Analysis on the Oil Tanker Industry

Case Study: Oil Tanker Industry

Players: Oil Companies

Bankers

Brokers

Ship Builders

Ship Owners

Industry Structure: Concentrated

-transportation of oil (crude) or dry goods products

Product Generic: only a few players involved; not a lot of countries/companies

Technology: Slow 10 -20 years: no rapid change

Product Technology: Low: takes long time to create a boat (5years approx)

Location: Global

Product Life Cycle: In 1973, there was a growth within the industry

In 1978, there was a maturity within the industry

Barriers of Industry:

High: Cost to build ship is approximately 32 million for average cost—200,000(dead weight tons)

Financing: 40% market value

-depending on region and government regulation

- Bankers "viewed as disruptive force" because they force shippers into

disadvantage financial agreements— "charters"— that give shippers harsh

penalties so that bankers can make money.

Brokers: "middle man"

Specific Region(Countries): were in markets

-customer loyalty

-saturation within market based on geographic location due

to players such as Japan(made an agreement with Hong

Kong), China (China had to finance ships through

Japanese Banks while did the work), Norway, and

Scandinavia.

Barriers of Entry:

Supplies: - economies of scale.

- new entrant: build advantage against competitors

- increase cost

Demand Size: Benefits of Scale: - Reputation

Switching