Imperial Logistics Dedicated Contracts

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Introduction

The company that I chose for the assignment is a logistics company called Imperial Logistics Dedicated Contracts. It's a division of the Imperial Logistics group (which consists of a number of companies including Imperial Logistics Dedicated Contracts) which is the transport division for the Imperial group. In this assignment I have developed a vision and mission statement for the company as well as the long term objectives and the SWOT analyses. I have also evaluated different strategies and selected the one that I feel is appropriate for Imperial Logistics Dedicated Contracts.

Task 1
1.1 Mission and Vision Statements:

Vision:

To be the market leader in specialised dedicated logistical services.

Mission:

• We will, through efficient and innovative management, create a climate that releases the full potential of our people.
• We will achieve superior performance by consistent service, innovative technology and sustained competitiveness
• We will be objective in all our dealings with the stakeholders of the company and the environment
• We will conduct our business with integrity and in a social responsible manner.
• We will strive to generate superior returns for the shareholders and an enhanced quality of life for all our people.
• We will continuously measure all our actions and decisions against the above.

1.2 Long term objectives

In the long term Imperial Logistics Dedicated Contracts seeks to achieve:

• Higher market share by obtaining the following contracts: Midvaal Waters, Medsichem, Aqau Centre, Aqau Centre Tzaneen, Isegen and Sudchemie.
• Obtaining ownership of smaller competitors.
• Obtaining joint ventures with Frightmax.

Task 2
2.1 Compile a detailed report on the internal environment.

Imperial Logistics Dedicated Contracts focuses on selected markets, while they utilise their resources, assets, distribution network and reach, intellectual capital, global best practises and appropriate technology, both from within the Imperial Group and through strategic alliances with other leading service providers.

With a comprehensive and vast infrastructure and asset base, they service their customers and potential customers by providing tailor-made, non-integrated logistics services, be it primary transportation, secondary transportation, warehousing, consolidation, distribution and any other logistics requirements.

Imperial Logistics Dedicated Contracts has a Health & Safety Policy in place to reduce risk at the workplace for both managers and employees. Imperial Logistics Dedicated Contracts commits to apply best practise in health and safety management and sets the following objectives:

• To ensure compliance with all local and national laws, regulations and standards applicable to its business
• Identifying hazards and impacts as well as assessing and, where possible, reducing risks associated with the activities, conditions and processes attendant to the business of Imperial Logistics Dedicated Contracts which may have a negative affect on the safety, health and/or the working environment of our employees and the living environment of interested and/or affected parties.
• To review health and safety targets annually to ensure appropriateness and enable continuous improvement.
• To document, implement and maintain this policy and ensure that it is communicated to all employees with the intent that employees are made aware of their individual health and safety responsibilities.

In the internal environment Imperial Logistics Dedicated Contracts has identified the following strengths:

Knowledge of the industry, because Imperial Logistics Dedicated Contracts have been in the transport business for over 10 years, they have experience in the field and know exactly what to expect. They also have a large existing customer base, most of them with contracts with over 2 years left which means they are in a stable financial position and is not being threatened by the current recession that we are experiencing. They also have a good reputation for their excellent customer relationships and customer satisfaction. Imperial Logistics Dedicated Contracts is part of the Imperial group which means they have the advantage of being able to use the Imperial name, which is a well established company with a good reputation. And because Imperial has so many different establishments in the field, can get the best prices on their trucks, parts and diesel, which in return means they can reduce costs which will result in more competitive pricing and higher market share. Their staffs is also very committed and dedicated to their jobs and that's why they have better customer satisfaction than most of their competitors.

They have also identified the following weaknesses:

Because technology is changing so fast in today's environment, that it is difficult for any business to stay on top with the latest advances, including Imperial Logistics Dedicated Contracts. Their main contracts are cyclical which means that some times of the year they have more business than other times. That makes it difficult for them to make efficient use of their workforce. Imperial Logistics Dedicated Contracts is part of the Imperial Logistics group, but so are other logistics companies such as Imperial Cargo, Colbro Transport, Cargo Africa, Wilco Transport ect which often results in inter company rivalry.
However, overall the strengths in the company override the weaknesses.

2.2 Develop an Internal Factor Evaluation Matrix. (IFE Matrix).

IFE Matrix for Imperial Logistics Dedicated Contracts:
Key Internal Factors Weight Rating Weighted score.
Strengths A B C=A*B
Knowledge of the industry
Customer Base
Committed and dedicated staff
Stable financial position
Customer relationships
Imperial procurement 0.05
0.1
0.05
0.2
0.1
0.1 4
3
3
4
3
4 0.2
0.3
0.15
0.6
0.15
0.4
Weaknesses 0.6 - -
Technology
Cyclical nature of main contracts
Driver remuneration vs productivity
Inter company rivalry 0.03
0.2
0.07
0.1 2
3
3
2 0.06
0.6
0.21
0.2
Total 1.00 - 2.87

Task 3
3.1 Compile a detailed report on the external environment.

Even though we are currently experiencing a recession, it has not had a major effect on the profitability and performance of Imperial Logistics Dedicated Contracts, reason being the nature of their current contracts and available resources. Imperial Logistics Dedicated Contracts comply fully with BEE requirements to have a more diversified workforce and they are also an equal opportunity employer.

Imperial Logistics Dedicated Contracts recognises that it has an impact on the environment, so they have an environmental policy to apply best practice in environmental management and sets the following objectives:

• To comply with all applicable local and national laws, regulations and standards
• Identifying environmental impacts as well as accessing and, wherever possible, reducing environmental impact associated with the activities, conditions and processes attendant to the business of Imperial Logistics Dedicated Contracts which may have a negative impact on the environment.
• To review environmental objectives annually to ensure appropriateness and enable continuous improvement
• To document, implement and maintain this policy and ensure that it is communicated to all employees with the intent that employees are made aware of their individual environmental responsibilities.
• Promote a responsible environmental culture in order to improve the quality of life for all.

For a large company such as Imperial Logistics Dedicated Contracts, it is important to stay on top of changes in technology however, it doesn't matter how much technology changes there will always be a market for logistics. That means that the risk of the company going out of business because of changes in technology is very low.

From the external audit, Imperial Logistics Dedicated Contracts has the following opportunities:

When needed, Imperial Logistics Dedicated Contracts can have access to Imperial support and resources. There is specialised equipment available on the market that can increase the range of services they currently offer and increase market share. Forming alliances with major competitors and smaller companies is a major opportunity to increase profits. In the logistics business there are an increasing amount of smaller companies starting up, this is a very attractive opportunity for a bigger company such as Imperial Logistics Dedicated Contracts. By using them as subcontractors they can still do business with their customers without using their own resources.

Threats identified include:

Because the drivers of the trucks are on the road all the time, it's difficult to keep track of what they are doing. This is a major concern for the company as the number of HIV infected people are increasing drastically. The other major threat for the company is crime. Imperial Logistics Dedicated Contracts sometimes transport valuable goods and because there are only 2 people in the truck at a time, they are easy targets to criminals. Escalating costs are another threat to the company. For example diesel, Imperial Logistics Dedicated Contracts has over 100 trucks currently in their fleet; an increase in the diesel price will therefore have a major impact on the costs involved. As in any form of business, competitors remain a threat to the company.

EFE Matrix for Imperial Logistics Dedicated Contracts

Key External Factors Weight Rating Weighted score
Opportunities A B A*B
Imperial support/resources
Introduction of specialised equipment
Logistics skills and training
Alliances
Growth in subcontractor business 0.08
0.1
0.05
0.07
0.06 4
3
3
2
3 0.32
0.3
0.15
0.14
0.18
Threats -
Aids
Skills Availability
Competitors
Escalating costs
Crime 0.04
0.12
0.1
0.2
0.18 3
3
2
4
4 0.12
0.36
0.2
0.8
0.72
Total 1.0 - 3.29

Competitive Profile Matrix

Imperial Logistics Dedicated Contracts Imperial
Cargo
Critical Success Factors Weight Rating Score Rating Score
Advertising 0.05 2 0.1 2 0.1
Management 0.1 4 0.4 3 0.3
Financial Position 0.2 4 0.8 3 0.6
Customer Loyalty 0.15 3 0.45 3 0.45
Service Quality 0.15 3 0.45 4 0.6
Price Competitiveness 0.25 3 0.75 2 0.5
Market Share 0.1 2 0.2 3 0.3
Total 1.0 - 3.15 - 2.85

Task 4
4.1 Develop different strategies.

For Imperial Logistics Dedicated Contracts, I have selected 3 appropriate strategies that they can implement to increase their market share and profitability. The first is the Horizontal Integration strategy. This involves seeking ownership of, or increased control over their competitors. The reason for selecting this strategy is that the transport industry is growing rapidly, and by gaining ownership or increased control over smaller competitors they can expand their fleet and increase their market share and profitability. Most small transport companies don't have the resources needed to grow, by backing them financially, they can grow and that will lead to more profit for the company. The second is Market Development strategy. This means introducing their services in new areas. There are still parts of South Africa and neighbouring countries that Imperial Logistics Dedicated Contracts are not operating in, this is a major opportunity for the company as it will lead to higher profits. The reason for selecting this strategy is that Imperial Logistics Dedicated Contracts is very successful in what they do so they can easily expand and obtain new customers. Lastly is the cost leadership strategy. This means having the lowest cost in the industry. As mentioned in the strengths, Imperial Logistics Dedicated Contracts have Imperial procurement which means that they can get their trucks, diesel parts ect at much lower costs than most of their competitors. By taking advantage of that, they can reduce prices, and because of the current economic crises, people are very price sensitive, and by having lower costs than competitors, they will get more customers and increase their market share.

Task 5

To select the best strategy to use for a company you use a QSPM (Quantitive Strategic Planning Matrix). A QSPM is a high-level strategic management approach for evaluating possible strategies.

By drawing up a QSPM for Imperial Logistics Dedicated Contracts the strategy that I think will be the best for Imperial Dedicated Contracts is the Horizontal Integration strategy. This strategy will have the most benefits for the company. It will also have the least effect on the current operations of the company which reduces the risk of conflict arising within the organization as a result of the change in strategies from both managers and employees.

The company can easily integrate this strategy without disrupting current operations, as it has no effect on the trucks or any other part of operations. It is however important for the company to clearly communicate to the employees what is happening, how long it will take and what effect it will have on them. This ensures that there is no confusion among employees that can lead to conflict and reduced motivation and performance.

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