The proposal is meant for our company SRE Transportation Delivery Services that receives packages from renowned online retailers such as Amazon and eBay, which are then delivered to our client OnTrac. We offer point-to-point same day delivery services across Los Angeles and Orange Counties in USA. Our mission is to offer value-added delivery services by following principles of honesty, reliability, superior quality and promptness for customer satisfaction.
At present, SRE Delivery has been facing business challenges such as increment in salary and administrative expenses, maintenance and fleet upgrading costs, cargo insurance fees and overhead charges. In fact, the existing revenue stream is not generating adequate returns for reinvestment, business expansion and sustainable profitability; therefore, the company’s strategic policy-makers have assigned the task to revise pricing strategy effective from July 01, 2015 to generate additional revenue for business growth and organizational development. The business proposal is aimed to explicate SRE Delivery’s strategic planners about the recommended $4 package price, which will be then notified to OnTrac for future transportation agreements.
SRE Transportation would like to adopt the new pricing strategy under which the transportation charges will be $4 for packages and parcels. The company, however, retains existing weight and dimension policy to ensure competitiveness. The first major reason for the price increment is to enhance company’s financial capability to offer higher compensation to SRE workers across the board. The company has already approved addition of twenty new employees coupled with 10% annual increment for existing employees effective July 01, 2015. In other words, it will now incur a higher salary expense compared to previous fiscal year. The second financial impact is regarding the acquisition of a high priced insurance policy that offers greater cargo safety advantage and long term returns in exchange of higher short run policy premium. SRE Transportation is, therefore, committed to minimize risks and improve service quality through beneficial long term strategies with healthy financial returns for our clients. Thirdly, the overhead charges for SRE Transportation have escalated amid higher rentals, administrative and general expenses, retirement benefits under Social Security program, and medical & insurance cover for employees. The fourth reason is the addition of modern fuel-efficient trucks for increase in fleet size combined with replacement of older vehicles. The fleet modernization requires substantial investment because SRE Delivery aims to expand across other different large cities and counties of California. In fact, the objective is to replicate same day delivery model in populated U.S. cities of California including San Jose, Sacramento, Oakland, Fresno, Long Beach, San Francisco and San Diego. Also, the investment will reduce fuel consumption and distribution costs, while positively impacting same-day package delivery proposition to exceed client’s quality expectations.
In conclusion, SRE Delivery could respond to aforementioned business challenges and organizational development objectives with increase in revenue generation that would enhance wealth distribution among employees and corporate retained earnings. The transportation firm will then rejuvenate its value-chain system to transition into a state level delivery service provider. However, it should be pinpointed that the existing package price translates into an approximately 3 – 4% annual ROI, which thus leaves SRE Delivery with no option but to enhance package price to $4 to enhance profitability and pursue expansion opportunities.
