Booking Offices in Netherlands - Case Study Example

Problem Definition The selected company, WBS, is an excess baggage company in The Netherlands and for the past several years, has seen a steady decline in sales (does overzicht balle mean sales? If not, please change it to sales for this graph..just change the graph to show that it id for sales in different years, OK?) The receding market share and sales, WBS has suffered a loss of 62,000 Euros in 2007, 12,929 in 2008 and made a dismal profit of just 2,739 in 2009. (see appendix A, balance sheet of WBS for past three years). The financial figures from the company records therefore show that the sales are going down and profit margins are very less. This is despite the fact that the excess baggage market has been growing continuously for the past years (NL EVD International, 2010). It is expected that the global transportation services will grow by 9.7% and reach a $3,252.1 billion by 2013 while the transport industry of the Netherlands yielded over $53 billion in the year 2004 (NL EVD International, 2010). While the excess baggage market may be a smaller percent of this overall figure it is expected to grow with the growth in travel for business and education that is steadily increasing over the years. According to the estimates by the WBS management, the Netherlands market is estimated at 25,00,000 Euros at the moment. (personal communication, 2011) The excess baggage market was not much influenced by the economic downtrend of 2008-2009 owing to the continuous movement of people for business and work related activities or for travel and pleasure. WBS is therefore in a position what would be called a ‘Dog ‘ on the BCG matrix . The main problem is therefore to find out the reason for this position, and to make suggestions to the company for appropriate changes. For this, the current research is focused on conducting a SWOT analysis . Main Findings The research used various Frameworks of analysis in order to generate information about the external and the internal environment of WBS so that its weakness and strengths, opportunities and threats could be assessed. This is done in order to understand what are the reasons for the decline in sales in a growing market. 1. Decreasing Market share due to powerful competitors (who have better technology, more qualified professionals, large number of employees and large logistic network and better costs for the customers) 2. Decrease in Market share due to lack of internal efficiency due to weak organizational culture, autocratic leadership style, lack of investment in technology or hiring These findings were based on the following SWOT analysis (IF YOU HAVE TIME IN YOUR PRESENTATION, YOU CAN ELABORATE ON THIS) Strengths 1. Organizational Skills Knowledge of Consumers Knowledge of Market Dynamic Liaison with customs 2. Organizational Shared Values People: Efficiency of the Staff and Operations Sensitivity and Responsiveness of the staff 3. Promotion and Reach: Well Developed and Comprehensive Website and call centre 4. Credibility Weaknesses 1. Less Products and Services 2. Lack of Availability of Network and Destinations 3. Lack of Competitive Price and discounts 4. Weak Organizational Structure 5. Inadequate Organizational Strategy 6. Inadequate Organizational Systems 7. Inadequate Organization Leadership Style 8. Inadequate Organizational Staff Strength 9. Promotion and Reach: Lack of Advertising 10. Inadequate technology Opportunities 1. Large Market Size 2. Growing Market 3. Non-Demanding Customers 4. Lack of Substitutes 5. High Barrier To New Entrants Threats 1. High Bargaining Power of Suppliers 2. Powerful Competitors Solution and Proof of feasibility (finance) The SWOT analysis indicated that there was a need for WBS to make changes in its internal environment as well as to develop a strategic marketing plan. An objective of increasing the market share by 5 % per year was found to be suitable and practical. The 5% per year increase in market share equals to 1,25,000 Euros in terms of revenues for WBS as the market is assessed at 25,00,000 Euro.(personal communications, 2011). Currently, WBS has a the market share of 20% of the 25,00,000 Euro market, and with the implementation of the new marketing plan, it will acquire a 25% share in the first year. This would mean that the total revenue for WBS should be of the order of 25% of 25,00,000 or 6,25,000 in the first year. The expected budget for WBS in the year 2011 is 2,50,000 Euros and Cavalier Logistics can be expected to provide an additional allocation of funds for the marketing plan. The additional investment is therefore aimed at yielding a 5% increase in first year and hence enhances the scope for WBS to have a positive profit margin. However, the profit margins will also depend on the total costs that it incurs and the total revenues that it makes. The current marketing plan is based on the understanding that the additional investment in these marketing activities is expected to be profitable per se for WBS. Based on the analysis, it is recommended that WBS use a focused differentiation strategy to achieve the above. The marketing plan includes: Please see from chapter 7: product, price, place etc,.. and then include the following statements. Profit Loss Statement For the Year 2011-12 Expenses Product and Services: (Technology investment) 14,000 Price: Discounts 3,250 Place: Increasing Number of Booking Offices in Netherlands and Europe and providing pick up and drop facilities 16,666 3,333 Promotional Activities Cable Ads Print Ads 10,000 5,000 People: Employee hiring and Efficiency Training Cultural Training 134,000 20,000 Process 13,000 Total 219,249 Income Product and Services: (Technology investment) 15,000 Price: Discounts 65,000 Place: Increasing Number of Booking Offices in Netherlands and Europe and providing pick up and drop facilities 40,000 27,000 Promotional Activities 13,000 People: Employee hiring and Efficiency Training Cultural Training 50,000 Process 30,000 Total 225,000 Net: Income – Expenses +5,751 For the next year, the market is expected to grow at the rate of 6% per year or have a total value of 3,074,000 (6% of 2,900,000euros added to 2,900,000euros). The objective of WBS is to expand to capture 5% of the market, so, for the year 2012-13, it is expected that the revenue generation would be additional of 263,800 (directly in response to the marketing plan) to become 988,800euros (263,800 +725,000) Profit Loss Statement For the Year 2012-13 Expenses Product and Services: (Technology investment) No Investment Price: Discounts 3,250 Place: Increasing Number of Booking Offices in Netherlands and Europe and providing pick up and drop facilities 16,666 3,333 Promotional Activities Cable Ads Print Ads 10,000 5,000 People: Employee hiring and Efficiency Training Cultural Training 134,00 20,000 Process No Investment Total 192,249 Income Product and Services: (Technology investment) 15,000 Price: Discounts 65,000 Place: Increasing Number of Booking Offices in Netherlands and Europe and providing pick up and drop facilities 40,000 27,000 Promotional Activities 14,300 (*10% over last year) People: Employee hiring and Efficiency Training Cultural Training 72,500 or 10% of 722,500 revenue of last year Process 30,000 Total 263,800 Net: Income – Expenses 71,551 For the next year, the market is expected to grow at the rate of 6% per year or have a total value of 3,258,440 (6% of 3,074,440 Euros or 184,466 added to 3,074,440euros). The objective of WBS is to expand to capture 5% of the market, so, for the year 2013-14, it is expected that the revenue generation would be additional of 291,610 (directly in response to the marketing plan) to become 1,280,410euros (291,610 + 988,800) Profit Loss Statement For the Year 2012-13 Expenses Product and Services: (Technology investment) No Investment Price: Discounts 3,250 Place: Increasing Number of Booking Offices in Netherlands and Europe and providing pick up and drop facilities 16,666 3,333 Promotional Activities Cable Ads Print Ads 20,000 20,000 People: Employee hiring and Efficiency Training Cultural Training 134,000 20,000 Process No Investment Total 207,249 Income Product and Services: (Technology investment) 15,000 Price: Discounts 65,000 Place: Increasing Number of Booking Offices in Netherlands and Europe and providing pick up and drop facilities 40,000 27,000 Promotional Activities 15,730 (*10% over last year) People: Employee hiring and Efficiency Training Cultural Training 98,880 or 10% of 988,800 revenue over the last years income Process 30,000 Total 291,610 Net: Income – Expenses 84,361 Read More