The business of logistics Essay Example | Topics and Well Written Essays - 1000 words

The business of logistics - Essay Example The acquisition was aimed to invest in future infrastructure, increase industriy syngeries, leverage scale of economics, improve competitive positioning and thereby reduce operational and management costs. The business of airlines being very volatile and Toll's competitor having the majority shareholding in Virgin Blue,overcapacity in the shipping business and problematic rail business it was difficult for Toll to establish a firm foothold toward leadership position in the logistics industry. Toll had only two alternatives to either to merge with some bigger international transport company to achieve its strategic goal or acquire related business of high standing to get business opportunities to expand further and consolidate its position. Toll had the vision to get advantage by acquiring Patrick but still there were several internal risk involved. Whether the acquisition would generate synergy and integrated cost saving. Whether investment in an aging infrastructure of Patrick corporation would prove productive or turn negative in future. Will the acquisition build competitive advantage for Toll's business in the logistic industry. Patrick corporation themselves needed to be reorganized and restructured with injection of massive funds of $1.1 billion to stablize. These were challenging questions for the leadership to answer. However, the oportunity in the industry after acquisition was great to hold about 15% of the market share with the revenues of both the transport giants that was about $5.1 billion in 2005. This market share would transform them to formidable position in the domestic and international transport and storage market. Toll and Patrick both had massive transport and storage assets which is likely to be over $7.3 billion after consolidation. This asset strength would put them into strategic and competitive advantage position to command leadership in the industry. Patrrick had a massive asset worth $4.6 billion. They had 14 major operating divisions to earn regular revenues: Patrick Terminal as the largest operator of container terminal to provide high technology logistics movement. Patrick Autocare- that offers an integrated service of processing, distribution and storage of motor vehicles that operates in partnership with Patrick Stevedoring. Patrick Port Services- that offer a national network of land based services to importers and exporters, shipping lines, freight forwarding agents, and customs brokers. Patrick PortLink- the interface provider between Patrick's road, rail and stevedoring services - Patrick Intermodal operates a national network of interstate transport, warehousing, distribution and wharf cartage services. - Patrick Defense Logistics provides logistics support services to the Defense sector, including commercial and government organizations with specialist project management requirements - Patrick International Freight services to Australian importers and exporters. - Patrick Air Services is the airline ground handling business of Patrick Corporation Toll Holdings will be able to utilize