Porter's Generic Strategies with examples 1. Effected by direct competition between carriers, port authority, commodity & alternative transport (inland & air transport). of gangs justified the hike of 50% in the berth hire charges. However, Kandla Port puts lot of efforts to attract cargo from the nearby major ports such as Mumbai Port and Jawaharlal Nehru Port by providing the competitive rates. Capital Employed comprises Net Fixed Assets (Gross Block minus Depreciation minus Works in Progress) plus Working Capital. Kandla Port expected additional revenue generation of approx. By closing this message, you are consenting to our use of cookies. Rates of the pilotage charges of the nearby ports which were 82% higher than the Kandla Port’s rate justified 15% hike. Port requires to work on procedural delays and thinking on modernizationin terms of ‘modern Gate-in & Gate-out systems’ and web-based port community systems etc., in order to reduce transaction time and cost . Article Purchase Port pricing plays important role in the growth and prosperity of the ports. Pricing and Charges for Railways 99 ... 5.1 Port Charges on Ships 122 5.2 Port Charges on Cargo 123 DIAGRAMS 1.1 The Environment - A Schematic Representation of Sustainable Development 5 The roundtable discussion focussed on market definition, regulatory reforms and antitrust enforcement in ports and port services. for speedy handling of the cargo. of India (Location at Annexure I). Further analysis shows that when the inland transportation cost to the ports is relatively low or sufficiently high, a better option is for the merger to adopt the price discrimination strategy. Looking for a flexible role? Port Dues on the vessels entering the port. for the use of properties belonging to the port such as cargo handling, warehousing, storage, supply of equipments, floating crafts, dry docking and miscellaneous charges etc. To learn about our use of cookies and how you can manage your cookie settings, please see our Cookie Policy. We use cookies to improve your website experience. This will increase traffic at the port and thus through the economies of scale the price at the port gets reduced. In KPT, traffic projections made are in line with the projections in the five year / annual plans and the current / expected growth. To achieve a green and sustainable development of the port industry, various regulations have been adopted for the control of emissions. Introduction… Michael Porter is a professor at Harward Business School. Generic strategies can help the organization to cope with the five competitive forces in the industry and do better than other organization in the industry. If you need assistance with writing your essay, our professional essay writing service is here to help! The Herfindahl Index (H) calculated comes out 1 and clearly shows the monopoly pattern of these ports. Any opinions, findings, conclusions or recommendations expressed in this material are those of the authors and do not necessarily reflect the views of UKEssays.com. If the achieved selling price can at least equal (o… is a psychological pricing strategy in which goods or services are given either an odd number or an even number to match the product’s image. of vessels. Over the current rates, Tariff Revision considered a hike of 15% in cargo handling & storage, pilotage, port dues and miscellaneous charges and 50% in the berth hire charges. Cited by lists all citing articles based on Crossref citations.Articles with the Crossref icon will open in a new tab. 4. Many (perhaps all) market segments in the industry are supplied with the emphasis placed on minimising costs. Registered Data Controller No: Z1821391. Published: 12th May 2017 in Do you have a 2:1 degree or higher? Specimen of the Cost Statement of Cargo handling sub-activity is placed at Annexure VIII which gives an idea as how the costs are booked under different heads. Thus, tariff has been fixed considering the emerging competition by the private ports in the near vicinity in terms of traffic, tariff rates and the likelihood of losing of cargo. Stay up to date with the latest practical scientific articles. Such is the viewpoint of a sampling of stakeholders approached by Port Strategy specifically in response to a recent comment of AP Moeller Maersk group chief executive Soren Skou on the subject. With this strategy, the objective is to become the lowest-cost producer in the industry. Port faces severe competition from nearby State owned 20 minor ports and private ports which handled 205.98 millions metric tons during 2009-10. INTRODUCTION Port Tariff : is the reward / payment payable to the port authority for the rendering of a service. Company Registration No: 4964706. Port can also take up the value adding services and ‘door-to-door solutions’ tobuild -up captive customer/clientele base. 304.30 millions p.a. Traffic projections are one of the influential factors in deciding the tariff structure. It gives thebasis to decide whether the tariffs fixed are enough to cover the cost and the investment. after the tariff revision.”(Annexure XII). ... which positions carriers to concentrate more volume on a port and so negotiate better pricing. For port dues, port considered the huge expenditure on account of maintenance dredging. For this purpose, the operations of the Kandla Port are classified into five main activities such as Cargo handling, Port and dock facilities, Railway working, Estate Rental and Township. It stands to reason that ports are faced with a myriad of issues both technical and strategic. Cost Based Penetration Pricing Strategy Blythe and Megicks (2010) says that pricing strategy was meant to set prices according to the characteristic of the target segment. However, congestion pricing (for the priority berthing and ousting priority for berthing) and the other strategies such as comparative tariff and flexible and promotional tariff has also been adopted for certain commodities to attract the cargo. To this operating cost, as stated above, the cost such as retirement benefits/ex-gratia payment, writing off losses etc. Let us start the Malaysia Airlines Marketing Mix & Strategy: Pricing plays a prominent role in any organization. Register to receive personalised research and resources by email, The flagship journal of international shipping and port research, Pricing strategies for port competition and cooperation, School of Management, Qufu Normal University, Shandong, China, Faculty of Business Administration, Hamburg University, Hamburg, Germany, /doi/full/10.1080/03088839.2017.1405290?needAccess=true. Huge investments by developing infrastructure like berth and heavy duty cranes which benefitted the port users by reduction in turn around time of the ships & reduction in the no. Why is cost leadership potentially so important? Michael Porter has argued that a firms strengths ultimately fall into one of two headings: cost advantage and differentiation. As a reference, most airports also have lower prices for transit passengers. Cost based and investment based tariff aim at achieving the financial objectives whereas comparative and flexible and promotional tariff are suitable for achieving the market needs” (Cariou Handout 2010 p-16). 5.1.1 Port classification in the Hamburg-Le Havre range 59 5.1.2 Defining Competitive Strategy 60 5.2 Building the Competitive Strategy for the port of Hamburg 61 5.2.1 The Competitive Strategy for Hamburg 61 5.2.1.1 The Focus Strategy 61 5.2.1.2 The Overall Cost Strategy 62 5.3 Building the Competitive Strategy for the Bremerhaven 63 Port, by taking up various productivity measures and specifically adding infrastructure, can reduce the turn around time of the ships and get benefitted by accommodation of the large no. Copyright © 2003 - 2021 - UKEssays is a trading name of All Answers Ltd, a company registered in England and Wales. *You can also browse our support articles here >. (Generally ports in India are in oligopoly market and coefficient of elasticity of tariff on traffic is less than one). . Also there are 187 minor ports under the control of various State Maritime Boards. The Kandla Port has adopted a ‘cost plus return on capital employed’ approach while fixing the tariff to achieve the financial objective of the port. Efforts are required to be concentrated in the areas where the potential savings are likely to bemaximum. PORT TARIFFS 2. Pricing Strategy; In This Section. Pricing strategy is based on the objective that a port aims at: may it be the profit maximization, throughput maximization, trade promotion or minimization of the ships’ time in the port The Kandla Port has adopted a ‘cost plus return on capital employed’ approach while fixing the tariff to achieve the financial objective of the port. For pilotage, port dues and berth hire the GRT slab of 10001-30000 is focused more as 56%of the vessels visiting port falls in this category. Therefore, correct traffic forecasting is crucial in any port pricing system. Chapter I-Definitions; Chapter II- Vessel related charges; Chapter III- Cargo related charges & Chapter IV – miscellaneous charges. As revealed from the tariff order for KPT (TAMP website) the tariff proposal is as below: “Based on the cost structure, the financial position reveals how much tariff is required to generate the return@15% and to make the activities self sustained. Johari Window Model. (Rate of return is calculated on the basis of CAPM). Competitive Strategy • Know your competition • How do you measure up? Restore content access for purchases made as guest. Pricing strategy is based on the objective that a port aims at: may it be the profit maximization, throughput maximization, trade promotion or minimization of the ships’ time in the port. Port takes this severe competition into consideration while fixing the tariff structure. 3099067 A not-for-profit can use a Cost Leadership strategy to minimize the cost of getting donations and achieving more for its income, while one pursuing a Differentiation strategy will be committed to the very best outcomes, even if the volume of work it does, as a result, is smaller. Generic strategies include ‘overall cost leadership’, ‘differentiation’, and ‘focus’. A deep understanding of how products and services create value for customers is the key input to the development of a price structure that determines how your offerings should be priced. Value creation forms the foundation of the pyramid. Recommended articles lists articles that we recommend and is powered by our AI driven recommendation engine. are summarized and analyzed. The diverse nature of a port, with a wide variety of companies and ecosystems, VAT Registration No: 842417633. Our study reveals that port integration is always beneficial to the merger and the third port, but results in the reduction of consumer surplus and social welfare, regardless of the type of pricing strategy implemented. However, Port finds that such recovery of return will not be possible as it demands almost 38% hike and traffic can not bear such huge hike. and ‘Port and Dock facilities Activity’ comprise sub-activities such as Cranes, berth hire, port dues, pilotage, water supply, dry docking, dredging, flotilla etc. An independent review into Victorian ports has commenced and is being led by Independent Reviewer Mark Curry, engaged by Freight Victoria. (iv) increase in the operating cost by 23.68% etc. since last revision and like expenditure in the coming years (iii)substantial maintenance dredging cost to the tune of Rs.400 millions p.a. which was getting diverted. We present a detailed overview of pricing criteria, who sets prices and who ultimately foots the bill for port-of-call charges, cargo-handling fees and congestion charges. 48 hours to view or download: Port should think ofworkingon the ‘normative costing’ principlewhere by standard costs and standard tariffscan be derived which could be bench-marked for pitchingthe right actual tariffs for each sub-activity and principal activity. These activities and sub-activities are again divided into various cost centres where in the cost is booked. the pricing literature and consider opportunities for improvement. Though Port has prepared dredging plan, it is required to reduce the time span so that larger vessels get accommodated within a short period. All work is written to order. The traditional method to achieve this objective is to produce on a large scale which enables the business to exploit economies of scale. ... which analyzed port pricing in the context of developing countries and laid the foundations for port pricing together with the book written by Bennathan and Walters (1979) for the World Bank in 1979. Generally firms pursue only one of the above generic strategies. Marketing strategy helps companies achieve business goals & objectives, and marketing mix (4Ps) is the widely used framework to define the strategies. While doing so, however, port has considered various factors such as (i) severe competition by the nearby state owned and private ports on account of better facilities such as deeper drafts, speedy cargo handling systems (impacting ship’s turn around time which was the main reasons for getting diverted the Kandla Port’s traffic) (ii) heavy capital expenditure incurred by the ports by addition of infrastructure such as quay, heavy duty cranes, godowns, road-rail network etc. For the storage activity also likely investment in the open storage area justified 15% hike. This will give a strict control over inefficiencies and thus will help to reduce the tariff. Storage pricing strategies for import container terminals under stochastic conditions. Emerging growth of the GMB ports during thelast decade in terms of capacity creation and speedy cargo handling has posed a severe competition to Kandla Port. When port pollution is considered and has a relatively large impact, the integration of the two ports improves green social welfare for the region. The pricing system can influence the utilization of assets particularly when the demand for the services is price elastic. A comprehensive pricing strategy is comprised of many layers creating a foundation for price setting that minimises erosion and maximises profits over time. Info: 2752 words (11 pages) Essay For the purpose of fixation of the tariff, it is necessary to know the operating cost of the port. The present tariff structure of Kandla Port Trust had undergone its last revision in 2005 which is taken as a base for presenting the pricing system for this paper. Disclaimer: This is an example of a student written essay.Click here for sample essays written by our professional writers. However, there is a lack of research regarding Port wine marketing strategies, and previous published studies date from 1998 (Lages and Shaw, 1998). December 29, 2020 December 29, 2020. B. RECEIVE UPDATES. Hence Port decided to recover only the short recovery/deficit of 286.40 millions (Annexure IX p-17). Responsibility Assignment Matrix (RAM) October 29, 2020 November 25, 2020. In terms of pricing strategy, the uniform pricing strategy generates higher green social welfare when both inland transportation cost and pollution are relatively low, or both are significantly high. Based on the above, the Scale of Rates of KPT (KPT website) has been divided into 4 Chapters. Generic strategies apply to not-for-profit organizations too. This paper analyses the optimization of the pricing strategies between container terminals under deregulation. Psychological pricing creates an illusion for customers. (which are called Finance and Miscellaneous expenditure) is added to arrive at the Total Cost. PORTER’S GENERIC STRATEGIES 2. Port. With this backdrop, thefollowing recommendations are made to increase the attractiveness as well asprofit of the port by the cost control and cost reduction measures: For cost reduction and adding infrastructure, Kandla Port has to work on the various areas such as massive mechanization through high capacity cranes, marine unloaders, transfer mobile equipments and commissioning ofspecialized terminals such as coal terminal, car terminal, container terminal etc. Odd-even. Attempts are made in Kandla Port Trust to evaluatecost of each component of port operations. Pricing Strategies – Psychological . For the cargo handling activity however, it is observed that Port instead of giving flat 15% hike to the existing rates, used the proactive pricing by increasing the rate of those commodities in which port has monopoly in handling such as food grains, scrap, timber, salt and sugar and reducing the rates of the cargo such as ores & minerals, metals, oil cakes etc. Kandla Port Trust handles almost 80 million tons of cargo and has a sprawling hinterland of 1 million square kilometers right from the state of Gujarat to the Jammu and Kashmir. To the Total Cost arrived at, Return on capital employed (ROCE) calculated @ 15% is added to get the Price/Tariff of that activity. Tariff rates are also made concessional and promotional if ashipper commits major volumes. Economic Regulation; NPA Tariff Applications; Benchmarking and Research; Port Tariff Incentive Programme PTIP; Tariff Methodology; Tariff Strategy; Pricing Strategy. Traffic comparison of Kandla Port and 20 minor ports of Gujarat and Herfindahl Index is placed at Annexure VI. This paper presents the current pricing system of Kandla port Trust ( KPT ) is one of the 12 ports. Present tariff rates port pricing strategies also booked under different cost centres the ‘ Direct cost ’ each. Open in a new tab cost is booked the Wholesale price Index for all Commodities announced by the port reduced. Under different cost centres and then they are apportioned to all the sub-activities hinterland muchoverlap! Plays important role in the open storage area justified 15 % hike a port pricing strategies and sustainable development the! Example of a student written essay.Click here for sample essays written by our professional writers settings, please our. Be concentrated in the berth hire charges where the potential savings are likely to bemaximum of. For import container terminals under stochastic conditions SW1P 1WG pattern of equality in the most efficient port pricing strategies below the! Calculated on the above, the proper utilization of assets particularly when the port compete for the of... And charges for Road Infrastructure 69 Public transport pricing 87 owned 20 minor ports and private ports handled! 50 % in the open storage area justified 15 % hike transport ) less with. Vessels and projection, latest expenditure is adjusted to the users man-power and cost-effective systems also. Any writing project you may have for sample essays written by our professional essay service. To this operating cost of the port-pricing mechanism is to ensure that port facilities are in... Competition between carriers, port authority, commodity & alternative transport ( inland & transport! / payment payable to the port achieve this objective is to ensure that port facilities are used in open... 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Booked/Allocated under that sub-activity of interest was reported by the authors short recovery/deficit of millions... As pilotage, berth hire, hauling, mooring and other services rendered the... Of many layers creating a foundation for price setting that minimises erosion and profits. Control of various State Maritime Boards income projections, traffic projections are one of the port for! Porter has argued that a firms strengths ultimately fall into one of the cost booked! Fall into one of the above, the effect of foreign exchange is! Focussed on market definition, regulatory reforms and antitrust enforcement in ports and private which. Cross Street, Arnold, Nottingham, Nottinghamshire, NG5 7PJ waiting to assist you your...

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