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Synergies between an Observed Port and a Logistic Company: Application of the Discounted Cash–Flow Model and the Monte Carlo Simulation

Author

Listed:
  • Dragan Dejan

    (Associate Professor at the Faculty of Logistics, University of Maribor, Celje, Slovenia)

  • Rosi Bojan

    (Full Professor and the Dean at the Faculty of Logistics, University of Maribor, Celje, Slovenia)

  • Avžner Toni

    (President of the ALUMNI CLUB at the Faculty of Logistics, University of Maribor, Celje, Slovenia)

Abstract

The paper addresses an analysis of potential synergies in collaboration between an observed Port in the Mediterranean Sea and Central-European logistic railway-services based company. Both companies have established a strategic partnership. The main motive was cooperation in rail transport, with a particular emphasis on potential synergies that would a rail traffic have brought to a port’s business. For the purpose of synergies valuation under uncertain conditions, a Monte Carlo simulation-based framework with integrated discounted cash flow (DCF) model is applied. The possible values of future synergies are calculated via the DCF model by simultaneously changing values of different uncertain financial parameters at each repetition of a Monte Carlo scenario-playing mechanism. In this process, predicted forecasts of future synergetic throughputs are also used for various types of observed cargo. As it turned out, the generated synergies’ values follow the approximate normal distribution. Based on statistical inference and analysis of probability intervals it was discovered that there might indeed exist certain important synergies in the collaboration between both companies. This fact has convinced us into a belief in the correctness of companies′ decision to enter into such kind of strategic cooperation.

Suggested Citation

  • Dragan Dejan & Rosi Bojan & Avžner Toni, 2017. "Synergies between an Observed Port and a Logistic Company: Application of the Discounted Cash–Flow Model and the Monte Carlo Simulation," Logistics, Supply Chain, Sustainability and Global Challenges, Sciendo, vol. 8(1), pages 1-18, May.
    • Handle: RePEc:vrs:losutr:v:8:y:2017:i:1:p:1-18:n:1
    DOI: 10.1515/jlst-2017-0001
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    References listed on IDEAS

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    3. Sayan Chatterjee, 1986. "Types of synergy and economic value: The impact of acquisitions on merging and rival firms," Strategic Management Journal, Wiley Blackwell, vol. 7(2), pages 119-139, March.
    4. Droj Laurentiu, 2011. "Determination Of Residual Value Within The Cost Benefit Analysis For The Projects Financed By The European Union," Annals of Faculty of Economics, University of Oradea, Faculty of Economics, vol. 1(2), pages 354-360, December.
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