http://archive.gulfnews.com/articles/06/02/14/10018701.html
A recent multi-billion bidding war on shipping giant P & O was won by local port operators Dubai Ports World. They clinched the deal at a staggering USD6.8 Billion after outbidding Singapore’s PSA.
Many of Hamel’s Business Concept Innovation (BCI) components can be applied to the acquisition, from both the DP World and the P & O perspective. DP World Chairman Sultan Bin Sulayem stated that “It (the acquisition) is a vote of confidence in our ability to manage the company”. This is a direct reference to the company’s core competencies, which is defined as the skills and unique capabilities that the company possesses.
Additionally, the acquisition completely redefines DP World’s product and market scope, allowing it to operate in a much larger coverage area than before. This is evident in the fact that DP World jumped up from being the seventh to the third largest port operator in the world. Likewise, the scale factor grew significantly.
Porter’s trusted five forces model also pops up in this occasion, since DP World strengthened its position by buying out one of its competitors, effectively reducing competition in the market and enlarging its asset base.
The one thing I did find interesting though is that DP World is still looking at expanding further, thus indicating an aggressive core strategy of providing large scale shipping services coupled with rapid expansion, i.e. growing their most important strategic asset – ports. Nevertheless, they do not intend, at least in the eyes of the media to become a monopolistic port operator, as mentioned by Bin Sulayem: “We respect PSA and are aware of the competition… I think it is healthy for the industry”.
As a final note, it is important whether this growth is organic or not, since sometimes too rapid growth is not a good thing. DP World may be following the general “Dubai” trend of lighting fast growth, but with an organization that large, it is critical the DP World use the services of top business consultancy firms to ensure that their moves are properly calculated and analyzed.
A recent multi-billion bidding war on shipping giant P & O was won by local port operators Dubai Ports World. They clinched the deal at a staggering USD6.8 Billion after outbidding Singapore’s PSA.
Many of Hamel’s Business Concept Innovation (BCI) components can be applied to the acquisition, from both the DP World and the P & O perspective. DP World Chairman Sultan Bin Sulayem stated that “It (the acquisition) is a vote of confidence in our ability to manage the company”. This is a direct reference to the company’s core competencies, which is defined as the skills and unique capabilities that the company possesses.
Additionally, the acquisition completely redefines DP World’s product and market scope, allowing it to operate in a much larger coverage area than before. This is evident in the fact that DP World jumped up from being the seventh to the third largest port operator in the world. Likewise, the scale factor grew significantly.
Porter’s trusted five forces model also pops up in this occasion, since DP World strengthened its position by buying out one of its competitors, effectively reducing competition in the market and enlarging its asset base.
The one thing I did find interesting though is that DP World is still looking at expanding further, thus indicating an aggressive core strategy of providing large scale shipping services coupled with rapid expansion, i.e. growing their most important strategic asset – ports. Nevertheless, they do not intend, at least in the eyes of the media to become a monopolistic port operator, as mentioned by Bin Sulayem: “We respect PSA and are aware of the competition… I think it is healthy for the industry”.
As a final note, it is important whether this growth is organic or not, since sometimes too rapid growth is not a good thing. DP World may be following the general “Dubai” trend of lighting fast growth, but with an organization that large, it is critical the DP World use the services of top business consultancy firms to ensure that their moves are properly calculated and analyzed.
posted by Late Night Blogger at 3:32 AM
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