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A strAtegic study: Utilization of the Wintergas fleet for shipping Ethylene gas and BTX+S chemicals in China, South Korea and Taiwan This paper is done as a part of the undergraduate program at BI Norwegian Business School. This does not entail that BI Norwegian Business School has cleared the methods applied, the results presented, or the conclusions drawn.” Bachelor in International Marketing In cooperation with and Diploma Project Academic year 2010-2011 Course Bachelor in International marketing Submission date 29.04.2011 Prepared by Kamilla Vedeler (N1001785J) Lasse Jamt (N1001759C) Magnus Beyer-Arnesen (N1001746C) Rikke Gran Jensen (N1001761C) Trygve Andre Tellefsen (N1001781K) Supervisor: Clive Choo “This paper is done as a part of the undergraduate program at BI Norwegian Business School. This does not entail that BI Norwegian Business School has cleared the methods applied, the results presented, or the conclusions drawn.” II | P a g e Executive Summary The purpose of our study is to guide Norgas in the commercialization of the Wintergas (WG) fleet. We will do this through gathering, systematization and analysis of data and information. The Wintergas fleet consists of three ships: Cathinka, Pan and Camilla. The ships are smaller and wider than Norgas’ existing vessels, but have the ability to carry both chemicals and petrochemical gases. Their features are unique and could potentially be a source of competitive advantage for Norgas. Norgas is currently struggling with the commercialization of their new concept, partly due to a weak chemical market, but from our point of view, also because they are lacking important internal resources. Furthermore the authors will provide Norgas with analysis of the external environment and the company itself. This thesis includes both the collection and analysis of primary and secondary data. The case study research involves in-depth which were done by the authors. We have found that the petrochemical shipping industry is overall attractive and the demand for shipping services is growing with the growing GDPs in the selected countries. However, we have identified some mismatches between the key resources and capabilities needed to be able to succeed with the Wintergas concept, and those of Norgas. Based on the analytical part and our interview findings, a sound strategic plan has been crafted to enable Norgas to reach their operative and strategic goals. The two proposed trade route goes from Taiwan to China and from South Korea to China. It can earn Norgas a Time Charter Yield (TCY) of 12,000USD per day, given that they find cargoes that go in that pattern and a customer. The authors have recommended Norgas to implement and make use of their new CRM system, which is currently not in use. This Customer Relationship Management system can be a vital asset to the company in order to provide superior service to their customers, and building strong relationships. Furthermore, it has been recommended that Norgas employs people with extensive knowledge and network within the chemical market, and ensure thorough education of the commercial employees. III | P a g e Acknowledgements It is a pleasure to thank those who made this thesis possible. This project would not have been a reality if not for everyone that has kindly helped us in different parts of the project process. We will especially give our attention to some key people. First and foremost, we would like to thank our contact person Mr. Majumdar, VP Marketing Asia and Trygve Dyrlie, Managing director at Norgas. We would sincerely thank you for giving us the opportunity to write this project; moreover we would like to thank you for your support and knowledge in this demanding process. We also want to thank the other employees at Norgas, Ragnar Ruud, Alexander Røynesdal, Capt. VRS Rajandran, Capt. Ajay Singh, James Tan and Jannie Jiang for their support and invaluable inputs. And for all the ones who deserve it and that is not mentioned, thank you. Furthermore we want to thank our interviewees who have shares their knowledge and opinions with us. We have been met with smiles, openness and a sincere desire to help. They have provided us with knowledge, understanding and information we would not have been able to gather on our own. Lastly, we owe our deepest gratitude to Mr. Clive Choo, our eminent supervisor who has been available any time for guidance and supervision. He has been supportive and most importantly, patient with us. We could not have reached the finish line without your help! Singapore, April 2011 IV | P a g e PROJECT OVERVIEW PROJECT Introduction Literature review Research Methodology Analysis Findings Strategy formulation Recommendations Conclusion Table of Contents EXECUTIVE SUMMARY ....................................................................................................................... III ACKNOWLEDGEMENTS ....................................................................................................................... IV TABLE OF CONTENTS ........................................................................................................................... V INDEX OF FIGURES ............................................................................................................................... IX INDEX OF TABLES .................................................................................................................................. X 1. INTRODUCTION .............................................................................................................................. 1 1.1. Purpose of study ....................................................................................................................................... 1 1.2. Motivation ................................................................................................................................................ 2 2. LITERATURE REVIEW .................................................................................................................. 3 2.1. Shipping Industry ...................................................................................................................................... 3 2.1.1. Petrochemical segment ........................................................................................................................... 4 2.1.1.1. Olefins, Ethylene and BTX+S ................................................................................................................ 5 2.1.1.2. Derived demand .................................................................................................................................. 8 2.2. Norgas Carriers AS ..................................................................................................................................... 8 2.2.1. Business model ........................................................................................................................................ 9 2.2.2. The Wintergas fleet (WG) ...................................................................................................................... 10 2.2.2.1. The unique features of WG ............................................................................................................... 10 2.3. Academic concepts and frameworks ....................................................................................................... 12 2.3.1. External .................................................................................................................................................. 12 2.3.2. Internal .................................................................................................................................................. 13 2.3.3. Strategic ................................................................................................................................................. 14 3. RESEARCH METHODOLOGY ..................................................................................................... 15 3.1. Primary and secondary data .................................................................................................................... 15 3.2. Research Objective .................................................................................................................................. 15 3.3. Research Limitations ............................................................................................................................... 16 V | P a g e 3.4. Research Questions ................................................................................................................................. 17 3.5. Design and Data Requirements ............................................................................................................... 17 3.6. Data Collection ........................................................................................................................................ 18 3.6.1. Interview Process ................................................................................................................................... 18 3.7. Evaluation of fieldwork and own method ............................................................................................... 19 4. ANALYSIS ........................................................................................................................................ 20 4.1. External analysis ....................................................................................................................................