A corporate strategy for Batangas Laguna Tayabas Bus Co.

• Main Author: Elarmo, Richelle Alegria B.
• Format: text
• Language: English
• Published: Animo Repository 1998
• Subjects: Business Administration, Management, and Operations
• Online Access: https://animorepository.dlsu.edu.ph/etd_masteral/2141
• Institution: De La Salle University

An industry is defined in accordance with the need and wants that the group of firms comprising it satisfy. Batangas Laguna Tayabas Bus Co. is in the Transportation Service industry and as such, it aims to provide transportation service for passengers or good by land, offering its service to the public for compensation. Since the environment is constantly changing, there is a need to analyze Opportunities, Threats and Societal Expectations which comprise the external environment before a competitive strategy can be formulated. Similarly, the other factors that must be considered are the Strengths and Weaknesses of the company and the Personal Values of the key decision makers. All of these must be analyzed in order to come up with the best competitive position for the company. In the transportation service industry, there are a lot of opportunities and threats. Using Porters Five Forces of Competition framework, the industry is characterized with high barriers to entry because of the presence of economies of scale, high capital requirements, there is service differentiation, access to distribution channels is important, learning and experience greatly impact on the operations and because of all these, the threat of new entrants is low. There is also a low pressure from substitutes are not enough to shift demand to their end. Specifically, opportunities are: the transportation infrastructure is being set up there is increase in demand by foreign travellers for land transportation service brought about by the cheaper peso there will be a continuous increase in economic activity to and from the rural areas restriction on foreign equity will still be imposed cost of private vehicles have increased significantly there is a significant increase in the cost of airline and shipping there is a high cost of capital requirement economies of scale are highly existent there is high liquidity in the industry and, the industry is franchise-based. Threats are the high bargaining power of suppliers and, less mobility of people brought about by economic slowdown. Societal expectations are the role of transportation service providers in economic development and safety concerns. Strengths of BLTB Co. are its long outstanding reputation as a quality service transportation provider it has the highest number of authorized Certificate of Public Convenience in its franchised area there is a strong operational cash flow, the Companys terminals and locations are located in prime locations. Weaknesses are its deteriorating profitability and depleting capital base low bus utilization rate weak cost, operational and internal controls and, there is a dispute with regard to management control. Based on the analysis of the pertinent factors, the generic strategy of the Company should be Overall Cost Leadership. Specifically, the Company should fully utilize its approved lines to expand revenue base and improve profitability, optimize bus utilization, raise capital to finance refleeting and rehabilitation of buses to decrease costs, maximize strong cash flow through more effective cash management, strengthen internal control and administrative functions and resolve management disputes. The Company should now focus on improving its operations so that it can attain objective of having overall cost leadership in the industry. There are a number of opportunities that must be exploited by the Companys strengths, and weakness must be converted to strengths as soon as possible to gain competitive advantage.