Strategic Risk Management at Titan Shipping Company: Lessons From Metallgesellschaft Harvard Case Solution & Analysis

IMD-1-0271 © 2010
Buraschi, Andrea; Diverse, Albert

Having completed his MBA earlier in the summertime, Peter returned, as planned, to assume the helm of the family business. The past three months had been devoted to a close examination of the financial picture of both his family as well as the family business. During this time, he reacquainted himself with the present state of the transportation industry and Titan’s recent functionality. Transportation tonnage had become a commodity company with highly volatile prices and shrinking margins. Companies which needed to ship could not depend on having an accurate figure for how much shipping tonnage would cost in the long and medium term. Such volatility was partially due to changes in petroleum markets, but, irrespective of its source, it was hurting the business of its particular customers and Titan.

Historically, Titan ’s earnings came mostly from its long term, loyal customers, but customer loyalty was diminishing. Yet, in spite of being an extremely competitive and efficient shipping company, Titan just could not match those rates, since many of its costs were fixed ahead of time. If it were to enlarge, or even hold on to Titan had to offer an advanced value proposition, its customer base – it needed something to get them locked in. And whatever that turned out to be, it would also need to reduce Titan’s exposure to explosive cargo costs so that it might get an improved valuation.

Strategic Risk Management at Titan Shipping Company Lessons From Metallgesellschaft case study solution

Subjects: Shipping; Price volatility; Risk management
Settings: Global; Shipping; Large

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