Port of Baltimore Corporate Strategy Case Study
- Length: 5 pages
- Sources: 5
- Subject: Business
- Type: Case Study
- Paper: #97365052
Excerpt from Case Study :
Port of Baltimore's Strategic Orientation
As the Case Review by Ross et al. (2005) shows, the Port of Baltimore finds itself almost perpetually in a highly challenging and precarious position where environmentalism is concerned. The demands of its industry, and particularly those relating to the highly competitive market driven by the leverage of the shipping sector, require the POB to seek a balance in the variant priorities of profitability, satisfaction of state interests, security and environmentalism. Often, when this last dimension of its operation is relegated behind other considerations, POB has been forced to confront the ire of environmental advocacy groups, lobbyists and public agencies.
One of the more complex issues surrounding its environmental position is that relating to dredging, which has a mix of negative and constructive implications to the ecology surrounding the port and the Chesapeake Bay. According to Ross et al., "dredging, which is the process of removing sediment from the bottom of the harbor, is potentially destructive to fish and other aspects of the environment. Dredging may also provide material that can be used to create other habitats such as bird nesting sites, that can help restore Chesapeake Bay." (p. 312) As Ross et al. continue on to report, the use of dredging is essential to maintaining a safe harbor depth for incoming and outgoing ships. Ross indicates that according to the Maryland Port Authority, it remains necessary for the shipping industry to continue to function competitive in the Port of Baltimore for roughly 'two million cubic yards of silt' to be dredged annually. (p. 312) This means that the POB is continually at odds with the environmental community dispatched to protect the rich ecology of the Chesapeake Bay.
In considering the challenges that this has created for the Port of Baltimore as both a business dedicated to profitability and a group dedicated to the public well-being in the state of Maryland, the theories espoused by Hart (1996) in Beyond Greening are particularly useful.
Hart describes the necessity of a 'sustainability portfolio,' which outlines and classified strategies for the development of clean technology (tomorrow-internal), a sustainability vision (tomorrow-external), modes of pollution prevention (today-internal) and ecologically conscious product stewardship (today-external). (Hart, p. 74) According to Hart, regarding one's sustainability efforts according to this four-part approach, "this simple diagnostic tool can help any company determine whether its strategy is consistent with sustainability." (Hart, p. 74)
Hart asks the firm to think of its efforts at sustainability according to his matrix, which combines the purposive nature of businesses with the universal environmental demands that are now emergent in the market place. For the POB, this means establishing partnership with important stakeholders both in the business and environmental communities. The projects at Hart-Miller Island, Poplar Island and the Oyster Restoration Program have all been brokered as ways of channeling dredging into positive sustainable behavior that nonetheless still allows the controversial but economically necessary procedure. This also show that the Maryland Port Authority and the Environmental Protection Agency can find ways of being compatible even in the face of some divergent interests. Still, it must be recognized that the very survival of the Port of Baltimore depends on its competitive relevance. Therefore, the interests of stakeholders such as the MPA and the shipping industry as a whole are typically elevated above the interests of stakeholders such as environmental groups.
Additionally, the sustainability portfolio outlined by Hart should today be amended to incorporate security interests, which have gained increased relevance to all public and commercial affairs. Two ways to do this are to make space in the matrix for assessment of the infrastructural changes demanded for improvement of security measures and the reduced efficiency and resultant increase in energy consumption that may relate to security-related bottlenecking.
Among the most problematic strategic realities facing the Port of Baltimore is one facing all port businesses in the United States. According to the report by Ross et al., there is a glut of available port facilities and real estate, providing a great deal of pricing leverage for shipping services choosing ports for delivery and departure. This denotes a highly saturated and highly competitive industry. Simultaneously, Ross et al. report, the POB has routinely been given less-than-adequate funding from the U.S. Army Corps of Engineers for critical projects that could improve its business capacity. As the article by Ross et al. indicates, "the financing process for the POB emphasized vulnerability to the Maryland state political process. Because POB is part of the Maryland Department of Transportation, only revenues are reported on the Maryland Department of Transportation's financial report ( and are not retained by the POB). Costs must pass through the State budget process. POB funding therefore is a cost item in the state budget." (Ross et al., p. 311)
It would appear that POB has gone to great efforts to taken competitive advantage of their strengths. Indeed, the improvement in its operations is generally dedicated toward differentiating the port from other Eastern Seaboard ports. Among its competitive advantages, one of particular note is its position as the top importer of forest products in the United States. This makes it a reputable and preferred port for the transference of essential economy-driving commodities like timber. A second competitive strength is its record for a distinctively low rate of cargo damage, a credit that recently earned it a 10-year contract to import 280,500 Mercedes Benz. (Ross et al., p. 310) A final competitive advantage and perhaps the most important of its self-determined distinctions, is the fact that POB is capable of accommodating 24-hour-a-day shipping. According to Ross et al., "the POB's Seagirt Port and Intermodal Container Transfer Facility are the only port locations in the U.S. east coast open 24 hours a day, which speeds turnover." (Ross et al., p. 311)
Though the port has established relationships with such facilities as well as with local railroad utilities that have enhanced its market position, these partnerships cannot protect it from the impact of Maryland's political and economic objectives. As a matter of reality in a market where supply outweighs demand, the POB remains at the mercy of many outside forces.
Based on the apparent revenue drawn by the POB for the state of Maryland, one can deduce that it is a suitable fit for the region identified here as Maryland. Moreover, within the scope of the Chesapeake Bay region, the involvement of the POB in environmental improvement projects seems to support its contextual appropriateness there as well. However, a consideration of the Parenting-Fit Matrix suggests that in many ways, it is the set of behaviors displayed by the parenting company that must be altered to optimize the performance of the POB. According to Campbell et al. (1995), "critical-success-factor analysis identifies areas in which the parent's influence is inappropriate. Parenting opportunity analysis focuses attention on the upside potential. The parenting-fit matrix ranks the business, exposing those with lower levels of fit." (p. 132) Such an analysis might also help to justify more adequate funding on the part of the state for the POB such that this might help its capacity to attend security and environmental priorities without sacrificing economic priorities.
To understand the capabilities of the Port of Baltimore to add value to their processes, it is valuable to consider the 'four basic principles of capabilities-based competition' as described by Stalk et al. (1992). As to the first principle, 'business processes' have been the foremost determinant in the POB's decision-making, with market realities and internal capabilities driving its priorities over 'product' emphasis. As to the second principle, the POB has achieved competitive success by, among other things, minimizing damage to its cargo. This may be described as a superior valued that helps to improve the customer's experience. POB's investment in infrastructure, the basis of the third principle,…