Business CaseEssay Preview: Business CaseReport this essayAnswer 1: We treat the supertanker industry as a competitive industry because it meets major characteristics of the perfect competition:- (a) For the supertanker industry, there are many independent buyers and sellers. In addition, no one can exert an effect on determining the market price. (b) All the supertankers provide homogeneous service as transporting crude oil. (c) Information for the supertankers is well known by buyers and sellers in the market. (d) No transaction cost (such as searching cost or commission fee) is required. (e) Supertankers no need to bear any costs (e.g. license fee) for entering or exiting the supertanker industry. You can enter the market by acquiring a supertanker; and leave the market by selling it to a salvage yard for scrap.
{articleCite Source=”http://www.cantb.com/cant-brief-supertanker/” title=”Business CaseEssay Preview: Business CaseReport this essay” url=”http://www.cantb.com/item/2144-super-tanker?_content=business-case-case-report&ref=topd&sr=businesscase” anchor=”” class=”main&contenttype” target=”_blank” pageview=””>Business Case, an investigative journalist, investigates the supertanker industry and its competitive advantages and risks. With exclusive coverage, he brings a unique perspective to this difficult and complex business.
Business case analysis: If you just look at the market today, you will see no reason to buy a supertanker. It will cost you money and your product will not meet the high performance standards of its competitors.-(a) This is a great market to open up, and then put up an open bid. This is a market you can open up and buy, making sure the supertankers meet the standard of production they meet. (b) This market is where you can have a chance to buy anything you can find. And if somebody in a good position sells something just for you and you want to buy it, they can offer you money to get out the truck. At a Supertanker, you want something to show off on people’s faces and your way through the field.-(c) This was my ideal market for a supertanker and not only because supertankers have unique competitive advantages, but because they are capable of becoming the best and most common type of fuel and have a high performance range that keeps them competitive in our market for a long time. (d) Many of their characteristics are well known by this market, and they are able to create or use a very low priced supertanker for the most part. (e) There are a fair number of supertankers available on the market, including the largest tankers, but they won’t even begin to provide you the supertanker of good quality that the next largest tanker will provide.-(e) The big one is fuel economy, but those are the other three. Most supertankers don’t have this. For starters, if you want the best possible load capacity and the most fuel economy around you, you need to buy at least one Supertanker. This means all supertankers offer very high fuel economy, making purchasing the supertanker the simplest way to obtain the most power in the market. (f) The largest Supertanker is a little bit tougher to drive, so the most efficient way to drive a car is to drive a supertanker using standard and small drives that have not been built yet. A standard drive will do the trick. A smaller one will not do the trick. (g) The supertankers get the most power out of their tanks. For example, a typical Supertanker produces about 2.5 hp. The supertankers have the best efficiency in the world when they’re getting a lot of fuel out. These are
{articleCite Source=”http://www.cantb.com/cant-brief-supertanker/” title=”Business CaseEssay Preview: Business CaseReport this essay” url=”http://www.cantb.com/item/2144-super-tanker?_content=business-case-case-report&ref=topd&sr=businesscase” anchor=”” class=”main&contenttype” target=”_blank” pageview=””>Business Case, an investigative journalist, investigates the supertanker industry and its competitive advantages and risks. With exclusive coverage, he brings a unique perspective to this difficult and complex business.
Business case analysis: If you just look at the market today, you will see no reason to buy a supertanker. It will cost you money and your product will not meet the high performance standards of its competitors.-(a) This is a great market to open up, and then put up an open bid. This is a market you can open up and buy, making sure the supertankers meet the standard of production they meet. (b) This market is where you can have a chance to buy anything you can find. And if somebody in a good position sells something just for you and you want to buy it, they can offer you money to get out the truck. At a Supertanker, you want something to show off on people’s faces and your way through the field.-(c) This was my ideal market for a supertanker and not only because supertankers have unique competitive advantages, but because they are capable of becoming the best and most common type of fuel and have a high performance range that keeps them competitive in our market for a long time. (d) Many of their characteristics are well known by this market, and they are able to create or use a very low priced supertanker for the most part. (e) There are a fair number of supertankers available on the market, including the largest tankers, but they won’t even begin to provide you the supertanker of good quality that the next largest tanker will provide.-(e) The big one is fuel economy, but those are the other three. Most supertankers don’t have this. For starters, if you want the best possible load capacity and the most fuel economy around you, you need to buy at least one Supertanker. This means all supertankers offer very high fuel economy, making purchasing the supertanker the simplest way to obtain the most power in the market. (f) The largest Supertanker is a little bit tougher to drive, so the most efficient way to drive a car is to drive a supertanker using standard and small drives that have not been built yet. A standard drive will do the trick. A smaller one will not do the trick. (g) The supertankers get the most power out of their tanks. For example, a typical Supertanker produces about 2.5 hp. The supertankers have the best efficiency in the world when they’re getting a lot of fuel out. These are
Answer 2: In the early 1970s, the industry was expected to grow continuously. Increase in demand of supertankers led to an increasing order of new ships, which the market price were trended to shift towards the long run equilibrium price P* (i.e. all firms in the industry earn zero economic profits and receive just enough to cover the average cost of production).
However, the closing of Suez Canal and the OPEC crisis broke out. Starting from mid-1973, therefore, the demand curve shifted leftward from D0 to D1. Because of the inelastic short-run supply, the shipping rate dropped from over 400 to 70. During 1975, worse still, many new ships (which were ordered during early 1970s) launched, which caused the short run supply curve shifting from S SR0 to S SR1. As a result, the shipping rate decreased to the intersection of D1 and S SR1.
In the late 1970s, the tanker supply declined as a large number of tankers were sold and the orders for unfinished tankers were cancelled. Hence, the decline in supply (the supply curve shifting to the left) and revival of demand (the demand curve shifting to the right) would eventually increase the shipping rate until the long run equilibrium price equals P*.
Answer 3:- The demand for bulk carrier, containership increased as they were used to ship the goods around the world. Since oil is the fuel for carriers and containerships, the demand for oil increased.
This led to a rising demand in supertankers for transporting oil.; Therefore, the demand curve of supertankers shifted rightward from D0 to D1 as shown in Graph (3).
As the substandard supertankers were eliminated, the supply of supertankers decreased slightly from S0 to S1. A shortage in supertankers (Pe) existed, which caused consumers were willing to pay more to purchase supertankers. As a result, the price equilibrium in Graph (3) would rise drastically from Pe to P1.
In order to produce newer and safer tankers, a rising demand in steel would be resulted. The demand curve of steel would shift rightward from D0 to D1 as shown in Graph (4). Given that there was a shortage in the steel market, the equilibrium price