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Posted on September 3rd, 2012, by

Today, the development of a truck repair shop is very perspective, taking into consideration the permanently growing demand for transportation services and truck repair. In such a situation, the development of the truck repair shop, namely the Marshall Truck Repair Shop can bring considerable benefits and returns on investments in case of a successful development and implementation of the marketing plan. The key concerns of the marketing plan should be the customer satisfaction and the formation of customer loyalty to the brand and, therefore, to the truck repair shop. At the same time, it is obvious that the high level of customer satisfaction and customer loyalty can be grounded only on the high quality of services and wise pricing policies which allow the company to take the leading position in the market and get stable revenues. In addition, the truck repair shop should offer customers new services and products which can attract new customers. In this regard, it is very important to outpace the major competitors to take the leading position in the market. Finally, the truck repair shop should not count for maximization of its profits, at least in the nearest future, because the current financial crisis and economic recession prevent the rapid development of the truck industry, while the company needs to attract new customers that will increases expenses of the company and decrease of its revenues. Nevertheless, in a long-run perspective the company can count for stable and relatively high profits on the condition of the maintenance of the leading position in the market.

Situational analysis

a. Environment

On analyzing the contemporary business environment, it should be said that the development of the truck repair shop may have good prospects, although the company may face certain difficulties related to the overall development of the truck industry and transportation.

Nevertheless, the current benefits and business environment are basically favorable for the development of the truck repair shop. To put it more precisely, Canada, where the Marshall Truck Repair Shop operates is a well-developed country with a widely-spread infrastructure and transportation system. Moreover, the location of the truck repair shop in Hamilton, Ontario, opens huge perspectives for the ongoing growth of the company because this region may be viewed as a transportation bridge which links together not only largest provinces of Canada but also two largest economies of North America and the world Canadian and American ones. Naturally, in such a situation, the efficient and stable transportation of goods is constantly growing, while the financial crisis and economic recession cannot prevent the local, national and international transportation system keep growing. Moreover, in a way, the current economic situation is favorable for the development of truck transportation, which is apparently beneficial for the truck repair shop. In fact, many companies refuse from using services of aircrafts for transportation of goods because of a high price of such services. The latter naturally stimulates companies to return to the truck transportation. The increase of the truck transportation naturally leads to the increase of the number of trucks, while the trucks need to get repair that increases respectively the demand of transportation companies for the services and goods of the truck repair shop. As a result, the company can count for the steady growth, which may increase even more significantly after the end of economic recession when the growth of business activities will naturally stimulate the increase of transportation of goods and, therefore, wider use of trucks, which cannot be used without regular repair. In such a way, seeming economic problems will not affect consistently the financial position of the truck repair shop, although, the company cannot count for high or maximum profits in the nearest future.

b. Industry

At the same time, the development of truck industry at large and truck repair industry in particular raises a number of problems the company will need to tackle with. First of all, the development of the industry is accompanied by the growing competition because the well-developed transportation network, good infrastructure and stable demand for the truck repair services naturally attracts investors and companies who are willing to work in the industry. The high level of competition naturally raises the problem of taking the leading position in the market, which is the more difficult to do the higher the competition is.  At the same time, the high development of truck industry contributes to the introduction of high technologies and the truck repair shop should come prepared to offer customers goods and services which meet the current demands and are highly technological. The latter implies the need to introduce innovations that means that the truck repair shop should constantly work in the introduction of new goods and services to maintain its competitive position in the market.

Furthermore, it is important to remember that the truck industry, which is mainly focused on the provision of transportation services, has substitutes, namely air and railway transportation, which can be used by companies as alternatives for the transportation of their goods. In such a situation, the truck industry should be able to compete with its potential substitutes. The role of the truck repair shop can hardly be underestimated in this regard, because the shop should provide companies using trucks with ample opportunities to get goods and services of the highest quality to minimize the costs of exploitation of trucks that will improve consistently the competitive position of the truck industry in the market. Anyway, it is obvious that the truck repair shop is highly dependent on the situation in the truck industry and transportation.

c. Organization

The efficient organization of the business is of the utmost importance in the contemporary business environment. In this respect, it is important to lay emphasis on the fact that the truck repair shop should focus not only on the employment of well-qualified professionals, but it should be also able to develop positive company-customer relationships, which can stimulate the customer loyalty and increase the level of customer satisfaction. In such a context, it is obvious that the truck repair shop should develop its company-customer relationship that will need the employment of public relations managers and training of managers to improve their communication and relationship with customers. At the same time, the organizational structure of the organization should be highly efficient that implies that all employees should perform their specific functions and it is necessary to avoid overlapping of functions, when several employees or managers perform similar or identical functions. On the other hand, the employment of professionals who are able to perform multiple tasks and functions is particularly prospective in the contemporary business environment because such employees can easily substitute each other or perform different functions depending on the current needs of the company. The latter will allow the company to reduce costs of the labor force and minimize the level of the personnel turnover.

In addition, the development of the positive organizational culture should be one of the major priorities of the company because it is impossible to succeed when the company suffers from internal conflicts and has a poor organizational culture. In this respect, the truck repair shop should focus on the development of basic principles which will be respected by all employees and managers and which will unite the personnel forming the common organizational culture. At the same time, the organization should focus on the development of the leadership qualities in top executives because, in such a way, it is possible to increase the motivation of employees and make the management of the company more efficient than it is at the moment. In fact, the efficient leadership unties people and makes them following the lead of the leader. As a result, the company can fully benefit from the use of non-material motivators which can be applied efficiently by a successful leader or leaders. Moreover, the efficient leadership decreases the risk of internal conflicts within the organization, because employees view the leader as the highest authority and they are ready to follow their leader even if they face certain difficulties on this way.

 

d. Marketing strategy

The development of the marketing strategy of the truck repair shop should be grounded on the current business environment and the development of the industry. At the same time, the marketing strategy should meet the mission and vision of the company. In this regard, the truck repair shop should focus on the achievement of the leading position in the industry, at least at the local level, while, in a long-run perspective, the company can focus on the expansion of its business nationwide. On the other hand, the current position of the company and its target market, being mainly oriented on the local level, is sufficient to ensure the steady growth and progress of the company. In actuality, the company needs to focus on the development of the company-customer relationship, which implies the formation of a positive public image of the company, the development of customer loyalty and customer satisfaction. In such a context, it is possible to single out the total quality management and just-in-time management as key strategies which can ensure the efficient marketing performance of the truck repair shop, minimization of its expenses and the achievement of the aforementioned strategic goals of the company.

SWOT analysis

a. Strengths

Basically, the truck repair shop has a number of strengths, which can provide its stable development. First of all, the company has a well-trained and highly-qualified personnel, which can provide customers with the high quality of services. At the same time, the additional training of the personnel and the introduction of the position of the public relations manager will improve the company-customer relationship and strengthen the position of the company even more. Furthermore, the internal structure and organization of the company can be highly efficient, due to the redistribution of functions within the company and enlargement of multifunctionality of employees to ensure their ability to perform various functions and, if necessary, substitute each other. Finally, the company is located in a very prospective region that opens huge opportunities for the ongoing development of the company.

b. Weaknesses

At the same time, the company suffers from certain weaknesses which can deteriorate its marketing performance. First of all, the company needs to introduce new technologies which can meet the current demands of customers. Moreover, the truck repair shop should offer new products and services in order to outpace its competitors that means that the company need to introduce products and services which have not been introduced in the market yet. At this point, the company suffers from the lack of the introduction of environmentally-friendly technologies and products. As a result, the company fails to take into consideration the growing environmental concerns of the public and, therefore, customers using products and services of the truck repair shop.

c. Opportunities

Nevertheless, the truck repair shop still has good prospects and excellent opportunities to take the leading position in the market at the local level, while in a long-run perspective, the company can expands its business nationwide. In this respect, it is worth mentioning the fact that being located in Hamilton, Ontario, the company has a large customer basis. what is meant here is the fact that the demand for products and services sold by the truck repair shop is high in this location and the only thing the company should do is to gain the larger share of the local market. This goal can be met through the high customer satisfaction and customer loyalty. At the same time, to gain the larger share of the market, the company can extend goods and services it offers to customers. For instance, the company can introduce new storage facilities, fuel, washing, brake/tire services. In such a way, it will be possible to attract new customers, while the company will get an excellent opportunity to gain a larger share of the local market. Potentially, the leading position of the truck repair shop at the local level will create the basis for the national market expansion.

d. Threats

However, in order to meet strategic goals, the company needs to overcome existing threats. In this respect, it is necessary to take into consideration several external factors. First of all, the major problem is the high competition with the industry, especially, today, in time of financial crisis and economic recession. Current economic problems increase the competition in the market and deteriorate the position of the company because to maintain its competitive position the truck repair shop needs to offer high quality of services and products that need addition investments and personnel training and, simultaneously, it leads to the decrease of company’s revenues. As a result, the company needs to optimize its organizational performance to cope with the growing competition.

Another serious threat is the existing of substitutes to the truck transportation industry, because the decrease of demand for the truck transportation will decrease the amount of trucks and, therefore, the company will suffer from the loss of its customers. Naturally, in such a situation, the truck repair shop cannot count for a stable growth, but the current situation in air and railway transportation does not imply the consistent deterioration of the position of the company in the market.

Finally, the openness of Canadian economy and proximity of the US can raise a new threat the appearance of new competitors from the US, which can enter Canadian market to compensate losses in the domestic market. As a result, the company can suffer from growing completion even more than it suffers at the moment.

Problems found in situational analysis

The situation analysis has revealed several key problems. Firstly, it is the problem of the competition, which increases and forces the company to invest in the improvement of the quality of services and products. Secondly, the company operates in the situation of the ongoing economic recession that limits consistently its opportunities for growth. Thirdly, the company needs to improve its customer relationships. Finally, the company should focus on the improvement of the quality of its products and services and introduction of innovations to maintain its competitive position in the market.

Strategic alternatives to solving the problem

It proves beyond a doubt that the solution of the aforementioned problems heavily relies on the marketing strategies applied by the truck repair shop in the contemporary business environment. In this respect, it is possible to single out several strategic alternatives, including the development of the total quality management, the introduction of just-in-time management, minimization of costs by means of redundancy or job cuts, and the formation of customer loyalty and customer satisfaction. All of the aforementioned alternatives have its strengths and weaknesses, but it is important to stress the fact that the redundancy is likely to destabilize the situation within the company and undermine the organizational culture, because employees will be uncertain in their future in the company. In such a situation, it is hardly to speak about increasing efficiency and productivity of their work. Thus, the redundancy can save costs, but it will deteriorate the internal atmosphere within the organization, performance of employees and it can deprive the company of prospective employees. As for other alternatives, they are quite efficient but they may need investments.

Selection of strategic alternatives and implementation

On analyzing the current position of the company, its strengths and weaknesses, it is possible to estimate that the development of customer loyalty is the most efficient strategy. In the contemporary world, the competing position of a company is of a paramount importance but a company can hardly achieve positive results in the competitive struggle if it fails to gain the popularity and loyalty of customer. At the same time, customer loyalty may led to a company to progress and guarantee its stable future giving the basic advantage in the competition with its major rivals.

In fact, nowadays, customer loyalty is one of the basic conditions of the commercial success of any company. The reason for such a situation is quite obvious and is closely related to the changes that occurred in national and world markets. In this respect, it should be said that the rapid development of the process of globalization led to the fast penetration of different companies in new markets. As a result, markets, including markets of such well-developed countries, faced a serious problem of the growing competition in which national companies should take into consideration not only its traditional rivals but also foreign companies that entered the market.

On the other hand, the situation proved to be quite good for customers who got a chance to benefit from the growing rivalry between various company which naturally focused on the satisfaction of customers needs and interests providing the higher quality of services at lower price targeting the development of a positive customer experience. In such a way, companies defined customer loyalty as their major priority in their strategic development.

In fact, it was quite a logic decision. The abundance of companies operating in different markets leads to the situation when customers need to deal with reliable companies they can trust to. In such a situation, the role of the brand has increased considerably since customers proved to be loyal to brands they knew and were confident in.

Obviously, the development of customer loyalty gives a company strategic advantage compared to its competitors. Firstly, it should be said that customer loyalty means stable sale rates since customers traditionally acquire certain products or use services of the company they are loyal to that occurs when customers have positive experience of using the company’s services or buying its products. Secondly, customer loyalty contributes to the enlargement of the number of customers since through loyal customers a company is promoted without direct investments in this promotion. What is meant here is the fact that loyal customer share their opinion and positive experience they have with other potential customers and of the company manages to meet the interests and needs of new customers, the number of its customers, including loyal ones, increases. Finally, increasing sales rate and growing number of customers contribute to the popularization of the brand of a company. As a result, the company improves its position in the market since the brand constitutes a substantial part of the market value of a company now and often determines the choice of customers in favor of a company. Consequently, the company may increase production and continue the market expansion.

Thus, it is possible to estimate that customer loyalty is very important since it provides a company with ample opportunities to increase sales and attract a larger amount of customers that leads to the growth and higher profitability of the company. The formation of the customer loyalty should be grounded on the efficient implementation of the quality management and just-in-time management. To put it more precisely, the company will need to establish a system of control over the quality of goods and services provided by the company to customers. Secondly, the company will need to train the personnel to ensure the high quality of their work. Furthermore, the company has to work with its suppliers to ensure the efficient implementation of just-in-time management. The latter means that goods should be delivered in time, when they are needed and when customers want to buy them. In this regard, the supply management is very important.

Summary

Thus, the truck repair shop has good prospects for the business development. On the one hand, the company faces numerous problems, including the high competition, economic recession, lack of innovations and others. On the other hand, the company has the potential to grow. The truck repair shop has to focus on the development of customer loyalty, which provides the company with ample opportunities to increase its market share, sale rates and take the leading position in the local market. The customer loyalty can be achieved through the efficient implementation of the recommendations given above, including the focus on the total quality management, just-in-time management, and customer satisfaction.

 

 

Appendices:

Table 1. Financial analysis

2009 2010 2011
Sales $461,900 $484,735 $508,712
Direct Costs of Goods $277,140 $282,620 $288,210
Hidden Row $0 $0 $0
———— ———— ————
Cost of Goods Sold $277,140 $282,620 $288,210
Gross Margin $184,760 $202,115 $220,501
Gross Margin % 40.00% 41.70% 43.35%
Expenses
Payroll $86,240 $88,840 $92,840
Marketing/Postage/Other $6,000 $6,000 $6,000
Depreciation $2,500 $2,500 $2,500
Legal $1,200 $1,200 $1,200
Books/Accounting $1,200 $2,400 $2,400
Licenses/Permits/Memberships $900 $900 $900
Delivery/Transportation $4,800 $4,800 $4,800
Insurance $3,600 $3,600 $3,600
Rent $30,000 $30,000 $30,000
Utilities $12,000 $12,000 $12,000
Equipment/Supplies $4,800 $4,800 $4,800
Building/Equipment Maintenance $1,200 $1,200 $1,200
Payroll Taxes $12,936 $13,326 $13,926
Other $1,200 $1,200 $1,200
———— ———— ————
Total Operating Expenses $168,576 $172,766 $177,366
Profit Before Interest and Taxes $16,184 $29,349 $43,135
EBITDA $18,684 $31,849 $45,635
Interest Expense $5,997 $5,107 $4,179
Taxes Incurred $3,056 $7,272 $11,687
Net Profit $7,131 $16,969 $27,270
Net Profit/Sales 1.54% 3.50% 5.36%

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