meli marine Essay

631 Words3 Pages
Strategy
Overview

Container shipping industry is a mature market, where few large companies dominates the market.
Main factor regards
Overcapacity, oil prices fluctuations, demand growth converging with global GDP. cascade effect, Capital requirements, increasing competitiveness,

Detailed analisys

ENTRY BARRIERS
Capital requirements. Shipping industry is asset intensive and requires a significant amount of capital for shipping acquisition as well as maintenance and operations.
Economies of scale. Per-container profit can be increased using bigger ship, assuming that the capacity is utilized entirely. This assumption is challenged by the cascade effect. Redeployment of excess tonnage by largest competitor challenge the
…show more content…
Switching cost. Very low
Buyers’ information. High, not relevant
Ability to integrate vertically (backward). Very low

The bargaining power of suppliers is symmetrical with the bargaining power of buyers. In particular:
Commodity suppliers have limited power unless they resort to cartelization (e.g. OPEC).
Suppliers of complex, technically sophisticated components may be able to exert considerable bargaining power.
The absence of substitutes increases supplier power
High switching cost increases supplier power.

Substitutes are products that perform the same function as the product of the industry (e.g. aspartame vs. sugar). NOT RELEVANT. Container shipping have about 90% of total volumes of exported goods
• Substitutes limit the potential return of an industry by placing a ceiling on the prices companies in the industry can profitably charge.
• The competition from substitutes is a function of: switching costs; substitute product’s price vs. industry’s product; substitute product’s quality and performance capabilities vs. industry’s product.

The level of competition in the industry is a function of:
- Industry concentration.
- Diversity of competitors.
- Product differentiation.
- Excess capacity and high exit barriers (for economic, strategic, emotional or legal reasons).
- Scale economies. - Cost structure: fixed vs. variable cost.

Common exit barriers include:
– specialized assets (assets with values linked to a particular business or
Get Access