1.0 Executive Summary
The majority of transporting companies optimize their clients with competitive rates, shorter transport durations, protection of goods, and convenience delivery. Nelson Transport SA shares its objectives many of its competing transport with the aforementioned criteria. Nelson Transport SA specializes in the transport of letters and furniture throughout Switzerland, but currently letter courier is the dominant service. Nelson prefers to stay streamlined with courier and trucking as they find these realms more profitable and better potential for business growth in the transporting industry. Nelson is expanding its vehicular capacity to suit the needs of customer orders, bulk customer letter delivery, department store inventory supply, and moving transportation. Hence, their services range from courier cars for smaller furniture items or items needed for rush orders to trailers to supply inventory and letters to specific regions when necessary. In some extreme cases, delivery service will include for-hire transport by private couriers contracted by Nelson. The type of transportation delivery service will depend on the size of the clients, weight of letters, and their orders.
Since Nelson is mostly specialized in letter and furniture transport, its customer segment will remain identical. The range of its customer base will be between 700 and 1200 commercial and industrial customers, and between 1500 and 1800 residential customers. With this volume of customers, Nelson had to formulate its management strategy. It is comprised of a merger of regional freighter and trucking companies with planning vantage locations nationally. For regional outlets short on specific services, Nelson will be obtaining its delivery contracts when regional divisions are requested with higher volume of transport demands. As every company wishes to satisfy customers, Nelson plans to promote its strategy through variable media streams (Reid & Bojanic, 2009). What is helpful is it can outreach to its new client base by also retaining its current one. With the current customer base, it does not require expensive advertising and media.
2.0 Company and Corporate Strategy
2.1 The Company
Nelson Transport SA is being proposed as a new and principle office located in Switzerland. It is starting off with the combined efforts of two salespeople formerly employed together by a freighter company in versatile departments and will be respectively titled as president and vice-president once Nelson is established. Hence it is significant for such a partnership to form based on familiarity. The only differences between these positions are by title. Nelson will be their first company they establish together and hiring a new crew. In spite of their titles, their shares are somewhat equal in dual ownership before they decide to initiate subsequent shares if they take on such a route. The purpose of this dual ownership and share is to accommodate the event if one associate leaves the partnership the remaining associate has the option to renegotiate shares.
2.1.1 Necessity
The advantage Nelson Transport SA gained was to reduce unnecessary excessive transport time and distance with its letter courier service. What its customers were then dissatisfied was the service from variable companies with too many competing rates. Hence the creation of Nelson shall help eliminate these hardships but variable rates are still available in correlation with variable transport services. However, with letter delivery, the importance falls on the rate of delivery instead of vehicular transport.
2.1.2 Strategic Objectives
Nelson Transport is planning to outreach to customers by increasing its market share and overtake its rivals. By promoting additional outlets in the future, it can easily provide lower shipping rates instead of retaining expensive rates by long transporting commutes. Nelson’s newly formed partners experienced various outlets when employed by their former company and their own personal experiences then can propose to accommodation to Nelson’s commuting routes.
2.1.3 Development of Capital Structure
Initially, Nelson is formulating an optimal capital structure and somehow emulates their experiences as former salespeople. The merging of their experiences makes it possible the outreach toward Nelson’s target capital structure (Peteraf & Barney, 2005). By analyzing the debt-to-capital ratio, the chief financial planner estimates this ration can remain between the 30 to 50 percent range. The reason why the range must not fall below 30 percent is because of the inclusion of added courier cars, vans, and possibly more trucks in the future.
2.2 Company Strategy
2.2.1 Nelson’s Vision
Nelson Transport SA’s vision is to execute prompt and successful service with any type of furniture delivery by trucking and couriers to customers where other transport companies have failed. Its competitors (further mentioned in later sections) will deem Nelson as a new entrant and face challenges. Once it has proven to favour Switzerland, it hopefully plans to traverse into the rest of Western Europe.
2.2.2 SWOT Analysis
Strength
The founders of Nelson have developed a larger and diversified product proposal. Their former employer currently controls most courier and trucking routes throughout Europe’s major freeways. After years of working as dispatchers and salespeople, these founders developed understanding in forming better contractual relationships with local transport companies where the locals can assume transport, scheduling and product responsibility where the trucks cannot access (Humphrey, 2005). Hence, when able to presume the transport route by auxiliary transport outlets, this reduces delays and encourages prompt product delivery. A tracking system is updated daily to inform customers of delivery status.
Weakness
Nelson may begin as a larger company than most local courier companies, but because it is recruiting new personnel, internal conflicts can reduce performance especially if they are unfamiliar with company policy and not used to working with new staff. Success factors may be obstructed when new personnel hired may expect to land similar occupations and responsibilities they are already familiar with. Field staff may eventually demand and request courier and transport routes they frequented instead of being completely relocated. What may be a promising plan on paper may not be practical. When personnel cannot reach Nelson’s newly defined terms, declines in profits and company morale may occur.
Opportunities
Distant communities normally have only local transport and delivery service available. Nelson has the power to remove dismal competition from local communities. However, this is not Nelson’s favourable intent. Nelson prefers cooperation instead of competition with smaller companies. Its goal is to offer cooperation and contract negotiation with smaller community delivery with the intent of improving transport and delivery service while simultaneously integrating smaller independent companies that may not fully provide service Nelson is capable of providing.
Threats
Profits and margins as well as companies grow in shareholder investments and may decline if the industry declines. This may occur only if the dual founders decide to outreach publicly and invite shareholders. Heavier transport and freighter are limited to specific freeways and may only access them at specific times throughout the day. The transport and freighter industry is a highly regulated industry where certain products are only admitted to particular countries. Even Switzerland has lamented many regional crossing policies the transportation of certain goods may not be permitted across into other regions if Nelson plans to expand within the Swiss borders. Politics within Switzerland may prevent transportation and have adverse effects on major freighter routes.
2.2.3. Strategy
Nelson’s strategy is to reduce delays and offer services where transport to more remote communities can be launched in tandem with local couriers who have easier access. There shall be nothing that Nelson cannot transport on a timely basis. It expects to reach higher market sharing in record time compared to other transport companies to prepare for magnified outreach, Nelson plans to distribute its marketing message with social media including television, radio, and online advertising servers.
3.0 Product and Services
3.1 Product Portfolio *
Products/Services How do clients benefit? Do they meet a strong client
need?
Trailers warehouse/commercial non-critical delivery
and retail delivery
Box trucks Apartment, care home, timely delivery
& small business
delivery
Mini-trucks detached home and top priority delivery small retail delivery
*assumptions only by Nelson’s financial CFOs (chief financial officers)
3.2 Positioning
As per the aforementioned product portfolio, the type of transport vehicles dictate how far they are to travel. The trailers will be taking the longest routes internationally. If an order is located too far away, one of Nelson’s regional outlets will conduct the product transfer. Since the transfers are conducted under the Nelson umbrella, no further transport charges will be incurred.
3.3 Price Segment
Prices will vary depending on the weight and volume of letters and related packages transported. Customers can order mail service online for cheaper transport costs as opposed to purchasing directly through a department store. If customers order mail services in bulk, the sender will shoulder the costs to forward to the transport companies. Transporting excessive mail packages requiring more than one vehicle will increase costs. But if the customer decides to hire a larger vehicle on a route carrying multiple letters to transport in on sitting, costs can be saved.
3.4 Quality Standard
Nelson’s dispatch and field staff ensures whom they hire are conscientious of mail and products being transported. For more rush letters and sensitive products, they have quality control staff frequently assessing arrangements of products being transported. The factors they often inspect for are product weight and volume and in which vehicles they will be transported. They check on products for proper packaging and inspect the positioning and placement of products once they are loaded on board the vehicles.
3.5 Additional Services
Nelson offers letter and packaging services for residential, commercial and industrial companies moving regionally and internationally. To ensure relocation is prompt so as to provide little interruption in business as possible, they negotiate scheduling with their clients to transport all items simultaneously.
3.6 Product Lifecycle
Nelson’s transport vehicles are acquired by trades reports and field inspections to ensure vehicles purchased are suitable for transport and are prepared to travel over longer distances. After specific periods and driving distances of time on the road, each vehicle becomes subject to inspection to increase the reliability of the vehicle. The lifecycle of each vehicle may vary, but regular maintenance after constant usage can extend delivery vehicles up to 15 years.
4.0 Market Clients
4.1 Market Overview
Nelson is anticipating it will gain at least 6 percent of clientele after each fiscal year once word of a combined service is announced. What could change are marketing entrants proposing lower transport rates. But Nelson assures the quality of its rates along with its service quality. The majority of the market are segmented by pricing, service type, and quality. The pricing on identical services may vary, but only by increments depending on what services customers order.
4.2. Success Factors for Future Development
Nelson’s advantage by a start-up from former coworkers helps collaborate business incentives of similarly thinking minds involved in separate divisions in the past. By focusing on what has been successful instead of the errors hindering success, Nelson has future plans to expand its product transfer to rentals and increase its transport in the furniture division. If the former coworkers that launched the success of Nelson’s strategy were instrumental in the success of their former company, then expanding to other realms of transport shall be viable and feasible.
4.3 Clients
Nelson’s ideal clients have a variety of clients from single-home owners to commercial and industrial clients needing mail and registered packages. Nelson’s many regional outlets are centralized. In the event that an order is placed for their services, they relay the service to one of their location nearby their clients for prompt service.
4.4 Own Market Position
Nelson’s strategy involves reducing transport time and distance as much as possible. Hence this is the reason why it establishes variable outlets where necessary. Nelson’s marketing strategy enabled its marketing position by offering distant services while reducing costs simultaneously.
4.5 Porter 5 Forces
New Entrants
- Newly proposed access to product transportation
- Profitable industry
- Changes in government policies and capital requirements
- Cost competition and disadvantages
Product or Service Substitutions
- Lack of service quality or service of lesser quality
- Changes in customer order habits
- Purchasing of online mail service over telephone orders
Customer Bargaining Power
- Available channels of transportation
- Customer cost switching and alternative costs based on companies switching costs
- Uniqueness of industry services
Supplier Bargaining Power
- Popularity and demand of transport routes
- Provision of in-house service transport instead of using Nelson’s services
- Favourable transport service contracts if transporting suppliers goods
Competitive Rivalry
- Variable advertising with online presence and social media
- Firm concentration ratio
- Decisions between uses of online or offline services
5.0 Competition
5.1 United Parcel Service (UPS)
5.1.1 Profile
- Located worldwide (5 locations in Switzerland)
- Package delivery and specialized transportation and logistics services
- Over 600 employees (Switzerland)
5.1.2 Target Markets
- Basic business (commercial and industrial) and domestic shipping envelopes and packages
5.1.3 Market Position
- Average annual sales: 8.76 billion Swiss francs
- Market Share: 12.2 % (61.1% worldwide)
- Profitability: 7.89% (as of December 31, 2013)
5.1.4 Distribution
5 city locations (Arlesheim, Grancia, Meyrin, Ruemlang, Wiler Bei Seedorf)
5.1.5 Competitive Advantages/Disadvantage
- Specialized and streamlined services (advantage)
- Market share in confined industry (advantage)
- Worldwide service (advantage)
- Transport service deregulations allow new competitors into the industry (disadvantage)
- Business environment changed due to development of information technology
5.1.6 Identifiable Strategies
- Marketing budget on a specific industry niche on a worldwide basis
- Self-outsourcing instead of contracting out to independent companies
- Long-time mail and courier service history
5.2 FedEx
5.2.1 Profile
- Worldwide (6 locations in Switzerland)
- Inbound/outbound, heavyweight, domestic, and international services
- Approximately 950 employees in Switzerland
5.2.2 Target Markets
- Embassies and other governmental institutions, small business owners
5.2.3 Market Position
- Average annual sales: 10.7 billion Swiss francs
- Market Share: 18.3% worldwide (14.3% in Switzerland)
- Profitability: 8.04% (as of December 31, 2013)
5.2.4 Distribution
5.2.5 Competitive Advantages/Disadvantage
- Specialized and streamlined services (advantage)
- Market share in confined industry (advantage)
- Easy to duplicate business (disadvantage)
- Information technology competition and advancement (disadvantage)
5.2.6 Identifiable Strategies
- Marketing budget in a low competition niche
- Single and vocal worldwide brand
- Independent operations
- Collaborative management
5.3 United Parcel Service (UPS)
5.3.1 Range of Transportation Services
- Critical freight (air and ground freight)
- Full range of freight services for heavyweight shipments over 68 kilograms
- Customs brokerage
5.3.2 Service Characteristics
- Safe and intact product transportation
- Frequent vehicle inspection
- Branding and logo
5.3.3 Additional Services
- Courier divisions
- Next day transport
- Second day transport
- Three day select
- Ground and standard service
5.3.4 Prices and Payment Terms
- Prices per weight and volume
- C.O.D. payments
- Added value service
- Shipping risks, payment/non-payment collections
5.4 FedEx (Service Provisions)
5.3.1 Range of Transportation Services
- Express and critical shipments
- Supply chain security
5.3.2 Service Characteristics
- Safe and intact product transportation
- Frequent vehicle inspection
- One of the largest carriers of added value service
5.3.3 Additional Services
- Hold at location services
- Dangerous and sensitive goods services
- Automated tracking systems for customers to consult the status of their product delivery
5.3.4 Prices and Payment Terms
- Prices per weight and volume
- Accessible updated rate forms
- Electronic funds transfer
- Electronic data interchange
6.0 Marketing
6.1 Marketing Strategy
- Clients can expect prompt delivery within specific and requested time frames prior to 48 hours of ordering
- Providing versatile service with variable delivery vehicles, Nelson’s transport and field personnel gain experience and familiarity with various routes and interacting with staff employed by other branches
6.2 Strategic Principles
Most transport companies outsource by contract independent transport or courier companies to deliver single, specialized products, meet customer demands, or accommodate product returns or return mail (William, 2005). This can often be difficult to reduce costs when travel distances are increased, need to pass through certain districts or bridges. Nelson’s plan is to reduce this problem by utilizing more vantage points as opposed to customers having to travel great distance to return products and mail. This creates tensions between the transporter and the customer and there is no guarantee if products can return with given timeframes. Nelson plans to establish sub-outlets to bridge the gap between larger freighting distances, if the customer needs to return defective products and can conveniently consult a local outlet.
7.0 Service and Procurement
7.1 Means of Service
Nelson is notified for tis tracking system to keep its customers updated on the status of their delivery. Customers have the option of either contacting the nearest Nelson branch or outlet or they enlist themselves on the email list. The emailing tracking system is especially useful for long distance transports and helps keep customer assurance that their products are on the road or if thee any hindrances. If for example an emergency occurs including accidents, damaged products, lost mail packages, or traffic delays, customers will be informed almost immediately.
7.2 Technology
Customers may access any one of Nelson’s websites and web portals to customize their transport costs by entering their own information as needed. They can determine the time of delivery, cost, available transport, and even the maximum weight and volume appropriate per loading. When customers have the option of arranging their own methods of shipping at their convenience, Nelson is sure customer satisfaction will be reached. Once customers place service orders, or arrange for transport, they will immediately receive confirmation that their request has been processed.
7.3 Capacities and Bottlenecks
Sometimes field operations do not function as smoothly as planned. When Nelson’s transporters arrive at their destination, for example, an order may have been cancelled without the drivers’ knowledge, and the driver was too close to the destination to be informed ahead of time. Line-ups at the highway weight scales may cause delays in transportation.
8.0 Research and Development
8.1 Sources of Expertise
Nelson’s personnel and safety policies ensure that all its divers have clear driving records and have adequate knowledge in trucking mechanics for the purposes of identifying any problems with the vehicle. Nelson employs its own mechanics department that was a requirement for agreement prior to the merger. For field drivers having knowledge of mechanics is helpful for minor mechanical issues that can be dealt with by the driver. Either way when mechanical problems with vehicles occur, the driver can inform the nearest Nelson branch or outlet in case of any delays.
8.2 Innovation Policy
Nelson’s innovation policy is welcoming all levels of personnel as long as it is discussed with personnel. Full coordination with all stakeholders will be obliged depending if Nelson’s branches will be affected only nationwide or internationally and conduct gap analyses. Common research priorities to improve transport routes shall be executed alongside government and road policies with territorial authorities.
8.3 Current Development Projects
8.4 Planned Development Projects
Nelson is preparing a plan for rush and emergency transports in case demands for mail delivery increase. Mail package demand may be unpredictable and by providing a freighter crew for readily available service will retain customer satisfaction.
8.5 Product and Trademark Protection
Nelson has a registered trademark with notification of an approved transporter of various goods and letter services. Prior to signing a contract with new clients it must present a legal documentation and legal recommendation. Updated verification from its franchisors and licensors are required to enter into new agreements in order to protect itself and its customer base.
9.0 Risk Analysis
The risks Nelson was able to identify were targeted toward motor carriers and additional commercial transportation. These also included major segments such as last mile delivery, courier and livery services. To reduce these risks Nelson provides its companies with program analysis, marketing, safety and loss prevention. Nelson is sure to develop strong relationships with domestic insurance markets that specifically deal with road transportation from the new partners’ years of experience in transportation. Nelson negotiates risk transfer and insurance placement solutions to ensure protection of all parties concerned and offer greater value than its competitors.
9.1 Strategic Risks
- Joint ventures and alliances (if planning to associate with other transport companies in the future)
- Relations among investors
- Changes in supply and demand services and introduction to new technology
9.2 Marketing Risks
- Stock volatility
- Commodity price volatility
- Interest rate changes
9.3 Financial Risks
- Amount of credit in purchasing and/or leasing vehicles
- Cash flow from external financing
9.4 Operational Risks
- Clients, processes and business practices
- Damage to products and physical assets
- Workplace safety
10.0 Finance
10.1 Long Term Planning
10.1.1 Target Balance Sheet (numbers in Swiss Francs – CHF)*
* based on a two-year projection only as the increase from 2015 to 2016 indicate a positive margin under ideal conditions. Numbers are for estimates only and not to be used as actual financial figures.
10.1.2 Target Profit and Loss (numbers in Swiss Francs – CHF)*
* based on a two-year projection only from 2015 to 2016 as the transition between these years in net profit will suffice for subsequent years. Numbers are for estimates only and not to be used as actual financial figures.
10.1.3 Target Cash Flow Statement (numbers in Swiss Francs – CHF)*
* based on a two-year projection only from 2015 to 2016 as the operation costs vary between consecutive years. Numbers are for estimates only and not to be used as actual financial figures.
10.2 Short Term Planning
10.2.1 Budgeted Liquidity
Liquidity Budget (Swiss Frances - CHF)
Payments-In
Cash Sales 63,260 63,260 53,771 55,353
Sales on Credit 5,535 5,535 3954 4,586
Interests 791 791 554 0
Payments – Total 55,026 68,796 58,279 59,939
Payments-Out
Creditor 9,489 9,489 9,489 9,489
Costs 791 791 791 791
Compensation 633 633 633 633
Vehicles Supplies 949 949 949 949
Equipment 712 900 900 900
Salaries 791 791 791 791
Repairs/Maintenance 475 475 475 475
Payments-Total 13,840 13,840 13,840 13,840
Changes
Cash Credit 475 514 593 475
Cash Credit Beginning 554 573 573 554
Cash Credit End 1,028 1,087 1,166 1,028
11.0 Conclusion
Although Nelson Transport SA has an understanding of its initiatives, it may be wary of its first year in operation as the net profit and sales begin at much lower ends of the margin. This identifies a financial risk for formulating a merger to develop Nelson. Perhaps the cofounders did not capture all accounting factors from their former company into the formation of Nelson. Its short term planning merely indicates it can sustain minor expenses upon its inception.
However if Nelson prefers to attain a successful first year of operation, the cofounders shall recapture their operational experiences. Perhaps there is more reason why the cofounders have left their former employer to start anew. It is possible that both cofounders agreed to initiate a dual partnership to provide further outreach to its customer base by combining their available services their former employer could not perform. On the other hand, they have had their employments terminated by their former employer because they were overly qualified for their positions. In fact, many qualified employees have been released from their former employer for fear that these coworkers may transition their company through a complete overhaul. In either case prior to forming Nelson Transport SA, the initial employment policies and turnovers may affect its first year performance that could affect the 2nd year of operations. Surely the financial statements indicate growth, but in order to bring its projection closer to ideal conditions, a projection over 5 years or updating the financial reports each year may bring Nelson more promise.
REFERENCES & WORK CITED
Humphrey, A. SWOT Analysis for Management Consulting. SRI Alumni Newsletter. December 2005.
Peteraf, M. & Barney, J. Unraveling the Resource-Based Tangle. Managerial and Decision Economics. 04 June 2005.
William, C.A. The Marketing Plan. John Wiley & Sons, Inc. 14 April 2005.
Reid, R.D. & Bojanic, D.C. (2009). Hospitality Marketing Management. John Wiley and Sons. 09 February 2009.
