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Offshpring Essay

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Below is an essay on "Offshpring" from Anti Essays, your source for research papers, essays, and term paper examples.

Meli Marine (a niche player) primarily competed in the highly fragmented intra-Asian shipping business. The container shipping industry did not look very attractive (low margin) according to the Porter's Five Force analysis. The threat of entry is low due to high barriers to entry. This is due to the requirement for high initial capital investment to buy assets (vessels). Moreover, the asset intensive and network-based nature of the industry creates additional challenges for the new entrant to get finances in order to achieve and maintain cost efficiencies. The operational costs are high with 50% strapped in fixed costs and 20%-40% of fuel cost (prone to fluctuation). However, the investment costs can be slightly reduced by leasing the vessels. Further, the cascading effect caused a substantial entry barrier draining out the industry profits. The bargaining power of the customers is high due to lower switching cost for customer. The lack of differentiation in the products and services further increased the negotiation power of the customers. The bargaining power of the suppliers of vessel is low due to the widespread market of leased containers. This could be supported by the low ROCE (9%) for the players of container delivery. However, the supplier power of the suppliers of terminal services was high due to dependence of ship on the port. The rivalry amongst the competitors was high due slower growth potential of the intra-Asian shipping lines. The lack of differentiation caused the rivals to be aggressive in order to

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