MMA has its own specialised fleet and as part of their business purchases and sells vessels to develop the capabilities of the company. In the 2009-2010 financial year, MMA purchased four vessels throughout the year and sold those older vessels that couldn’t provide the same capabilities. There are few risks associated with this business strategy as investing in MMA’s fleet is a necessity due to the vessels being a core part of the company’s business operations. However, a potential risk of purchasing and selling vessels is buying and selling at a price beneficial to the company.
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Investing in its supply base infrastructure may also have associated risks but again it is a core part of the company’s business operations and the risks are involved are minimal. The cost of investing in the company’s supply base infrastructure is a risk in itself as it requires a substantial amount of capital which could increase the company’s debt affecting the financial structure of the company. However, this risk is outweighed by the potential future benefits foreseen by the company’s cost benefit analysis.
MMA’s strategy to shift their boat services from primarily on-demand to long-term contracts has seen the company develop a long-term contract with the Port Authority of Singapore. A major risk associated with this business strategy is the change and uncertainty in clientele. Mainly providing on-demand contracts previously has afforded the company a certain clientele whose repeat business has made the operation profitable. Focusing primarily on long-term contracts could be risky as previous clients have used the company for on-demand contracts.
