T.A.G. Partners System Case Analysis

Only available on StudyMode
  • Download(s) : 333
  • Published : July 17, 2009
Open Document
Text Preview
*TAG Partners System*, Inc.
TAG’s business plan is to provide small trucking companies complete back office solutions and strategic alliances to eliminate the competitive advantage large trucking companies’ benefit from. The small trucking companies will receive greater revenue per mile and have lower operational expenses through TAG’s services, which are gained by leveraging a large client base, forming strategic alliances, and implementing their software. TAG’s management team is offering a 20% stake in the company for $100,000 in equity funding. Management’s perceived value based on the 20% stake for $100,000 indicates a valuation of $500,000 would be necessary in order for an investment to be considered. SWOT Analysis

TAG will offer a complete back office solution for small trucking companies. TAG would fill a niche, as there are no companies who offer complete back office solutions for small trucking companies. TAG offers a business model which cuts out intermediaries, and can increase margins for small trucking companies with no leverage. Strategic alliances have been acquired in order to offer a complete end-to-end business solution. Partner companies are already established and specialize in their respective area of business. Weaknesses

TAG’s software has not been patented. Receiving a patent is not an easy task and leaves risk of the software infringing upon an existing patent, or someone copying the software prior to a patent being applied for. Management has no experience successfully carrying out a business plan and does not have a detailed exit strategy. High volumes are necessary to obtain any competitive advantage. The dramatic increase in sales in TAG’s financial summary is not adequately justified. Customers could go directly to the suppliers on their own and possibly save more money. Opportunities

An experienced Board of Directors could help mitigate some of the risk associated with the current management team A clear exit strategy should be defined with potential suitors in order to incentivize equity investment. A study should be done to determine the need for such a company and if TAG’s market penetration rate is reasonable. A plan to offer their own line of services, rather than partner with existing companies, would help alleviate the risk associated with their strategic alliances and the bargaining power of the suppliers. Threats

TAG’s strategic alliances and reliance on other companies poses an increased risk to their complete back office solution. The small trucking industry has been declining or close to flat in recent years. An increase in Internet based competition with the ability to offer lower prices due to little staffing and overhead would devastate TAG’s business model. TAG may not be able to attract enough companies in order to achieve the competitive advantage they are offering. Trucking companies may be better off economically if they outsource their back office work to individual companies who specialize in one area. Porters 5 Forces

Bargaining Power of Suppliers
TAG has entered into strategic alliances with GETLOADED.com, Randy McNally, Transinsurers.com, and Intuit. The terms of the alliances do not spell out the competitive advantages over trucking company’s using the services individually rather than TAG’s full integrated back office solution. Even if the terms of the agreement were given, TAG’s business model is dependent on other firm’s products. Any problems caused by a supplier would disrupt TAG’s business model. Also, each individual supplier could mirror TAG’s business model if it becomes lucrative. The bargaining power of certain suppliers like Rand McNally should be fairly insignificant considering there are other alternatives for TAG to use, such as...
tracking img