Assignment One – Green Cabs case study
1.Green Cabs has many opportunities to grow their business into other locations and also diversify into other services (e.g. courier services, shuttles, vans). They have resisted these opportunities to date. Should Green Cabs be taking these growth opportunities? Why or why not?
I believe the decision to expand areas of Green Cabs opertaions is one that Callum Brown should offer more thought. Green Cabs currently possesses strong market positions in Auckland, Wellington and Christchurch and a distinct image with their bright green cabs. They have recently secured priority spaces at New Zealand’s three main airports and are increasing their exposure to consumers with a unique marketing campaign, which includes carbon offsetting. With such a succesful position aquired after only being founded in 2007, it is important that Green Cabs continues to expand into new cities. Their competitors are beginning to imitate Green Cabs’ initiative, they must ensure a presence in more cities to increase overall customer exposure.
Green Cabs controls a large portion of the market where their taxis are situated. With the ever increasing environmentally concious population, demand is likely to remain strong. Currently Green Cabs is a SME, operating in 3 main centres with 104 drivers. With the successes that the company has had in these cities, it would be a wise decision to start broadening Green Cabs horizons by testing the waters in more New Zealand cities. It would be wise for them to initially start offering franchise opportunities for taxi drivers situated in North Island centres close to Auckland such as Hamilton and Tauranga. This would enable close monitoring of the expansion and lower costs as they could probably run these centres through the Auckland call centre. After testing the waters in these areas, and strengthening their position on the national market, Green Cabs can look to expand to new places.
Green Cabs was founded on Callum Brown’s vision “to forge change, to preserve the environment and inform the public about climate change” through creating a more environmentally conscious transport option. This innovative perspective that Callum Brown has for his company means that it has a lot of potential to be one of New Zealnds leading taxi companies. He says “I’ve never doubted for a moment that Green Cabs was going to succeed” – with this passionate attitude from their founder, and a succesful track record so far, there is no reason as to why green cabs will not function well in other main centres.
Diversifying into other service areas is a different story and is one I believe Green Cabs should tread more carefully. Green Cabs operate on a strong sets of values that are based on supplying the most economic and environmentally friendly taxi transport service for consumers. They only allow Toyota Prius’ in their fleet as they are the most environmentally friendly hybrid option. The case study specifies an increase in competing taxi companies choosing to shift to lower emission cars. However, not only taxi companies starting to make the shift, other transport services are too, such as the Link Bus in Auckland (www.linkbus.co.nz) “Transport makes up a large part of the average household budget – about 14% or $136 a week.” (sustainability.govt.nz) and with the current economic climate, consumers are seeking the lowest price option available. I believe that Green Cabs should focus primarily on taxi transport in the foreseeable future. They should look to expand into a nationwide entity and raise more capital before considering the possibility of horizontal integration into other forms of transport service.
2.What potential difficulties do you think might emerge as Green Cabs continues to grow? ( personal philosophy, management and structure of the business, environmental impact)
As sole proprietor to the business, Callum Brown will struggle...