PLANEACIÓN

Strategies that focus on capturing market share are very popular in almost every industry including the port sector. What makes them so popular is the perception that there is a direct causal relationship between market share and profitability of a business (Buzzell et al. 1975). A major tool that has been used to operationalise such strategies is the growth-share matrix also known as the 'Boston Box' after its developers, the Boston Consulting Group (McKiernan 1992; Kotler 1994; Haezendonck 2001). The matrix suggests that competitive success and growth are determined by the level of growth rates prevailing in the market and the relative market share a firm can command. In other words, the growth hinges on the ability of the firm to capture higher market share relative to the competitors in markets which are experiencing fast growth. This view is not unusually agreed (Szymanski et al. 1993; Woo and Cooper 1981, 1982; Rumelt and Wensley 1980; Jacobson and Aaker 1985) but the market share strategies and their underlying foundations have found their way into the corporate world.

Managers who base their strategies on the 'Boston Box' argue that markets with high growth rates are more attractive than mature or declining markets because they offer substantial opportunity for growth (Aaker and Day 1986). In the case of ports, investing in high growth markets such as container trades is perceived to be a good strategy because in such markets it is easier to gain market share as more opportunities are created from new business being attracted to the port. Further, it is argued that even if some firms do experience market share erosion, competition in high-growth markets is unlikely to be intense because trade eventually grows at a satisfactory rate and firms pay

little attention to competitors' gains because they are busy coping with their own growth.

How realistic this argument is, is debatable. For instance, it is known that for regional ports to attract container trades is difficult and involves considerable amounts of investment without assurance that they will ultimately succeed. The assumption that competitors will react softly to their market share erosion is flawed because it fails to incorporate their expectations. As Wensley (1982) pointed out competitors may react just as aggressively in a high-growth market as they would in a low-growth market if their expectations are not met. In the world of competition it is the difference between expectations of future sales and actual sales level attained that dictates competitors' behaviour and reaction.

There is no doubt that for ports the rewards from opportunities presented by high- growth markets are considerable; but this makes sense only if the port can compete across markets and capture and sustain market share gains. But even if that was possible, the port would still need to take into account the risks inherent in the uncertainties and competitive response mainly from its adjacent capital city port. Numerous firms have entered growth situations only to endure years of painful loss and ultimately an embarrassing, costly and sometimes fatal exit during a traumatic shakeout phase in which they are less likely to have planned upfront an 'exit strategy'.

A market is neither inherently attractive nor unattractive just because it is experiencing high growth. The real test is whether the port, for instance, can capture the opportunities presented by market growth in such a way as to gain a competitive advantage and attain growth. In this context, then, market share should be seen as an effect and not the cause of superior performance and profitability. Higher market share and high ROI, are an indication that management has been implementing strategies, whether by design or by chance that have proved to be successful. Strategies which focus only on accumulating market share may be myopic and inconsistent with longer-term horizons. Focusing solely on market share can stifle and suffocate the consideration of superior alternative strategies such as those oriented to capture opportunities which are available to the port. In fact, situations could exist where a decline in market share may actually be an

indication of good management. There is no shortage of commentary in the management literature on how smaller share competitors achieve high returns without competing on the basis of market share.

Hamermesh et al. (1978) and Woo and Cooper (1981, 1982) offer a comprehensive discussion of the factors and circumstances in which low market share businesses compete successfully and achieve high returns. They attributed the superior performance to superior ways in which they compete. Specifically, successful low market share firms tend to focus on profitable niches and they highly differentiate their products/services as they conservatively but efficiently use research and development as a basis for innovation (Porter 1985; Kotler 1994; Hall 1980; Thompson and Strickland 1992). They compete in market segments where their strengths are highly valued and where their larger competitors are less likely to compete or to possess competitive advantage. Management of such organisations spends time identifying and exploiting valuable opportunities rather than making broad assaults on entire industries or entire market segments. Being a small market share business is not necessarily a handicap; it can be a significant advantage that enables a company to compete in ways that are unavailable to its larger rivals. Certainly, as Hamel and Prahalad (1994) suggested, the measures of market influence and profitability have to extend beyond the traditional measures of market share to include other measures such as the measures of opportunity share because regardless of whether the market growth rate and relative market share are higher or lower some marketplace positions are more profitable than others.

It can, therefore, be argued that for a regional port which seeks growth in the shadow of its capital city port, competing for opportunity share is superior and more effective to competing for market share. Port management should view market share as a desirable outcome of the accumulation of opportunities the port is able to capture.

There are many compelling reasons why this approach is appropriate, but we restrict our justification to a few. First, competition for market share is limited because in general it is conducted within the existing markets and tends to focus on strategies that allow the firm to build up its market share mostly by taking away competitors' current market share. In a sense the focus of competition for market share has been on the

redistribution of the 'pie' and less on how to make the 'pie' bigger so that all parts involved can benefit. In this context, it is obvious that competing for share of an existing market is likely to attract intense competition which often triggers price wars and as the rivalry amounts the prospects of success are likely to be slim.

If a regional port pursues market share in non-traditional regional port markets such as containers it may find it difficult to compete because of considerable financial and technical resources that may be required but lie beyond the regional port's capabilities. Weinzimmer (1996) argues that most small firms fail to compete for high market share because they have limited resources needed to succeed. Like small businesses, regional ports often lack resources to invest in port infrastructure or to support commercial activities to change the existing trade patterns or introduce new ones to sustain their competition for a share of container business.

Another compelling reason against focusing competition for market share is that it is a strategy that may not provide a secure foundation for long-term profitability and growth. Scheer (1974) for instance argues that success in creating and adopting new products and process technologies is more important to long-term profitability than is exploiting economies of scale that a higher market share position may allow. The point being made here is that the relationship between market share and profitability is neither causal nor strong enough to justify the pursuit of market share as a universal strategy for regional port growth.

Regional ports need not focus competition on market share per se. They can develop new trades and enter new markets where opportunities are available and can be exploited without attracting strong competition or requiring considerable resources. Of course, the advantage of this strategy is that it broadens the scope of competition to markets and trades that are likely to be underserved and therefore less difficult to penetrate. By identifying valuable opportunities and exploiting them ahead of competition, regional ports can build a first-mover advantage. Porter (1998) and Kotler (1994) contend that in general, first-movers enjoy some competitive advantage because they initiate actions which face virtually no competition and in the short term they may be able to survive even though they may have scarce resources and limited efficiencies

(Covin and Slevin 1991). However, as Jacobson (1988) cautions, firms that are more efficient and offer superior value, grow larger and more profitable than others.

2.4.2 Strategy as operational effectiveness and strategic positioning: the