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Powell Logistics Inc.

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by

Madison Freeston

on 28 May 2014

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Transcript of Powell Logistics Inc.

Powell Logistics Inc. Case
By Megan Ray and Madison Freeston


PEST + C
Goals
Personal
Alternative #1
Continue with Current Operations
Alternative #2
Changing Current Operations
Internal Analysis
Internal Analysis Cont.
Agenda
Summary
Goals
PEST + C
Internal Analysis
Alternatives
Solution
Summary
Canadian Trucking Company from 1979
1983 Bought Their Own Truck
"Less Than Load" Service
What Should be Done That Will Best Benefit the Company?
Political
Highly Regulated
Weight and Merchandise Restrictions
NAFTA
Country Traffic Regulations
Number of Hours Needed to Rest
Economical
Increase in Fuel Costs
Rise in Value of the Dollar
Declining Popularity-Shortage of Workers
Social
Online Focus Decreases Personalized Customer Service
Price and Time Effective
Marketing
Very Personalized
May Attract Customers - Accessibility
Online Decreases Customer Relations
Operations
Less Than Load (LTL):
Charges More Because of Numerous Pickup and Delivery Locations
Advanced Dispatch System and Satellite Tracking System
All Year Round
Human Resources
Frank
Finance
Technological
Online Tools Reduce Costs
Too Much Can Restrict Personalized Customer Service
Dispatch System
Satellite Tracking System
Competition
TTS - Lower Prices, Focused on LTL and Truck-Load Services, Cargo Vans
Yellow- Global, Large Financial Resources, Online Tools
Providing Income for his Family
Retiring
Remaining Dedicated to Community
Keeping a Good Reputation
Leading a Successful Company in his Name
Professional
Alternative #3
Lowering Labour and Travel Costs
Maintaining Strong Customer Relations
Maximizing Capacity and Minimizing Distance
Sell & Expand or Expand & Sell
Alternative #4
Must Drive Back and Forth
Paying Workers Overtime
Double the Staff
Since 1987
Executive VP
Makes Day-to-Day Decisions
No Business Training, but Hands-On Experience
Sarah
Since 1999
School Teacher
Administrative Decisions
Ryan
Since 1984
National Sales Manager
Negotiates Pricing
Maintains Customer Relationships
No Formal Training; Solid Network of Customers
Decrease in Net Income
Strengths
Sales are Steadily Increasing
Total Assets are Increasing
Weaknesses
Twice as Many Loans Owed to Other Companies he Owns
Shareholders' Retained Earnings Decreased
Total Long-Term Debt Increased Drastically
Profit has Increased 0.4%
Operating Expenses have Increased 0.5%
Administrative Wages - 1% Increase
Expand the Business
Pass the Business to his Children
Pros
Currently Working and Making Income
Sales are Increasing
Cons
He Won't Retire
Expenses will Continue to Rise
Strengths
Weaknesses
Alternative #5
Sell the Business
Pros
Interest Coverage Now = 1,242,841/175,794
= 7.1
Interest Coverage After Expansion, 4% Interest Rate and 10% Income = 984,705/575,794
= 1.7
Affordable
Provides Income
Lowers Expenses and Saves $60,000 Annually in Wages
Cons
Not Retiring
Recession - Hard to Pay Off Debt
Expand the Business and Give it to Frank Powell!
Our Solution!
Why Frank?
Pros
Cons
Income Stays in the Family
Company Keeps the Name
Maintain Good Company Relations
He Can Retire
Would They be able to Manage it?
Family Issues
Burden if not Successful
Costs Remain the Same
Pros
Retirement
No Burden if Economy Fails
Cons
Children are without jobs
No income for his family
His name may not be associated with the company anymore
Would Sell Before Expansion
Truck Load
Electric Cargo Vans (Gas)
Sarah - New, only Administrative Decisions
Ryan - Good with Customer Relations
Frank - Makes Day-to-Day Decisions, Hands-on Training
Retirement, Name, Income
Why Expand?
Cuts Fuel Costs and Labour Costs
Affordable
Retirement
Full transcript