Powell Logistics Inc.
Powell Logistics Inc has been in the trucking business for over 50 years. The president and founder, John Powell finds himself in a dilemma as he has a difficult decision to make. This dilemma relates to making the right strategic choice for future of the company he started and grew. With the major changes happening in the trucking industry he wondered whether it was time to expand the business and simplify operations or to step down as president and pass the business on to someone else. Having shown growth over the last few years, this is a great time to simplify operations and expand Powell Logistics. A new centralized facility needs to be constructed, services to be expanded and new online tools need to be added to help PLI be more competitive in their “lane”. With these potential solutions new customer will be added and expansion into more Canadian/USA markets is inevitable.
- With the major changes that have recently taken place in the for-hire trucking industry, President and Founder of Powell Logistics Inc, John Powell, needs to determine the next step for his future and that of the family business.
Environmental & Root Cause Analysis
- Customers have many available option for transporting their goods so this makes
the transportation industry highly competitive. The main competition Travelers
Transportation Services offers lower prices and have added value services (ie:
small expedited services).
2. Increase in fuel/operating costs
- Over the last few years the cost of fuel has increased due to the supply of oil,
this has lead to operating costs for all carriers to drastically increase. 3. Rise in value of the Canadian Dollar relative to the US Dollar
- Hurts the manufacturing industry in Canada as it decreases the cost advantage
for American companies to manufacture goods in Canada. Affects the
transportation industry directly as they facilitate the transfer of goods between the
4. Potential shortage of qualified drivers
- With the current work force aging and the decline in popularity of this line of
work there is expected to be a shortage of qualified drivers. Experts predict that a
shortage of drivers will have direct affect on the wages driver will be paid leading
to increased operating costs.
5. Increased regulations of the trucking industry by both Canadian and US governments
- The transportation industry is highly regulated with numerous regulations. (ie:
strict security checks & restrictions to merchandise and weight). Also the
regulation o of cross-boarder trading as per the NAFTA. If the measures and
standards are not me it will cost the trucking companies both time and money
Alternatives & Options
1. Simplify operations and expand (Constructing a new centralized facility)
PRO - Decrease in labour and travel costs, having a single location will save
$60,000 yearly in administrative salaries due to current duplicate
positions. Sales trends anticipate future growth for the company
CON - $10 Million total investment in both land and construction fees for a new
central building for all of PLI’s activities, at least 1 year to implement. 2. Sell the business and resign
PRO - Reap the benefits of his companies success once the sale has been
completed. Completely hands off so he can forget about trucking and
enjoy his retirement.
CON - Conflict between selling now or after expansion. Have to wait at least two
additional years to see benefits of the potential changes. Might not be able
to sell for the dollar amount he is asking. Not keeping business in the
family might upset his children.
3. Pass control of the company to a successor
PRO - If passed down to one of Powell’s children the company would remain as a
family run business.
CON - If passed down to one of his children, Powell is...
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