Assessment Of Environmental Factors In The Ship Investment Decisions

Ship market and maritime transport market, as the two important components of shipping market, are closely related with and interacted on each other, and both restricted by environment. Investment in ship, which is the initial step and one of the most important business for shipping enterprises, is one of the main business activities in ship market. It plays an important role in the development of international maritime industry and serves as the driving force for its growth.Environment is an essential factor for the existence and development of enterprises. Consequently, the research and analysis on market environment are the prerequisite for enterprises to run business and make investment. It's a universal truth that the fittest survives. The effect of environment may result in either opportunity or challenge.Investment in ship is not only affected by macro-environment, but by other environmental factors. Generally speaking, the enterprise can re-structure the internal micro-environmental elements with its own effort, but the macro-environmental factors cannot be controlled merely by enterprises, instead, enterprises have to make research on them. In order to run business and make investment, enterprises should make the best use of those advantageous environmental factors and prevent been affected by disadvantageous factors. Financially, shipping industry requires heavy investment and face special risks. Investment in ship is the main investment activity in shipping industry, from which the industry risks are clearly reflectedInvestment in ship is a special kind of investment. It is similar to other kinds of investment in some aspects, but it also enjoy its own features, which lies in its large amount of investment fund, long payback period, the variety in investment currency, complicity in the operation, high risks, fast changes in the market and difficulty in choosing the right time for the investment. As a result, the analysis on the environmental factors is of much importance.This paper starts from the analysis on the currently existing problems and explanation of reasons in the investment in ship so as to introduce the concept of"Environment".Regarding the effect of environmental factors on investment in ship, firstly, the author makes qualitative analysis. In the author's opinion, there're three types of environmental factors in ship investment, namely, macro-environment, micro-environment within shipping industry and other related environmental factors. Macro-environment is mainly composed of political and lawful environment, economic environment, technical environment, natural environment, social and cultural environment. Micro-environmental factors include competition situation in the market, shipbuilding market, freight rate and so on while other related environmental factors refer to enterprises development plan, different ways of payment and failure in cash flow because of cargoes on the way etc..On the basis of the qualitative analysis, the author put forward to the concept of Environment Function in Ship Investment, that is, the relationship between ship investment and the above-mentioned three environmental factors can be reflected by such a function. Then, AHP is introduced to make quantitative analysis on how environmental factors affect investment in ship. By fixing the coefficient, the environment index is deduced. Besides, the author in the paper also makes a case study on the investment practice.The last chapter summarizes the whole paper and put forward to Time-Space-View in ship investment decision making and explains how to apply the environment function to investment practice.ZOU Weidong (MBA) Directed by Prof. SHAO Ruiqing...