Documente Academic
Documente Profesional
Documente Cultură
01 Executive Summary
Fright 48 is a goods transport and freight hauling trucking business based in Karachi. The goods transport industry currently shows a strong growth marked by a higher demand, but also growing costs. The development of new business strategies and solutions seems critical for new industry players to get market shares and survive in this highly competitive industry. The choice of services, as well as the development of applications, can be one strategy in this field of business. Additionally, sound cost management is of critical importance for a solid stream of revenues. Big industry players have shown that, even in a competitive market, growth rates of more than 20% can be sustained. A strong focus of this business will be placed on the development of new and innovative strategies for the customers that deliver a significant value. As an add-on, a broad range of customized services will be offered, which will help utilize company and employee capacity. The range of services is selected to provide solid growth potentials. The operation of this business requires a good knowledge of the markets, as well as a competitive goods transport and freight hauling service concept, to increase customer satisfaction. However, it is critical that this service is offered with a strong focus on cost management. One central goal of the proposed business strategy is the development of a unique corporate identity. Such identity will create customer loyalty and help gain a competitive advantage. Therefore, it is planned that, in addition to the selection of new and interesting services, a company design is developed. The average investment required to start a new business in the transporting industry is around 30,000,000. The required investment for the proposed business is moderate compared to other companies in the industry. Freight 48 can be launched for about Rs. 14,555,000 largely with the investment of owner, who will get this amount by selling his previous business and with some investment by investing partners. The business will be launched with three 18-wheeler trucks and will expand its operations to utilize eight 18wheelers by the end of its third year, using auto loans to finance this expansion. Gross margins will be around 60%, allowing for significant profit by the end of the third year as the business scales up. Beyond three years, the business will seek to expand to additional bases of operation in the Peshawar and Quetta to add trucks with refrigerated and temperature-controlled trailers. The business will be developed on a plan consisted of five growth stages namely Existence, Survival, success, takeoff and maturity. Purchasing new assets, establishing bases across country and achieving strong annual revenues are among the objectives to be achieved. Freight 48 will offer the following a number of services for businesses in the Karachi and Lahore which includes picking-up and delivering of goods, both "less than a truck load"
1
BBA VIII/Spring 11
and "truck load" services, Online tracking information including expected arrival times for pick-up or delivery, Phone support for all customer, online accounts, regular schedules of shipping and consultation services. To maintain its competitiveness in its core services, Freight 48 will also offer storage or warehousing of goods and packaging. In the future, Freight 48 will add the following services Flatbed hauling and Temperature-controlled shipping The marketing strategy of freight 48 will revolve around creating strong awareness of the existence of the company in the mind of the customers. The customers will be segmented on the basis of industrial segmentation i.e. location, company type and behavioral characteristics. The target market strategy would differentiated marketing in which the firms will decides to target several market segments and design separate offers for each. The positing strategy will be on the basis of user category. The pricing strategy will be developed by taking in consideration the internal and external factors. The internal factors will include marketing objectives, marketing mix strategy, costs and the external factor will include nature of the market and demand, competition, economy and government. The promotion strategy will be a mixture of advertising, public relation, sales promotion and internet marketing. A web plan will be developed in order to activate a 24/7 online web site which has never been done in Pakistan before and through which customers can get a lot of information regarding their goods.
BBA VIII/Spring 11
BBA VIII/Spring 11
Stage I: Existence In this stage the main target of the business are obtaining customers and delivering the product or service contracted for. Among the key questions are the following:
BBA VIII/Spring 11
Can we get enough customers, deliver our products, and provide services well enough to become a viable business? Can we expand from that one key customer or pilot production process to much broader sales? Do we have enough money to cover the considerable cash demands of this startup phase?
Stage II: Survival In reaching this stage, the business would have demonstrated that it is a workable business entity. It would have enough customers and satisfies them sufficiently with its products or services to keep them. The key targets thus shifts from mere existence to the relationship between revenues and expenses. The main Questions to answer in this stage are as follows: In the short run, can we generate enough cash to break even and to cover the repair or replacement of our capital assets as they wear out? Can we, at a minimum, generate enough cash flow to stay in business and to finance growth to a size that is sufficiently large, given our industry and market niche, to earn an economic return on our assets and labor?
Stage III: Success The decision facing owners at this stage would be whether to exploit the companys accomplishments and expand or keep the company stable and profitable, providing a base for alternative owner activities. Thus, a key issue would be whether to use the company as a platform for growth or as a means of support for the owners as they completely or partially disengage from the company Stage IV: Take-off In this stage the key problems would be how to grow rapidly and how to finance that growth. The most important questions, then, would be in the following areas: Delegation: Can the owner delegate responsibility to others to improve the managerial effectiveness of a fast growing and increasingly complex enterprise? Cash: Will there be enough to satisfy the great demands growth brings (often requiring a willingness on the owners part to tolerate a high debt -equity ratio) and a cash flow that is not eroded by inadequate expense controls or ill-advised investments brought about by owner impatience?
BBA VIII/Spring 11
Stage V: Resource Maturity The greatest concerns of the company entering this stage would be, first, to consolidate and control the financial gains brought on by rapid growth and, second, to retain the advantages of small size, including flexibility of response and the entrepreneurial spirit. The corporation would have to expand the management force fast enough to eliminate the inefficiencies that growth can produce and professionalize the company by use of such tools as budgets, strategic planning, management by objectives, and standard cost systems and do this without stifling its entrepreneurial qualities.
Establish bases in Sadiqabad, Peshawar and Quetta, Purchase 8 18-wheeler trucks with dry van trailers Hire 10 full-time truck drivers Achieve strong annual revenue based on 1.2 million miles of hauling in the third year
BBA VIII/Spring 11
and freight haling companies generally knows as the New Truck Stand which is situated at Hawks bay Road, Karachi
The Pakistan trucking industry includes about 25000 for-hire carriers and 5,000 competitors (existing and potential) Total industry revenue is nearly 5 Billion The growth of the industry 2% per annum Major players in the industry include A&S Goods Transport, Malik Goods transport, Carvan Transporter
The industry includes carriers that use commercial motor vehicles and doesn't include couriers like TCS and FedEx or private carriers (companies that transport their own products and raw materials). Research shows that "demand is driven by consumer spending and manufacturing output. The profitability of individual companies depends on efficient operations. Large companies have advantages in account relationships, bulk fuel purchasing, fleet size, and access to drivers. Small operations can compete effectively by providing quick turnaround, serving a local market, or transporting unusually sized goods. Average annual revenue per competitor is one million" The industry is broken into "truckload (TL) shipments that dedicate trailers to a single shipper's cargo" and "less-than-truckload (LTL) shipments, which transport the consolidated cargo of several shippers on one truck, dropping off goods at multiple delivery points".
BBA VIII/Spring 11
Their ability to partner with the shipper to offer logistics expertise and added services.
6.0 Services
6.1 Starting Services Freight 48 will offer the following services for businesses in the Karachi and Lahore:
Pick-up and delivery of goods with a minimum per-delivery weight of 3,000 kg from and to locations in its geographic range by 18-wheeler trucks hauling dry van trailers Both "less than a truck load" and "truck load" services Online tracking information detailing the location of all GPS-tagged trucks and the status of deliveries, including expected arrival times for pick-up or delivery Phone support for all customer questions, delivery changes, and scheduling Preferred client services including online accounts, regular schedules of shipping, or linking of client order information directly to Freight 48s scheduling software to allow for seamless logistics. Consultation services if required by any client regarding goods transport.
To maintain its competitiveness in its core services, Freight 48 will also offer:
Storage or warehousing of goods awaiting delivery (goods can remain in storage in trucks for short periods, but at relatively high cost to customers) Packaging
6.2 Future Services In the future, freight 48 will add the following services:
Flatbed hauling Temperature-controlled shipping to expand the range of customers freight 48 can appeal to. Trucks are operated by qualified and well-trained drivers with spotless records. Drivers are safety trained and re-tested for knowledge of laws as they change. A dedicated suite of software and communication systems will allow for the logistical management.
BBA VIII/Spring 11
Building a website with visibility on search engines and in databases of trucking companies (see Web plan) Creating a compelling brochure of Freight 48 services which will be distributed through direct mail, and kept in stock for networking events Advertisements in trade publications Public relations efforts including press releases related to the business launch and its unique preferred client account management package
BBA VIII/Spring 11
1. Location:
As we own three 18-wheeler trucks, so we have divided our market into two regions. The two regions where we are already providing our services are Sindh and Punjab. We will be covering the other two regions of Pakistan i.e. Baluchistan and NWFP as we will expand our operations to utilize eight 18-wheelers by the end of next year, using auto loans to finance this expansion. We are aiming to provide different packages to the customers to completely take over the new market and also to compete with the already existing transport providers in those areas.
2. Company type:
We have also segmented our market on the basis of company type in which we have focused on the size and type of industry from which our customers belong and on the basis of their industry we provide them with different services like: (i) Raw Material Suppliers: Raw material suppliers ship large quantities of materials to large manufacturers in the Sindh and Punjab. These materials generally do not require refrigeration or temperature control. Manufacturers maintain some on-site storage for these supplies and generally have some leeway as to when deliveries can be received, except when projections are mistaken and supplies drop low. Packaging supplies also must be shipped to manufacturers and are included in this group.
(ii) Manufacturers:
Manufactures often outsource the distribution of their goods to businesses that specialize in serving one type of retailer or business. Their packaged goods are often shipped to only one wholesaler/distributor, creating a regular business in shipping between the two locations.
(iii) Wholesalers/Distributors:
Wholesalers often serve large retailers assemble truckloads of goods from the many manufacturers they serve. While they often have their own trucks or distribution means, some of these firms do not either because they are smaller or because they attempt to limit their investment in assets. Others may require additional trucking support when they are operating at capacity but not prepared to expand their shipping capacity.
10
BBA VIII/Spring 11
3. Behavioral characteristics:
On the basis of behavioral characteristics we will segment our market by using usage rate and buying status of our customers. the usage rate includes that how much order they gave to us we gave different package to those customers which gave us large orders and uses our service more as compared to those who uses our service less and give us less orders By using buying status we segmented our market by looking at the factors that who is the potential customer who is our regular customers and giving them different packages according to it.
BBA VIII/Spring 11
competitors so consumers can make a direct comparison when they purchase? Or does the organization want to develop a strategy which positions themselves away from their competitors? Offering a benefit which is superior depends much on the marketing mix strategy the organization adopts. Our company will position itself as a professional, reliable goods transportation service at affordable rates. We will achieve the desired positioning by using our competitive edge. Our business will seek to position itself not as the most inexpensive carrier, but as a carrier with the best on-time record coupled with advanced systems to help clients manage their logistics better. Our main competitors are the train and air transport which is very expensive in our country so we position our service as the cost efficient. Apart from it we can also provide an on time delivery to our customers. In this way they should be satisfied and have a positive image in their minds of our company. We can also position our company on the basis of user category as we have three types of basic users i.e. manufacturers, wholesalers and raw material supplier we can provide them with different trucking service and in this way we satisfy their unique needs and hence our product is positioned in the mind of them. We can also provide our customers tracking facility through which they can track their goods which is a unique feature of our company. Because of this feature more customers can have a positive image of our company as they have complete knowledge of where their goods have reached and when it would be deliver to them. Apart from it we have trained and educated drivers running our vehicles which make our customers more satisfied as they are sure that their goods are in safe hands. By providing all the above features to our customer we position our company in a best manner in the mind of our customers and also take their goodwill in the form of good views in front of others and recommendation to other for using our company.
BBA VIII/Spring 11
Internal factors:
When setting price, we will take into consideration several factors which are the result of company decisions and actions. To a large extent these factors are controllable by our company and, if necessary, can be altered. However, while we have control over these factors making a quick change is not always realistic. Internal factors which affect the pricing decisions are, marketing objectives, marketing mix strategy, costs and organizational considerations. Marketing objectives: Marketing decisions are guided by the overall objectives of the company. We will provide the finest all-inclusive logistics services. We exist to attract and maintain customers. Our services will exceed the expectations of our customers. We intend to develop a steady image in the minds of the customers by providing them with high-tech services. Marketing mix strategy: Marketing mix strategy concerns the decisions marketers make to help the company satisfy its target market and attain its business and marketing objectives. Price, of course, is one of the key marketing mix decisions and since all marketing mix decisions must work together, the final price will be impacted by how other marketing decisions are made. Costs: Our starting point for setting a price is to first determine how much it will cost us to get the product to our customers. Obviously, whatever price customers pay must exceed the cost of delivering our service otherwise our company will lose money. When analyzing cost, we will consider all costs needed to get our services to market including those associated with marketing, distribution and company administration (e.g., office expense). These costs can be divided into two main categories: 1. Fixed cost 2. Variable cost Fixed cost: Also referred to as overhead costs, these costs are not affected by the number of orders we will receive. For example, whether we provide services to one customer or 1000 customers we still need to pay the rent where our trucks will be placed. Maintenance of our trucks will also be our fixed cost. Variable Costs These costs are directly associated with the number of orders, we will receive and, consequently, may change as the level of orders changes. From the marketing side, variable costs may also exist in the form of expenditure for carrying out an advertising campaign and providing labor to our customers for loading and unloading purpose. Organizational considerations: Our Company is small so prices will be set by the top management. In large companies, prices are typically handled by divisional managers. Our salespeople may be allowed to negotiate with customers with a certain price ranges.
External factors:
There are a number of influencing factors which are not controlled by our company but will impact pricing decisions. Understanding these factors requires the marketer conduct research to monitor what is happening in each market the company serves since the effect of these factors can vary by market. External factors that affect pricing decisions include the nature of market and demand, competition, economy and government. 13
BBA VIII/Spring 11
Nature of the market and demand: We will be under monopolistic competition in which the market consists of many buyers and sellers who trade over a range of prices rather than a single market price. A range of prices occurs because sellers can differentiate their offers to buyers. Our services will be different from our competitors so we will charge our customers accordingly. Competition: Another external factor affecting the companys pricing decisions are competitors cost and prices and possible competitor reactions to the companys own pricing moves. Although we will provide hi-tech services to our customers yet we have to set reasonable prices to attract and retain customers. Economy: Economic conditions can have a strong impact on the firms pricing strategies. Economic factors such as boom or recession, inflation, and interest rates affect pricing decisions because they affect both the cost of delivering goods and consumer perception of the price and value. Our countrys economic conditions are highly unpredictable; the fluctuation of diesel prices and taxes will also affect our pricing strategy. Government: The government is another important external influence on pricing decisions. We are aware of the regulations which are primarily government enacted meaning that there may be legal ramifications if the rules are not followed. Price regulations can come from any level of government and vary widely in their requirements.
7.5 PROMOTION STRATEGIES A successful product or service means nothing unless the benefit of such a service can be communicated clearly to the target market. An organizations promotional strategy can consist of advertising, sales promotion, personal selling, public relations, direct mail and internet marketing.
Advertising
Public Relation
Promotion Strategies
Sales Promotion
Internet Marketing
14
BBA VIII/Spring 11
Advertising Advertising is a form of communication used to persuade, inform and remind an audience (viewers, readers or listeners) to take some action with respect to products, ideas, or services. We will use advertisement technique for the promotion of our company by giving advertisements in the newspaper and business magazines of our company. We will also use our own trucks for the advertisement of our company by placing ads of our company on our trucks so that where ever they go the promotion of our company can be done. We will also use billboards to make people aware of our company especially in industrial areas where the factories exists. We also use cable service for giving the slides of our company below the popular television channels so that more people can come to know about our company. We can also giving advertisement of our company on business channels as well. Public relations Public relations (PR) is a field concerned with maintaining a public image for businesses, non-profit organizations or high-profile people, such as celebrities and politicians. We will maintain public relations by press releases related to the business launch and its unique preferred client account management package. Sales promotion Sales promotion is any initiative undertaken by an organization to promote an increase in sales, usage or trial of a product or service. We will use sale promotion strategy by giving our customers the offer that if they can use our service 20 times in a month than we gave them one half rate service to them by giving them loyalty card. We can also promote our company by allowing our customers to send their goods and services from one place to another place of weight equal to truck capacity or less than the truck capacity. Internet marketing Internet marketing is an inclusive term used for marketing product and services using online service. We will use internet marketing for the promotion of our company by building a website with visibility on search engines and in databases of trucking companies. And place the ads of our company on social websites as well as on the business websites so that more people come to know about our services. We can also mention the website URL in all brochures and advertisements so that more and more people can visit our website to check our services which we offered to our customers.
15
BBA VIII/Spring 11
Initial and ongoing search engine optimization by the Web developer and then by an SEO firm Profiles and listings on ten business and trucking company online databases Mention of the website URL in all brochures and advertisements
Homepage - Mirroring a basic brochure about Freight 48 About Us - Background on the owner, mission, and basics of the business Contact - Form to submit information and phone number to reach a salesperson during business hours Services - Deeper description of the service options along with images of the trucks and a map of the area served
Form - To enter delivery code which was designated for the delivery Map - Shows current location of the delivery on a map Statistics - Gives ETA, minutes late or ahead of schedule, status of pick-up or drop-off, other notes about the order
Login - Login form for client username and password Account Profile - Basic client information, settings related to interface between client systems and Timely Trucking if direct links have been established
16
BBA VIII/Spring 11
Scheduling - Calendar on which pickups and deliveries can be scheduled and rescheduled Alerts - Settings for email or text alerts about deliveries which can be sent to client
Database Entry - Ability to search within and make changes and edits to the client and scheduling information in the database Billing Interface - Website sends billing information for completed jobs directly to accounting software for bill creation
The website will be developed over a three month period. Many elements can be adapted from off-the-shelf or open source software, but others must be developed from scratch to interface between client software and the Timely Trucking database
17
BBA VIII/Spring 11
18
BBA VIII/Spring 11
11 Management Summary
The CEO, will manage the strategic direction, sales and marketing of Freight 48.The Chief Operating Officer Position will be filled by another investor who will be granted up to 10% of shares in the business after meeting certain milestones. Additional shares will be granted if the COO contributes capital to the business. The COO will manage operations, finances, human resources, and procurement. The business will require additional personnel including an administrator/dispatch center operator and a sales/marketing support associate. These individuals will be managed by the COO and the CEO, respectively. Three part-time truck drivers will be hired initially.
Personnel Plan Year 1 Year 2 Year 3 CEO 48,000 70,000 75,000 COO 60,000 70,000 75,000 Sales/Marketing Associate 27,000 40,000 45,000 Administrator 36,000 40,000 45,000 Truck Drivers (Non-Job Payroll) 26,961 40,000 50,000 Total People 08 12 14 Total Payroll 197,961 260,000 290,000
19
BBA VIII/Spring 11
20
BBA VIII/Spring 11
Total Start-up Expenses Start-up Assets Cash Required Other Current Assets Long-term Assets Total Assets Total Requirements
Salary: Covers the management, staff, and truck driver wages and monthly salary. Marketing/Promotion: Projected higher in the first year and then dropping due to extra marketing devoted to the launch and the weaning off of search engine marketing over time Depreciation: Reflects the growing investment in trucks and equipment over the years. Trucks are depreciated on a 35 year straight-line schedule. The depreciation is 1,000,000 per year per truck. The business will grow from three trucks at the end of year 1,to six at the end of year 4, to eight at the end of year 10. Truck Maintenance/Repair: Estimated at 10,000 per year per truck to start and rising to 15,000 in year 5 due to aging of some of the first trucks purchased. Rent & Utilities: Projected to remain same due to contract while utility may increase Insurance: Will grow with the number of trucks and size of operations Licensing and Permitting: Include ongoing renewals of licenses and additional licenses for new trucks as they are purchased
21
BBA VIII/Spring 11
The business expects a net loss in the first year as operations and sales scale up appropriately. Net profits will begin in the second year.
22
BBA VIII/Spring 11
Sales Comparision
6,000,000 5,000,000 4,000,000 3,000,000 2,000,000 1,000,000 0 Year 1 Year 2 Year 3 Sales Total Cost of Sales
Sales
6,000,000 5,000,000 4,000,000 3,000,000 2,000,000 1,000,000 0 Year 1 Year 2 Year 3 Sales
23
BBA VIII/Spring 11
Expenses Comparision
3,500,000 3,000,000 2,500,000 2,000,000 1,500,000 1,000,000 500,000 0 1 2 3 Gross Margin Total Operating Expenses
Net Income
1,500,000
500,000
0 1 -500,000 2 3
24
BBA VIII/Spring 11
25
BBA VIII/Spring 11
13.0 Conclusion
The domestic transport segment is one of the most profitable within the business service industry, while almost any other segment, especially in the local markets currently lives through a difficult time. This situation is mostly driven by the competition of larger international companies. A business that successfully survives the current temporary slowdown can be certain of increased profitability once the situation rebounds. The relatively modest investment requirements and running costs (compared to industry businesses) provide a favorable argument; since external funds from banks become more difficult given that the risk aversion to finance such ventures has risen. A company with specific knowledge and innovative ideas has good chances to move into profitable market niches and run a successful business. Market conditions change constantly, as do customer demands. This is the chance for businesses with innovative ideas and new offerings to secure a dependable customer basis. Service is a critical factor that can earn a competitive edge. This is also true for new trends in the industry to better control costs and increase efficiency. For a successful operation of a goods transport company, five factors are critical and central for the business strategy: - In the goods transport industry, it is important that the customer experiences a comprehensive and competent transport service. This will secure customer loyalty in a market that is very fast and competitive. - The utilization of personnel capacity is critical for the long-term profitability because of changing margins and the constraints to flexibly reduce personnel. - A carefully selected assortment of services, as well as the selected choice of new technologies, has the potential to gain a competitive edge against competitors. Furthermore, a service that aims to give the customer an added value through new services can justify price mark-ups. - A critical factor in the transport industry is quality management. Better quality at lower cost increases customer satisfaction. Deficiencies in service quality can lower demand, while good service quality can help create customer loyalty. - Cost management is a critical success factor for businesses in industries where margins are low. Computer aided planning is an integral part of cost management.
26