MGMT 6080 NewCo Case Study

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Fanshawe College *

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6080

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Management

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Apr 3, 2024

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FANSHAWE COLLEGE NewCo Final Case Study Report Executive Sum— Newco is a nonassetAhaseddeay logistics provider that was founded in 2800, T 0GifaMAIN0946595) | customers are AQanaqg .M%lz%g,y 6?nd the United States. They . . 10us Xavier are proficient in bcean transportationS REMAREBYA4AB) and Trucking services. They also provide $aaxaitid: 8ty 43) logistics full service. The main challenge of Newco is to increase its market share in the Canadian market. Since their expertise lies in Ocean frans’portation, Rail transportation, and Trucking, theitéarRehseddaigp uncover resources to have an efficient service to their clients. This way, the company can successfully penetra];e tlﬂe Canadian market. Moreover, Newco has already ah existing customer base. It is importattaenRav82a good relationship with them because as Jesse Champagne said, “Existing customers are 50 percent more likely to buy new products and spend 33 p% than new’ fi%féfii@?’?fi“fi‘m 1] T e o m b P0OWRIpaded EpaSaad Islamy@anitif97 /@seosnapsLomyy g L T e m o maem .

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Page |2 Executive Summary Newco 1s a non-asset-based lead logistics provider that was founded in 2000. Their main customers arc Canada, Mexico, and the United States. They are proficient in Ocean transportation, Rail transportation, and Trucking services. They also provide Fourth party logistics full service. The main challenge of Newco is to increase its market share in the Canadian market. Since their expertise lies in Ocean transportation, Rail transportation, and Trucking, the team needs to uncover resources to have an efficient service to their clients. This way, the company can successfully penetrate the Canadian market. Moreover, Newco has already an existing customer base. It 1s important to have a good relationship with them because as Jesse Champagne said, “Existing customers are 50 percent more likely to buy new products and spend 33 percent more than new customers.”[ CITATION Jes19 \l 13321 ] To penetrate the Canadian market, the team will research and discusswhich transportation mode has the highest net profit potential, which transportation mode has the highest risk to avoid using it, what are the benefits and drawbacks of Newco being an Asset-based LLP, who are the current competitors of Newco, and the various methods for expanding the Canadian market share.

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Page |3 Immediate Issue Newco aims to have a positive impact in the Canadian market mainly to increase its market share and attract potential clients. They also have a wide variety of services ranging from full-service 4PL., Ocean transportation, Rail transportation, and Trucking. They also can resolve problems for their clients. Some of these services are already provided by their competitors. It is essential to have a point of differentiation in this industry to captivate the attention of potential clients. Basic Issue The basic 1ssue that Newco 1s facing 1s the risks in penetrating the Canadian Market. Since they have good competitors, it 1s important to know the risks and threats that may happen in the future to have a contingency plan. Some of these risks are product pilferage, improper equipment loading, delivery delay, equipment malfunction, accessibility limitations, vulnerability to flooding for water carriers and many more. Assumptions 1. We are assuming that NewCo does not have a high rate of customer retention since their main objective is to penetrate the Canadian market even if they have existing clients. 2. We are assuming that the current/ existing clients of NewCo are not major or big clients since they continue to invite new potential clients. 3. We are assuming that there are some drawbacks in the transportation services of NewCo since there are transportation issues that need to be resolved. Problem Statement What can the research team at Newco do in the next 12 months to penetrate the Canadian market and 1n the long run increase the market share so as to have a productive and efficient workforce? pranm———

Page | 4 ANALYSIS Situation Analysis Name of Organization: NewCo Location of Organization: Canada Services provided: Ocean transportation, Rail transportation, Trucking, Automotive, Food Industry, full service 4PL Industry: Logistics provider Sector: Private The main challenge of NewCo is to increase its market share in the Canadian market. Since their expertise lies in Ocean transportation, Rail transportation, and Trucking, the team needs to uncover resources to have an efficient service to their clients. This way, the company can successfully penetrate the Canadian market. Moreover, NewCo has already an existing customer base. It is important to have a good relationship with them because as Jesse Champagne said, “Existing customers are 50 percent more likely to buy new products and spend 33 percent more than new customers.”[ CITATION Jes19 \1 13321 ] To penetrate the Canadian market, the team will research and discuss which transportation mode has the highest net profit potential, which transportation mode has the highest risk to avoid using it, what are the benefits and drawbacks of NewCo being an Asset-based LLP, who are the current competitors of NewCo, and the various methods for expanding the Canadian market share. Symptoms& Inferences 1. NewCo as full service 4PL provider should distinguish their target market for this service. They should know that targeting medium-to-large businesses are better for 4PL providers while 3PL providers reasonable to small-to-medium businesses.[ CITATION Tom20 \l 13321 ]

Page |5 Inference: The company should provide the proper and suitable provider for their specific client and provide efficient results in order to have a positive image and to possibly have a high customer retention. 2. The capability to provide quality service in a broad market located in different places such as Mexico, Canada, United States. Inference: Although NewCo has been in the industry for 21 years, their challenge to penetrate the Canadian market can also affect the quality service in the different locations of the company because they might focus too much of their resources and energy on increasing the market share in Canada. 3. Should NewCo continue as a non-asset based LLP? Inference: It would be preferable if the business remained a non-asset focused lead logistics provider, as this allows i1t to have required equipment and capabilities, scheduling flexibility, and greater access to warechouses. [ CITATION Purl9 \l 13321 ] Who are Newco’s competitors? Newco 1s a lead logistics provider that has also several competitors with a similar business style. Some of which that are located in Canada and the United States are: Lean Supply Solutions —is a Fourth-Party Logistics Service provider that has several locations both in Canada and the United States. They offer several services such as Contract Logistics, e- Commerce Fulfillment Services, Inventory Planning & Management, Supply Chain Management & Optimization, Pick-and-pack Services, freight & Warehousing, Reverse Logistics Management solution, and Technology Solutions & Integration. This company has a wide variety of services that assures quality service to their clients. From reliable IT solutions to management software, and well-deliberated warehouse locations. [ CITATION Fou \l 13321 ]

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Page | 6 Cedric Millar Integrated Solutions — i1san integrated solutions company where their expertise lies 1 integrating intelligent strategy and optimized supply chain solutions for their clients that are located 1n Canada and the United States. [ CITATION Ced \l 13321 | Kuehne+Nagel —is a transportation services, supply chain services, and industry services. Some of their transportation services are air logistics, sea logistics, and road logistics which 1s quite similar to the transportation services of Newco. Additionally, Kuehne+Nagel has also Supply Chain Management 4PL, Warehousing, Automotive, and Perishables services. [ CITATION Int \l 13321 ] Overall, the competitors of Newco offer a wide variety of services that assures the business of their clients and that their best interest 1s for the business of their valued current and potential clients. SWOT Analysis Strength Weakness Opportunity Threat Transportation methods | R&D Qualified Technical problems professionals 4PL service provision | Market loss Improvements in | Govt. Terms and transportation conditions Diversity of clients Competitive Technical Progress Improving fuel costs Customer Works at different sites | Dependent staff Enhance the sum of | New positions freight per shipment Financially stable Growing Consumer loss Interdependence STRENGTH 1) Transportation methods Newco 1s responsible for all transportation systems such as the railways, the sea and the roads. This makes the business a strong by placing orders with service quality on correct time period to use multiple routes. LT T

Page |7 2) 4PL service provision Newco offers a 4PL service referring to supply chains and logistics for fourth parties with obligations like customer support, customer care and on-time order fulfillment. 3) Diversity of clients Newco Company has different customer transactions with numerous registered companies, such as the automotive and food industries. 4) Works at different sites Newco operates in different areas including Canada, Mexico and the United States 5) Financially stable The profit margin in the last 5 years 1s big with subsequent profits. WEAKNESS 1) Research and Development In order to enhance production performance, Newco requires devoting more resources to research but instead development in the field of customer preferences. 2) Market loss Newco may lose customers and eventually of its inability to meet customer needs and satisfaction. To keep its clients, Newco wants to upgrade its operational activities. 3) Competitive Customer Since the year 2000, Newco has been working in North America. As a result, Newco requires additional focus in the sector in order to be a major manufacturer of 4PL services. In North America, there are a range of rivals with more customer service that Newco. 4) Dependent staff

Page |8 Many of the problems today that the Newco Company is experiencing are due to the workers' lack of attention. For instance, Railways have had problems for the past 20 years. OPPORTUNITY 1) Qualified professionals Recruiting new staff and employees to satisfy the consumer demands build the chance to connect further clients from the industry. Increasing availability of trained workers means more successful and creative jobs that contribute satisfaction of customer needs. 2) Improvements in transportation Lease and getting new transport system leads to improve operating efficiency of the Newco business. 3) Technical Progress The bulk of Newco's challenges can be addressed by integrating new technology into its services. Technological advancements would also improve the effectiveness and quality of services, as well as the fulfillment of buyers' desires. 4) Enhance the sum of freight per shipment One of the Newco firm's strategies is to increase the load each delivery in order to fulfill consumer demands on time. This will provide the organization with the ability to expand its operations. 5) Growing Interdependence Newco 1s currently based in Northern America, but its development has opened up new business possibilities all around the world. THREAT 1) Technical problems When imnnovative technology is implemented or replaced in an existing enterprise, cost effectiveness is jeopardized. To retain operational productivity, technological progress

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Page |9 necessitates the use of professional or trained workers. This raises the company's costs even more. 2) Govt. Terms and conditions Because Newco functions in Mexico, Canada, and the United States, trying to change government regulations for global trade pose a risk to the business's transportation costs. As a result of the recent COVID-19 scenario, which has seen all countries shut their international boundaries and prohibit global trade, Newco's shipment to customers may be delayed. 3) Improving fuel costs Fuel price increases can have an effect on transport service operations. The cost of transportation is that as the price of gasoline rises. This poses a new threat to the Newco. At delivery, they must determine the costs related to transport. 4) New positions Newco has an excellent experience to recruit new staff and personnel to remedy the current crisis. However, the expense of doing this is higher, and adding a new worker to the market lowers consumer expectations and may result in customer loss. 5) Consumer loss Repeated late deliveries and unhappy customers result in contract termination and the loss of potential consumers. To meet the expectations of its consumers, Newco must recognize the issue and fix it as soon as necessary. Alternative Recommendations Newco wants to boost its productivity and its market share. Innovation, strengthening customer relationship, advertising, and quality improvement 1s some of ways in which the company can grow its share in market. The quality of the service provided is a critical factor which increases the market share. Also introducing innovative technologies that competitors yet not introduced assist to dominate the market. [ CITATION mar21 \l 4105 ]. Along with these some of the most important considerations to be addressed are following: a) On-time shipment to consumers

Page | 10 b) Risk mitigation c) Operational cost reduction These are the most important considerations to be addressed To achieve this, the below conclusions are proposed. I. Leasing of trucks Newco will work through leasing organizations to reduce consumer satisfaction depending on shipping criteria. Newco will provide you with an offer for the cheapest price. ADVANTAGES a. Lease Payments Monthly As compared to buying a car or truck, renting offers the advantage of paying lower service charges. Also, get the choice of stopping transactions once it has completed its work, earning costs on lengthy maintenance costs. Since the value of an automobile drops in value over time, renting one for the duration of the company's usage is becoming a more cost-effective and flexible choice. b. Price of Maintenance The business saves money on maintenance costs by choosing the rental solution. When the tractor grows, it begins to show signs of damage. However, the business will also incur no lengthy installation costs while subletting. There 1s also a possibility to change the trunk method to suit your needs. c.Benefits of Taxation Another advantage 1s corporate income taxes, which are measured based as to how much duration the car is being used for business activities. To qualify for the exclusion, the leasing truck must be used at minimum 50% of the time period in business activities. DISADVANTAGES a. Improvement A rented truck must be returned in nearly the same state as that when it 1s rented. No one can change it or do anything they want about it. b. Pre-termination fees:

Page |11 And if the company doesn’t use a truck, it will have to pay costly pre-termination fees. In such circumstances, some consumers have looked for someone to take over contract. ¢. Acquiring Insurance coverage Due to the obvious borrower's risks, insurance premiums for leased trucks are probably higher than those for new trucks.[ CITATION Adv \l 16393 ] II. Combined Service Currently Newco. works as a non-asset enterprise. Since the business in the Canadian market expands, Newco can provide its consumer with a mixed service. Combined service indicates that both are integrated. As logistics company total assets, Newco can attract services cost reductions because it employs its own allocation facility and perception. It could also provide advantages of non-asset operations management at the very same period. Transfer to a mixed service enables Newco to reduce costs, offering various accessible services focusing on various customer requirements. ADVANTAGES a) Zonal processes are simple to execute It 1s easy to implement three zonal operational activities. The green, yellow and red zone of the transportation services can be made on the basis of quantity and operating frequency. The Green Zone 1s an extremely industries application so it can be served as an operation process based on assets. The mixed service could be used to represent the yellow and red zone with low intensity and modulation scheme. b. Security Protection may be offered by the transfers of the threat to the partnership firm whenever the non- asset process 1s used. In the combined service, non-asset-based method can be used wherever it is necessary and includes a large risk. The patterns that help can also supply specialized tools, managing technology needed for the functioning. c. Fast-tracking

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Page |12 The recommended customer may be designed with appropriate requirements and expedited facility if the client asks for accessing immediately. Unless the service is combined, it can be processed to meet customer requirements as soon as possible. DISADVANTAGES a) Timetable for updating Clear shipment objectives, schedules and receipts must be efficiently updated, for both assets and non-assets. Two separate procedures require considerable effort to apply the others. b) The appropriate partner Identification Identifying the perfect partners i1s really essential in combined, non-asset-based transactions, since they correspond to our quality service. It i1s also crucial to identify a sincere collaborator with a customer.[ CITATION DOV17\l 1033 ] I11. Implementation of ERP Software Newco must purchase non-asset installations software for dealing its non- asset activities. This can make the activities automated and technically efficient with minimal errors and trails. ADVANTAGES a. Enhanced Reports and Scheduling In addition to enhanced exposure, appropriate intervals are an important benefit of Erp systems. Erp implementation package along all departments implies that each procedure has a fixed, cohesive review system. An ERP user can efficiently offer valuable reports at a certain time by getting a single version of the truth. NewCo. can identify and evaluate the operations in various departments with the software, without worrying about multiple notices and emails. b. Detailed accessibility This advantage from ERP is among the software's largest sales outlets. The ERP Software provides Newco with complete access to all significant decisions through easy access to information from all departments.

MGMT 6080 NewCo Case Study

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