A Study on the International Competitiveness Improvement measures in the Korean Ship Management Business
Department of Shipping Management
Graduate School of
Korea Maritime University
This study intends to present how Korean Ship Management companies should strengthen their competitiveness in the global market. With the rapid growth of shipping industry, Ship Management business is getting attention as a new growth business and competition among ship managers is also keen.
In spite of Korea’s remarkable growth in shipping and shipbuilding industry, the current scope of Ship Management business in Korea is still regarded as small in size with relatively low competitiveness compared to international companies.
This turns out to be a natural consequence, since Ship Management business has been considered as incidental in Korea, whereas advanced countries in world shipping has intensively fostered the industry with the recognition of the importance of Ship Management business.
This empirical study was carried out by collecting information from current board members and employees from domestic Ship Management companies, aiming to strengthen the competitiveness in Ship Management.
First, environmental factors Subject(S), Resource(R), and the Mechanism factor(M).
Environmental factors which affect the Ship Management industry are classified into Positive (Opportunities & Strengths) and Negative causes (Threats & Weaknesses). Hypothesis is framed with determining factors(Subject, Resource and Mechanism) of Ship Management industry’s competitiveness. Moreover, this study pursues to examine the effectiveness of those factors whether it actually effects on strengthening the competitiveness or not.
Variables affecting reliability and validity are analyzed throughout the survey, while selecting 23 models of environmental factors as exogenous variables. Also, 26 variables related to the determining factors of competitiveness, Subject, Resource and Mechanism factors, are selected to verify the effectiveness of environmental causes on determining factors of competitiveness.
First, Opportunities & Strengths from Positive causes turned out to affect factors determining competitiveness (Subject, Resource and Mechanism factors). Also, they were verified to have noticeable influence on improving competencies.
Therefore, Ship Management companies need to concentrate on establishing and implementing strategies to expand their businesses abroad, and increase the market shares with qualified crews and advanced technical management skills. Ship Management companies should also seek for various opportunities to expand out-sourcing and increase the number of special purpose ships. To achieve these goals, the CEO must suggest clear visions and establish innovative strategies. Ship Management companies should utilize capabilities to strengthen the competitiveness while Government should come up with counter plans to foster the industry.
After analyzing the Threats and Weaknesses factors from Negative causes, Weaknesses factors turned out to have worthwhile effectiveness on determining competencies, while Threats factors did not. The results have partial influences in boosting competencies.
Ship Management companies and Governments should strive to improve the weaknesses, since it is impossible to enhance competencies while business sizes are remaining small and legal systems are incomplete. Especially, the Threats factors, limited numbers of seafarers and increasing number of crews avoiding embarkation, is somewhat not adjustable which proves low relevance to competencies.
On the other hand, an important implication of this study is that the subject, resource and mechanism factors have strong influence on strengthening competencies. SER-M model, a dynamic strategic management theory was highly useful in this research analyzing the competencies of Ship Management industry. The study implicates the importance of the capability and vision of the CEO, and influence of technical skills and human resources of companies on strengthening competencies. growth opportunities, threat, strengths and weakness, affecting Korean Ship Management industry were intensively studied by caring out research with case studies and analyzing current conditions of domestic and international Ship Management firms.
Also a survey was conducted by applying the SER-M model, a dynamic strategic management theory, which corresponds perfectly to the current rapid-changing shipping industry. This model is mainly used to analyze the structure of Ship Management industry, utilizing the following factors