Strategy Formulation assignment:

Resource audit of A.P. Moller Maersk Lines.

Submitted By
Amresh Kumar Jha
Roll Number- 418
Div-E
NMIMS
 Resource Audit:

The resource audit identifies the resources available to a business. Some of these can be owned (e.g. plant and
machinery, trademarks, retail outlets) whereas other resources can be obtained through partnerships, joint
ventures or simply supplier arrangements with other businesses.

I am choosing a Shipping and `Logistics company named,

A.P Moller MAERSK lines for my resource audit. It is the largest container ship operator and
supply vessel operator in the world. A.P. Moller - Maersk is based in Copenhagen, Denmark,
with subsidiaries and offices in more than 135 countries worldwide and around 120,000
employees. It ranked 106 on the Fortune Global 500 list for 2009, up from 131 in 2008.

Business lines of A.P.Moller are:

1. Maersk Line:

The largest operating unit in A.P. Moller - Maersk by revenue and staff (around 22,000 employees) is
Maersk Line. Involved in global liner shipping services, Maersk Line operates over 450 vessels and has a
capacity of 1.9 million(Twenty-foot Equivalent Units). It is currently the largest container shipping
company in the world. Maersk Line took delivery of 26 owned vessel in 2008.

2. Safmarine
Safmarine is an independently operated shipping company in the A.P. Moller - Maersk Group with roots in
Africa. It operates a fleet of more than 40 container vessels and more than 20 MPV’s (Multi Purpose
Vessels). [A.P. Møller - Mærsk A/S annual Report 2008].
The company has five container vessels and four MPV’s on order for delivery in 2009-2011.

3. Damco
Damco is the new, combined brand of the A.P. Moller - Maersk Group's logistics activities previously
known as Maersk Logistics and Damco.
Damco is involved in supply chain management and freight forwarding solutions all over the world.
Damco has 10,500 employees in offices in more than 93 countries.

4. Maersk Line, Limited

Maersk Line, Limited, is a US-based subsidiary of A. P. Moller-Maersk Group which manages a fleet of US-
flag vessels and provides U.S. government agencies and their contractors with transportation and logistics
services. Headquartered in Norfolk, Virginia. It manages the world's largest fleet of US-flag vessels.
Beginning with a relatively small number of vessels focused on handling commercial and US Government-
subsidised cargoes, MLL's fleet of vessels engaged in commercial liner services.
 5. Other
Maersk Container Industry A/S: Container manufacturing with factories in Tinglev (Denmark), China, and
the UK.
Container Inland Services (Includes; Depots, Equipment Repair, Trucking, Container Sales etc.

Resource Audit:

Financial Resources:
Financial resources concern the ability of the business to "finance" its chosen strategy. For example, a strategy
that requires significant investment in new products, distribution channels, production capacity and working
capital will place great strain on the business finances. Such a strategy needs to be very carefully managed from a
finance point-of-view. An audit of financial resources would include assessment of the following factors:

For this , I have Analyzed the cash flow statements and Balance sheet for the year ending 2009.

Existing finance
funds  Cash balances-:
For the year ending 2009, it suffered a loss of $2.1bn. The cash flow from
operating activities was USD 0.25 billion compared to USD 2.2 billion in 2008.
Investments made were USD 1.4 billion compared to USD 3.2 billion in 2008 .
Gains on sale of ships, etc. amounted to USD 59 million compared to USD 346
million in 2008 .
   Working capital (e.g. stocks, debtors) already invested in the business:
Cash flow from operating activities led to reduction of USD 565 million in the
working capital.

 Assets:
Current assets- USD 3.452 Bn.
Non – Current assets – USD 19.434 Bn.

 Revenues:
The company earned a total revenue of USD 20.6Bn. It was 28% less than the
previous year primarily because of falling freights and volumes

Overall the scenario was really tough for global shipping industry in year 2009. Because
of global economic crisis of 2008-09, the market contracted by 13%. At the same time ,
the supply of tonnage increased by 5%, thereby squeezing the rates further. Somehow,
maersk was able to withstand it because of its relatively good financial performance in
the previous years.

   
Ability to raise new  The group is highly recognized in Danish market. The company is listed at 106 in
funds fortune 500 list. It is a regular dividend payer in the market.

   The company has a huge number of ships , which can be leased to various
organizations. This a potential source of generating funds.
   Currently more than 90% of world trade happens through sea. Hence it is huge
market with great potential of revenue generation. Also maersk owns the close to
500 ships.

   It is listed on the Copenhagen stock exchange. There is always a possibility to

generate funds from the market .

Human Resources:

The heart of the issue with Human Resources is the skills-base of the business. What skills does the business
already possess? Are they sufficient to meet the needs of the chosen strategy? Could the skills-base be flexed /
stretched to meet the new requirements? An audit of human resources would include assessment of the
following factors:

Existing staffing -Maersk group has a presence in more than 130 countries. Currently it has employee
resources/training strength of more than 1,20,000. Maersk International Shipping Education (M.I.S.E.) was
: the two year management trainee program constituted to develop the future leaders of the
A.P. Moller-Maersk Group.
Each year approximately 450 trainees were enrolled representing more than 80 countries
into the M.I.S.E. Programme. Trainees were selected from more than 85,000 applications
received each year and underwent an intensive education. The program combined practical
 and theoretical education across all major divisions of the group with extensive
multicultural exposure and international job opportunities within Maersk upon completion.
Starting 2009, the M.I.S.E programme has been discontinued and Maersk will begin to
operate business specific entry level programmes. In autumn in 2009 Maersk Line launches
a new graduate programme called the Maersk Line Graduate Programme (M.L.G.P).

Entry level programmes in A.P. Moller - Maersk

 Maersk Line Graduate Programme (MLGP).

 Finance Programme (MIFP).
 Technology & Science (MITAS).
   
Changes required - Maersk is collaborating with various Govt training institue for employee talent
to resources augmentation. In India, they have tie with best colleges like DMET etc, MMD(Mercantime
Marine Department). People are send here for specialized courses .

 
  Maersk is hiring from different parts of the world. They have a strong culture of diversity
and this is what they maintain in their workforce.

Physical Resources:

The category of physical resources covers wide range of operational resources concerned with the physical
capability to deliver a strategy. These include:

Technological - Represented in all major trades with offices in more than 100 countries, Maersk Line
facilities has the network and the resources to transport your cargo to practically any part
of the world. Maersk Ships have state of the art cargo handling , refrigeration facilities.
They have different types of vessels like reefer containers which is used to handle and
transport sensitive items.

Apart from all this , Maersk line has access to its APM terminal across several ports
of the world . This what they have established in Gujrat and Chennai port.

 
Marketing - Maersk maintains its online site regularly , promoting various new initiatives , busines
facilities lines etc. This is a part of their Viral Marketing.
- It has a presence in more than 130 countries. Through its local offices around the
world, it constantly promotes about its several features.

- It has been a constant supporter of various Maritime Conferences. It has been a

podium for them to project themselves as great employer, and let the world know wha
they have done in the recent time and their future project.

- Maersk R&D department has been a regular commentator/columnist in various

magazines and journals. Through this medium , they let the world know any recent
 advances in marine technologies etc.

 
Intangible Resources:

It is easy to ignore the intangible resources of a business when assessing how to deliver a strategy - but they can
be crucial. Intangibles include:

 
Reputation A.P. Moller-Maersk ranked #31 overall in Reputation Institute's - Global Reputation Pulse 200
Study of the world’s most reputable companies.Reputation Institute's Global Reputation Pulse
is an annual online survey of the general public measuring the corporate reputations of more
than 1000 companies in 32 countries.
 
Awards and Recognition :

 Maersk Line 'Best Global Shipping Line', 'Best Shipping Line for
Asia-Europe', and ‘Best Green Service Provider – Shipping Line’ 2009.
 Maersk Line awarded Container Shipping Line of the Year  2007.
 Maersk Line wins Shipping Line of the Year 2007.

Milestones: On 28 August 2006, Maersk Line took delivery of the m.s. EMMA MÆRSK built by Odense
Steel Shipyard. EMMA MÆRSK was the first in a new series of PS-class vessels and she is one of the most
environmentally friendly container vessels built to date. As part of Maersk Line’s fleet of modern container
vessels, the EMMA MÆRSK sets new standards for global shipping, creating further opportunities for our
customers.

Market outlook 2010:

In the container shipping market, a 7-10% addition of tonnage is expected for the global container fleet. Cargo 
volumes are expected to rise by 3-5% in 2010 relative to 2009 and freight rates are also expected to rise. This 
will lead to a significant improvement in results if the level of vessels taken out of service is sustained. How-
ever, rates are not expected to lead to an acceptable return in 2010.