Savvy Bulge
New member
You’re the owner of a cab company, the market leader for the region. You’ve been in business for 20 years, longer than any of your 3 competitors. Fare prices are relatively standard, so you differentiate and compete on quality. You spend a good portion of your budget on advertising, so you’re well known for having the youngest, cleanest, largest fleet in the region with friendly drivers and consistently quick pickups and drop-offs. Your passengers are well-satisfied and loyal. Your company's service is loved by the city and its socialites.
A competitor has suddenly moved into your territory in the past 2 weeks. He’s operating a fleet as large as yours but of substantially more fuel-efficient vehicles, allowing him to compete heavily on price, which is radically below yours and consequently shrivels his profit margin to just above 0% (i.e. he's making almost no money doing this now in hopes of building the dominant, committed client base of the region, after which he'll increase prices gradually to avoid public outcry--profits to become healthy after 10 years).
These “green” vehicles are in extremely short supply on the streets and on the lots, in fact, all customers are currently on a 6 month waiting list, nation-wide.
You have failed to foresee changes in industry technology. You’re already losing market share, and your accountant tells you you’ll be out of business in 6 months if you do not act.
What is your strategic plan of action?
*indicate your assumptions, if any (i.e. details I haven't provided necessary for your strategy, etc.)
R: This is not homework--I'm a grown man interested in each gender's choice of survival moves. If you spent more time in GWS you'd realize who I am.
CA: so basically your first instincts are to 1) lose ownership stake by selling junk bonds just to possibly stay afloat and 2) downsize and increase the hours of or decrease the pay of your drivers (which are probably your biggest if not only intangible).
JMC: what are the effects of your purchasing the company? In other words, what good does it do now AND later?
All: I can see this is gonna be a popular Q b/c it requires a brain, but I got the idea from a female friend who had considerably different instincts than me about what to do in this scenario.
A competitor has suddenly moved into your territory in the past 2 weeks. He’s operating a fleet as large as yours but of substantially more fuel-efficient vehicles, allowing him to compete heavily on price, which is radically below yours and consequently shrivels his profit margin to just above 0% (i.e. he's making almost no money doing this now in hopes of building the dominant, committed client base of the region, after which he'll increase prices gradually to avoid public outcry--profits to become healthy after 10 years).
These “green” vehicles are in extremely short supply on the streets and on the lots, in fact, all customers are currently on a 6 month waiting list, nation-wide.
You have failed to foresee changes in industry technology. You’re already losing market share, and your accountant tells you you’ll be out of business in 6 months if you do not act.
What is your strategic plan of action?
*indicate your assumptions, if any (i.e. details I haven't provided necessary for your strategy, etc.)
R: This is not homework--I'm a grown man interested in each gender's choice of survival moves. If you spent more time in GWS you'd realize who I am.
CA: so basically your first instincts are to 1) lose ownership stake by selling junk bonds just to possibly stay afloat and 2) downsize and increase the hours of or decrease the pay of your drivers (which are probably your biggest if not only intangible).
JMC: what are the effects of your purchasing the company? In other words, what good does it do now AND later?
All: I can see this is gonna be a popular Q b/c it requires a brain, but I got the idea from a female friend who had considerably different instincts than me about what to do in this scenario.