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The power of suppliers

Supplier in this industry: Labor, truck manufacturing, and fuel

The power of the suppliers in this industry is relatively high because of the inability to control these suppliers. In the case of labor the unions frequently battle the companies for higher wages and benefits. These unions also set up cripple companies who use union workers as their main labor force. These unions have high power since the companies are dependent on their workers. With truck manufacturing the companies usually get little to no discounts on the trucks so their power is relatively low. Fuel, on the other hand, has a high impact on this industry. If the cost of the fuel rises significantly, the profits of the LTL companies would shrivel up because of the necessarily to pay at any cost.

Strengths: Shiner has been a TL carrier for the past 20 years and is currently the largest carrier of its type in North America. It has been able to establish its leadership in its industry through aggressive marketing, intermodal agreements, and leading-edge communications technology.

Its solid TL transportation experience has prepared Shiner for entry into LTL industry. Shiner wouldn’t worry about the suppliers in this industry that mentioned above (Labor, truck manufacturing, and fuel).

The power of buyers

The customers are highly price and service sensitive. They will seek other alternatives for their shipping needs when not given the right price and service. The customers have little to no loyalty for differing companies as long as one is cheaper and more efficient than the rest.

Strengths & Weaknesses: Its experience in the TL transportation business makes Shiner already have stable customers. But current carriers in the LTL industry have very loyal bases too.

Opportunities: The entry into LTL market could offer its customer base a larger service package over a wider range of shipment sizes.

Substitutes

There are plenty of substitutes for the LTL industry. There is the TL industry as well as the premium carriers such as UPS and Federal Express. The premium carriers are largely used for smaller volume shipments while the TL companies transport the high volume shipments headed toward the same destination. There are other alternatives such as rail and air, but they generally end up being more expensive since they use truck anyway.

Threats: entry into LTL which is a free market-based segment of the transportation industry will not go unchanged. There is the TL industry as well as the premium carriers such as UPS and FedEx.

Threat of entry                                                                                     

In order to be a national LTL company, there are lots of capital intensive investments that a company has to make which makes entry very difficult. The company needs regional hubs and terminals in order to efficiently sort and ship out goods.

Strengths: Shiner is a TL operation, it has a relatively low debt load and could absorb an initial high investment in terminal facilities. Its management have prepared a public stock offering to get equity capital for terminal facility investments.

Competitive Rivalry

Competition is mainly based on price and service, because customers see costs reduction as the main reason for logistics outsourcing and perceive fragmented services as commodities or near commodities.

Threats: Current carriers in the LTL industry have established terminal networks, have gained economies of scale and scope. These existing carriers could certainly start a price war or develop special services that would make survival difficult for Shiner in the LTL market.

Marketing Plan

According to the environmental analysis, shiner should purchase one of existing LTL carriers. It’ll definitely depress the level of entrance resistance. And it’s the most direct way to entry a new industry. It could use the existing operation system of the carrier to develop the LTL marketing. Shiner also has technology advantage. It has intermodal agreements, leading-edge communications technology. Shiner could use low price stratagem. We believe Shiner has harmonious relative to bank. It has enough capital to face the competition from other carrier. The new industry LTL could use the same distribution center. Finally Shiner can offer customer a larger package over a wider range of shipment sizes. This service is the core competence. Because Shiner has its TL system and enough truckload for the LTL plan. Special service can take plenty profits.

1.Purchase a existing carrier

2.Low-price carrier

3.Technology advantage

4.Special service

5.Cooperate with other LTL company

In addition to use advanced technology to communicate with partners, the cost accounting and the flexible price policy is an important strategy of marketing plan. As we all know, cost is the most important of management. The traditional relationship between customer and carrier is focus on price bargaining. That requires to be settled by consultation adequately.

Business models: asset-based and operated model

hybrid-outsourcing model

asset-based and operated model

Strengths

If this pattern will persist in the company have been grown by leaps and bounds. The control and profitability is higher than the outsourcing model.

Weaknesses

The financial risk plus the operations risk of not having terminal operation experience is high  for the asset-based model. In the initial stage of the company under-funded or in the course of the operation appeared to some error led to the loss.

hybrid-outsourcing model

Strengths

The outsourcing model requires a lower investment and has a lower financial risk if the venture is not successful

Weaknesses

The outsourcing model will not produce the desired service levels LTL customers desire. This is different from the pattern of outsourcing is changing the help of third-party operators, such restrictions compared with the company's technology development, and a lot of customer service and transportation technology companies to control their own admission do not, then the customer will not be able to have the company as well as the development.

Suggestion

I think the outsourcing model can not meet the requirements of different customers, and technology issues in the process of continuous improvement in practice, although the initial stage of development may be some risk, but when the business into the track, there will be more long-term Development, can develop their own customer service line, the expansion of business volume. Or when the company initially will try my best to outsourcing model to earn some profits after the familiar, as well as the business, converted to the first model to develop their own business customers.