Situational Analysis of Unipart - Essay Example

?Situational Analysis of Unipart Table of Contents Table of Contents 2 Introduction 3 Marketing Environment Analysis 4 Political, Economic, Social and Technology Analysis 4 Porter’s Five Forces Model 5 Competitor Analysis 7 Strength, Weakness, Opportunity and Threat Analysis 9 Conclusion & Recommendations 10 Reference List 12 Introduction Unipart is one of the leading multinational corporations in logistics which provides services to esteemed organizations by delivering their goods to the required destinations (Unipart Logistics, 2013a). The company operates in European regions, United States of America, Australia and Japan (Unipart Logistics, 2013b). It is one of the largest privately owned companies in United Kingdom (UK) and the modes of their transport are rail, air, metro and marine. The company has hired more than 7000 employees for maintaining its efficient operational system. It also provides services for warehousing and engineer support which helps in maintaining stable supply chain systems and reverse logistics (Unipart Logistics, 2013d). Unipart Logistics has a wide client base in departments like retail, automotive, retail, technology, defence and aerospace (Unipart Logistics, 2013c). Unipart Logistics is a part of the Unipart Group of Companies and specializes in outsourcing logistics and delivery services. The marketing consultant of the company has decided to enter into the Brazilian markets and wants to conduct a situational analysis. The situational analysis would help in the assessment of the external force which might affect the profitability of the company. An internal analysis would be conducted to understand the company’s current strategic position and check whether it is suitable for the company to enter into foreign markets like Brazil and further inside. Finally, the study would conclude with recommendations which would highlight on improving the current business activities and methods before entering into Brazilian markets. Marketing Environment Analysis Political, Economic, Social and Technology Analysis Political, Economic, Social and Technology (PEST) Analysis would be conducted for identifying and understanding the external threats and opportunities faced by logistics industry in Brazil. Political Presently, the corporate tax rate of Brazil is 35 percent which is very high compared to the other developing countries (KPMG, 2013). The high corporate tax rate has limited the entry of several logistics and supply chain companies into Brazil (KPMG, 2013). The corporate tax rates of a particular country helps the logistic companies to decide upon the transportation, warehouse and delivery charges for their clients (Brazil Business, 2013b). Apart from the corporate tax rate, these companies need to also consider other tax reformations like Contribution Incident on Liquid Profit (CILP) (15 percent) , ICMS tax (12 percent) and ISS tax ( ranges from 2 to 5 percent ) (Brazil Business, 2013b). Economic Presently, the economic situation for logistic companies is not preferable due to the very high logistic costs allocated by the government. The logistic and supply chain companies spend 8 to 10 percent of their annual GDP which is almost double compared to the average of other developed countries (Brazil Business, 2013a). Moreover, the infrastructure is unfavourable for the development of the sector because the transport matrix developed by the government is favourable only for road transportation companies. Social The success of the logistic and supply chain companies depends upon the nature of their delivery organizations to a large extent. The success of these organizations in turn depends upon the social culture and lifestyle of the individuals. If the purchasing power of the common people increases, then the sales will also increase automatically and vice versa. Technological The logistic and supply chain industry is usually dependent on technology used for the movement and storage of goods within an accurate time frame (Global Logistics Media, 2013). Technology has totally transformed the method of business operation in a logistic industry and has also helped in optimizing costs and processing (Global Logistics Media, 2013). Different companies would use different technological solutions for their effective delivery and performance measurement systems. The companies utilize radio frequency identification for tracking purposes and removal of tags used in logical operations (Organisation for Economic Co-Operation and Development, 2002). Porter’s Five Forces Model The identification of the external force which affects the profitability of the industry is essential for the development of effective strategies. Threat of new entrants: As mentioned before, the many tax rates and economic situation is unsuitable for the existing and novice companies, who contemplates to enter into the markets at the present moment. Due to the high corporate tax rates and the weak economic scenario, the threat of new entrants into the Brazilian logistic industry is very low. Bargaining power of buyers: The necessity of efficient logistic companies is absoloutely a prerequisite for an effortless delivery and distribution system within the region (Clausen, 2013). In this case, the logistic and supply chain are usually the sole decison makers for laying down of the terms and conditions of the contracts. Specifically, in the case of Brazilian companies they are highly dependent on the suppliers and therefore the bargaining power of buyers is low. Bargaining power of suppliers: The bargaining power of suppliers is very low since, the logistic and supply chain companies do not require one. Threat of substitutes: In Brazil, the only substistute companies which have the potentiality of replacing the physical suppliers would be the online suppliers. Some of the renowned online suppliers of the company would be the Global Sources and Novertur who supply candy and hair products to leading store outlets. Intensity of rivalry among competitition: The existing Brazilian logistic companies is facing stiff competition amongst themselves due to the current financial condition. The key logistic and supply chain companies include Azfreight, DC Logistics Brasil, Fraunhofer, JSL and Logistic Fair Brazil. From the above PEST and Porter’s Five Forces model, it is observed that the social and technological situation is very much suitable for the entry of Unipart. However, the high tax rate, intense competition and weak economic situation in Brazil exhibits why it would not be favourable for Unipart to enter at the present moment. Competitor Analysis The competitors of Unipart can be categorized into two: local and international. The local suppliers of Brazil would be a stiffer competition than the international competitors because of their strong footing in the country. The local competitors of Unipart would include Azfreight, DC Logistics Brazil, Fraunhofer, GAC, JSL, Penkse, DHL, TNT and Prompt Brazil Logistics (Logistics Brazil, 2013). Azfreight: It is one of the leading logistic companies of the country which provides delivery of goods and services to more than 35000 global airline companies and 1700 airports (Logistics Brazil, 2013). DC Logistics: The Company specializes in providing technological solutions in transport scheduling for international commerce activities. The company adopts pro-active attitude while implementing the global thinking logistic technique to meet client requirements (Logistics Brazil, 2013). Fraunhofer: This logistic company provides innovative research and development facilities as well as customised supplier technological solutions for the companies. It presently distributes goods and services in Asian, European and the entire American regions. The company delivers the goods and services mainly through shipment mode (Logistics Brazil, 2013). GAC: This is one of the Brazil’s largest supplier companies who are known for their supply of goods for the mining, service, manufacturing and agricultural sector. The company had formed a number of subsidiaries in the North American regions for delivery through road transport mode (Logistics Brazil, 2013). In terms of competition, Unipart would be facing intense competition from CEVA and Wincanton. Prompt Brazil Logistics: The company delivers and transports goods and services through air and shipping modes. It delivers goods through advanced techniques and believes in prompt delivery to the main airports (Logistics Brazil, 2013). (Sources: Yahoo Finance, 2013) In terms of international competition, Unipart faces rivalry from Wincanton and CEVA Logistics Ltd. Although, the risk is peaking in developing countries, especially in China and Brazil, the future prospects of logistic companies of these countries is very high. As per the UPS Supply Chain survey conducted in Brazil, it was observed that the DHL, DC Logistics, Prompt Brazil Logistics, Penkse and Fraunhofer are some of the profit yielding logistic companies. They have been co coordinating the ground handling of the cargo by streamlining the export and import process from the ports. In the Brazilian markets, DHL, one of the significant logistic companies, conducts safety checks at different transit locations and keeps a track on the parcel systematically. It earns most of its revenue from the pharmaceutical companies and keeps a check on the healthcare model, pricing, volume etc of these companies. It is observed that out of the local supplier companies, Penkse have been performing exceedingly well in this industry along with DHL. The performance of these companies has been a significant contributor to the Brazilian economy during the tenure 2012 to September 2013. Strength, Weakness, Opportunity and Threat Analysis Strength, Weakness, Opportunity and Threat (SWOT) analysis would help in determining the strategic position of the company. Strength Unipart is one of the few logistic companies that adopts the lean methodology which helps in removal of unwanted wastes within the existing systems(Nash, Poling and Ward, 2006) and identification of those elements which add no value to the productivity of the organization (Graban, 2011). The company does not follow the management principles of leading companies instead it has devised some of its own management training concepts like “The Unipart Way” and “ The University on the Shop Floor” . Weakness The safety stocks, order quantities, re order points are not allocated according to the different product ranges due to which returns cannot be maximised on investment in the inventory levels. This is one of the major reasons that Unipart could not be a leading supplier company in the pharmaceutical industries of various countries. Opportunity Along with governmental support, the Logistic industry is expected to perform exceedingly well by the end of 2014. The governments of different nations have taken initiative for the enhancement of the distribution network of the logistic companies. For example, the Brazilian government had launched the Logical Investment Program with an investment amount of $ 212.3 billion for investment in rail, air, shipping and port development (Brazil Business, 2013a). Threats Presently, Unipart follows the tradition lean methodology concepts and other traditional business models developed by the company itself whereas its competitors are already utilizing advanced methodologies to enhance their distribution network. From the above SWOT analysis, it is observed that the traditional logistic methodology concepts and its effective utilization is one of the major reasons behind its success of being one of the major market logistic solution providers. However, the company should focus on revising its business models keeping in consideration the present scenario of the logistic industry. Conclusion & Recommendations In consideration with the present economic situation and the ability of Unipart to adopt into the existing markets, it would be advisable for the company to implement effective strategic management techniques. However, the company needs to revise some of its strategic management procedures to become one of the leading logistic supply chain companies in Brazil. To reshape the transport activities of the logistic company by using business models with the capability of adapting to the changing marketing environment. Models like Allen Input Processing Technique and other tracking devices would ensure both the effective delivery of goods and the systematic tracking of the same. To develop a strong integrated transport development policy which would help in the attainment of socio economic objectives (Organization for Economic Co-Operation and Development, 2002)? Development of transportation techniques along with attainment of socio economic objective is necessary for smooth operational procedures (Plunkett, 2007). The company should invest highly in research and development activities which is very important for the development of the logistic systems (Sherlock, 2008). A separate department for research and development is necessary for the maximization of benefits of the entire technological process and in turn, help the transportation system. Thus, it is observed that apart from the attainment of social objectives along with the implementation of advanced business models and technologies aiding the delivery, the company needs to focus on time management techniques also. The accurate and prompt delivery of goods along with the development of environment protection measures would enable the company not only to yield profitability but also gain recognition worldwide. Reference List Brazil Business, 2013a. How to Operate a Logistics Company in Brazil. [online] Available at: < http://thebrazilbusiness.com/article/how-to-operate-a-logistics-company-in-brazil > [Accessed 20 October 2013]. Brazil Business, 2013b. Understanding ICMS. [online] Available at: < http://thebrazilbusiness.com/article/understanding-icms > [Accessed 20 October 2013]. Clausen, U., 2013. Efficiency and logistics. Berlin: Springer. Global Logistics Media, 2013. Use of Technology in Improving Logistics. [online] Available at: < http://www.globallogisticsmedia.com/articles/view/use-of-technology-in-improving-logistics > [Accessed 20 October 2013]. Graban, M., 2011. Lean hospitals: improving quality, patient safety, and employee satisfaction. Adingdon: CRC Press. KPMG, 2013. Corporate Tax Rates. [online] Available at: < http://www.kpmg.com/global/en/services/tax/tax-tools-and-resources/pages/corporate-tax-rates-table.aspx > [Accessed 20 October 2013]. Logistics Brazil, 2013. Logistics Companies. [online] Available at: < http://www.logisticsbrazil.com/Logistics_Brazil > [Accessed 20 October 2013]. Nash, M. A., Poling, S.R. and Ward, S., 2006. Using lean for fast six sigma results: A synchronized approach. Adingdon: Productivity Press. Organisation for Economic Co-Operation and Development, 2002. Transport logistics: Shared solutions to common challenges. Paris: OECD Publishing. Plunkett, J. W., 2007. Plunkett's telecommunications industry almanac. Houston: Plunkett Research. Sherlock, D., 2008. Quality improvement in adult vocational education. London: Kogan Page Publishers. Unipart Logistics, 2013a. About Us. [online] Available at: < http://www.unipartlogistics.com/wps/wcm/connect/ulweb/unipartlogistics/aboutus > [Accessed 20 October 2013]. Unipart Logistics, 2013b. Global Reach. [online] Available at: < http://www.unipartlogistics.com/wps/wcm/connect/ulweb/unipartlogistics/aboutus/globalreach/> [Accessed 20 October 2013]. Unipart Logistics, 2013c. Our Way of Working. [online] Available at: < http://www.unipartlogistics.com/wps/wcm/connect/ulweb/unipartlogistics/aboutus/ourwayofworking/ > [Accessed 20 October 2013]. Unipart Logistics, 2013d. The Unipart Way. [online] Available at: < http://www.unipart.co.uk/ > [Accessed 20 October 2013]. Yahoo Finance, 2013. Penske Automotive Group. [online] Available at: < http://finance.yahoo.com/q/bc?s=PAG+Basic+Chart > [Accessed 20 October 2013]. Read More