Case Study: Melli Marine

938 Words 4 Pages
David Tian, CEO of Meli Marine, is now considering about acquiring 16 vessels from an indirect competitor, Teeh-Sah Holdings, and entering the Asia-North America market. Yet the decision has not been made and some questions are raised to help Meli Marine to analysis the case and measure the gain and loss of the case.

Critical questions
1. Does this potential acquisition of 16 vessels worth the cost?
2. Are the loyal customers powerful enough to fulfill the Asia-North America operation and will they remain loyal regardless of the price?
3. What the company should do if the shipping industry is overcapacity?
4. Is 4500 TEUs really the right size of the ships Meli Marine need?
5. How to solve the problem that highly asymmetrical
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Indeed, the relationship between Mr. Tian and the major customers is quite good and the number of customer who will choose Meli Marine without hesitate if they offer an Asia-North America service is growing. However, the whole industry still depends on powerful customers. In the intra-Asia region, the business was fragmented and, therefore, it is not sure that weather these loyal customers are powerful enough to support Meli Marine to run new business in Asia-North America lane. The other problem is price because not all customers are loyalty enough to regardless of the price. Some of the loyal customers may require lower price as a reward to their loyalty (customer loyalty). Some of them may be price sensitive, when Meli Marine offers a higher price, they would choose the company with lower price (customer loyalty). Using customer’s loyalty to be the reason is not strong enough for attract customers in a new …show more content…
The average capacity of 16 vessels sold by Teeh-Sah is 4500 TEUs. It is not that simple as it is said that these vessels are right ships of the right size and at the right price. In the whole industry, there is a trend toward the bigger ships, by 2007, the average size of the vessels on order had reached 10000 TEUs. For example, “panamax” could be loaded up to 5100 TEUs, which has similar capacity with the vessels sold by Teeh-Sah. Compare with a 10000 TEUs level ship, panamax will cost 25%-50% than the 10000 TEUs level ship because the larger ship is capable to transport the cargo much more effectively than the panamax. Not only the larger vessels, the smaller vessels can be proved better than these 16 vessels from Teeh-Sah. When Mr. Tian first came to Meli Marine, he added small vessels to the company, and succeeded with a fleet which average capacity was only 1200 TEUs. In addition, the small vessels are the suitable choice for the Meli Marine’s strategy. One of the most advantages of Meli Marine is their service. They tried everything to make their customer satisfy. For example, they would contact their customers and arrange the best time for them to collect and deliver their products, especially to the farmers. However, this strategy is more suitable for the small vessels because most customers could not fulfill a 4500 TEUs vessel. Therefore, unlike the small vessels, they must wait until the ship is full or leave with half empty vessel, both increase the cost or to

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