Meli Marine Line Acquisition Case
Meli Marine is a company that started its operations in the year 1974 to provide short sea services. Over time, the company has grown from offering short sea services to feeders’ services and specialized cargo transport. The company managed to expand its business after the management changes in 1991 when David Tian brought in new leadership with incorporated leasing vessels as opposed to 100% ownership.
Statement of the Problem
Meli Marine wants to enter into long distance voyage, and it considers a possible acquisition of the vessel operations business of a Tee-Sah company that comprises of 16 ships with an average capacity of 4,500 TEUs each. If the acquisition goes through, the company will ply the vessels …show more content…
This shows that consumers are price takers, who have an ability to compare prices and services of the companies and go for the best service. However, a few major departmental stores that need frequent vessel services with huge cargo quantities have the leverage of negotiating prices. For any company to survive in this industry, it should have a good relationship with a number of freight forwarders since such companies have repeat business, and they can sustain a shipping liner as Meli has done.
Competitive Rivalry
A few players perform the actual service of delivering containerized goods from one point to another in the shipping industry. Some of these players have leased vessels while others own them. Shipping liners are few, and they cut across multiple segments of the shipping line service delivery.
Threat of Substitution
The industry has a number of players with each having its terms of service. There are no entry and exit costs, so clients are free to choose any shipping liner to transport its goods. What keeps clients to a player is the kind of service they receive and transport charges. Meli offers its clients personalized transport services and in return it provides high rates of customer …show more content…
The second alternative will be to concentrate more on strengthening the clearing and forwarding arm for the time being given that this avenue has the potential of giving the company a flow of long-term good business. Once the clearing and forwarding business is well established with a good flow of containers for transport, the company should consider going on long-distance voyage.
Conclusions and Recommendation The CEO has raised the concerns about the kind of business Meli wants to venture. He is citing unpredictable prices with big companies conspiring to finish struggling ones during bad economic times. To make matters worse, the company wants to buy a complete lining business, which could be composed of old vessels with high maintenance costs.
The board should heed to the advice of the CEO and shelve the acquisition so that the company can strengthen its current business units like clearing and forwarding and it should lease more vessels as opposed to buying
Meli Marine is a company that started its operations in the year 1974 to provide short sea services. Over time, the company has grown from offering short sea services to feeders’ services and specialized cargo transport. The company managed to expand its business after the management changes in 1991 when David Tian brought in new leadership with incorporated leasing vessels as opposed to 100% ownership.
Statement of the Problem
Meli Marine wants to enter into long distance voyage, and it considers a possible acquisition of the vessel operations business of a Tee-Sah company that comprises of 16 ships with an average capacity of 4,500 TEUs each. If the acquisition goes through, the company will ply the vessels …show more content…
This shows that consumers are price takers, who have an ability to compare prices and services of the companies and go for the best service. However, a few major departmental stores that need frequent vessel services with huge cargo quantities have the leverage of negotiating prices. For any company to survive in this industry, it should have a good relationship with a number of freight forwarders since such companies have repeat business, and they can sustain a shipping liner as Meli has done.
Competitive Rivalry
A few players perform the actual service of delivering containerized goods from one point to another in the shipping industry. Some of these players have leased vessels while others own them. Shipping liners are few, and they cut across multiple segments of the shipping line service delivery.
Threat of Substitution
The industry has a number of players with each having its terms of service. There are no entry and exit costs, so clients are free to choose any shipping liner to transport its goods. What keeps clients to a player is the kind of service they receive and transport charges. Meli offers its clients personalized transport services and in return it provides high rates of customer …show more content…
The second alternative will be to concentrate more on strengthening the clearing and forwarding arm for the time being given that this avenue has the potential of giving the company a flow of long-term good business. Once the clearing and forwarding business is well established with a good flow of containers for transport, the company should consider going on long-distance voyage.
Conclusions and Recommendation The CEO has raised the concerns about the kind of business Meli wants to venture. He is citing unpredictable prices with big companies conspiring to finish struggling ones during bad economic times. To make matters worse, the company wants to buy a complete lining business, which could be composed of old vessels with high maintenance costs.
The board should heed to the advice of the CEO and shelve the acquisition so that the company can strengthen its current business units like clearing and forwarding and it should lease more vessels as opposed to buying