

IBS: Dynamic Positioning, wind/direction/speed information, gyro compass values, map systems (ECDIS),

Radar Plotting Aid (ARPA) etc. All these functions will be gathered on 3–4 screens due to the integrated

solution. Hence, all application gives the operator unique redundancy and flexibility. In addition, MT offers

secure satellite communications solutions for remote diagnostic and monitoring of IBS functions, enhancing

operations and enabling more cost efficient system maintenance. All of these functions are optional, depending

on what the vessel would need for its operations. MT also emphasizes on meeting international requirements of

all seagoing ship types. It is designed to meet all International Maritime Organization (IMO) and classification

societies` requirements, all the way up to one-man bridge operation.

The Bridge mate Integrated Bridge System

Strongly


Strongly

Disagree N/A

I find the Bridge Mate Integrated Bridge

System an interesting product. (1)

I would recommend the Integrated Bridge

Systems system over regular bridge systems.

(2)

Integrated Bridge Systems are more user

friendly than regular bridge systems for the

navigator. (3)

International classifications (like IMO) are

very important for bridge systems. (4)

Allthough adding costs, I perceive Marine

Technologies Remote diagnostics service to

be valuable. (5)

The following questions are optional.


150

[Not required]

What do you think the main strength of the integrated system is? If any….

[Not required]

What do you think the main weakness of the integrated system is? If any….

[Not required]

What are your thoughts on Marine Technologies Bridge Mate Integrated Bridge System?

12.3 Appendix 3 – Introduction mail used in survey deployment From: Diploma Project Survey

Subject: Offshore Petroleum Industry Survey

Dear sir/madam

We are five Norwegian exchange students in the final year of our bachelor degree in

international marketing at Nanyang Technological University in Singapore. As a part of our

degree we are writing a diploma project concerning bridge systems for offshore vessels in the

offshore petroleum market in Singapore, Malaysia and Indonesia.


151

The focus of the project is to map the bridge system market and its needs, and as a part of this

we are conducting a survey we would be happy if you would participate in. The Survey

should take about 6-8 minutes to finish, and is evolving around your perception of the

offshore market and bridge systems on offshore vessels.

----------------------(The following section was added in the first reminder sent):------------------

We are writing our project on behalf of Marine Technologies, who are a supplier of Integrated

Bridge Systems in the market. Marine Technologies, a possible future supplier for you or your

customer, have said they will look favorably on those who participate in this survey, a

welcomed advantage in a competitive market. There is more information about Marine

Technologies and their product in the survey itself.

-----------------------------------------------------------------------------------------------------------------

We would very much appreciate if you could relay this survey-link to whoever you feel also

would be relevant as respondents for our survey, as we want as many participants as possible.

After taking the survey, if you would be interested in the data we are collecting, we have no

problem sharing it when the survey is done. Please reply to this mail if this is something you

wish.

The survey can be found at this address: http://confirmit.bi.no/wix/p4263209.aspx

We thank you very much for your time

Regards,

The Diploma Project Team

12.4 Appendix 4 - Interview with Farstad Shipping Pte Ltd - 12.02.2010

How would you describe the safety requirements in this industry?

“The IMO regulations and classification societies are the basis of the safety requirements;

however, Farstad is a company that aim to be in the high end market, and a leading force in

the industry. We have way higher safety standards than most players in the industry.”

Could you please tell us about Farstad’s attitude to quality of your


152

Vessels?

“Our vessels are in the high end segment of the market, so quality naturally is a main factor

in all the vessels we have in operation.”

Operations?

“In essence, the vessels are the key for the operations alongside personnel. We in Farstad

will always strive to be in the forefront of operational quality in the industry.”

Services?

“Our attitude is reflected all the way through the value chain, so naturally we aim to have a

high quality in our services as well.”

Do you do retrofit of vessels?

“We very rarely retrofit, older models are mostly sold. We will rather get a new ship that is

truly up to date, than retrofit an old one. There is however a financial aspect to it, and if the

ship is needed in a short notice for a job that will give good returns, a quick retrofit is a faster

way to have a ship ready than to build a new one. But that is a rare scenario. Our main

approach to retrofitting is that we don‟t generally do it.”

Is retrofit common in the industry?

“Not really, you may have some capitalists looking to make a decent buck on an old ship,

using some retrofitting to get it sea worthy. But I can‟t say too much on what other companies

do, the ones who buy our old ships get a ship that is way over industry standards, even though

the ship may be 5-6 years old. Will they retrofit? I don‟t think so.”

Approximately how old are the vessels that get retrofitted?

“Depends on the job the ship is supposed to do, we mostly sell the vessels before retrofitting

becomes an issue, but a guess would be 10-15 years old. But it really depends on type of ship,

type of company, and whether IMO has changed regulations or not.”

Purchase behavior – what characteristics of a potential supplier is most important to

Farstad?


153

“If I were to pick three central criteria that are important for Farstad, I would say: “Product

quality, Reliability and After Sales Service”. Price is really not a main consideration, but then

again, we are a branch of a Norwegian company. Our main concern is the overall quality, not

whether we save a couple of thousand or not. “

Bridge Systems

Do you know what an IBS is?

“An integrated bridge system is a navigational system where you limit the number of

personnel needed through redundant monitors. It has a number of advantages such as more

safety through avoidances of single points of failure. If there is one screen failing on a regular

bridge you‟re in some trouble, on an IBS you won‟t be facing these issues in the same

degree.”

Do you use IBS on all your vessels?

“As far as I know, there is IBS on most of our vessels; we get our bridge systems from

Kongsberg and Rolls Royce.”

What do you consider to be the greatest advantage of the IBS?

“The safety bit is crucial, but it is worth mentioning that if you‟re able to save some costs on

operational personnel that is a big plus for us as a western company with higher wage

expenses than most Asian companies.”

Biggest weakness?

“The initial cost is a bit steeper, but I believe if you look at “lifetime costs” it makes

perfect sense.”

Do you prefer large/well known companies as equipment suppliers?

For IBS?

“Farstad has been using Rolls Royce for a long time, and you could safely say that they are

both large and well known. It is an industry where trust is essential, so a close relationship

with the suppliers is important.”

How high do you value stringent international classifications regarding bridge systems?


154

“As I said earlier, for us in Farstad, classifications are just the start, we always try to be

better.”

Marine Technologies

Have you heard of the Edison Chouest Group?

“No, I‟m unaware of them.”

Have you heard of Marine Technologies?

“No, I haven‟t.”

The Offshore Industry

Why did Farstad choose Singapore as their base for operations in Asia?

“Farstad‟s Singapore branch was established in 2003, and there are quite a few factors that are

in favor of being represented in Singapore. First of all there is Singapore‟s position as a hub

and decision center. Almost every company operating in the region has some sort of

representation in Singapore. So we use Singapore as a base for operations in this region. And

of course you have the tax benefits; we hardly pay any tax at all, at least compared to

Norway.”

Where do Farstad operate in Asia?

“Most of our fleet is actually located in Australia, but we have about 10% of our fleet in Asia.

In Asia our fleet is mostly based around the shores of Vietnam and the Philippines.”

Do you also see potential for the offshore industry in Malaysia, Singapore or Indonesia?

“We were involved in both Indonesia and Malaysia earlier, but there is mostly shallow-water

offshore activities going on there. Farstad‟s ships are more suited for deep water offshore. But

of course, there are a lot of potential in these countries even though they‟re not our main

market. I can also add that there is a lot of competition in those markets, so it is clearly a lot of

activity going on.”

Do you expect the offshore industry in this region to grow the following 3-5 years?

“Definitely, I‟ve heard that drilling projects has doubled in the last years. You have Petronas

which is a major player in the offshore industry on a worldwide basis. The region is currently


155

undergoing a “energy crunch”, which means that they are currently using more energy than

they are able to produce themselves.”

What is your impression of the Asian perception of bridge solutions, compared with

Farstad’s perception?

“The way I see it there is one major difference and that is the cost sensitivity. The Asians are

very cost-conscious while we focus more on quality and having a better product to offer our

customers. But I have to say that they (the Asians) are catching on in terms of technological

solutions, there are signs that the demand is increasing. Asian companies are looking for the

latest technological solutions, the main difference however is that while we (Farstad) are

building a Mercedes, Asians are willing to settle for a Hyundai. It gets the job done at a lower

price.”

12.5 Appendix 5 - Interview with Associate Professor Ng - 2010.18.03

Which attributes would you consider to be the most different from South-East Asia to

Scandinavia/USA?

“There are no research that establish “the most important” cultural attribute, but I can imagine

that the communication and interaction between people could create problems. It is the

moment people actually interact that the cultural differences become evident. It is often hard

for western people to understand what eastern people actually mean, I am thinking about high

and low context (a cultural dimension). On the other hand, western people come on as being

very blunt and almost rude to us Asians.”

What cultural aspects/differences can affect western people of doing business in

Singapore? Malaysia? Indonesia?

“First of all, one has to separate the country into subgroups. Especially in Indonesia and

Malaysia, people will act very differently depending on their subgroup. Muslims differ a lot

from Christians or Buddhists. I do believe that relationship building is important in all three

countries, and this is something deal-focused westerners tend to not understand. Asians

generally value the relationship between the partners higher than just that one deal, so Asians

generally have a long-term perspective. Also again, the communication is crucial, especially

high-low context. Singapore differs somewhat from the two others, as Singapore is very

“westernized”. There are a vast number of western businesses in Singapore, so Singaporeans

are more used to interacting with westerns and vice versa. “


156

Which cultural clash will be most likely to occur in a setting with a western vs. a

Singaporean customer/enterprise?

“As I‟ve said Asians value relationships more than the one deal itself, so the value of the

contract is as a result less important to Asians than westerners. It all boils down to the element

of trust really. Westerners build trust upon “objective” competence, while Asians build trust

through relation- and partnerships. Also the Power Distance dimension plays in. Who is the

decision maker? This separates the cultures. In Asia it is common that a very high ranking

employee, often a CEO, is the final decision maker, as “his word is law”. However in the west

the decision makers are often delegated by the higher ranking employee, as they perceive

them as more competent for that particular decision.”

Advantages with being a western doing business in Singapore?

“This is an interesting question. I think there is a general mentality or popular belief that

western products are of higher quality than Asian. So if one is selling quality products this

belief will be an advantage. I also think there are bigger room for social “mistakes” if you are

a westerner, as Asians realise westerners have a different way of doing things, and accept that

misunderstandings may occur. If a fellow Asian would do the same mistake, it would result in

a different reaction. Asians are also more open to a new perspective when interacting with

westerners compared to interacting with other Asians.”

Disadvantages with being a western doing business in Singapore?

“There is of course the trust issue that westerners often value the single contract more than the

relationship, and this does not contribute to building trust for an Asian. Also a negative side to

the perception that western products have higher quality is the same products are also more

costly.”

How to build up and maintain a relationship in: Singapore, Indonesia and Malaysia (are

these countries distinguishable to a great extend)?

“First of all, one has to accept that it takes time to build a relationship founded upon trust in

Asia. Second you need good connections in order to do business. You have to be introduced

by the right people in order to reach the right people, as relationships are so important here.

Also, be flexible when interacting with people from these cultures. In Singapore it is common

to build relationships by going out to eat meals together, but it is important that the meals are

of high quality. This relates to the issue of giving and receiving face, which is very important

especially in Singapore. Gift giving is also somewhat common, but the legal and ethical


157

boundaries are slim. There are strict regulations concerning this, and one should never give

gifts that can be interpreted as a form of bribery. I would rather suggest little meaningful

things as a relationship-building tool, or even donations to local causes or other similar forms

of Corporate Social Responsibility.”

How does Singapore distinguish itself from Indonesia and Malaysia? In what way?

“First of all, I believe Singaporeans are more task focused than the two others. The perception

is that Singaporeans are more efficient, and Indonesia and Malaysia perceive us as too

efficient making them look slow. The cultures in Indonesia and Malaysia are also more

ascriptive than in Singapore, which basically you are judged by who you are rather than what

you can do (achievement based). Also we have many laws in Singapore, but what differs most

is the enforcement of all these laws. Singaporeans are very obedient. Singaporeans are also

scared to make statements, because it is not appropriate to say their thoughts in a collectivistic

culture like the Singaporean. This can be traced back to the level of uncertainty avoidance.”

Is there a cultural connection to the general perception that western people emphasises

quality more than Asians?

“Maybe the history and the fact that most of south-east Asia was colonized until middle of the

20th

century. Also westerners have a more innovative mindset, and more used to compete on

quality rather than price.”

What about safety?

“Asians are more price sensitive, and not everyone can afford the high price of high safety.

One can also look at the degree of uncertainty avoidance. A good example can be the cars

people buy in Singapore, where there has been a shift to cars where safety is important.”

Due to the fact that there are a lot of western companies established in Singapore,

how good would you consider the average Singaporean businessman to be adapted to

the western cultural mindset?

“Singapore has a very high cultural intelligence, for the reasons you mention. Malaysia and

Indonesia have somewhat lower, but for your specific market (offshore market) I would think

they are also quite high as it is very global.”

It is relevant to ask to about Singaporeans work habits.

They occur as very task oriented and can be perceived as “prisoners in their own

labour”. Can this be explained through any cultural aspects?


158

“Singaporeans generally do not have a nine to five job, meaning work often takes time out of

their personal life. Work is very important to Singaporeans. When Singaporeans go to school,

they go to school until they have a job, and they work very hard.”

12.6 Appendix 6 – Interview with Swiber Pte Ltd - 22.03.10


Health, security and environment (HSE) department constantly inspect the equipment on the

vessel in order to check if they meet the preliminary requirements. We meet the requirements

of SOLAS and IMO on all out vessel, other safety standards varieties from vessel to vessel.

We do not intend to meet the highest requirements of safety on the market, e.g. DNV.

Could you please tell us about Swibers attitude to quality of your vessels, operations and

services?

“Well, we are very focused on high quality. Since we are shipowners, the quality must meet

our high demand. Nonetheless, there is hard to tell precise thing about quality since it is

difficult to quantify. However, we practice a detailed check several times a year to see if to

quality and safety requirements are meet.”

How old must a vessel be before you start considering upgrading control systems or

other retrofit?

“One can say that in the Marine industry it is an industry average to change equipment or

control systems when the vessel reaches an age of 15 years. This time is also referred to as the

midlife upgrade. However, Swiber pte ltd operates with selling the vessel when they reach an

age of 4 years. This to constantly keep the operating vessels good in condition and meet the

high demand of quality on the offshore market. Swiber pte ltd is indeed very focused on

safety and health both on the boat and amongst the personnel.”

How often do you normally change navigational personnel on your vessels?

“Well, there are normally 2 crews working 2 months at the time. So every second month we

change. “



159

“I am familiar with an IBS and I would guess around 20 of our 50 vessel contains the IBS on

the bridge. However, we don‟t build ships, we are only shipowners. In other words, we

influence the shipbuilding to a very low extend. Hence, I am not an expert on IBS, and

constitute very few suppositions in terms of knowledge around IBS.”

Do you prefer large well-known companies as equipment suppliers?

“Well, the thing is that we buy little of the equipment on the ship. That‟s already

predetermined when we buy the vessel. However, we prefer to work with shipyards that we

know, in other words they must hold a sufficient size to meet our requirements.”

Do Swiber also see potential for the offshore industry in Malaysia and Indonesia?

“We have vessels in both of the countries. In addition, we operate vessels in China, India,

South Korea, and more.”

Can you elaborate, what makes Malaysia/Indonesia attractive or not attractive?

“Ok. Malaysia holds lot of crude oil. The country shows very promising future. However, to

work within the oil industry, one have to establish a joint venture with the local company

PETRONAS. That can limit some businesses over there. Indonesia on the other hand, is not as

lucrative to venture into. Before it used to be a oil exporting country, but due to governmental

restrictions it is now to be considered an oil importing country. The offshore industry

therefore finds difficulties establishing foothold in this country, as long as the government

maintain its rigid policy. I would also emphasize that Singapore is attractive due to its people.

Singapore doesn‟t constitute any natural resources, and there are therefore more dependent on

the people and their capabilities. On this area I would say that Singapore has an advantage

compared to the other countries in Southeast Asia.”

What would you say are the major differences between offshore in Europe compared to

offshore in the south-east Asia?

“Basically, I think they are all integrated. The offshore industry is to be considered as a global

industry. Therefore, the business norms and value are pretty similar throughout the whole

world. Examples are Exxon, Shell, and Conoco Phillips who all operates in all 5 continents. “



160

“Well, 2010 will be a busy year. There is a lot of oil major starting to drill since the oil price

is 80 dollar now. Consequently, it is hard to predict to market forecast, but if the economy is

growing, and then the offshore market will also constitute a promising future with stabile

growth.”

12.7 Appendix 7 - Interview with Jaya Shipyard - 22.03. 2010


“We solely follow SOLAS requirements. Upon developing the ship we install the safety

which the owner request. This is in most cases purely the SOLAS classification requirements,

but off course we implement higher safety qualifications on the ship if the owner request

this”.

Do you retrofit vessels?

“Well, retrofit is not common to do in this business. It requires a lot of time. And secondly it

is very costly to implement. Retrofit is not any widespread in this part of the world, in most

cases it is much more efficient to buy the vessel new, rather than spend a lot of capital on

retrofitting an old vessel”.

Regarded bridge systems, how many different navigational functions do you implement

on a typical vessel?

“Oh, that really depends. But usually our buyers tend to be quite sparse when it comes to

procurements. They focus on cost efficiency and they rarely spend money on equipment that

isn‟t necessary or mandatory. SOLAS and IMO classification requirements is typically what

our buyers aim to fulfil”.

Do you know what integrated bridge system is?

“Yes, of course I do. But we rarely implement those kind of systems on the vessels”.

When you implement IBS, how much time do you spend on the installation?

“I am not in charge of this area, so I wouldn‟t now precisely. But I guess we use

approximately 2 months on implementing the system. Maybe longer if the client have high

demands. 2 months is however the industry norm”.

Which vessel do you implement IBS on?


161

“Like I said, I am not any technician. I build the ships; hence other people provide the

technical parts with the navigation and design/layout on the bridge. The service engineers

usually perform these kind of tasks”.

What would you consider to be the greatest advantage of the IBS?

“I do not know much about these kind of systems, but from what I have heard, I guess they

are a lot easier to handle due to less screens, in addition to crew efficient”.

What about the most prominent weakness?

“I cannot answer this question, due to my lack of knowledge on the system. As I have said, I

build ships. Thus, I am not responsible for any technical demanding installations or

operations”.

12.8 Appendix 8 - Interview with Keppel Singmarine Pte Ltd - 23.03.2010


“All the marine vessels we build fulfill the different international classifications like IMO and

SOLAS. Every ship has a certain contract with us, and we deliver according to the notations.

The customer are very cost sensitive, and higher degrees of classifications cost more. There

are certain technical requirements affiliated with higher classifications, and these cost more,

so we only deliver whatever is needed. I cannot say I have heard of any customers that require

any classifications higher than the bare minimum, like IMO”.

Do you do retrofit of navigational equipment on vessels?

“Here at Keppel we do not, I cannot understand why anyone would want to change

navigational equipment unless it is required by regulations”.

Approximately how old are the vessels that get retrofitted?

“I believe that vessels very seldom get retrofitted, so I don‟t know”.

Purchase behavior – what characteristics of a potential supplier are most important to

Keppel?

Product quality?

Service?


162

Delivery reliability?

Flexibility?

Price?

Other criteria?

“These are all important, and I believe that every vendor will promise to deliver all those

characteristics. It all depends on the cost of the products and services offered, so price is a

very important factor”.

We believe a big company does not focus as much effort on service as smaller

companies. What is your experience regarding the size of the company delivering after

sales service?

“In my opinion the quality of the service delivered from bigger companies is lower than that

of smaller ones. This is probably related to their size. But it can also work the other way; if a

company has two engineers and three companies have a problem, one small company will

suffer”.


“Size does not matter as long as they deliver what they are supposed to. I have bad experience

with both small and big companies. The name of a company can be big, like Keppel, but it is

the people that make the company. It has become common for big companies to outsource

work to China, and this affects the quality negatively”.

Bridge System

How many different navigational functions do you use on your typical vessel?

“It depends on the customer‟s specs, but we usually deliver ships with the most basic

functions”.


“Integrated bridge systems were a real hype 10 years ago, but in essence it is like “fancy

food”, it really doesn‟t do anything special. The hype is over, and I would say that IBS is “out

of fashion”. The main selling points are that it saves operating costs, and reduces the number

of screens necessary by having multifunctional workstations. But the different functions of an

IBS can easily be done by regular bridge systems”.


163

Do you use IBS on any of your vessels?

“There‟s hardly anyone using IBS in Singapore as far as I‟m aware of. The customers don‟t

require it, and it is therefore no need to offer it”.


“I‟m really not that interested in IBS, but the main advantages would be that IBS reduces the

need for manpower, thus reducing operating costs. The cost reduction is the driving force. I

believe that the only ones who really know the advantages are the companies selling IBS. To

me it looks like a marketing scheme”.

Biggest weakness?

“The start-up costs. And the fact that the suppliers of IBS have not been able to clearly define

what it is. There are a number of different systems, but no one has been able to truly state why

customers should buy it. At the end of the day, it‟s all about costs. And as long as cheaper

systems are enough to fulfill IMO regulations, the IBS won‟t be considered necessary in the

market”.

Marine Technologies

Have you heard of the Edison Chouest Group? It is an American conglomerate.

“No I have not”.

Have you heard of Marine Technologies? It is an American company with office in

Norway and a newly opened office here in Singapore. They sell bridge systems among

other navigational equipments.

“No I have not”.

The Offshore Industry

To whom does Keppel sell or lease vessels?

“We are open to all customers. Keppel is an old company that have build hundreds of ships,

so I don‟t know who bought every ship”.

Do Keppel also see potential for the offshore industry in Malaysia, Singapore or

Indonesia?


164

“Like I said we sell ships to everyone, but I cannot say anything special about those

countries”.

12.9 Appendix 9 - Interview with Nordic Maritime PTE LTD - 03.04.2010


“Very good and necessary. International bodies such as IMO & class society keep the industry

to safety standards. Although this could mean higher cost for owners, the industry perception

has changed towards fulfilling these safety requirements at any cost.”

Could you please tell us about your attitude towards quality of your vessels and your

operations?

“Our quality standards are high; our attitude is that we will rather build a vessel with a long

lifespan, than building vessels of lower quality more rapidly. In the long run, high quality is

much more cost efficient in terms of maintenance etc. In terms of newbuilds, we oversee both

the design process and the construction process. Nordic has a strong in-house technical team,

which is important as the industry has had several issues with ship yards trying to take

shortcuts and neglect quality requirements. There really are a lot of shady newbuilds out

there. Our vessels will never be part of that group.”

“The vessel, the crew and of course the shore management and maintaining close

communication between onshore and vessel are key factors to delivering a high quality

service to the client. In addition to a good vessel we have skilled bridge personnel (mostly

Norwegian and Russian), and like many other shipping companies, the rest of the marine crew

are often philippinos/indonesians. They are doing a good job, and we haven‟t had many issues

regarding our work force. The onshore personell are all well experienced and offer excellent

ship operation and management services.”

Do you do retrofit of vessels?

“The company was founded eleven years ago, and when the company was in the starting

phase it used retrofitting to save costs. Now that Nordic is an established company, we focus

more on high quality newbuilds.”

Is retrofit common in the industry?

“I can‟t be too specific as I don‟t have the complete overview of the industry. There are a lot

of newbuilds, but some are of very low quality built on a „quantity before quality basis‟.

However, it is safe to assume that there will be a need for retrofitting as time goes by.

Retrofitting is a lot faster than building a vessel from scratch, generally cheaper on a shorter

perspective, and the fast delivery times will always be attractive to companies looking to

expand their fleet rapidly.”

Purchase behavior – what characteristics of a potential supplier is most important to

Nordic Maritime?


165

“The most important characteristics for us is product quality, delivery reliability, price,

before/after sales service, and payment terms.”

How many different navigational functions do you use on your typical vessel?

“Minimum requirement from flag/class and VSAT for communications.”


“Yes.”

Do you use IBS on all your vessels?

“No, I don‟t think we do.”


“Streamlined navigation system and increased safety”

Biggest weakness?

“The biggest weaknesses are the initial cost & personnel training required operating the

system.”

Are you willing to pay a premium for the very best quality?

“Our vessels are not big vessels. We need to weigh the dire need for IBS before committing to

one.”

How important do you consider a user friendly interface to be for a bridge system?

“A user friendly interface is important, but training and experience is more important.”


“Yes. In my opinion “well known” equals “reliable.”

For IBS?

“Yes”

How high do you value stringent international classifications regarding bridge systems?

“Highly valued and we try to meet these requirements for all our vessels.”

Which ones do Nordic Maritime fulfill? IMO, DNV?

“We fulfil flagstate and class requirements. We also have Certified Document of Compliance

by DNV.”

Have you heard of the Edison Chouest Group?

“No, I haven‟t”


166

Have you heard of Marine Technologies?’

“Yes, but only through word of mouth”

What do you know of them?

“They provide communication systems such as VSAT & other satellite communications.”

Perceptions?

“We have not had dealings with them before, but heard they are well established.”

Heard of Bridge Mate IBS?

“No, I haven‟t”

To whom does Nordic Maritime sell or charter vessels?

“Anyone and everywone (legitimate users) worldwide, both direct to end clients and to other

operators. Our main focus is the Asia Pacific region. We prefer dealings with end user directly

to avoid long chain of communications which can compromise service.”

Does Nordic Maritime also see potential for the offshore industry in Malaysia,

Singapore or Indonesia?

“Definetly, there are lots of potential in the region. An entry barrier for us, however, is that

countries like Malaysia and Indonesia has a clear preference for locally registered vessels.

Still, we see that there has been an increase in exploration and production budgets, both for

national and private oil companies in the region. Increased E&P obviously means a higher

demand for offshore support vessels. Nordic is located right in the middle of the three

countries, giving us a big advantage.”


“Without doubt. Asia is the place to be right now and almost every major industry is

experiencing growth, including offshore. I see a lot of indicators pointing towards growth,

such as the increase in E&P, the incredible growth in consumer demand and more permissive

governments. I really don‟t see any factors leading towards decline in this region. The

offshore support industry took a big hit during the financial crisis, now it‟s time to get back up

and keep building value for clients and end users.”

12.10 Appendix 10 – Geert Hofstede’s Five Cultural Dimensions

The data is collected from: Hofstede, Geert. Cultural Dimensions. Itim International, 2009.

Web. 8 Feb. 2010.


167

http://www.geerthofstede.com/hofstede_dimensions.php?culture1=78&culture2=57#compare

Singapore Indonesia Malaysia Norway USA World Avarage

Power Distance 74 78 104 31 40 51

Individualism 20 14 26 69 91 40

Masculinity 48 46 50 8 62 47

Uncertainty Avoidance 8 48 36 50 46 61

Long-term time orientation 48 20 29 42

12.11 Appendix 11 – GLOBE Project Graphs

The following graph shows Cultural Dimension Scores for the Southern Asia Societal Cluster

0

20

40

60

80

100

120

Singapore

Malaysia

Indonesia

Norway

USA

World Avarage

http://www.geerthofstede.com/hofstede_dimensions.php?culture1=78&culture2=57#compare


168

The following graph shows Cultural Dimension Scores for the Nordic Europe Societal

Cluster.

The following graph shows the Cultural Dimension for the Anglo Cluster.


169

The following graph shows the Cultural Dimensions for the Anglo, Confucian and Southern

Asia Cluster (Practices).


170

The following graph shows Cultural Dimensions for Anglo, Confucian Asia and Southern

Asia Clusters (Values).

bachelor thesis in international marketing

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