The purpose of this study

The main problem in this study is as follows:

What are the entry barriers to the High North, and how do they influence the choice of entry strategy?

The area is still young in an industrial perspective, meaning that there are few incumbents.

Given the uniqueness of the environmental factors, there is a new set of rules and regulations related to operations in the area. The government and other institutions are still working on several specific criteria that must be fulfilled for the entrants, so the political influence can be described as uncertain, especially by Norwegian standards. The climate also indicates the need for local competence and experience, which may not be transferable from operations in the North Sea, the Norwegian Sea and similar environments. In the same regard, new

technologies might be necessary to mitigate these new challenges.

The potential entrants must then develop a viable entry strategy. The strategy that is chosen should contribute to creating the most favorable solution for their customers, in order to become the chosen supplier in the new market. Based on previous research, as elaborated in chapter 2.1, we define entry strategy into a new market as follow:

A firm’s configuration of resources internally and its connection of external resources through cooperation to overcome barriers when entering a new market.

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The resources and capabilities of a firm decide to which degree a company is able to compete.

If those that are needed are not already in place, they must be acquired through other methods.

Everything from the physical resources of a company, to the intangible knowledge their employees possesses is an example of this, and how these are used is critical for future competitiveness. Relations to customers, suppliers and competitors may yield competitive advantages. Internal development can occur through resource base configuration and entrepreneurship, which enables the firm to be dynamic and exploit opportunities as they present themselves.

Becoming the chosen supplier in the OSV-market represents many difficulties. High entry barriers will hinder the emergence of new competitors in a market. Competitive advantages to overcome these can often be found internally in the form of resources, both physical and organizational. The OSV-industry is capital intensive, due to the high costs of vessels, but the intangible resources such as knowledge, innovativeness and experience, may prove just as important as the physical resources. The entrants must map these resources to get a better knowledge of which strategic capabilities is necessary, and how to build a competitive advantage based on these.

Even though there are few incumbents in the High North thus far, the area will prove

interesting to several of the market leaders from other areas. The competition status must be assessed, especially with regards to the barriers for new entrants. In addition to the

competitive barriers, there are regulatory and technological ones. An example is the strict demands related to both practices and equipment, which must be met in order to operate in Arctic waters. Hereunder, the new polar code, which will increase the demands as to “ship design, construction and equipment; operational and training concerns; search and rescue;

and, equally important, the protection of the unique environment and eco-systems of the polar regions” (IMO, 2014)

The entry barriers described above are tied to the following factors: competition,

technological demand and regulatory barriers. It is necessary to go in depth on how these affect the company’s choices of entry strategy with relation to the resource base,

entrepreneurial orientation and modification of the business model.

The competitive forces dictate the power relation between the customers, suppliers and competitors in the market. The new entrant must adjust their entry strategy to mitigate the barriers created by the most influential actors in the market.

5 This leads us to the first research question:

R1: What is the relation between the competitive forces and the choice of entry strategy for small to medium sized shipping companies in the High North ERRV-market?

The high technology market in the High North may present obstacles for new entrants that are not yet invested in such technologies. The new entrant might have to considerably expand its resource base by new and unfamiliar methods, albeit, the newcomer might prove to be better than any other accessing and utilizing these. If the smaller firms are able to use their size as a competitive advantage instead of disadvantage, they may prove to be more dynamic and have a higher chance of adapting to technological development.

This leads us to the second research question:

R2: What is the relation between technology demands and the choice of entry strategy for small to medium sized shipping companies in the High North ERRV-market?

On the Norwegian Continental Shelf (NCS) there is a comprehensive mandatory framework from government institutions like the Norwegian Petroleum Safety Agency and the Maritime Directorate that one has to encounter as a ship owner. Shipping companies have to invest a lot of resources to meet these demands, and the requirements influence the way the companies operate. The regulations are under development in the High North, and may also provide uncertainty for the concerned OSV companies.

This leads us to the third research question:

R3: What is the relation between regulatory demands and the choice of entry strategy for small to medium sized shipping companies in the High North ERRV-market?

The following figure visualizes the correlation between our independent and dependent variables:

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With this in mind, we seek to find answers to how a company can establish themselves as a central player in the high tech offshore service vessel market, with a focus on the response and rescue segment. There is no single answer to these questions, as different companies will find themselves in different situations, with their unique set of resources and capabilities.

Nonetheless we hope to simplify the process by utilizing a framework of theories and concepts, and adapting them to the given industry.