Introduction

In November 1997, the acquisition of APL by NOL was successful. As compared to the larger US based APL; NOL was a small Singapore firm. Through this acquisition, it appeared that NOL was ready to become an industry leader in the shipping industry. Thus this acquisition is a strategy through which NOL buys a controlling, 100 per cent, interest in APL with the intent of making the acquired firm a subsidiary business within its portfolio. Thus APL became a wholly owned subsidiary of Singapore based NOL, a global transportation and logistics company engaged in shipping and related businesses.

Below is the study of the problems and strategies that NOL faced or is facing during the acquisition and integration of APL. …show more content…

As diversification is a dominant corporate level strategy used in the global economy, the M-form adopted by NOL/APL is a widely organizational structure. However, no one organizational structure (simple, functional or multi-divisional) is inherently superior to the other as pointed out by Peter Drucker. We will use the strategic business unit form of the multi-divisional structure with related linked strategy to illustrate the acquisition of APL by NOL.

SBU form of Multidivisional structure for implementing the related linked strategy

Firms with fewer links or less constrained links among their division use the related linked diversification strategy. Thus, the strategic business units such as NOL, APL, and APL logistics support implementation of this strategy. The strategic business unit (SBU) form consists of three levels, corporate headquarters, strategic business units (SBUs), and SBU divisions. The SBU structure is complex and used by large firms with the complexity reflected by the organization’s size and product as well as market diversity.

The divisions within each SBU are related in terms of shared products or markets or both, but the divisions of one SBU have little in common with the divisions of the other SBUs and are managed separately. Divisions within each SBU share product or market competencies to develop economies of scope and possibly economies of scale e.g. integration of the two separate IT