Competitive Strategy Research Of DC Shipbuilding&Marine Engineering Co.,Ltd

Located in Yantai,Shandong,DC Shipbuilding&Marine Engineering Co.,Ltd("DC")is a wholly-owned subsidiary invested by South Korea's DE Shipbuilding&Marine Engineering Co.,Ltd("DE"),the second largest shipyard in the world,in September 2005.Put into production in May 2007,it produces ship blocks and offshore oil drilling platform modules with an annual capacity of 400,000 tonnes.As international trade declined in the global financial crisis in 2008,international shipping market is in a recession.Coupled with a surplus of transport capacity caused by excess investment when the shipping industry was flourishing,international shipbuilding market takes a nasty knock.The imbalance between effect demand and excess supply results in low prices of new ships,thus increasing the competition.DC is in a tough situation as limited orders make little profit.Under such circumstances,it is important for DC to make competitive strategies.Guided by Michael E.Porter's theory of competitive strategy,this thesis tries to seek the opportunities and threats DC faces by analyzing its external environment with GPEST and Porter's Five Forces Model before evaluating them with the EFE Matrix.Meanwhile,it analyzes its value chain based on DC's situation to find out its strengths and weaknesses before evaluating them with the IFE Matrix.The opportunities that DC faces are as follows:Yantai is favorable for the shipbuilding industry with its superior location,convenient transportation and mild climate.A string of policies have been launched to accelerate the structural adjustment in the industry,which will facilitate profitable ship manufacturers with competitive products.The People's Bank of China has cut down the interest rate and deposit reserve ratio multiple times,with the former reducing fund-raising cost for shipbuilders to a certain extent and the latter promoting their financing.Renminbi has been depreciating against the US dollar,increasing the export competitiveness of domestic shipbuilders in the global market.The cost of China's sufficient labor has declining absolute advantage but remaining relative advantage.The shipbuilding technology development has underpinned the industry.With small and medium sized shipbuilders failing,orders go to large shipbuilders.As suppliers of steel,iron outfittings,paint and welding material have weak bargaining power,potential newcomers and substitutes pose little threat.And the threats it faces are as follows:The shipbuilding market has been sluggish since the financial crisis in 2008,as the imbalance between over-capacity and weak demand makes prices of new ships remain low and increases competition.The fact that international oil price remains low has reduced the need for drilling platforms and semi-submersible drilling platforms as well as LNG ships,LPG ships and oil ships.Domestic labor cost keeps rising.The European and American suppliers of marine equipment and electronics,who control the core technology,have strong bargaining power.And orders are often delayed and even canceled as shipowners have strong bargaining power.DC has the following strengths:advanced and complete shipbuilding equipment and facility,advanced production technology,excellent financial conditions,well-developed quality management system,high information management level,good management and rich company culture,strong attractiveness in purchase and a well-known brand.And it has the following weaknesses:limited experience in independent marketing and poor marketing;weak research and development capacity,which makes it rely on its headquarters;customer service needs to be improved;and incomplete human resource management system.This thesis analyzes the opportunities,threats,strengths and weaknesses with SWOT matrix and establishes a QSPM Matrix to score optional strategies before selecting the Focus Strategy.And it will focus on large ring PE blocks,focus its target market on Asia and its customer base on large shipyards.To achieve the strategic goals,it puts forward the following measures:reinforcing its marketing campaign,improving its R&D and design capacity,bettering its materials supply,improving its production,developing the company culture,adjusting its organizational structure,improving its human resource management and development,advancing its financial management and greatly pushing forward informatisation construction.Connected to the reality,this thesis selects a competitive strategy that will boost DC's sustainable development by making strategy execution and guarantee measures,which can also be used for reference by other companies in the industry.