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Final Project

Erhvervsakademiet Lilleblt
Nikas Sinevicius

LOG1308i (2013-2015)

14,559 Words

Table of Contents
Opening.......................................................................................................................... 2
Introduction.................................................................................................................... 3
SWOT.............................................................................................................................. 7
Strengths..................................................................................................................... 8
Weaknesses............................................................................................................... 11
Opportunities............................................................................................................ 13
Threats...................................................................................................................... 14
Michael Porters 5 forces.............................................................................................. 16
PESTLE analysis............................................................................................................ 17
Political...................................................................................................................... 17
Economical................................................................................................................ 17
Social......................................................................................................................... 18
Technological............................................................................................................. 18
Legal......................................................................................................................... 19
Environmental........................................................................................................... 19
The Value Chain............................................................................................................ 20
Primary Activities...................................................................................................... 20
Inbound Logistics................................................................................................... 20
Operations............................................................................................................. 20
Outbound Logistics................................................................................................. 21
Sales and Marketing............................................................................................... 21
Service................................................................................................................... 26
Support activities...................................................................................................... 26
Firm Infrastructure.................................................................................................. 26
Human Resource Management.............................................................................. 34
Technology Development....................................................................................... 36
Procurement........................................................................................................... 37
Mitransa Logistics transportation service.....................................................................38
Competitor and Customer analysis.............................................................................. 42
Vehicle Tracking system implementation.....................................................................45
Mitransa Logistics economical evaluation....................................................................46
Recommendations........................................................................................................ 47
Conclusion.................................................................................................................... 50

Critics and Evaluation................................................................................................... 53


References:................................................................................................................... 54

Opening
The title of my assignment is: Analyse and evaluate company by implementing value
chain and relevant analysis in order to make usefull suggestions to change and improve
the company
First of all I will introduce the company by providing information about the companys past
and todays activities, where is the company currently takes place in the market, what is
the mission and goal of the company, also I will express my opinion on generic strategy
company is using and will comment on growth strategy.
Main tasks are:
To analyse Mitransa Logistics business environment factors
To make an analysis of distribution services provided by Mitransa Logistics

To analyze the companys current situation on market I will be using PESTLE analysis and
Michael Porters five forces, also I will use SWOT analysis to get a better view of what are
the company strong at, where are its weaknesses, what are the opportunities and what
can be threat for the company.

Introduction
Introduction of the company
The company called Mitransa Logistics is a young and growing transportation company
based in the capital of Lithuania, Vilnius. In the past company were transporting small
carriages, nowadays it delivers transportation as well as warehouse services for its
customers. The services company is mainly providing transportation of cargo to and from
Lithuania, Latvia, Estonia, Russia and CIS countries(Azerbaijan, Armenia, Kyrgyzstan,
Belarus, Kazakhstan, Tajikistan, Uzbekistan, Moldova), as well company is transporting
goods to and from European countries to Eastern and Central Asian countries. Company
does transportation of small, partial and full cargo. There are different means of transport
company is offering:
Transportation by road company transports partial cargoes, full trailers, also dangerous
ADR cargo and has semitrailer freezer to carry food and beverages that is capable to
handle temperature ranged from -25C to 25C. Transportation by road trains and tilt trailer
is offered as well.
Transportation by railway organizing a transportation of cargo from/to EU, Eastern and
Central Asian countries, also tracking the movement of a cargo.
Transportation by sea organizing deliveries of containers to and from Klaipedas port
based in Lithuania
Storing good in a warehouse company is offering a short-term and long-term storage of
cargo and also offers services of cargo loading and re-loading, sorting goods, packing and
labeling goods, preparing needed documents for transportation. Also company owns a
large secured outdoor area where it is possible to store bulky goods that are not affected
by temperature.
The company has highly skilled employees who have a large number of years behind their
back working in logistics area. Employees of the Mitransa Logistics have knowledge
about cargo transporting by different means of transport and know the best routes to do

the transportation. That helps to ensure the best quality of cargo carriage, making the
company flexible and strong in completing orders on time. Employees take a reasonable
part of running companies business in very efficient way. Mitransa Logistics in the present
time has 22 employees. 12 people in the office, 9 drivers and 1 mechanic.

Mission, vision and goal


The mission of Mitransa Logistics is to strengthen their position in Lithuanian and also in
foreign regions, by providing the highest quality of transportation service for their clients in
Europe, Eastern and Central Asia, also to meet the expectations of customers by providing
best quality cargo carriage and get the trust of our customers for our offered service and
the company itself.
The vision of the company is to be leader amongst competitors in its region for providing
transportation service, that will have strong positions in European, former CIS countries
and Central Asian market.
The main goal of the company is: to ensure good quality of services provided, excellent
customer service, close work with business clients, respect to competitors and
comprehensive expansion of the company.
Mitransa Logistics operating principles are as follows:
Creating strong connection with the most important partner customer
Key features of the company everyone have to remain united, commonly improve their
skills and knowledge, remain responsible and goal-oriented.

Generic strategy
Michael Porter has created a generic strategy model in 1980, so that business companies
could use one to get advantage amongst their competitors. There are three generic
strategies:
1) Cost leadership, meaning that the company wants to have the lowest cost for product or
service compared to its competitors.

2) Differentiation, meaning that the company wants to have a product or service that is
different then other competitors are offering, it could be a product or service offered with
higher and better quality.
3) Focus, meaning that company concentrates on a focused groups, and offering specific
products or service.

Company should choose strategy depending on their mission and goal, as mentioned
before, Mitransa Logistics has a goal of being best quality providers for their customers
and that means they chose Differentiation strategy. Their difference is that workers are
highly skilled and experienced, what means they are able to provide better transportation
service then competitors. Because it is often case when customer picks a transportation
company where workers are not experienced and do not know the fastest, cheapest and
safest routes, what makes customers unsatisfied, because they want a transportation
company that can be highly efficient as possible, that has a lot of experience and knows
how to run everything smoothly.

Market Position
Today European market is filled with transportation companies, there are many both large
and small companies who provide transportation inside Europe so it is highly competitive
market, that is why Mitransa Logistics choose to concentrate on international
transportation service between European countries, Russia and other CIS countries, as
well as Central Asian countries. Also as an advantage for the company that all employees
know Russian language fluently so it is easier to operate with customers in Russia and
former CIS countries.
It is also became challenging doing business lately, because of the political situation, there
are less transportation orders that are made from European market to Russian market,
what negatively affects our company.

Growth Strategy
Company is trying to stay competitive amongst their competitors in Lithuania, remain in
good relationships with their existing customers and attract new customers. Mitransa
Logistics is still a young company and they are very careful with their investments, so they
are trying to make investments into what is considered to be most important for the
company, latest bigger investment was to buy a truck. This helps company to gain more
profit, and have less expenses on renting truck from other companies. Even though
company has a warehouse and could make more investments there, they choose to invest
in distribution business, because it is their main activity.
To find out what strategy company uses I implemented Ansoffs Matrix, which has four
different growth strategies for business companies to choose:
1) Market Penetration, which means staying in the current market and offering current
service.
2) Market Development, that means offering our current services, but offering it to a new
markets.
3) Product(Service) Development, means offering new service in the current market we
are working.
4) Diversification, means a complete change by moving into new market and offering new
services.
In the Ansoffs matrix Mitransa Logistics is choosing Market Penetration, because it is the
safest way for our company to grow, especially when it is young, if company would try
moving into the new market it would be risky, because we would have to make a good
analysis, put a lot of effort, a mistake could end up critically for our company.
Also company is choosing safest strategy, because they want to remain doing business
with their customers, who are in close relationship, meaning company is using voice
strategy, that helps them grow slowly, but with more confidence.

Summing Up
Mitransa Logistics is a young and developing company, the main strength of the company
is highly experienced workers, that have been working in distribution companies for many
years. Company has a vision of being leaders amongst their competitors and to

accomplish the vision their goal is to provide the best service for the customers. To provide
the best quality services, company is choosing Differentiation strategy from Porters
Generic Strategy model. Company main business is transportation between European,
Russian, east and central Asian markets. To grow Mitransa Logistics is using Market
Penetration strategy in Ansoffs growth matrix, because company wants to grow safely,
confidently, even though there are many competitors in transportation market, they use
many years of experience in transportation area and close relationships with customers as
their strength.

SWOT
The SWOT analysis is used for companies to evaluate their Strengths, Weaknesses,
Opportunities and Threats. Basically it helps to see advantages and disadvantages that
company has against their competitors.
Strengths:

Weaknesses:

Distribution by different means of transport.

Owning not many trucks

Multimodal transportation.

Young and not very big company.

Great company leader.

Lack of language knowledge of EU countries.

Enthusiastic, loyal and experienced staff.

Not all drivers have enough skills

Owns a warehouse.
Opportunities:

Threats:

GPS tracking device system

High, growing competition.

Expansion to new markets

Increase of petrol prices

Improve employees qualification

Some countries have critical road conditions

Reduce the debts of our buyers

Weak technologies

Improvement of advertising

Strengths

Mitransa Logistics are offering a wide choice of transportation, what is a huge advantage
for our customers who need transportation by different means of transport, not only by
road, but also by sea and rail. Wider choice of services lets our company be more
advantageous then our competitors. Because sometimes customers want to transport
heavy, big and bulky cargos, or transport cargo in large quantities, offering wider choice of
services lets our company to work with larger customer group.
Transporting goods by road is the most flexible way of transportation, because you can
transport goods into rural areas, which cannot be reached by rail, sea or air. It is cheap if it
is used for a small distanced transportation. But it is more expensive method then railway
if it has to be long distance transportation of goods in big quantity.
Railway transportation has many advantages, because it is not affected by weather
conditions like rain, snow or fog, so for example if we want to transport big amount of
petrol from Russia, we will use railway, because during winter time road conditions in
Russia are extremely dangerous, what can cause a critical accident, that is why it is better
to transport by rail and also because it would be cheaper to transport big amount of petrol
by rail then by road. In long distance transportation railway is also better then sea or road,
because it is faster.
Sea transportation is the best choice for customers who want to transport heavy and bulky
goods or goods in large quantity it is leader amongst all transportation means if we are
speaking about capacity. For example if we would want a large quantity of bananas
transported from Brazil to Europe, the cheapest way would be to transport goods by sea.
Being able to transport cargo by different means of transport makes our company better in
the eyes of our customers, because we can offer more services then our competitors who
are only making carriages by road. If our close customer would want to use transportation
services by rail, he would not have to seek for another company, he could stay with us,
trust us more, because we have history of working together.

Our company has an ability to transport goods using multimodal transportation, what
means we can perform a transportation by at least two means of transport under a single
contract signed. And we as carriers take the responsibility for the transportation. The
advantage of this transportation is that our customers can transport their goods even to the

most remote parts of the world. For example if our customer would want to transport wine
from France to Eastern part of Russia, our company could offer a multimodal
transportation, firstly transporting wine to Lithuania by truck and further using railway. Also
choosing our company to use multimodal transportation cost less for our customer, they do
not have to waste time on searching different transportation companies, our company
does the work for our customers and it is easier to make transportation using one
company then two or more.

Mitransa Logistics has a good leader that push the company to develop faster. He has
needed skills to manage his subordinates, who are working hard and are devoted for the
company. CEO is strict and is using centralized decision making system, that helps
company to achieve better results. Often company has to make important decisions and
decisions should be made fast, to do so it is better to have centralized system in the
company, because there are less opinions and less disagreements on decision choice. He
is spending a lot of time on work, and works hard along with the whole team.
This is a good type of leader that should run a business company, because hard work will
always result in huge success for any company.

The number of employees in the company is small, but all employees are experienced,
well trained and devoted. All employees have been working in large transportation
companies before and therefore have good communication skills, what is important not
only in working with customers, but also working together as a team, reaching same goal.
It is important to create a team that will be in close relationships with each other, not only
during work time, but also after work. Team that will become good friends, it is a very big
advantage for the company, because strong team is a perfect key for the company to
achieve its goals.
First of all experienced worker helps company to attract more customers and remain in
good relationships with current customers, good performance of workers helps to gain a
good reputation. Most of the workers are speaking more then 2 languages, what helps
doing business with countries that have big population, big population means there is a
bigger need for transportation service. Being experienced workers they also help company

to make less mistakes, meaning that they help company to save on cost, having
unexperienced workers would be hard to develop for a young company, because they tend
to make more mistakes and we cannot allow that on a highly competitive transportation
business.
Mitransa logistics has a team of workers that are punctual and responsible, everyone
comes to work on time, because they understand, that being late would create extra job for
their team-mates, sometimes workers are going to work even if they are little sick, what is
not good, but it shows how devoted for the company they are. Also workers are not only
going to work 8 hours a day and go home, just to get paid, they are coming to work,
because they have interest in it and they understand that they will leave only when their
daily job is done. Being experienced they also feel free to share ideas amongst workers,
what is helpful for the company, an employee who just started his career may be shy and
will hesitate to express his ideas, because he will be only listening and learning from
experienced workers. The employees are aged in between 26-39 years old, that means
they have developed good communication skills, what is important in daily work, because
bad communication can result in unneeded stress, what will result in less efficient work.
Also communication with our customers makes an impression about our company, good
communication helps to get a positive reputation on the market.

Owning a warehouse is another strength, because our company in the delivery process
often gets orders, with Less then container load, so to save on costs we can use
warehouse to bring different products and then create a mixture of goods and make single
shipment to our customer. By having ability to mix goods, instead of sending two not full
trucks, we can use one, what is an advantage. Another advantage of having warehouse is
that we can keep goods that customer is buying steadily, so if we will receive an urgent
order from our customer, we can send out product straight away. We have a lot of
customers that use our service to transport wine from Western Europe to Eastern and
Central Asia, so wine is not a product that expires soon, that is why we can keep it in our
warehouse without risk to spoil the wine. The ability of fast delivery will help our company
to gain respect from customers, that will increase value of our brand name.
Our warehouse also is used to store products for other companies, what is positively
increasing our profit. Our warehouse contains inside part where temperature can be

regulated and outside part, where customers can place big, bulky and heavy products that
are not affected by weather conditions.

Weaknesses
Having not many trucks in fleet is a weakness of our company, because we have big
transport companies in Lithuania, who has a lot of trucks and currently not all of them can
be used because of lack of orders, what is good for our company, political conditions helps
to weaken our competitors, but we still need more trucks, because we can have more
orders and renting is expensive in a long run. Having more trucks will help our company to
earn more profit. Best solution would be to buy used trucks, because we are young and do
not have budget to buy brand new trucks. Expanding transport fleet will help to become
our company more independent and expansion will be faster, because with each additional
truck added we will gain more profit.

Being young company is hard, because the competition is very high and brand is not yet
well known, because of that many customers will choose bigger companies, that have
longer history and is well known in European or Asian markets. Main reason for choosing
bigger companies is reliability, many customers do not want to risk even though delivery
prices of small companies are cheaper then big companies. Young companies are often
seen as unexperienced companies, and it is often case when company do not know most
efficient roads to transport goods. That is why our company has to prove that we are
experienced by making less mistakes, even if we are young, that will attract more
customers, it is important for us to become trustworthy.

Many employees in our company knows mainly Lithuanian, Russian fluently and English
moderate. This is very good to work with Eastern Asia, but as it becomes harder to do
business with these countries because of political reasons company should be thinking to

hire employees knowing German language for instance. Because German market is a big
market and it means there is a big demand for transportation. Having an employee who
knows German language fluently could create more orders for our company, we could
attract more customers. Or hire employee who knows any other language, but this is a
look into the companies future, so that by doing that company could feel safer about
having customers and will not be so affected by political situation.

Another weakness of the company is drivers, it is relatively find good, responsible and
honest drivers, mainly because our company is young and cannot offer very high salary or
good work conditions. There are drivers, who make accidents and it can cost our company
a good reputation. Mostly accidents happen because there is lack of subordinance, driver
should always listen for the instructions of his manager. Our company makes
transportation to Kazakhstan, Russia where driving can be dangerous, not only because of
poor road conditions, but also because of hijack attempts. It is important to dedicate some
time to instruct drivers how to be safe on the road, how to avoid these situations. It is very
important to hire honest driver, probably a person that company knows for long time,
because often case when drivers do cheat, for example drivers are saving petrol and then
they are selling it to people for a lower price. That kind of behavior is not appropriate for
our company especially because we are young and small company, we have to save
costs. Also drivers should be taught how to be gentle on the road especially driving
through the long roads where are only two lanes, drivers often get close to each other and
do not let cars to overtake them, and not keeping safe distance results in accidents. Hiring
good drivers, who are educated, well experienced will help our company to become more
efficient, meaning there will be less accidents, better service for our customers, resulting in
reputation growth.

Opportunities

A good opportunity for the company in the future would be implementation of new GPS
tracking systems. It is an expensive opportunity now, but in the future it could be done,
because it would reduce companies running costs, checking drivers speed and waste of
fuel we could calculate more precisely what are our wastes and fix that. Next advantage is
that insurance companies are offering discounts to companies who are implementing
vehicle tracking systems, in case of stealing a truck it can be tracked and also drivers are
driving safer. GPS system also could be helpful tool for work with our customers, they will
be able to see where are their goods at the moment. Also checking drivers activity could
improve their performance, the most advanced drivers could get a bonus salary, this would
motivate drivers and would help company to achieve better work results.

Expanding to new markets is an opportunity for our company in the future. Nowadays our
company provides transportation service in Europe, Russia and former CIS countries. As
company will grow it is a good opportunity to start providing transportation services to
India, China, Brazil and USA, Australia, Africa and Middle east countries. Because there
are many competitors in Europe and in the future our company will grow and will be able to
do transportation in other growing markets, because there will be a demand for
transportation. Expansion will result in having more customers, more orders, meaning
more profit. Company is mainly doing business between Europe and Russia, and because
of unpredictable political situation we should think of different markets so that we would
always have where to provide our service.

Improving employees qualification is always a good opportunity. Employees in the


company are very experienced, but attending different lectures or courses from time to
time would be a good idea for expanding their knowledge, what could result in a positive
way for our company. Employees are the most valuable thing in the company now,
because it is still young, the future of the company mainly depends on employees
performance.

Reducing debts of customers are very important for us as lately many our customers in
Russia were going through hard times because of sanctions and currency fall, so they are

not able to pay for our provided service on time, meaning that our company has to cover
the transportation costs for some time. Not getting paid for services are affecting our
company some workers are not getting paid on time. We cannot push our clients too
much, because we do not want to lose them so we have to always look for win-win
solutions, help them and by doing that help ourselves.
Even though our company is known in many countries, we still do not advertise our
company well. Good advertisement would attract more customers, meaning we could
provide more service to our customer, we do not own a lot of vehicles to serve many
customers but we could try to find solutions renting trucks and providing services for
customers, but it would mean that we need more employees to deal with more orders and
more transportation and it is not easy to find a good experienced employee who would
become loyal to our company and would not leave it if company would experience hard
times.

Threats
Main threat of the company is high and growing competition in transportation
industry. There are many big transportation companies in Europe and have
many years of experience, well established brand, many customers. Customer
is more preferably choosing well known company, because every customer is
looking for reliability even though our provided service could cost less, only
small number of customer will choose young company. Our company in the
future could improve marketing so that more customers would be aware of our
company, also we do have to maintain good performance, fast and good
quality deliveries, without delays and damages of goods. When our customers
will see good performance of our company they will pick us to provide
transportation service and we will be offering wider choice of services, be more
flexible then our competitors so that customers will not be willing to choose our
competitor.

Furthermore increase in fuel prices affect our company and are a threat,
because it increases our expenses. A constant need for fuel is increasing and
oil reserves are decreasing, what results in higher price. As our company
provides services to and from CIS countries, the solution to save up on fuel
expenses would be to fill the truck trunk fully in these countries, because fuel is
cheaper then in European countries.

A poor road condition is a very serious threat to our company. Bad conditions
create expenses for maintenance of our trucks, because trucks are faster
getting broken when driving through bad roads. More important threat is car
accidents, our company does the transportation through Poland, Russia, Baltic
countries where road conditions partly are badly maintained. Based on my own
experience of traveling through Poland it is often case of car accidents,
sometimes critical, our company cannot do much about that, but instructing
drivers on how to drive safely and with respect to other drivers could decrease
a possibility of accident happening. In the future road conditions is going to be
better, roads will be upgraded and our expenses of truck repair will decrease.

Technologies used in our company are out of date, the improvement or update
would be a very good solution to become more efficient. First of all company
computers are quite old and are running slower, meaning the work itself
becomes slower. Sometimes older computers are lagging, what can irritate
employees, and we do not need it, because employees should remain stress
free during work time to show the best performance when working with
customers and with the colleagues. Our company uses special communication
programs to connect with our customers and if computer starts to lag then our
customer gets answers slower what can irritate them, because customer
should get all information fast so that the waiting time would be minimal. Also I
noticed that company was using slow internet browser Internet Explorer and
my following suggestion was to install Google Chrome, because it is faster, so
employees can now browse the internet faster.

Michael Porters 5 forces


This analysis is used to identify level of influence by different competitive
forces that affect our company.

Threat of new entrants(Medium):


Today requirements for entering transportation business are
hard, because of many competitors. If there will be new
transportation companies, they will definately affect our
company. But our company has many years of experience and
stable customers. Young and small company would not be a
threat for us, but if a young company would be very well
funded it would definately affect our company negatively.
Because if shareholders will invest a lot in a young company it

Bargaining power of
suppliers(Medium):

Rivalry amongst existing


competitors(High):

Mainly as a transportation
company we are not highly
influenced by our suppliers.
Most influence has the oil
companies and petrol
prices, so if oil companies
will raise prices, we will be
affected by that, because
our fuel expenses would
grow. Other suppliers that
are used for truck
maintainance do not have a
lot of influence, because if
we want to buy tires or
batteries we have a wide
choice, meaning we are not
affected by only one
supplier of tires or
batteries.

The competition is high,


speaking of transportation in
Europe, because there are
many and various
transportation companies
offering their service. But when
we speak about transporting
goods to Russia and Former CIS
countries we have less
competition, because our
priority is that company
workers know language and
have big experience working
with these countries.

Threat of substitute
product and
service(Medium):

We are mainly providing


transportation by road.
Also organising
transportation by train
and sea. There is still
transportation by air, so
we loose a small
customer group who
Bargaining power of buyers(High):
needs to transport goods
by air.

There are many companies who provide


transportation service, that is why
customer have a lot of influence on us,
we have to always offer best solutions
for customers. Buyers are increasing our
competition with oher companies,
because they are forcing down service
prices, also they make us to work hard
on improving service quality and variety.

PESTLE analysis

PESTLE analysis is used to identify external factors that are affecting business.
There are 6 factors that affect company: P-Political, E-Economical, S-Social, T-

Technological, L-Legal, E-Environmental. I will show how these factors are


affecting transportation companies in Lithuania.

Political
Lately political factor is affecting our company a lot and not in a positive way.
The implementation of sanctions affected European as well as Russian business
world. Our companies as well as other transportation companies in Lithuania
were doing transportation to Russia and from it very intensively, but after
political changes, Russia lowered prices on goods inside the country and
increased production of domestic products, by doing so, many business
companies from Russia stopped using transportation services to transport
goods from Europe to Russia. This resulted in loosing strategic customers and
order quantity lowered, meaning many transport companies had to fire
workers, big companies that had large truck fleet had to stop activities of many
trucks which resulted in loosing a lot of profit. It is very important to our
company to maintain business with countries that has large population,
meaning high demand for transportation.

Economical
The economical factors that are influencing transportation business are directly
involved with reforms made by home or foreign countries. Mitransa Logistics
were struggling because of the economic crisis it is very hard to grow when
facing financial problems, costs are increasing and customer demands for lower
prices. Lately in Lithuania currency changed from national currency Litas to
Euro, what affected our company negatively. Currency change meaning
higher prices of goods and services. Also there were extra costs, to reorganize
activity of the company, rounding prices what resulted in disadvantage for

customer. The cost of transport repair services went higher. One advantage is
that interest rates given by banks became lower, meaning it is now better idea
to take a loan for business companies.

Social
Mitransa logistics during its work activities are facing certain structure of
society that cannot be changed by our company, but our company have to
adapt to it. Department of statistics have provided data, which says that
population in the last three years decreased by 4,2%. Almost one-fifth (18%)
Emigrants were 25-29 year old citizens, about 14% were 30-34 years old and
13% were 20-24 years old citizens. Demographic changes negatively affect the
company, because a lot of young manpower emigrating to other countries
and it is difficult to find a young, educated workers. However it should be noted
that in recent years the situation slightly changed to the brighter side, many
immigrants are returning to Lithuania. According to Department of Statistics
data, in 2013 there were 22 thousand people immigrated back to Lithuania.
This is favorable data for Mitransa logistics, they can easier find employees,
because of more workforce appearance.

Technological
New technologies that are coming into the market in nearby future will be able
to provide customers new services and will let the transportation forecasting to
be more effective and advanced. The future technologies will not only improve
the comfortability of driving, but also will improve safety.
The influence made by technologies is important for cargo transportation and
warehousing, because of the technological progress, transport vehicles are
improving. This lets companies to have better organization of goods flow from

manufacturer to consumer, helps to reduce the costs and improve customer


service.
The newer technologies are having a little negative impact on our company,
because large companies have bigger capital and can invest a lot to upgrade
technologies, therefore our company is young and does not has large capital,
so investments are only made into what is most important. Companies that will
be able to afford new technologies will automatically look better and more
attractive in the eyes of consumers.

Legal
Legislation has a huge impact on Mitransa Logistics activities, because
Lithuanian and foreign countries legal acts have differences, what makes it
more difficult to operate for transport companies that are transporting goods
internationally. There are different sanctions, that provide advantage for
national transporters. An example of that is the recent resolution adopted by
the Polish government to prohibit foreign operators the entry into Polish
territory and ride inside the territory on weekends. This solution results in high
downtime growth and is harmful. Mitransa logistics who is providing cargo
transporting services, are affected, because expenses increase due to excise
tax for fuel, national road tolls and other similar charges for the usage of road
infrastructure.

Environmental
Geographical and environmental factors are highly affecting transport,
especially transportation is affected by landscape: mountains, plain, valleys,
coastline. Landscape is making huge impact on all means of transport.
Lithuania is very important Eastern-Western transit country and geographically
is based in the center of Europe, it has borders with 4 countries: Poland,

Belarus, Russia and Latvia.


Mitransa Logistics are focusing on environment and pollution minimization.
Company is progressively moving to meet the EU requirements on fuel use, by
installing gas neutralization systems in vehicle exhaust. Company is especially
proud of newly installed filter system that helps to reduce emissions of harmful
gas by 6 times.

The Value Chain


The Value Chain analysis is a tool that is used to analyze internal activities of
the company. The goal in value chain is to find ways to add value to the
product along each part of the process and do so at the lowest possible cost,
operating this way maximizes the companies profits.

Primary Activities
Inbound Logistics

Mitransa Logistics owns a fleet of 9 trucks, company has its own car mechanic,
so after the expedition driver drives the truck to the truck parking lot and then
mechanic inspects the truck so that when next expedition comes vehicle would
be in good technical conditions.

Operations

There are a number of operations in Mitransa Logistics, main activity of


managers who are supervising truck drivers, making agreements on cargo

transportation, finding drivers to deliver goods, creating transportation orders,


tracks the transportation so that there would not be any unnecessary actions
made by driver, always keeps in touch and gives driver the instructions. Also
manager is contacting customers, providing with all the needed information
about their goods being transported, solves all the problems that are related
with service provided to customer.

Outbound Logistics

Mitransa logistics has 9 trucks: 2 IVECO trucks, 3 MAN truck, 4 Mercedes


Benz trucks, some of the trucks are quite old and they are causing many
troubles for a company, because they need to be repaired often. Company also
has 10 trailers: 5 MADO trailers, 2 FLIEGL trailers, 2 WIELTON trailers and 1
refrigerated trailer, company has many MADO trailers, but nowadays are more
interested in WIELTON trailers.
When company is providing transportation for customers, firstly driver has to
pick up goods from the sender and has to check the quality of goods and if
there are exact amount of goods, to check the quality he has to have CMR
waybill, because it is most important document while providing transportation
service. CMR waybill contains all related information concerning transportation:
the location of the place where goods should be picked, where they should be
unloaded, quantity of goods should be loaded usually measured in pallets or in
kilograms, sometimes special conditions of delivery and all other relevant
information. Driver must keep CMR waybill all the way, he has to get stamp
when he loads goods, also he has when it is needed to show while crossing
customs and get stamps and also when he delivers he has to get stamp that
approves receiving of the goods. At the end has to ask for a copy of the CMR
waybill so that our company would have legal prove of successful delivery if
any issues will arise concerning paying for our service.

Sales and Marketing

Very important key element in sales is price modification


Mitransa Logistics is seeking to maximize company profits, to provide the
highest quality services and attract more and more customers. When
determining the cost of service it is very important to rely on market research,
assess on current market situation and economic situation of consumers. The
lower the service cost the more new clients will be attracted and existing
customers will be more willing to stay. Prices in the company are selected in
the particular way to ensure a stable functioning.
Prime cost of provided service is very important to every company. Only
knowing the cost of services we can determine the sizes of discounts that could
be applied to regular customers.
When determining cost, the main expenses of Mitransa Logistics are:

Fuel costs
Cost of vehicle depreciation
Wage costs
Daily allowance for expenses
Cost of vehicle documents, drivers insurance, licenses and other

necessary transportation documents


Toll road costs
Cost for different means of communication
Overhead expenses

The prime cost of Mitransa Logistics transportation is the amount of funds


spent for carriage of goods or for performed service.
Cost formation. As Mitransa Logistics is an international shipping company
we will calculate cost for transporting cargo by international route Lithuania
Belarus. Cargo will be transported by Mercedes Benz 2540, transportation time
will take 3 days. To transport the cargo we will need to pass two countries:

Lithuania 350 km.


Belarus 270 km.
Total of 620 km..The estimated distance is often adjusted by multiplying by a
factor of 1.05, because it is impossible to calculate kilometers precisely(during
the transportation the chosen route can change, often it is needed to drive
through bypass, etc.).
Cargo capacity 25767 kg, goods should arrive at warehouse in Minsk at
February 3rd. Cargo unloading and transportation to the recipients warehouse
at our own expenses.
Row
no.
1.
2.

3.
4.
5.
6.
7.
7.1.
8.

Name
Vehicle Depriciation
Driver wages (variable)
Driver wages (fixed)
Taxes (30,98 %)
Mobile communication
Vehicle insurance
Cargo insurance
Drivers insurance
Toll road costs
Belarus
Overhead expenses
Fuel cost
TOTAL:
Cost 1 km.

Quantity
3 days
620 km.
3 days
3 days
1
1
1
1

Sum ()
35,57
74,40
48,30
38,01
11,74
58,16
110,43
2,00

1
1
208,32 l

23,48
23,48
233,32
635,41
1,0248

620 km.

Analyzing prime cost formation for the route Lithuania Belarus, we can see
that Mitransa Logistics spends around 1,02 euros per 1km while transporting
goods from Lithuania to Belarus.

Prime cost is calculated by company for every route, because expenses


depends on traveled kilometers, fuel prices on the date of transportation,
drivers wages, etc. However it should be noted that Mitransa Logistics are
applying different prices for loyal customers:

Exceptional Prices. Sometimes competition makes impact on prices, what


is resulted in making exceptions for certain goods. Consequently some
freight prices are reduced, but they are confidential and personally

agreed with customer.


Agreement Prices. The price is determined by the contract between
Mitransa Logistics and its customer, hey are also confidential and
personally agreed with client.

Fixed Price. Mitransa Logistics applies fixed priced to its customers. It is when
long-term contracts are signed, at this time fixed price is agreed and during the
whole term of the contract remains unchanged. Such contracts usually contains
price clause - price cannot be changed. These contracts are commercial secret
of the company and are not published publicly.
Summarizing price policy and prime cost formation we can tell that price is
customer oriented and corresponds the transportation price. We can note, that
company is trying to meet the needs of our customers and increase the
demand by making agreements and reducing service prices. However Mitransa
Logistics use price reduction to a certain level so that it does not undermine
provided service, because cost reduction is quite risky process. Mitransa
Logistics is trying not to reduce costs by reducing expenses on employees,
because it can negatively affect work performance.
Promotion. Mitransa Logistics has an objective to form such an advertisiment
programs, which could grant proper delivery of company services to potential
customers.
In order to keep existing customers and attract potential customers, company
constantly informs users about provided service on the website, by offering
good quality service, fast and safe delivery of goods, information about cargo
movement. Customer can submit related questions on the website, and will get

answers to them also contact phone numbers are indicated on the website. By
using advertisements company aims not only to keep existing customer, but
attract new customers, introduce what is new in the company, emphasize the
positive sides of the company, expand its activities.
The promotion of the company runs in 2 phases:

1) Periodical promotion when the decline of customers is anticipated


(Decrease of customers occurs in December January, because at that
time main foreign customers are on holidays Christmas holidays, many
businesses and companies are closed. Also during July-August many
foreign companies do not work due to Summer holidays and again
volume of transportation services is decreasing). To increase the volume
of services especially during named months Mitransa Logistics are
offering special discounts for customers who transport goods across the
Lithuania.
2) Limited promotion when there are enough customers and orders are
carried out by all the companys available vehicles. These are seasonal
months (Autumn, Spring and early Summer) when most of the goods are
transported. Promotion during these months is restricted, because all
company vehicles are used in full capacity. Promotion is implemented
only partially, particularly to loyal customers or customers whose
shipment is very large or oversized. Such clients can get a one-time
discount.

Mitransa Logistics Discount system


Discount Name

Discount Description

Accumulation Discount

Mitransa Logistics offers this discount if sender


has sent a certain amount of goods in a month
and his order size expressed in monetary form
exceeds the amount of 6000 euros (The size of
discount is from 300 euros to 900 euros)

One-time Discount

Mitransa Logistics offers this discount if sender


sends a shipment, which is large or oversized
and his order size expressed in monetary form
exceeds the amount of 9000 euros (The size of
discount is from 900 euros to 1500 euros

Special Discount

Mitransa Logistics offers this discount if the


recipient undertakes to perform unloading
operations himself (Discount size is 200 euros)

Mitransa Logistics advertise the company in the media. Activities description


and coordinates can be found in directories online. While Mitransa Logistics
advertises in such catalogs, ensuring a high quality service and good customer
service, creates good company image in the eyes of the user.
Seeking to show high service quality level and favorable price of transportation
company is sending useful commercial offers to their stable and loyal
customers by mail, fax and e-mail.
Summarizing promotion of Mitransa Logistics we see that promotion takes
place periodically (particular months) and promotion is limited when all the
vehicles operate at their full capacity. Such a purposeful way of promoting
helps company to save resources.

Service

Mitransa logistics provides good service for customers, by constantly


contacting customers, sending the relevant information about the
transportation of goods: location of the truck, the expected time of delivery,
etc. Mainly company communicating using phones, mail and also workers are
using telecommunication software such as Skype to solve arising issues
easier and faster. Also when doing international calls it is free using Skype,
that safes company some cost.

Company handles claims from customers according to CMR convention, there


were cases when goods were delivered at unloading point, goods were found
wet and ruined, damaged during the transportation, then when damages were
calculated company had to compensate all the damage that has been made. To
find out who is responsible for the damages company were investigating driver
who had to write the explanation of why the incident happened, and also
manager who was supervising the driver.
Company handles all claims very accurately according to the law regulations,
so that everything would be fair.

Support activities
Firm Infrastructure

Vision:
The vision of Mitransa Logistics is to be a leading company for providing cargo
transportation in Lithuania, and hold strong positions in former CIS countries
market.

Goal:
Main goal is to assure good service quality, excellent customer service, close
work with business clients, respect for the competitors and dynamic
development of the company.

Organizational structure:

CEO

Expedition
Department:
Forwarder - Manager

Financial
Department:

Operating
Department:
Drivers, Mechanic

Company staff consists of 12 administrative staff and 9 drivers and mechanic.


All company managers have higher education and drivers education is varied
from basic to advanced.
Mitransa Logistics has 3 departments, which are subordinate to the company's
director. Head of the company has the complete control of the company,
because he is also owner of the company. His direct participation in the
business program is just as important as his personal responsibility for the
firm's operating strategy. During the progress of activities director is seeking to
establish companies strengths and weaknesses, and evaluate situation among
other similar companies. After the evaluation of Mitransa Logistics situation,
head can predict future aspirations, then in general terms and in detail foresee
how the goal will be achieved. One of the main tasks that head must to face is
to identify and solve problems.
The head is in charge of Expedition department, Finance department and
Operation department.
Expedition department is responsible for drivers, meaning drivers are
subordinates of Director.

Company Accountant - Is often called right hand of the head, forms a major
part of information used in the business activities. Accountant is calculating
companies assets, operating costs and revenues, determines profit, evaluates
and forecasts company operating results, plans and calculates taxes, controls
payments and performing many other specific accounting and analytical work.
Accountant not only informs employees about their work performance, but also
controls their activities, provides all the information needed to improve
operational efficiency, controls costs, takes care of all fraud and irrational
activities. Based on current accounting data accountant prepares companys
financial statements. Accountant, according to the Lithuanian laws and
regulations, has to guarantee the rightness of accounting records and must
prepare accountability on time. The instructions of accountant concerning
accounting are mandatory for all employees in the company.

Expedition Department and forwarder, manager duties could be described


as follows:

Selecting a right transport for cargo (Container, ADR class cargo or

container)
Finding cargo for empty transport in both directions
Route optimization
Filling the necessary paperwork
Management of customs formalities
Making insurance for cargo
Organizing financial settlement between sender and carrier

Forwarder takes care of cargo transportation. Also forwarder has to organize


the transportation of goods so that transporting vehicles would be used
optimally, always being aware of their location, distance between place of
loading and unloading, coordinated time of loading and unloading works, also
downtime and dead mileage time.
Forwarder must properly carry out commitments and properly represent his
client. Freight forwarder has a duty to prove that he is responsibly defended
interests of the customer. Also if freight forwarder or any of those for whom he

is responsible intententionally have caused damage, forwarder would not be


able to take advantage of rules, which justifies or limit his liability.
If the agreed time of arrival was not guaranteed in writing, freight forwarder
must ensure that the load is transported at acceptable time period suitable
both for receiver and forwarder. Both parties pledge to provide all information
necessary to cary out an agreement. Forwarder agrees to follow the
instructions of customer to look after the cargo transportation in the way that
satisfies customer. If not agreed otherwise, freight forwarder has a right to
choose the normal means of transport and routes. If forwarder when
performing a contract must start operating before receiving an instructions,
risk is on customer. If there is danger to people, assets or the environment and
is impossible to contact customer or if after a request to dismiss goods
customer did not, nor have agreed to do, forwarder may take appropriate
measures and if necessary transfer these goods in an appropriate manner.
Depending on the circumstances, freight forwarder without notice may pass on,
decontaminate or destroy cargo, which can become worthless or if value
reduced, or if it creates imminent danger. Freight forwarder is obliged to inform
the customer and consult on the action that should be taken to guarantee
customer right to receive compensation from the party, which actions have
caused the loss or party that is responsible and if it is required to help the
customer, forwarder must help to maintain contact with a third party.
When freight forwarder signs a freight forwarding contract, forwarder is
responsible to carry out cargo carriage, forwarding or organize their execution
on behalf of customer.
The contract is the most important legal document in accordance with the law,
other regulations and general forwarding terms, regulating the customers and
freight forwarders relationships, reporting procedures and forms, indicating
asset responsibility for not processing or wrong processing with contractual
obligations.
Under the general conditions of forwarding, cargo forwarding contract shall be
considered concluded from the moment when freight forwarder gets an order,

unless when forwarder immediately refuse to carry out this order. Orders that
are sent using fax, immediately confirmed by Mitransa Logistics company seal
and sent back to the customer.
Transportation order contains following details:

Cargo senders and receivers names


Cargo dispatch and destination point addresses
Name of goods
Cargo weight or quantity
Loading, unloading and shipment terms
Special conditions for cargo shipment
Other data necessary for the execution of the order

An example of transport order could look like this:


Transportation Order
Picture 1

Picture 1 shows a Transportation Order of Mitransa Logistics, customer is


PREMIER WINE Ltd., From the top to the bottom we can see:

The contact person, her telephone number and address of the company.
The date of loading: 2014 09 30 and date of unloading is unspecified.
Name and address of both Shipper and Receivers.
Contact information of Mitransa Logistics manager and Premier Wine

manager
Number of pallets being transported 27 pallets, weight brutto 22,2 tons,

package: carton boxes containing 6 bottles each is 0,75 liter.


Price of cargo: 12 922.50 Euros
Freight cost: 2566 Euros, Customer Signature and Stamp

Mitransa Logistics drivers they work in operating department and their


main function is to deliver cargo to the customer safely and on time. Even
though they assigned to the bottom layer in organization structure, many
results of the company depends on drivers. They are trusted with expensive
company assets trucks and trailers. All the company performance indicators
(Profits from the trip, expenses on spare parts, etc.) depend on how well drivers
take care of equipment and how much they save on related expenses. Because
truck is useful when it is active, not when it stays in service. Depending on
reliability, rationality and consciousness of driver we can permanently reduce
transportation costs and thus get higher profit for provided transportation
services. Moreover, the driver represents the company name when truck is
loaded and unloaded, contacting clients in Lithuania, Europe or CIS countries.
Therefore driver has to be neat, smart and communicative. This is required by
Mitransa Logistics driver job descriptions.
The driver directly subordinate to the director and the manager. He must follow
all the instructions given by supervisor concerning the direct drivers work.

During the period of trip, driver is fully responsible for all the companys assets
entrusted to him:

Vehicle and its equipment


Cargo load
Documents
Means of communication, etc.

During the period of trip driver must inform the supervisor or manager when
truck is loaded, unloaded, state border crossing time, when loaded abroad and
preliminary planning when returning back to Lithuania, technical condition of
the vehicle.
In addition to this, it is necessary to inform when cargo is not loaded/unloaded
on time, cargo is not delivered on time or if there are any other
inconveniences. If the truck breaks down in foreign country driver must consult
with supervisor for further action, clearly and precisely stating the essence of
the problem and all possible options to solve a problem. The driver is directly
responsible for reloading truck and if it is needed to reload, driver must inform
supervisor or manager.
Supervisor or manager must solve all the related problems concerning drivers
work, responsibly react to all the comments, advices and at agreed time has to
give an answer to important questions.
The driver has the same rights as all the other employees of the company and
can claim all the social and state guarantees and additional privileges and
guarantees provided by workplace (i.e. fixed workplace guarantee, crediting to
meet family needs, all the company celebrations, disaster relief, etc.)
Mitransa Logistics in in 2013 26 employees, in 2014 24 employees, in 2015
22 employees.

14
12
10
8
6
4
2
0

2013
2014
2015

Picture 2
In Picture 2, we see that Mitransa Logistics had 11 drivers in 2013, and in 2014
it decreased to 10 in 2015 it decreased by 1 more resulting 9 drivers and 1
mechanic who remained unchanged. In Expedition Department there were 13
managers, in 2014 decreased to 12, and in 2015 there are 11 managers.
Financial Department during these years contained 1 accountant.
According to the internal information of the company, we can analyze Mitransa
Logistics workers age and experience. As a sample 13 workers will be taken
(Picture 2)

45
40
35
30
25

Age

20

Experience

15
10
5
0
1

10

11

12

13

Picture 3
Analyzing Picture 3, according to employees age we can see that maximum
age is 39 and minimum 26. The average age of workers 32 years. The
average shows that company consist quite a young team. Examining the
experience of workers we can see that minimum is 4 years and maximum is 12
years, the average experience of employees in the company is 8 years,
meaning that company has good employees that have a lot of experience in
transportation business.
Summarizing Mitransa Logistics general characteristics of the employees we
can say that company employs young, educated and promising employees,

specializing in cargo transporting areas, having the ability to manage and make
decisions in improving the companys business.

Human Resource Management

The internal environment of Mitransa Logistics

Organization is a system created by humans, therefore companies lifetime


depends on the will of the people and managerial decisions. Internal
environment is what is inside the organization.
Typically, in management everything is based on service supplier and customer
relationships. Mitransa Logistics internal management is also based on supplier
and customer mutual relationship. Only here service supplier is employer and
employee is a customer. In this case workplace is a management service at the
disposal of employer. In other words the head of Mitransa Logistics is trying to
sell a product to the employees, the value of which is salary and work
conditions(labor hours, scope of work, bonuses, and various incentive
measures) are the product attributes. Exclusive features of the service are that
it must be constantly managed.
Company has excellent employees, that are experienced and loyal, but head of
Mitransa Logistics do not rely on the employees to much, because he does not
know what can happen employee can change workplace, get sick, go on
maternity leave and so on. Therefore he foresees backup options so that he
would have appropriate replacement. During all organized recruitment
competitions, memorizes the most promising candidates and safes their
addresses and telephone numbers. If the workplace gets vacant, director
knows whom to approach and besides it saves time and resources when
searching for new employees.

As soon as at least one employee of Mitransa Logistics quits the job, the
negative effect is felt immediately. First of all, due to staff shortage the
company has to increase drivers working hours. And the duties of employee
who left should be shared amongst the drivers that are working in the
company. Even if company recruits new driver, time has to pass to reach
effective work performance. Elderly employees will have to waste their time to
trin new driver (show the transportation routes, schedule, existing rules of the
company and so on). So much time is spend until it is clarified how to deal with
customers, until employee is adapting to a team. This is why head of Mitransa
Logistics is trying to keep existing and trustworthy workers. To reach that he is
using internal management, creating great place to work by providing many
attributes (salary, motivational measures).
Salary in Mitransa Logistics is paid 2 times per month. The average salary of all
employees in the company is approximately 800 Euros. Drivers average fixed
salary per month is approximately 400 Euros, plus additional variable salary,
which depends on distance driven. Driver gets a bonus of 0,12 Euro for every
kilometer driven.
In addition to the basic salary paid to all employees, the company has
implemented motivational system, which is based on monetary and moral
premium that motivates employees.

Mitransa Logistics Motivational System

Material motivation

Moral motivation

5 years of experience working in


the company 80 Euros

Christmas gifts for employees

10 years of experience working


in the company 200 Euros
Individual performance
evaluation from 140 580 Euros

Christmas gifts for children of


employees
Organizing summer holiday for
children of employees

Analyzing Motivational System of Mitransa Logistics, we can see that after


working certain amount of years in the company employee can get monthly
salary raise, also in addition to that in the end of the year every employee
receives one time premium, when workers performance is evaluated by head of
the company based on the performance results of employee. Every individual
worker can be evaluated in the scale from 1 to 3 points, maximum is 3 points.
Depending on the quantity of points, worker gets one time additional bonus
ranged from 140 Euros to 580 euros.
Mitransa Logistics also has implemented a few moral motivations, such as:
Gratitude expression, professional career opportunities, greetings on employee
birthday. In the future expanding service activities company is planning to raise
the salaries trying to keep mature and united team.
Newly hired workers are introduced to the companys history, activities, policy,
responsibilities, promotion and penalty system, the layout of premises, the
salary payment procedure, new workplace, tasks, functions, safety
requirements, direct by subordination supervisor, colleagues, other staff with
who employee will have to communicate directly to complete new job tasks.
Summing up the internal environment of the company, we can see that
Mitransa Logistics has flat organizational structure, very warm working
atmosphere, there is integration of new employees into existing collective,
created good work conditions, steady and motivating salary is paid.
Very well selected strategy of company management, because it is very
important to choose correct management strategy when providing
transportation service, strategy that is the best for Mitransa Logistics.

Technology Development

Company has implemented quality management system ISO 9001, meaning


that our company works according to international ISO 9001 standardized
requirements. The advantage of ISO standards implementation helps to make
export easier, improves internal management of company. Employees clearer
understand the goals and processes of the company. Most importantly is that
customers can trust more about provided service and our work quality. In
Europe companies that implemented ISO 9001 standards are seen as serious
and reliable partners, who focus not on short-term profit, but on long-term
plans and quality.
On the other hand speaking of technologies company have not up to date
technologies like good computers and software, do not have GPS vehicle
tracking systems. Buying and updating the technologies would result in better
efficiency of the company, but currently it is expensive and company is not in
the best financial position, but it could definitely be implemented in the future
thus lowering expenses.

Procurement

Main suppliers for transportation company could be considered petrol stations,


shops that sells vehicle parts(tires, batteries, etc.).our partners that lends us
their trucks and we can provide service using these trucks to our customers.
As fuel is inseparable element of transportation, our company constantly is
making analysis of different petrol stations and discounts that are offered, what
helps to save company a lot of cost. For example discount card in Lukoil
petrol station gives an opportunity to save up to 0,035 EUR per one liter and
0,01 Euro per one liter accumulates to discount card, which afterwards lets to
cover up to 50% of any products bought in petrol station except fuel. So for
example if truck driver pours 500 liters of fuel into the truck, he can save up
17,5 Euro plus accumulates 5 euros to a discount card, which he can use later

on to pay for goods or services in the petrol station. So using discounts is a


very smart way to save up on fuel costs. Also company has wholesale partners
who sells tires, batteries and other equipment for vehicles, they also make a
discount for Mitransa Logistics.
Our company are using services of partner companies that are also
transportation companies, but have bigger transport fleet. These partners are
mainly companies that CEO or managers of Mitransa Logistics have worked in.
It is easier to cooperate, when companies sort of share common knowledge in
transportation service, because previously Mitransa Logistics employees and
employees of Large transportation companies were working together in one
company. It is a good idea to use trucks of another logistic company, but of
course profit that we get is not as high as could be if we would use our own
transport.

Mitransa Logistics transportation


service
In order to meet the consumer needs, Mitransa Logistics assessing both new
and existing services are guided by the following criteria:
Quickness. As company wants to fulfill needs of service users as soon as
possible, firm constantly analyzes created routes in the aspect of speed.
Customer being able to see comparable estimates of routes can choose himself
the fastest. To perform a route calculation company is using special program
called Autoreute Express Europe. Using this program you can plan routes,
calculate the time spent on the road, vehicle mileage and then make
comparison analysis.

We will make speed analysis, two routes will be picked and transporting vehicle
will hve the same cargo. First route Klaipeda(Lithuania) Kaunas (Lithuania)
Salcininkai (Lithuania) Minsk (Belarus), second route Klaipeda (Lithuania)
Vilnius (Lithuania) Lida (Belarus) Minsk (Belarus). The place of loading
Klaipeda (Lithuania). The place of unloading Minsk (Belarus).
Performing a cargo transportation by choosing the first route
Klaipeda(Lithuania) Kaunas(Lithuania) Salcininkai(Lithuania) Minsk
(Belarus) the quickness analysis is following (Table 1).
Time

Hours
30
22,5
4
3
59,5

Driving
Resting
Customs
Other
Total

Table 1
Analyzing Table 1 we can see that freight transporting by first route takes 2
days and 11,5 hours.
For comparison we will create a second route speed analysis. Cargo
transported by route 620km, truck departs from Klaipeda(Lithuania) through
Vilnius(Lithuania) and arriving in Minsk(Belarus).
Time
Driving
Resting
Customs
Other
Total

Hours
16
9
4
21
50

Table 2

Analyzing Table 2 we notice that the cargo transportation via route


Klaipeda(Lithuania)-Vilnius(Lithuania)-Lida(Belarus)-Minsk(Belarus) takes 2 days
and 2 hours.

Comparing both routes we notice that the transportation via first route takes 2
days and 11,5 hours and transportation via second route takes 2 days and 2
hours. This means that transporting cargo through Vilnius trip duration is
reduced by almost 10 hours and cargo is delivered faster.
Summarizing transport quickness we should emphasize that fast cargo delivery
does not benefit Mitransa Logistics, because sometimes it increases the
expenses of the company, because transportation prime cost is determined by
1km distance travelled or 1kilogram of cargo load.

Regularity. Cargo picking and transporting can be set precisely and regularly.
Carriage of goods can be assigned to the suitable time of the day, day of the
week or distance.
Mitransa Logistics are creating regular cargo transportation trips. Company is
using their own scheme, which is based on a regular route, where traffic
between two places is repeated many times. The essence of this scheme is
basically that transport carries goods one-way and returns without load.
Transporting by this particular way makes the efficiency of transport 50%.
Analyzing regularly carried out route scheme by company. Selected route
Vilnius (Lithuania) Lida (Belarus) Minsk(Belarus). Along this route transport
vehicle will go forward with the load and will return empty (Picture 4).

Vilnius(Lithuania)

Minsk(Belarus)

Picture 4
Analyzing Picture 4, we can see that transport departs loaded(red arrow), back
from Minsk to Vilnius empty(blue dotted line). In this case company is

experiencing loss, because transport capacity is 50 percent. This sort of route


is not profitable.
Another scheme is called circular. Under this scheme Mitransa Logistics
regularly performs a service for two or more consumers via one route. In each
point of recipient, goods are slowly unloaded, meaning that when travel
distance increase, the load capacity decreases. At the last stage of the route
transport vehicle returns empty. Using this transporting scheme, the efficiency
of vehicle is 80-90%. This scheme is more effective, even though it is more
expensive.

Vilnius(Lithuania
)

Lida(Belarus
)

Maladzyechna(Belar
us)

Minsk(Belarus)

Picture 5
Analyzing Picture 5, we can see that from Vilnius transport departs
loaded(Black straight line), in Lida part of cargo is unloaded(red dotted line),
from Lida cargo is transported to Maladzyechna, where again part of cargo is
left(yellow dotted line). From Minsk to Vilnius transport comes back empty(blue
dotted line). In this case company quite effectively uses the vehicle, so that the
efficiency of transport is 80 percent.
Summarizing regularity of transportation movement in the company, we can
conclude that Mitransa Logistics forms constant regular weekly, daily transport
routes. This kind of route regularity ensures efficient use of vehicles.

Work schedule. Mobile employee scheduling time the time from the
beginning of work to the end, during this time employee is at his workplace
carrying out his functions or activities, so to say the time devoted to various
road transport activities.

Drivers performing mobile road transport activities, work in the company not
longer then 6 hours. If total sum of working hours is 6-9 hours, the break of at
least 30minutes is inserted into the schedule, and if sum of working hours is
more then 9 hours, minimum 45 minutes break is inserted. The company allows
driver to divide his breaks into the shorter breaks, which can be minimum 15
minutes.

According to the established work schedule rules, when transportation vehicle


is driven by two drivers, each of drivers one time has to rest for at least 8 hours
in a row. Each week one of rest periods shall be extended to continuous 45
hours rest period. This time is shortened to 36 hours if driver is resting at his
home place. The work schedule includes work and rest book (tachograph)
since 1968 the certain transport law in Europe were introduced, which states
that it is necessary to register drivers working time in all heavy vehicles, which
weight more than 3,5 tons.

Work trips. Constant service location for Mitransa Logistics drivers are work
trips. Drivers trips extend via international routes in Eastern Europe and Baltic
states. (Picture 6) The data is according to year 2013.

Constant work trips


9%
8%
7%
6%
5%
4%
3%
2%
1%
0%

Russia Belarus Ukraine


Baltic states

Picture 6

As we can see from the data chart, most of the constant work trips are to
Belarus 8% and Russia 6%, 0,8% to Ukraine and Baltic States 1,4%.
Company work trips are our service provided to our close customers who
always uses our company to transport cargo.

Competitor and Customer analysis


Customer analysis. Search for new customers is the most important objective
of Mitransa Logistics, but no less important to keep the existing ones. Through
the active years Mitransa Logistics established cooperative contacts with more
then 10 companies:
1 PLC PREMIER WINE ;
2 PLC DELTA CLUB ;
3 PLC PRIVI ;
4 PLC KLAIPEDOS TRANZITO CENTRAS ;
5 PLC GELNA ;
6 PLC BALTIC FREIGHT SERVICES ;
7 PLC ARDARIKAS ;
8 PLC HANSA SEWAYS ;
9 PLC BALTIJOS GRUP ;
10 PLC GLOBETRANSA ;

Customer
GLOBETRANSA
BALTIJOS GRUP
HANSA SEWAYS
ARDARIKAS
BALTIC FREIGHT SERVICES
GELNA
KLAIPEDOS TRANZITO CENTRAS
PRIVI
DELTA CLUB
PREMIER WINE
0%

Customer

5% 10% 15% 20%

Analyzing the chart we can see that most ordered transportation services are
from PLC Priemier Wine around 18,6%, PLC Delta Club around 15,4% and
PLC PRIVI 14,53%. All other customer orders annualy ranging averagely
from 9% to 11%. Customers are one of the main factors influencing Mitransa
Logistics activities, but it is very important to determine competitors.
Competitor analysis is long and complex job, because it is extremely difficult to
find out about competitors profits and reveal their opportunities.

Competitor Analysis. All Lithuanian carriers that are engaged with


international cargo transportation are Mitransa Logistics competitors, and one
way or another we have to adapt, to say it is necessary to respond quickly if
competitors change prices, new services appear, etc. We do have to respond
quickly if we want to make our activities more attractive then our competitors.

Main competitors of Mitransa Logistics


Competitors
PLC Transekspedicija
PLC Kelias
PLC Vilniaus Dobilas

City
Vilnius
Panevezys
Vilnius

PLC Svoris
PLC Forlika

Vilnius
Klaipeda

Mitransa Logistics distinguish its competitors: PLC Transekspedicija are


providing transportation of bulky cargo and other types of cargo according to
customer requirements in Lithuania and foreign markets. Their transport
volume is considerably larger then Mitransa Logistics. PLC Forlika carry out
cargo transportation in foreign markets. This company specializes in certain
types of cargo food: soft and alcoholic drinks. Main performance factors of
these strongest competitors are: a coordinated and intensive management
efforts, achieved a great service and company name awareness among
domestic and foreign users.
The most dangerous competitors according to structure and scope of activity
are following transport companies: PLC Kelias the company provides
random deals and transports only small orders in the foreign market. PLC
Svoris company that also provides transportation of small orders in foreign
market, the car park is outdated, inefficient logistic solutions and do not have
route schedules. Main characteristics of dangerous competitors are:
management actions are not intensive, prices are maintained at intermediate
level, services are not very well appreciated by customers.
All the above-listed competitors do not have well-developed freight vehicle
fleet, this is why they cannot ship the goods requiring special conditions,
underdeveloped forwarding services, do not have extensive route network,
cannot mix individual goods from different customers in one freight vehicle. It
also does not provides small parcel delivery.
Summarizing we can say that all the listed competitors weaknesses positively
affect Mitransa Logistics activities as a company can easier penetrate to the
foreign market. Company having modern, reliable vehicles, increasing freight
transporting volume, by providing faster and more efficient service in the
future can expand its service potential in foreign markets.

Determined management factors, influencing Mitransa Logistics we can say


that the company has a wide range of serious and reliable customer base, with
existing customers company signed long-term cooperation agreements,
constantly monitors the activities of its competitors, their business strategy
and is trying to anticipate further steps of competitors.

Vehicle Tracking system


implementation
The implementation of vehicle tracking system is a very good way of improving
company efficiency, by saving cost. There are many advantages in
implementing gps tracking system to our transport fleet:
Vehicle tracking helps to track the activities of trucks at real-time, when
connected to this system we can see the location, movement history, fuel level
and fuel consumption. The system can inform about transport vehicle arrival to
the destination, deviation from the route, speeding.
Fuel tracking helps to control fuel consumption, it helps to prevent theft and
fraud. It shows exact fuel level in a fuel tank, also we have an ability to see how
much fuel poured and poured off.
Eco driving Shows how drivers driving technique has an impact on fuel
consumption, shows average maximum speed, fast acceleration and breaking
parameters.
Security If the transport is stolen it shows exact coordinates where the
transport is placed , this helps to protect our vehicles from being stolen and
also insurance companies are making discounts when company has this
system.

The price of transport tracking system varies from 119-149 EUR and additional
fuel tracking system cost 232 EUR 261 EUR, plus additional price for
installation 29 EUR. It is expensive, but in long run investments pay off,
because we can safe up from 10% to 40% on transportation costs. Mitransa
Logistics owns 8 vehicles, the total implementation of everything would cost
the company between 3040 EUR 3512 EUR.
Currently company are facing some challenges and are not ready to spend
resources on GPS tracking system, also they trust the drivers, because they are
trying to hire only sophisticated and honest drivers, also this tracking system is
more useful when transport fleet is wider. But in the future company will
definitely think about implementation of this system and it will help to save on
company expenses.

Mitransa Logistics economical


evaluation
Mitransa Logistics are currently facing some challenges, because of the
reduced need of transportation service in Russia. This is why company turnover
lately have fallen.

Turnover
12,000,000.00
10,000,000.00
8,000,000.00

Turnover

6,000,000.00
4,000,000.00
2,000,000.00
-

2009 2010 2011 2012 2013 2014

Lately Mitransa Logistics experienced a fall in turnover, we can see that since
2009 until 2011 the turnover was growing, in 2009 approximately 2 million
euros, in 2010 approximately 5 million euros and reaching peak in 2011 10
million euros, 2012 remained unchanged amount of turnover, but in 2013
turnover have fallen to 5 million euros and remain the same in 2014. The
reduction of turnover is not a very good factor for the company, because the
higher is turnover the bigger number of profit is for our company. The more
service we can provide, the more profit we can get, what in result helps
company to grow.

Recommendations

Mitransa Logistics is a young transportation company that provides various


transportation services in Europe and CIS countries. Currently it experiences a
number of challenges, there are both internal and internal effects that influence
Mitransa Logistics. Some of these challenges could be changed by the

company itself and some of the challenges can be resolved only by


themselves.
Main external challenge that affected company heavily is political reasons,
business companies are strongly affected by current relationships between
Europe and Russia, our company cannot influence changes in politics. To solve
this challenge both parties should be concerned about economy and restore
good relationships so that businesses companies would not have to struggle
anymore. Russian market is very large and the need for European products was
very high, our company is in between European goods and customers in
Russia, we have many loyal and close customers there it is very important for
us that Europe maintains good relationships with Russia.
Next external challenge is road conditions, many accidents, many goods are
being ruined annually due to bad road conditions. And our company has to
make transportation through countries where road conditions are not the best.
Accidents create traffic, sometimes vehicles has to wait a long time until
crashed vehicles are being removed from the roadway, based on my own
experience traveling through Poland I have seen many accidents and have
seen many traffics that lasted 10 kilometers, 20 kilometers or maybe even
longer. Our company is concerned about the road conditions, and more
importantly company is concerned about drivers safety, currently there are
roads being built around Poland, hopefully it will change current situation for a
better one where less or no accidents will occur.
One more external factor that affects our company is fuel prices. Fuel is an
element which is coupled with transportation services. Rising fuel prices affect
our company negatively by forcing us to have higher costs. We cannot affect
the price changes, but we can try to find and choose best routes to save on fuel
costs, also drivers should be instructed not to drive aggressively, meaning
driving should be at steady speed without unnecessary accelerations and
overtaking other trucks when it is not needed. Also we will be able to save fuel
when the company will install vehicle tracking systems and fuel tracking
systems so that the company would be able to modify routes, track drivers

activities so that there would be no theft or fraud attempt, because it is often


case when drivers are pouring off fuel and selling it.
Competitors are entering the market in transportation industry and existing
competitors are growing, improving so it becomes very hard to operate.
Customers are more willing to pick big trustworthy, experienced transport
companies, because they are afraid that young company do not have a lot of
knowledge and can make troubles even though some times small companies
are offering better prices. To make a good impression on consumers of
transportation service our company always has to keep up with our
competitors, track their activities like new service offers and price changes, it is
important to track competitors so that we could outrun them and offer better
service for customers.
Improving internal activities, company should take into consideration cargo
transportation safety, because it is mainly the most important term in
agreement between cargo sender and carrier. Company should pay attention to
the transported goods and establish loading method and suitable packing. Due
to inappropriate loading of cargo or wrong packing there are number of cases
when goods are being damaged what creates loss for our company. Also it is
very important that trucks and trailers would be in good conditions so that
there would be no damages caused to goods because of that. To keep
everything in good conditions it is important to have constant maintenance of
vehicles.
Furthermore service of customers should be improved by constant research of
customer needs, using newest technologies of performing orders. Even though
our company has experienced employees that are capable of good
communication skills and great knowledge of transportation business, it is
important to train employees by using most efficient up to date training.
Training will help our employees to improve their skills and extend their
knowledge, what will result in better customer service and this will result in
attraction of new customers, more respect from existing customers and better
reputation of company in general.

To increase companies profit indicators it is important to control and lower the


cost of companies activities. One way to reduce costs would be implementing
vehicle tracking system, it could help to reduce fuel expenses. Secondly maybe
company should consider of finding cheaper office to use or later on even
moving to their own office, because rent cost a lot it is cheaper to take a loan,
buy office space and return the loan. It is risky, but could be a good opportunity
to save on companies expenses in the long run. Also it is important to make an
economical organization of all company activities, there are many cheaper
ways to provide the same employee perks, for example there was a case of one
business company that replaced water cooler with a filtered water pitcher and
by doing that managed to save 870$ per year. Also there are many
opportunities to save on communicating costs, there are different solutions to
make calls outside of the company for a really cheap price by joining new
communication service providers.
It is important to increase efficiency, company is using technologies that are
not up to date and as we know technologies getting old fast, also always there
are new and better software and not all of the useful software are expensive,
some of them are even free. For example company was using Internet
explorer browser what resulted in slower browsing through the internet and
after they installed Google chrome the browsing became faster. Up to date
technologies today mean a lot, because it is a good way to be very efficient
and be better then competitors.
Company is now providing services to steady customers from CIS countries and
Europe, it would be a good idea of thinking about providing service in different
countries, because our company mainly does business with Baltic states,
Belarus, Russia and recent changes affected our company, we should be aware
that political changes are hardly predictable, we do not have to stick to current
countries, we should be thinking of providing service to another countries. It is
a good idea to hire employees that know foreign language, our company
consists employees that speak fluent Russian, Polish and Lithuanian and
medium English languages, for example we could hire employee who knows

German language that could help our company to find customers in Germany
and we could start providing our service to them.
Being a small business company we should be very careful with our customer
debts. Lately there were many customers from CIS countries that were not able
to pay for our services on time, it affects our company, because workers were
not receiving their salary regularly. It is of course important to maintain good
relationships and help our customers in their hard conditions, but also we
should be more strict about debts of customers. If we will let non-payment of
debt for too long it can critically affect our company.

Conclusion
In conclusion analyzing principles of Mitransa Logistics transportation service
we can see that company is experiencing challenging times due to many
internal and external factors that affect our company.
The key element of company success is well trained, loyal, experienced
employees, that gained their experience by working in large, successful
transport companies, also good and close relationships inside the company
helps to achieve efficient work performance, good atmosphere in the company
makes employees want to go to work, because they are like a family and they
enjoy their job, meaning they work more efficiently then employees who would
work just because they have to. Every employee knows vision and goals of the
company and all of them are reaching the same goal to improve the company.
Employees are mature people who have an experience in communicating with
people, that helps to interact better with customers, what in result helps to
create a good reputation of the company. Having such employees is the most
advantage of the company, because they help company to move forward and
expand.

Furthermore ability to transport goods by different means of transport helps us


to be better then our competitors, because not all of them can offer such wide
service as our company. Mainly because employees of Mitransa Logistics during
their experience of working in previous transportation companies managed to
gain a lot of connections with people who are now working in different
transportation companies that are transporting by different means of transport.
This helps to cooperate and lets our company to offer a wide choice of services
for our customers such as transportation by road, railway and sea.
Weakness of our company is that it is still young and cannot make a lot of
influence in transportation industry like other Large companies in Lithuania. But
latest changes in political sphere affected large companies even more then our
company, because large companies have large transport fleet and reduction of
need for transportation service resulted in transport vehicles being unused or
used with lower capacity, what resulted in turnover decrease, many employees
were fired. Meaning large transport companies struggle more then small ones
like Mitransa Logistics. Our company still needs more transport vehicles,
because there are many opportunities to work with customers and provide
more transportation service, our company gets many orders and because our
own transport fleet is too small company is mostly using transport of other
companies, this is good for company but we do not get maximum profit as we
could get if we would use our own transport.
Company has to improve its technological advancement, because there are
variety of opportunities now, many software, many technologies that can help
to improve transportation service efficiency. In my opinion in the future
company should hire a young employee, maybe who just finished studying,
maybe he would not have much experience in the transportation service, but
he would have a lot of fresh ideas and good ideas is a first step to drive
company to success after the realization of good ideas. The suggestion to hire
young employee is because younger generation is more capable of using new
technologies and having most efficient technologies in the company would be a
good way to remain leaders amongst competitors.

Most important factors that influence quality of transportation service reliable


and skilled employees, well technically maintained transport vehicles, effective
connections that are giving our customers an opportunity to be aware of cargo
movement and price policy which should be fair in the aspect of the customer.
Mitransa Logistics is a cargo transportation service providing company that are
seeking to become a leader in their region and reach strong positions in CIS
country market by providing great quality service and ensuring impeccable
customer service.
Weaknesses of our main competitors works positively for Mitransa Logistics
activities, because company has favorable conditions to expand in homeland
and penetrate to foreign markets, by increasing volume of transported cargo
and providing faster and effective customer service.
Company success basis regular analysis of various internal resources, which
enables their efficient use, effective motivational system which encourages
loyalty of employees and responsibility for companys assets and good
reputation.
Considering the peculiarities of service, we identified that Mitransa Logistics
pays attention to regularity, security and control of work schedule, which allows
to provide high quality services that meets our customer needs.
Transportation service prime cost calculation and evaluation provides
opportunities for greater profits, because following method helps to determine
optimal transport route and duration, while avoiding unnecessary expenses.
Analyzing Mitransa economical condition, we could identify that lately turnover
of company decreased in half, what is challenging for our company, lesser
transportation service provided gives our company less profit.
Promotions in Mitransa Logistics performed periodically and during certain
months in addition to save expenses of the company. Positive image of the
company is formed by providing high quality service, good customer service
and advertisements in catalogs.

Mitransa Logistics is a promising company, company will grow and will become
leader as every employee in the company are working very hard to achieve
common goals. Great efforts always results in great outputs.

Critics and Evaluation


The strengths of this assignment are usage of most effective analysis and
followed suggestions to the problems. These analysis are focused on biggest
and most important challenges that company is experiencing and also on
smaller problems that could be improved.
The weaknesses are that English language is not my native language therefore
making language used in the project less attractive as if it was written by a
person who is a wordsmith.
There could have been different analysis, for example more detailed
accounting analysis or analysis of manager performance or any other specific
company activity.
For project to be better it would have to be more detailed, more useful internal
data of the company. Project would be better if I would spent longer time in the
company and would get more new various tasks therefore getting more
experience about company activities.

References:

David A. Buchanan and Andrzej A. Huczynski; Organizational behavior, 7th

edition, Prentice Hall, 2010, UK


Alan Rushton, Phil Croucher, Peter Baker; The Handbook of logistics and

distribution management, 4th edition, Kogan page, 2010,UK


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