Consolidated strategic analysis report for the Central Communication Port

Introduction

The hot topic related to the construction of the Central Communication Port is heating up public opinion, finding support both among people supporting the construction of the investment, as well as opponents who consider the too high cost of the investment and the scale of the project as the main argument.

At Nowicki Consulting, we conducted a strategic analysis of the investment from the point of view of the owner, i.e. the Polish State. For this purpose, we used research methods, the results and conclusions of which you can read in this entry.

So far, most economists use quantitative methods, pointing to the high cost of investment, while omitting qualitative methods.

For the purposes of this entry, we will present the results of the macro-environment analysis, which we carried out using the PESTEL method (Political, Economic, Social, Technological, Environment, Legal). Analysis of the aviation sector, which we carried out using Porter's 5-Forces Analysis, and project analysis using the SPACE (Strategic Position and Action Evaluation) method - originally by H.Rowe, R. Mason and K. Dickel. In the original version, its structure favors subjective assessments and choices, therefore modifications were made to obtain more objective assessments of the strategic situation through its further operationalization.

The CPK investment includes 3 investment components - the airport, auxiliary infrastructure and high-speed rail connections (the so-called "spokes").

PESTEL analysis

What is the macroenvironment?

The macroenvironment is a complex set of external factors that influence the functioning of an organization, industry or economy as a whole. It is a broad context that includes social, economic, political, technological, ecological and legal factors. The macroenvironment shapes the conditions in which an entity or system operates and can have a significant impact on its success or failure.

In short, the macro-environment refers to all the external factors that can influence an organization, an industry or the economy in general, creating the context in which they operate and develop.

Why does this matter when making strategic decisions?

The macroenvironment is important when making strategic decisions because it is the context in which an organization or enterprise operates. There are several reasons why taking into account the macroenvironment is crucial in the strategic decision-making process:

1. Risk and uncertainty: The macroenvironment can generate risk and uncertainty for an organization because external factors, such as political, economic or technological changes, can significantly impact its operations. Awareness of these factors allows you to better understand potential threats and opportunities and allows you to adjust your strategies accordingly to reduce risks and realize benefits.
2. Competition: The macroenvironment influences industry competition by shaping market conditions, regulations, and changing customer preferences and behaviors. Analysis of the macroenvironment allows you to understand the strength of competition, industry trends and potential threats from new competitors, which is crucial when developing a competitive strategy.
3. Changes in the business environment: The macroenvironment may undergo dynamic changes, for example as a result of new legal regulations, technological progress, social or economic changes. Making strategic decisions without taking these changes into account may lead to a loss of competitiveness or even threaten the existence of the organization.
4. Development opportunities: The macroenvironment may also create new development opportunities for organizations, for example through the development of new markets, changes in customer preferences or technological progress. Awareness of these opportunities allows an organization to leverage the benefits of a changing environment and adapt its strategy to maximize potential benefits.

In short, analysis of the macroenvironment is a key element of strategic decision-making because it allows for a better understanding of the context in which the organization operates, identifying threats and opportunities, and appropriately adapting strategies to achieve success in the changing business environment.

PESTEL Analysis (Politics, Economy, Society, Technology, Environment, Law + Military)

Below is a brief description of the individual factors that are components of the PESTEL analysis.

1. Polityczne (Political):- The policy component of PESTEL analysis focuses on assessing the impact of government policies and decisions on the project. This includes political stability, government investment priorities, transport infrastructure policy and aviation regulation. The analysis of this component also includes an assessment of the project's relationship with the government, political support for the investment and the risk of political changes that may affect the project schedule and budget.
2. Ekonomiczne (Economic): The economic component of the PESTEL analysis assesses the impact of economic factors on the project. This includes factors such as the country's economic situation, commodity price trends, inflation, exchange rates and availability of financing. The analysis of this component includes an assessment of investment costs, potential economic benefits, financial risks and forecasts regarding demand for airport services.
3. Społeczne (Social): The social component of the PESTEL analysis focuses on assessing the impact of social aspects on the project. This includes regional demographics, social expectations, consumer trends, and employment and social equity issues. The analysis of this component includes an assessment of the project's reception by the local community, reaction to the planned changes and possible social conflicts.
4. Technologiczne (Technological): The technology component of the PESTEL analysis assesses the impact of technological progress on the project. This includes innovations in air transport, the availability of new technologies, digitalization trends and cybersecurity threats. The analysis of this component includes an assessment of the possibility of using modern technologies in the project, the risk associated with failures of IT systems and the need to invest in IT infrastructure.
5. Środowiskowe (Environmental): The environmental component of the PESTEL analysis assesses the impact of the project on the natural environment. This includes greenhouse gas emissions, natural resource use, biodiversity conservation and sustainability requirements. The analysis of this component includes the assessment of potential effects on the environment, the risk of violating environmental regulations and the need to apply sustainable development practices.
6. Prawne (Legal): The legal component of the PESTEL analysis assesses the impact of laws and regulations on the project. This includes building regulations, environmental regulations, employment law, competition rules and safety requirements. The analysis of this component includes an assessment of the project's compliance with applicable regulations and standards, the risk associated with possible changes in regulations and the need to obtain appropriate permits and permits.
7. Bezpieczeństwo Narodowe (Military): Ten element został dodany przez nas do analizy PESTEL ze względu na militarny charakter inwestycji. W czasie pokoju i rosnącego napięcia możliwość sprawnego przemieszczania wojsk i sprzętu jest kluczowym czynnikiem sukcesu na wypadek eskalacji napięć.

Conclusions after PESTEL analysis

Sytuacja makrootoczenia jest skomplikowana i rzutuje na powodzenie realizacji projektu. Czynniki polityczne mają istotny wpływ na powodzenie realizacji inwestycji i jej późniejsze funkcjonowanie, ale naciski wewnętrzne na politykę proekologiczną, wpływają in minus w stosunku do realizacji przedsięwzięcia. Rosnąca tendencja do walki ze zmianami klimatu, jak również coraz dalej idąca polityka związana z redukcją emisji CO2 wpływa na trudne warunki do funkcjonowania Portu Lotniczego. Członkostwo w NATO oraz sytuacja geopolityczna zmusza nasz kraj do realizacji przedsięwzięcia jako solidnego i poważnego sojusznika. W czasie pokoju, w przypadku eskalacji napięć koniecznym jest usprawnienie transportu żołnierzy oraz sprzętu, a tutaj komponent kolejowy oraz lotniczy są niezbędne. Gospodarka Polski jest stabilna, a tempo wzrostu gospodarczego przyzwoite, co pozytywnie rzutuje na podjęcie decyzji. Przyzwolenie społeczne sprzęga się z proekologicznym charakterem inwestycji w komponent kolejowy.

Summary

The PESTEL analysis showed 4 factors that may negatively affect the implementation and functioning of the investment. 8 factors favor the implementation of the investment + the aspect related to National Security.

One of the methods that could eliminate the impact of negative factors would be to prepare scenarios of possible events in order to be able to react according to the changing macro-environment.

Porter's 5-Forces Analysis

Do oceny otoczenia bliższego projektu posłużyliśmy się analizą 5-Sił Portera. M. Porter analizował sektor poprzez zbadanie pięciu czynników (sił), które kształtują jego atrakcyjność. Poniżej prezentujemy opis metody w formie graficznej oraz ocenę poszczególnych sił.

Analysis

1. Threat from new competitors:
   The construction of the CPK attracts the attention of investors, and new ports may compete with the CPK. This may include other major airports or intermodal transportation centers. However, due to enormous capital requirements and strict industry regulations, new competitors may face high barriers to entry. Existing financial obligations, the need to obtain appropriate permits and providing the infrastructure needed for the operation of such a large transport complex constitute a major challenge for potential competitors.
2. Supplier Force:
   Suppliers, such as construction companies, suppliers of construction materials or transport services, may influence CPK through their negotiating power. If the availability of certain materials is limited or there are monopolistic structures among suppliers, they may impose higher prices, which may increase the construction and operating costs of CPK.
3. Force of Buyers:
   CPK buyers, including airlines, carriers, logistics companies and passengers, may influence CPK's operations. Their bargaining power may come from their ability to choose alternative ports or transportation routes. However, due to the strategic importance of CPK for national and international transport, buyers may have limited negotiating capacity.
4. Threat of substitutes:
   Alternative forms of transport, such as rail, road or sea transport, may constitute substitutes for CPK. However, differences in time, cost and service levels may limit the attractiveness of substitutes. For example, rail transport may be more efficient in some cases, but less flexible than air transport, which means that substitutes are not always competitive with CPK.
5. Degree of competition in the industry:
   Competition in the aviation and transportation industry can be high due to high interest and international competition. CPK will compete with other airports and intermodal transport centers for passengers, carriers and airlines. However, CPK's unique features and specialization can help reduce direct competition, for example by offering specialized services for specific types of cargo or passengers.

Summary and conclusions

Summarizing the analysis of Porter's Five Forces in the context of the Central Communication Port (CPK) project, several key conclusions can be drawn regarding the attractiveness of the air and intermodal transport sector:

1. High entry barriers: The air and intermodal transport industry is characterized by high entry barriers resulting from huge capital requirements, strict regulations and long time needed to obtain the necessary permits and infrastructure. This makes it difficult for new competitors to penetrate the market, which benefits existing players like CPK.
2. Risk from suppliers: The negotiating power of suppliers, such as construction companies or material suppliers, may pose a risk to CPK by possibly increasing prices and operating costs. Therefore, it is important to maintain stable relationships with suppliers and develop strategies to diversify supply sources.
3. Limited buyer force: Due to the strategic importance of CPK for national and international transport, the negotiating power of buyers may be limited. However, customer needs and expectations should be monitored to adapt the CPK offer to changing market conditions.
4. Threat of substitutes: Alternative forms of transport may constitute potential substitutes for CPK. Therefore, it is important to constantly monitor and adapt the strategy to possible changes in customer preferences and to develop unique features and services that differentiate CPK from the competition.
5. Competition in the industry: Competition in the air and intermodal transportation industry can be high due to the large number of participants and international competition. Therefore, it is important to develop a competitive strategy that takes into account both the unique features of CPK as well as marketing, operational and pricing strategies to maintain a strong position in the market.

To sum up, the air and intermodal transport sector in which CPK operates may be attractive due to high entry barriers, limited buyer power and the risk of substitutes. However, there is a need to consciously manage risk and competition, and constantly adapt strategies to changing market conditions, to maintain the attractiveness of the sector and achieve business success.

SPACE (Strategic Position and Action Evaluation) analysis

SPACE analysis (Strategic Position and Action Evaluation) is a strategic tool used to assess the strategic position of an organization and identify appropriate actions. It consists of two main elements: strategic profile analysis (SPA) and matrix analysis (Strategic Factor Analysis - SFA).

SPACE analysis allows an organization to understand its position in the market, determine its strengths and weaknesses, and identify potential areas for development. Ultimately, this helps in formulating an action strategy, taking into account both the external and internal environment.

Analysis

Analiza SPACE CPK może być przeprowadzona w oparciu o cztery kluczowe wskaźniki: stopień stabilności, stopień konkurencyjności, stopień otwarcia na zmiany oraz stopień sytuacji finansowej.

1. Degree of stability: CPK, as a large infrastructure project, may be characterized by a moderate degree of stability. On the one hand, there is stability related to the planned government financing of the project and the long-term demand for transport services. On the other hand, risks related to politics, changes in regulations and unpredictable external factors may destabilize the project.
2. Degree of competitiveness: In the case of CPK, the degree of competitiveness may be relatively low, because CPK has the potential to become the dominant transport hub in Poland. However, there is competition from other large airports in Central and Eastern Europe and from other forms of transport such as rail, road and seaports.
3. Degree of openness to change: CPK is a project open to changes due to its scale and complexity. This is both an opportunity and a challenge, because the project must be flexible and ready to adapt to changing market, technological and political conditions.
4. Degree of financial situation: The financial situation of CPK can be assessed as stable, taking into account the government's involvement and the possibility of obtaining financing from EU funds and other sources. However, due to the scale of the project and the long payback period, there is a risk associated with maintaining financial stability during the project implementation.

To sum up, the SPACE CPK analysis suggests that this project is characterized by a moderate degree of stability and openness to changes, a low degree of competitiveness and a relatively stable financial situation. The conclusion is that CPK has potential, but requires flexibility and effective risk management to achieve success.

Assessment and final conclusions

PESTEL, Porter's Five Forces and SPACE analysis provide a deep understanding of the external and internal environment of the Central Communication Port (CPK) project. When looking at infrastructure projects such as CPK, we must take into account a wide range of factors that may influence its development and success.

PESTEL analysis allows us to look at CPK from various perspectives, from political government decisions and legal regulations to changes in society, economic trends, technological progress, and environmental issues. All these factors can have both positive and negative effects on the project. For example, changes in air transport regulations or changes in the country's economy may have significant consequences for CPK.

Porter's Five Forces analysis reveals specific threats and opportunities related to the competitive and market environment of CPK. There is competition both with other airports and intermodal transport centers, as well as with alternative forms of transport. However, high barriers to entry for new competitors and limitations on substitution may limit the strength of these threats.

SPACE analysis allows us to assess the strategic position of CPK and identify areas for development. CPK has a moderately stable strategic position, but requires flexibility and readiness for changes. Challenges such as competition and project complexity require effective action strategies that leverage financial power and government support to achieve success.

The conclusion is that CPK has potential, but at the same time it carries certain risks and challenges. It is crucial to properly manage these factors through a comprehensive risk management strategy focused on flexibility, reactivity and effective adaptation to the changing business and regulatory environment. This is why it is necessary to develop a strategy that takes into account all identified impact factors, as well as potential synergistic benefits resulting from the analysis.