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4) Alternatives
Melis Conflict
To grow and maintain Meli Marines position as a leading container carrier in the face of increasing competitor intensity, cascading effects and low returns on vessel operations.
Competitive Landscape Strong customer relations Leader in on-time delivery Specialized containers Capabilities in logs and transhipments Flexible cost structure
Well-priced ships for sale that provide economies of scale Fast growing terminal operations and Shipment Origination sectors Trans-pacific volume opportunities and growth
Cascading Upward cost pressure from commodity prices and regulation Competitors operate terminals Global trade imbalance Dependant on niche clients
Where do we compete?
$8B 9% 11%
$102B 3% 7%
$28B 34% 7%
Players
All Players
Notes
Current Focus on shipment origination Expand into terminal operations Partnership with Evergreen
Ships
Markets
Operations
Competitor Landscape
Pros
Gain a larger percent of current customer business Significant volume opportunities and rapid growth Diversification of markets Interfere with competitor profit pool
Cons
Difficult to maintain strong customer relations in North America High possibility for inefficient backhaul Greater fixed costs Uncompetitive long-haul boat capacities Downturn in global trade
Pros
Lower VC per container More stable rates on a per TEUkilometer basis Significant share at each port Greater ability to compete with larger boats Increase in capacity
Cons
Increased impact and threat of cascading Missing out on significant volume opportunities & rapid growth Lack of diversification Higher fixed costs
Pros
Gain a larger percent of current customer business Instant access to more customers Significant volume opportunities and rapid growth Diversification of markets
Cons
Loss of autonomy Conflicting company cultures Reliant on a successful deal
Pros
Leverages customer loyalty Reinforces key competencies & builds stronger relationships High return on capital employed
Cons
Quality of service may not be scalable No risk mitigation of cascading
Arriving at Recommendations Recognize the inherent strengths, opportunities, challenges Develop a plan that optimizes profitability and growth potential Plan of Action Invest in vessels and lease idle capacity Continue to grow business in Asia Slowly pursue NA market Grow shipment origination
Rationale
Rationale
Rationale
Shipment origination provides high available returns as well as synergistically grows our customer base for vessel operations
Rationale
1. 2. 1. 2. 3. 1.
Finance purchase of 16 vessels Establish relationships with NA customers Further development of shipping origination and acquisition of customers in Asia market Phased-in entry to NA Leasing of idle capacity Monitor & evaluate NA operations for profitability and quality
Mitigation Strategy
Hedge against fuel prices
Cascading: Compete using & time efficiency Freight Forwarding: Critical growth step for managing customer relationships Offer Lower Prices: Focus on relationship management. Offer freight forwarding & container specialization
Grow Business
Reduce risk
Increase profitability