Emergent Phase Growth Phase Mature Phase: Cumulative Revenue

INTRODUCTION
Founded in 1978, Labroy Marine Limited, hereinafter referred to as “LML”, is a marine contractor
listed in the Singapore stock exchange. Headquartered in Singapore, LML holds a dominant market
presence as one of the largest tug and barge owners-cum-operators in South East Asia, operating a
large and diversified fleet in excess of 190 vessels and is widely known for its core shipping
businesses. LML provides an array of marine related services such as tug boat and barge building,
repairs, vessel charter (rental / leasing) services, marine contracting, marine towing services and ship
chandlering.
LML was a dynamic and fast-growing marine contractor, which diversified into marine construction,
engineering, marine logistics and offshore rig construction. In its prime, LML’s business model was
complemented by two full service shipyards in Batam, Indonesia.
COMPETITIVE LIFE CYCLE ANALYSIS
The industry and organization are currently in mature phase of the lifecycle, where the exploratory
phase has long past and only a few larger firms remain in the market space, each with its own piece
of the market share and respective niche markets. Companies such as LML focus more on improving
inefficiencies such as processes and services as the companies within this market space show little
differentiation in the services they can provide against each other. Due to which, the years of
competition between parties have reduced margins and revenue growth has plateaued. The
following illustrates where LML is positioned in a typical Competitive Life Cycle:
Cumulative Revenue
Margins
Number of Firms
EMERGENT GROWTH MATURE

PHASE PHASE PHASE
Also, due to nature of the industry, end clients and direct customers are largely acceptable to the
current norm of business practices, and do not demand for new innovative designs and solutions.
There is therefore little innovation growth in the short comings.
INTERNATIONALIZATION STRATEGY
While it appears that a majority of LML’s current service offerings are located in South East Asia,
mostly within Indonesia, it is also important to realise that LML’s service offerings are applicable
globally and they are regulated by international standards of compliances. Within Indonesia itself,
LML has established two shipbuilding and ship repair yards in Batam, and a ship operations office
headquartered in Jakarta with four operations branch offices in Kalimantan where a majority of their
assets are current plying. Due to its huge local presence and the need to satisfy direct clients who
are predominantly Indonesians, they have been compelled to adopt the need for high foreign direct
investment to provide it services. LML current competitive position can be depicted as such:
LML
HIGH
INTERNATIONAL
TRADE
LOW
LOW HIGH
FOREIGN DIRECT INVESTMENT
DIVERSIFICATION STRATEGY
LML diversified from their traditional tug and barge charter and building business and ventured into
the niche industry segment to construct offshore drilling rigs in November. In terms of industry
attractiveness and competitive advantages, this market segment sits high on value benefits. It was
ideal for LML to build on this opportunity.
HIGH
Industry
Attractiveness
LOW
HIGH LOW
Rig Construction Business
Competitive Advantage
The offshore drilling rig industry was booming exponentially with the increased demand for oil
explorations. LML’s diversification strategy essentially expanded their current scope of businesses
and leveraged on their well established shipyard facilities and shipbuilding expertise to enter into a
related and emerging rent-generating market segment of rig building.
Each of these rigs may costs up to approximately USD 180 million as per the cited articles, which
results in high capital investment. However, by way of diversifying into this segment, LML has
managed to utilize idle schedule gaps in their shipyard facilities and ‘sharing’ the overall operating
costs with higher utility hours. Financially, this diversification reduces their risk profile considering
that the traditional scope of tug and barge charter and shipbuilding has matured and saturated.
The construction of such assets also require defined qualifications and accreditations. Diversification
into this segment expanded LML’s portfolio to be a player in the offshore space which will eventually
invite new incomes streams.
STAKEHOLDER ANALYSIS
Through LML’s mission statement and actions, their commitment to align their stakeholders can be
visualized by the critical significance which the respective stakeholders see in LML, as depicted
below, with the value of 1 being critically important to the stakeholders and 5 being least significant
to the stakeholders:
Sustainability Safety Financial Social

Returns Responsibility
End Clients 1 1 1 5
Community 5 1 5 1
PRIMARY Employees 1 1 3 1
STAKEHOLDERS Key Suppliers 3 1 3 5
Financiers 1 3 1 5
Shareholders 1 3 1 1
SECONDARY Government 5 1 5 1
STAKEHOLDERS Competitors 1 3 1 5
SYNTHESIS OF FINDINGS
Their current assets and services have reached their peak in physical limits of technical performance
and there are no new technologies being explored or introduced. Unless the drive for climate
change and electrification is coerced upon by governments and end clients, its unlikely a case where
new technologies would supplant old existing practices. This has compelled LML to diversify into
new market segments, such as drilling rigs, to seek for new revenue streams.
LML appears to be suitably poised for diversification and has the internal capabilities (and resources)
available to respond to change, as well as to respond to potential threats from dynamic pressures.
From the aspect of internationalization, LML has established a controlling stake in the host country
of Indonesia to provide its services. Through which, it has been able to succeed by managing the
local tariffs domestically and gain advantages in costs management. Due to its large clientele base,
the need for tight command and control over their operations was deemed necessary. This strategic
manoeuvre had allowed the head office in Singapore to have direct oversight of the site operations
and the ability to transfer practices and skillsets internally much faster.
It is thus foreseeable that LML will succeed in the future as their clients desire the assurance of
established firms such as that of LML, and LML is able to leverage complementary resources and
internal capabilities to their advantage, ie. has the “dynamic capability” per se, to adjust to changing
business conditions
https://scandasia.com/3308-singapores-labroy-marine-buys-norways-master-marine-share/
https://www.nextinsight.net/story-archive-mainmenu-60/30-2007/22-labroy-marine-bringing-out-
the-hidden-value-of-a-potential-six-bagger
https://www.offshore-mag.com/production/article/16792913/labroy-prepares-indonesian-site-for-
offshore-services-yard
https://www.offshore-mag.com/business-briefs/company-news/article/16791346/labroy-wins-
twojackup-construction-deal
https://www.offshore-energy.biz/viking-offshore-marine-enters-mainstream-offshore-rig-market/

Emergent Phase Growth Phase Mature Phase: Cumulative Revenue

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INTRODUCTION

COMPETITIVE LIFE CYCLE ANALYSIS

EMERGENT GROWTH MATURE

Sustainability Safety Financial Social

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