I wanted to include a final video blog on my personal experience, as well as a reflection on the strategy that Yusen Logistics utilizes.

Thank you for your time and for reading this blog!

JVB

As discussed through this blog, developing a Strategic Leadership plan for any organization lies in having either a Cost Leadership Advantage or through Differentiation. Typically, rising as the Cost Leader within a market exemplifies that companies ability to be able to drive down its operating and purchasing cost well past that of its competitors – at a point where the cost leader can flourish and its rivals will perish. This causes other companies to adopt a differentiation strategy to compete.

A prime example of this is Wal-Mart’s purchasing power and its general management strategy. Its power lies in historical value and efforts in entering rural markets decades ago, and establishing its name brand value amongst townspeople and citizens with few grocers and department stores to choose from. Through its organizational hierarchy, it utilizes its company vision to operate with a degree of consistency across North America. While this strategy is proven and powerful in the United States, it is less effective in countries like Canada – which has had a history of pushing against Wal-Mart due to its resistance to unions and strategic management practices. Because of Wal-Mart’s position as the cost leader, its competitor Target where forced to adopt differentiation strategies as a boutique department store. Its previous competitor K-Mart was unable to pivot its position into a differentiation strategy, and went bankrupt attempting to compete on cost with the cost leader.

Within the logistics field, companies such as Federal Express and UPS have the higher brand name value and resources to compete on cost in its distribution channels. Therefore, Yusen Logistics has had to adopt a strategy that compliments its business intelligence and have a relational business focus. However, Yusen still utilizes its presence overseas in western countries, as it is horizontally-integrated distributor in a field with varying competitors. While this is a competitive advantage, its benefits are incremental when operating in cities like Memphis, TN – where economies of location have provided buyers a large number of suppliers to access cost-effectively.

JVB

The following video illustrates Yusen’s position and strategic management challenges operating in Europe. Kevin Appleton details the challenges as a Logistics Carrier Manager:

Sources Referenced:

Glaeser, Edward L. Agglomeration Economics.

Chicago, Il, The University of Chicago Press, 2010.

Barney, Jay B. Gaining and Sustaining Competitive Advantage, 4^th edition.

Prentice Hall, NJ, Pearson Education, 2011.

BBC One – Kevin Appleton interview about European branch of Yusen Logistics

A VRIO analysis is a series of four questions that ask the Value, Rarity, Imitability, and Organization of business operations for a company.

Yusen Logistics enjoys a sustained competitive advantage over its competitors through its three-tiered transportation (Air, Traditional, and Sea Freight Forwarding) and vertical and horizontal integration as a logistics carrier. More specifically, its value is held in its housing of precious, horizontally-integrated resources. These combined allow for a simpler, in-house tracking and distributing approach to freight concerns among logistics challenges in contract. Rarity-wise, Yusen does have distinct competitors. Within its top rivals are Federal Express, UPS, DHL and Japan Railways Group. While the benefits that Yusen enjoys allows them to have a devoted customer base, they are challenged in growing their overall market space due to equally-equipped, large competing firms.

Distribution is a key factor within the Value Chain above, listed in Barney’s Gaining and Sustaining Competitive Advantage, on page 48.

Notably, the Cost of Imitability is quite vast. With an over-saturated market of suppliers within the Logistics field, the cost to enter and compete at the highest level comes with certain economies of scale. To compete with Yusen, a new company would need a horizontally-integrated distribution, supply chain, and freight transportation system over a global scale in land, sea, and air. With an investment of billions, it would allow the entering company an opportunity to only enter the market – as competing would also require a historical knowledge, operations, and relationships within the field.

These advantages must be exploited by the organization for survival within the red ocean that is transportation & logistics. Because of this, firms usually operate with only incremental advantages and disadvantages in this field of numerous suppliers.

JVB

Sources Referenced:

Barney, Jay B. Gaining and Sustaining Competitive Advantage, 4^th edition.

Prentice Hall, NJ, Pearson Education, 2011

Glaeser, Edward L. Agglomeration Economics.

Chicago, Il, The University of Chicago Press, 2010.

As for the Yusen Logistics Americas, ltd., they are among a multitude of carriers with fewer customers – thus granting consumers the buying power. With carriers being “a-dime-a-dozen”, they could choose from whomever they want to move their freight. The logistics field as a whole is a “red ocean“, as Renee Mauborgne and W. Chan Kim explore within their text, Blue Ocean Strategy. Essentially, the overcrowded field of competing freight carriers allow for only incremental advantages to be enjoyed by its competing rivals.

Moreover, the environment becomes dominated by active companies due to the economies of scale of established competing firms – a byproduct of one of Porter’s 5 forces. Newer companies face a “pay-to-play” challenge – in that to merely enter within the market, they must be of a certain size, technological capacity for production, and leadership strategy. All of this for the ability to enter without the power to necessarily compete!

Here is a brief model of P5F of Environmental Threats, taken from Barney’s Gaining and Sustaining Competitive Advantage, 4e, page 48.

In this arena, the threat of buyers is key, as they are so many suppliers and so few of them. With few buyers, they are cost-sensitive, and the switching cost of moving from carrier-to-carrier is very low while saving much needed income for them. Since cost leadership may be near impossible to attain, most suppliers in logistics compete on differentiation, economies of scale and location, vertical integration of resources, and internal development of core advantages.

Therefore, Yusen  is tasked with defining their competitive advantages while looking for ways to reduce their costs, streamline their processes, and push these additional “costs of doing business” upon its consumers (to offset their buying power).

In the embedded video outlined below, Anthony Gudger, CIO of NYK’s European Amsterdam offices,  outlines Yusen’s need for improved processes to compete globally through an integrated cloud computing network with Microsoft Azure. In addition to this, he discusses leadership development team consulted, Management Scale, to aid in their strategy. Specifically, Gudger describes Yusen’s greatest challenge as providing a consistent service across its global region, eschewing the once-favorable local-business-people-to-solve-local-issue approach. Ironically, this “cost of doing business” was also apparent in Amazon’s approach to doing business in its international markets.

I’ve included this video because it stresses the heart of what Chapter 3 & 4 conveys within the Barney text: that consistent evaluation in defining advantages and refining processes aids companies in their never-ending competition.

Through my personal experience, I have noted that more-often-than-not business fail from an inability to evolve with current trends. This video details Yusen’s efforts to embrace a greater synergy for its operating performance – JVB.

Sources Referenced:

Barney, Jay B. Gaining and Sustaining Competitive Advantage, 4^th edition.                                    Prentice Hall, NJ, Pearson Education, 2011

Kim, Chan W. and Mauborgne, Renee. Blue Ocean Strategy: How to Create Uncontested Market Space and Make Competition Irrelevant.                                                                                 Harvard Business Review Press, 1st Edition, February 13 2015.

https://www.yusen-logistics.com/en/europe/benelux/

 

Yusen Logistics tends to target markets where it will face the least amount of resistance to its unique profile as an international, Asia-based freight carrier. In particular, this moves them toward the strengthened regions of East Asia, Southeastern Asia and Oceania. The “relational” business philosophy (mentioned in the initial “Strategy” post preceding this one)  tends to be more apparent and ingrained socio-culturally there. With this business intelligence advantage in mind, Yusen can greater anticipate potential returns on its business, even through tumultuous quarters, due to a relational history with its customers (or as they have coined, “strategic partners”).

As evidenced by its Company vision statement,  Yusen Logistics projects over a $16,000,000,000+ investiture in the Asia & Oceania region for its continued global growth. This plan shows a focus on developing a greater supply chain initiative in freight forwarding in coldchain, healthcare, etc. business models across the aforementioned region. This external analysis of regional concerns, cost-benefit potential, customer value evaluation, and growth possibility allow Yusen to match its operating activity with its overall strategic mission.

However, Yusen’s competitive advantage lies in that they fully own and provide coordinated shipping & distribution, warehousing storage and supply chain management. These benefits are not the norm amongst carrier facilities. Usually, these various elements of transportation would require individual contracts with additional 3rd party suppliers for the customers to coordinate and incur in their overall process. However, utilizing Yusen provides an opportunity for customers to simplify there involvement in the process.

Having these resources consolidated allows for greater horizontal integration: a leverage-able strategy in streamlining operating processes within Distribution for more efficient, strategic performance. This advantage allows Yusen to thwart lesser-sized, less-equipped competitors. Overall, this is how Yusen Logistics is able to raise its performance level in its operating regions while having measurable success benchmarks (Barney 44).

Yusen can maintain an advantage over its competitors through these means. However, these advantages are often miniscule navigating the “red oceans” that permeate the logistics field globally. As such, developing a leadership strategy through cost-efficiency or differentiation is quite difficult.

Through out this blog, let’s examine how Yusen attains economic value considering its circumstance in an over-crowded market. – JVB

 

Sources Referenced:

Barney, Jay B. Gaining and Sustaining Competitive Advantage, 4^th edition.                                    Prentice Hall, NJ, Pearson Education, 2011

Click to access Yusen_External_Roadmap_08.05.17.pdf

Kim, Chan W. and Mauborgne, Renee. Blue Ocean Strategy: How to Create Uncontested Market Space and Make Competition Irrelevant.                                                                                 Harvard Business Review Press, 1st Edition, February 13 2015.

 

I wanted to start off this post discussing the heart of Yusen Logistics mission statement, and that is a focus on creating relationships between consumers and growers. This makes logical sense, as Yusen is a freight carrier company. With it acting as a third-party distribution channel for its customers, it is only fitting that Yusen should position itself as a purveyor of “Creating Better Connections”. Not only is this motto meant to endear themselves to customers, it is reflective of its traditional practices operating within the mercantile community of Japan. Business in East Asia is highly relational, with even the simplest of business being impossible to navigate without some form of rapport.

Specifically, Yusen’s Mission Statement conveys,

“Our promise is a short-hand for what we aim to deliver time and time again. It summarizes our management philosophy and explains that we want to connect to a more prosperous future by building better relationships and ties across the world with all stakeholders – our customers, colleagues, partners, and society.”

As a Japanese company, it is important for Yusen to utilize that universal currency of respect in developing relationships with its customers. Doing so allows them to transition past cultural and language barriers that rival Carriers may naturally supercede through the economic value of native location. By having a fully functioning Air, Land, and Sea mobility with freight forewarding, warehousing & distribution, and supply chain, Yusen Logistics is able to enter into western markets as a viable competitor through sheer economies of scale.

The following video piece illustrates Yusen Logistics approach to spreading its company mission and vision. Within it are the relational components and, most importantly, strategy it utilizes in moving forward as a global leader in freight carrier services.

Within the next post, I look to tackle how Yusen utilizes its competitive advantage while operating in international markets. – JVB

Sources Referenced:

https://www.yusen-logistics.com/en/about-us/presidents-message/

Barney, Jay B. Gaining and Sustaining Competitive Advantage, 4^th edition.

     Prentice Hall, NJ, Pearson Education, 2011