Strategic Management in East European Ports

Susanne Ferch, Michael Roe

• Publisher: Routledge
• Year: 2019
• Print ISBN: 9781138344792
• eBook ISBN: 9780429796579
• Edition: 1
• Topic: Business
• Subtopic: Business generale
• Index: Business

First published in 1998, this volume emerged as part of the series Plymouth Studies in Contemporary Shipping, which represents a unique collection of papers and texts edited from the leading maritime institute in Western Europe at the University of Plymouth. Covering research from a range of geographical sectors but with a particular emphasis on Western Europe, developing countries and Eastern Europe the topics covered emerge from the full range of business areas including maritime economics, policy, statistics, logistics, law and business studies. Designed for both the practising academics and the shipping and ports industry itself, this series is an original and novel contribution to the maritime debate. This particular volume focuses on ports in Poland and Eastern Europe more widely as transition economies after the fall of the Soviet Union. Susanne Ferch and Michael Roe examine their use of strategic management systems to determine whether and how the highly turbulent environment is reflected in the systems at Poland's largest ports, Gdynia and Gdañsk. Particular focus is given to inter-port variations.

1. Introduction

Background

Strategic management is a relatively young but dynamic field of research which concentrates upon improving a company’s position relative to its competitive environment. New tools and techniques are continuously being tailored to match the ever-changing business environment, this time for the “new” i.e. post down-sized, post transition organisation operating in a global, fast changing, unpredictable environment. Traditional models and tools like portfolio matrices however, are still in use but in a refined way. Now that business processes have been re-engineered, researchers turn to re-engineer strategy: designing re-active real-time systems which are able to cope with continuous organisational change imposed by the acceleration of the external environment.

Poland is a country transforming from a centrally planned into a free market economy. This, together with changes in other East European countries, has caused dramatic changes in political, legal, economic, social and technological aspects over the last few years, leaving businesses struggling with a highly turbulent environment.

Polish ports do not only face severe and increasing competition in a highly turbulent and fast growing East European transport sector. As ports, they face additional problems particular to the industry: these include high investment sums as opposed to low cash-flows; long-term investment as opposed to short term changes in ship design, technology and trade patterns.

Conceptually¹, this text analyses research that can be located at the intersection of these three fields. The sub-theme of environmental turbulence at the intersection of “strategic management” and “the Polish environment” runs as the linking factor through the study.

Methodologically, the research can be located in the area of explorative/descriptive field studies in Snow and Thomas’ (1994) classification of strategic management research. Although it is theory testing by its nature, the process of observation, hypothesis building and testing, and subsequent modification ... are interrelated steps in the process of scientific enquiry (Chadwick 1981:66) so that this study’s observation also contributes to the building of new scientific and exploratory frameworks.

Objectives of the study

The objectives of this study are:

• (1) to analyse the process of strategy-making in the ports of Gdańsk and Gdynia, i.e. to determine its elements, their sequence, interdependence and any possible feedback loops;
• (2) to examine whether there is a correlation between the strategic management system that exists, the techniques and tools currently applied and the level of environmental turbulence as perceived by the various port authorities;
• (3) to analyse inter-port variations of strategic management, if any, and explain why they occur even though both ports share effectively the same location and are subject to largely the same external influences.

Hypotheses

The study tests the following three hypotheses:

• (1) The ports of Gdańsk and Gdynia are expected to apply a process of strategy making where all steps of the classical model are employed in sequential order.
• (2) The ports of Gdańsk and Gdynia are expected to have different strategic management systems and to apply different techniques and tools. Both ports have carried out the process of transformation and privatisation in a unique way and this is expected to be mirrored in their approach towards strategic management as well.
• (3) The two ports are expected to apply a strategic management system which is applicable for an environmental turbulence level of medium degree. Strategic management systems designed specifically for a highly turbulent environment are only now just beginning to emerge and thus are not well enough understood yet to be applied even where the context may demand that such an intensity of approach is necessary.

Relevance and limitations of the study

Strategic management, ports and the Polish transformation process are well studied subjects and there is an extensive literature on each of these areas but in particular strategic management generally and the transformation process in Poland. As a result, what can and does this research contribute new to the world?

First it aims at closing a gap - not only one gap but several:

In the field of strategic management, much of the extensive research literature as well as a considerable number of applications in industry note a sizeable gap between theory and practice and go on to urge for case studies to be carried out to generate further knowledge about issues relevant for industry.

Strategic management concepts mainly originated in manufacturing companies. As they spilled over to other industrial sectors they had to be adapted to meet the changed environment. Meanwhile, strategic management in the port industry is still in its infancy even in the west. To enable this highly competitive industry to enjoy fully the fruits of adopting an advanced and appropriate strategic management approach and structure, the most suitable models possible have to be constructed. This in turn requires further observation, experimentation and hypothesis testing.

Following the substantial changes within Eastern Europe and the globalisation of markets in general, the nature and level of environmental turbulence is currently a topical issue amongst both managers and theoretical strategists. The challenge is to refine present strategic management concepts to cope with the increasing turbulence that is bound to remain. This study aims to take Obloj and Howard’s research on strategies of successful Polish firms (1996) at least one step further and extend it to the range of Polish port enterprises and authorities that exists.

Secondly, this research draws on the work of Ledger and Roe (1993 and 1996) who used conceptual modelling to analyse the impact of social, political and economic change in Eastern Europe upon the Polish shipping industry in eight (1993) and respectively ten (1996) sub-contextual matrix models. The study here, in adhering to the Ledger and Roe model, operates in particular in the managerial/organisational sub-context when it attempts to analyse which factors have a significant impact upon the design of strategic management systems; additionally, it carries the analysis over into the sector of the Polish port industry, represented by two of its major players: the ports of Gdańsk and Gdynia.

This study focuses primarily upon the process and content dimensions of strategy. It is thus limited in the sense that the very sizeable topic of strategic content has had to be excluded. This area has been and will continue to be the subject of a considerable number of studies and as a consequence, there is already a sufficient number of excellent documentations and recommendations that have been produced.² At the same time, since strategic content is one of the three main dimensions of strategy, it will run inevitably as an underground stream through this study, occasionally springing to the surface to make its importance and relevance clear to the argument.

The underlying premise of this study is that strategic management as such -and there is a proven record of more than 30 years for doing so - can improve company performance and can create a competitive advantage in any market place including that of the international ports industry.

Methodology

The research outlined here has employed various methods of data collection to meet the requirements of the study. Primary data were collected during a series of site visits when officials of both ports were interviewed and asked to complete a questionnaire. Those officials of the target group of ten who were not available received the questionnaire with a covering letter by mail for self-completion. Further opinion was obtained during semi-structured interviews with representatives of public bodies, academic institutions, research institutes and members of the group responsible for the privatisation process of Polish ports. To guarantee confidentiality, it was agreed that names would not be disclosed. Secondary data were gathered from port publications, internal documents, and governmental publications as well as from books, journals, newspapers and statistics available in the university maritime libraries of Plymouth and Cardiff in the United Kingdom and Sopot, Poland.

Overview of the study

This study is divided into seven chapters. Whilst this introductory chapter has broadly framed the purpose and focus of the research, the comprehensive literature review in the second chapter addresses the issue of strategic management. Chapter Three, introduces the ports of Gdynia and Gdańsk and then turns its attention to the Polish environment. Chapter Four contains an analysis of the conceptual models for the research and then goes on to assess the study’s methodological aspects. It provides detail about the research methods adopted, the conduct of the field research and discusses a number of design issues.

The results of the study are presented in Chapter Five and will be discussed in detail in Chapter Six. The study concludes with a summary of the managerial implications of the research, a conclusion of the hypothesis testing and recommendations for future research.

¹ See Appendix 1.

² Tubielewicz, A. (1997). Strategy of the Gdańsk Port Authority, (in Polish); Masterplan for Port Gdańsk 1995; Tubielewicz, A. (1994). Kompleksowe zagospodarownie portu Gdańsk [Complex development of the Port of Gdańsk]. Gdańsk: Instytut Morski (in Polish); Port Sector Study Poland (1994). World Bank and RMG. Port Strategic Plan for Port of Gdynia 1993. According to Gdynia port officials a North American/Canadian strategic feasibility study will be undertaken in 1998

2. Strategic management - a review of the literature

Introduction

This chapter provides an intensive review of the literature upon strategic management within five sections. To familiarise the reader with the subject, a beginning is made with definitions and basic concepts, introducing the three dimensions of strategy, explaining hierarchy levels and then going on to the types of strategies that exist.

A second section invites the reader for a short historical journey through the evolutionary process of the theory of strategic management. The aim is to understand how the focus of theoretical research not only changed over time, but how the tools and techniques that have been employed have become more complex and sophisticated in an attempt to capture the high complexity of the fast-changing business environment. In the next section the process of strategy making is explored in some depth: this includes consideration of mission statement, audit, strategic choice, implementation and control. Additionally, strategic management tools and techniques used in each step of the process are presented and analysed. Section four relates strategic management to the port industry and port authorities and addresses the question whether ports can benefit from this type of management and looks at the potential usage of strategic management in different business contexts. This chapter concludes by assigning each level of environmental turbulence to a specific strategic management system.

Definitions and basic concepts

Strategy defined

Strategy is of Greek origin meaning “the art of warfare” (Duden Fremdwoerterbuch 1966). As the twentieth century comes to an end and the 21st century approaches, the commercial and organisational battle is beginning to be fought on different grounds - including market share and the like - and it is now company directors who are asking the four questions of strategy:

• 1) Where are we now?
• 2) Where do we want to be in the future?
• 3) How do we get there?
• 4) How do we assure safe arrival?

Question number one is concerned with the analysis of the present state of the organisation and its environment. Question number two deals with the mission and goals of the firm. The third question is about formulating ideas concerning the set of actions that may lead to the achievement of missions and goals, evaluating the alternatives and finally choosing which one or ...

Table of contents

• Cover
• Half Title
• Dedication
• Title Page
• Copyright Page
• Table of Contents
• Lists of tables and figures
• List of appendices
• Summary
• Acknowledgments
• List of abbreviations
• 1. Introduction
• 2. Strategic management - a review of the literature
• 3. The ports of Gdynia and Gdańsk
• 4. Conceptual models and methodology
• 5. Analysis
• 6. Discussion of the issues
• 7. Conclusions
• References
• Bibliography
• Appendices