Ceo of Neptune Orient Lines Company

If I was the CEO of Neptune Orient Lines Company (NOL),I would buy APL Company. Merger and Acquisition in shipping industry had become more and more popular since 1990s.As analyst claims the industry was threatened by declining rates and overcapacity, acquisition strategy offer many potential advantages in order to overtake these two industry problem but not only the problems that NOL faced at that time, and formulate the long term survival and success.

Since Singapore is tiny in size, the saturation point will reach at someday eventually despite how busy it is. Also, globalization is a new trend in business world, and many global companies are originated from US , international trade between it and other parts of the world will definitely have a rapid growth. Therefore, expand into US is a good way with the purpose of brighter future. According to the case, APL had the largest freight rail services in many parts of US and harbor terminal operations worldwide. NOL could enjoy entering in this huge market thanks to this acquisition. Besides, this is match with the mindset of Singaporean: small geographical size has never stopped us from dreaming big. This is the largest acquisition ever made by a Singapore company, with cultural sense and innovativeness, this action could probably get support from government and let things run smoothly.

The second thing that can notice is that the cost saving advantage. The oil price plays a crucial role in the shipping business. While energy prices is expect to increase in future and oil is no exception. On the other hand, increase the size as well as the bargaining power is the only self-help method for shipping industry. After the acquisition of APL, NOL would become one of the largest carriers in the world, the transaction made everyday and oil used was undoubtedly high. Another significant projected cost saving is the administration cost. In such a big company and established by the government, the administration cost associate with every transaction, clerical as well as management. It's really waste of times and money. But after the acquisition, not only these costs can sharply decreases, but also the operating cost of container feet from the consolidation of certain operation and improved efficiencies, including enhanced network optimization ,streamlined information technology systems and etc.Synergies can be extracted from it.

Moreover, NOL can get one more competitive advantage that