Strategic Management Principles in CMA CGM

Introduction
The implementation of the strategic management principles within the organisation
helps in the development of the proactive nature of the organisation rather than the reactive
nature of the organisation. The execution of the strategic plan helps the concerned
organisation in foreseeing the future of the organisation and thereafter helps them to
formulate the plans in a better manner in order to deal with the situations that might arise
within the organisation. The incorporation of the strategic management principles within the
given organisation also helps in the development of the sense of directions within the given
organisation. The strategic management of an organisation also helps in the increase of the
efficiency of the organisational workforce in the matters that are related to the operations as
well as the increment in the market share and the profitability of the company.
The implementation of the strategic management principles within the industry leads
to the conditions wherein the company would be able to explore the various ways in which
the concerned business organisations would be benefitted in the matters that are related to the
identification, prioritization as well as the exploration of the various opportunities that are
being presented to the concerned organisation. The incorporation of the strategic management
within the organization would also help in the development as well as the alignment of the
concerned organisation to the various trends that are being followed within the organisation
as well. This in turn would help in the development of the competitive advantage of the
company in the given market as well as the industry at large. The major issues that might be
resolved with the help of the strategic management within the organisations majorly refer to
the issues that stem from the lack of the strategic focus and the lack of the proper strategic
direction in the activities and the actions that are undertaken by the organisation.
The following report deals with the strategic management principles that are
employed within the organisation in discussion, CMA CGM. The report deals with the

implementation of the various theories of strategic management within the activities that are
undertaken by the organisation in discussion. The report sheds light on the various matters
that are related to the issues in the strategic management that is followed within the
organisation in discussion. The report further proceeds to discuss the various issues that are
presented within the industry on the basis of the market trends that are presented within the
given market as well as provides some major recommendations for the improvement of the
given organisational operations.
Company profile
The CMA CGM is a French Container transportation company which is involved in
shipping operations as well. The business can be considered to be a worldwide leading group
which makes use of 200 shipping routes between 420 ports in around 150 countries (Cma-
cgm 2019). The company ranks fourth in order of the major giants as present in the field of
container and shipping behind the brands like Maersk, MSC and Cosco. The headquarters of
the firm are located in France and the current CEO of the company is Rodolphe Saade. The
company was found by Jacques Saade. The Parent organization of the firm is Merit
Corporation. When measured in capacity the company is third in line with a TEU of
2554264. In the year 2018, the company earned a revenue of $21.1 billion and has more than
750 offices in the global market. There are approximately 30000 employees working for the
company. The name of the company is an acronym for Maritime Freighting Company –
General Maritime Company.
Current market scenario
The current market has been increasing considerably and at present the cargo volumes
are increasing by 4-4.5% as compared to the container fleet which is growing by 3.9% per
annum. Hence, with respect to the container segment, it can be stated that the balance

between the demand and supply can be stated to be particularly stable. However, trends in the
Port Utilization state that, the vessels are getting bigger in size, and this tends to place
additional pressure on the different ports and the remaining terminals (Pearce, Robinson and
Subramanian 2000). In addition to this, it can be mentioned that, the new markets have been
emerging and the importance of China as a market has evolved considerably. In lieu of this,
the company has been making considerate plans to expand its operations into the field of
India in order to ensure success. The current market scenario appears to be good for the
container firms and there will exist a considerable demand for the containers in the future.
Previous market scenario
Previously, it can be stated that the market for the containers was not that good and
the market for the cargo was highly attractive and the vessel market was not performing
considerably well. However, at present it can be mentioned that, the market for container has
improved considerably which was not followed earlier (Wheelen et al. 2017). Additionally,
the use of technology was not present earlier, but currently the technology has made a great
progress and in lieu of this, the overall business scenario has changed considerably as
compared to the previous year’s scenario.
Future Market scenario
In the future, it has been recommended that technology and the digitalization of the
various ports as well as the terminals will have a great role to play and will go a long way in
ensuring that, the different companies will be successfully able to ensure that, they can
successfully be able to engage in the utilization of the digitalized resources and ensure higher
productivity and better shipping procedures (Wheelen et al. 2017).
Market Outlook
Shipping industries are one of the most reputable industries that are operated all
around the world. Among all the reputed organizations, CMA CGM’s reference is eminent to

occur in the lists of successful shipping companies. The former company has more than 750
offices and agencies around the world. According to Alix, Slack and Comtois 2016, CMA
CGM was recorded to be the third largest container shipping industry (globally), and also
topped the charts in the France’s market, offering services including port handling facilities,
shipping and logistics (Notteboom & Merckx 2016). The company has a strong financial
position, gaining net profit of $50 million inside the third quarter of 2016, and also more than
$610 million expansive profit in first nine months of 2017, with a prominent 57% rise in net
profit margin, in a yearly basis (Panayides & Wiedmer 2017). The company has expanded its
presence in Africa and European states, by opening new agencies and ground transport
services too. Also, the group had aimed to offer customers services in a digitalized manner
under visibility improvement requirements and dematerialization, and also company’s
improvement in operational performance. On 22nd of August, 2017, the company further
invested $13 million in the New York Shipping Exchange (NYSHEX), to enter the first
digital marketplace under the category of ocean freight contracts (Lam & Van De Voorde
2018). The digitalization strategy was scoped on the internal, commercial and capital
partnerships and projects, under corporate deals and ventures.
Moreover, the container shipping industry is gaining low volume growth, while the
pressure is observed in the freight rates under multiple lines (for short period). Hence, the
group is continuously varying the capacity of adjustment for maintenance of load rates and
optimization of vessel usage, to secure themselves from the backdrops. The fright rates were
predicted to face low growth for the next 2-3 years, from the third quarter of 2015 (Frémont
2018). However, the company was constantly taking appropriate steps to rebalance the
negative implications. CMA CGM officials also stated with respect to the continuance of
outstanding performance might include the leverage of factors like commercial dynamism,
disciplinary operation and presence in the global market.

Strategy
CMA CGM recorded the best operating result in the container shipping industry in
2017 whereas, the year after, their annual revenue grew by 11.2%, to a record level of $23.48
billion; what made the French group achieve such noteworthy results is their business
strategy model, whose pillars will be discussed in this section. The time period took in
consideration for the analysis is the quinquennium beginning in 2014 and ending in 2018.
Acquisitions
As one of the leading players operating within the container sector, the firm’s
development strategy relies on the acquisition of other businesses, both operating in the
container market and outside of it.
The quinquennium examined started with the merger of the German firm Oldenburg-
Portugiesische Dampfschiffs-Rhederei GmbH & Co. KG (OPDR) with Mac Andrews, a
CMA CGM subsidiary. (2014) This strategic operation allowed CMA CGM to enhance their
offer in North Europe, Canary Islands, the Iberian Peninsula and Morocco. In 2015, when
OPDR volumes surged by 30%, CMA CGM acquired LCL Logistix.
In 2016 CMA CGM accomplished the biggest acquisition in its history with Neptune
Orient Lines (NOL), Southeast Asia’s largest container shipping company, which owns
American President Lines (APL) as their container shipping arm; following APL integration
within CMA CGM, the Singaporean firm carried more than 5 million TEUs and generated
$340 million of operating income in 2017. This acquisition costed to the French group $2.4
billion and together with APL created a total fleet of 563 ships with capacity of about 2.4
million TEUs.
CMA CGM Acquisitions
Company Date Market / Sector Purpose

OPDR 2014 Short-sea shipping and
multimodal transportation.
Consolidating and broadening the
company’s regional network.
LCL Logistix 2015 Indian third-party logistics
leader.
To invest in logistic sector of a fast-
growing market.
NOL 2016 Singapore-based container
shipping company operating
mainly in Asia.
Boost CMA CGM service’s
performance across Asia, North and
South America, Europe, the Middle
East, the Indian subcontinent and
Australia.
SOFRANA
Unilines
2017 Key player in the Pacific
Islands regional maritime
trade.
Reinforce its operations in the south
pacific.
MERCOSUL
Line
2017 Leading player in Brazil
container market and door-
to-door services.
To strengthen inter-regional
connections and service offering in
south America.
Containerships 2018 Leader in short-sea services
in the Baltic and the North
Sea, and the other intra-
Mediterranean trades.
Densifying group regional coverage
and complement MacAndrews’
service offering in Northern Europe
and in the Mediterranean Sea.
CEVA
logistics
2018 Logistics Allow CMA CGM to offer its
customers high added value
solutions throughout the logistics