Diversification Strategy as a Way to Increase the Competitiveness of a Freight Forwarding Company

Abstract

Topicality. The need of introducing new strategies and services to the activities of freight forwarding companies in order to increase their own competitiveness and maintain their positions in the market in due to the growing number of logistics service providers such as NVOCC (Non-Vessel Operating Common Carrier) the services of traditional freight forwarders and their functional differences become unclear.Aim and tasks. The systematization of diversification`s types of the activities made by freight forwarding companies as a strategic direction of increasing competitiveness in the market of relevant services, determination of diversification strategy`s types and relevant areas of activity made by freight forwarding companies, development of an algorithm for implementing the diversification`s strategy of freight forwarding companies, formation of a management decisions’ list that should accompany the process of diversification freight forwarding companies.Materials and Methods. This scientific research was conducted in accordance with the logic and methodology of system analysis, the theory of transport processes and systems, as well as with the application of operations research methods. The theoretical basis of the study was the works of leading experts in strategic management, diversification of the activities of enterprises and the work of freight forwarding companies. The morphological method was used to substantiate the development directions of transport and forwarding services. Methods of analysis and synthesis were used to structure the process of development of freight forwarding services and to structure the process of development of a transport and forwarding company.Research results. Today freight forwarding companies are the first among all integrators of various transport services, which form certain delivery systems both for single shipments and for long-term transport services of regular deliveries, therefore the need of implementing a diversification strategy in the activities of enterprises is increasing so that the integration processes pass in a fully satisfactory manner. Since freight forwarding companies simply do not provide additional services to the transportation process, but are organizers and coordinators of cargo delivery, the main task of the freight forwarder is to free the cargo owner from solving issues related to cargo transportation. That is why there is a dependency between the range of services that freight forwarding companies can offer and the client's problems that these services can cause. Of course, it is more convenient and profitable for the client to transfer all types of cargo-related work to one company, which will completely take over the organization and implementation of the process without the involvement of third companies. In order for the implemented diversification strategy to bring only competitive advantages and positive consequences to the freight forwarding company, it is necessary to study and analyze the market, the behaviour of competitors, consumers and suppliers when developing a strategy and planning new areas of activity. It is no less important to distinguish the directions the diversification strategy in order for better understanding what goals should be aimed. Only with proper analysis, development of the goals and plans, understanding trends and taking into account possible risks, it is possible to accept the proper and desired results of the implementation of the diversification strategy of freight forwarding companies.Conclusion. Due to the fact that freight forwarding companies today are organizers and coordinators of freight transportation, they need to diversify their activities and range of services to fully satisfy the needs of consumers, which consist in acquiring a complete package of services that could free the cargo owner from solving any kind of issues, related to the transportation of goods. In order for the implemented diversification strategy to bring only competitive advantages and positive consequences to the freight forwarding company, it is necessary to study and analyze the market, the behaviour of competitors, consumers and suppliers when developing a strategy and planning new areas of activity.