Hardap Freight Services free essay sample

Hardap Freight Services (hereafter referred to as HFS) is a small/medium enterprise, registered as a closed corporation, providing superior courier logistics through a network of standardized service points. Their head office is situated in Windhoek, but they have regional offices in Karibib, Swakopmund, Walvisbay, Ondangwa, Rundu, Tsumeb, Grootfontein, Mariental and Keetmanshoop. HFS is currently one of many courier companies offering overnight logistical services throughout the country, additional to a high quality service, they pride themselves in delivering that service on a daily basis and guarantees delivery times to their customers. HFS has been in operation since 2006, but was bought by Mr. Gert Liebenberg in 2009 and has been operated under new management since then. A second member recently bought into HFS, specifically focusing on and developing the administration side of the business. HFS has a staff complement of 30 employees. The company currently has two departments only, namely Operations and Administration. Under the Administration department the financial, administration and human resources functions are managed and the Operational department is responsible for the entire logistical function, including warehouse management. We will write a custom essay sample on Hardap Freight Services or any similar topic specifically for you Do Not WasteYour Time HIRE WRITER Only 13.90 / page Map, indicating main daily routes and the location of the HFS branches. Hardap Freight Services Page 3 2. SWOT Analysis 2. 1 Strengths HFS is registered as a closed corporation, which means the company has a legal personality of its own. This allows the company to obtain finances for potential future growth and development of the business. HFS is currently the only courier service delivering the main daily newspapers, namely The Namibian, The Republikein, the Namibian Sun and the Algemeine Zeitung by a specified delivery time throughout the country on a daily basis. In addition to this, they offer door-to-door parcel deliveries countrywide. As stated by Mr. Liebenberg, HFS has a few exclusive contracts signed with big companies, such as The Namibian, House of Wines and Justine Beauty Products. This allows them to offer more competitive pricing, as the day-to-day operational expenses are carried by the fixed term contracts. HFS has been in existence for 6 years already and is a well-established company with experience in the field of small/medium parcel logistics. The fact that they have established branches throughout the country in all major towns and serving all major routes throughout the country, allows them to build a vastly spread customer base and commitment from communities throughout the country. Confirmed by Mr. Liebenberg, the growth that the company has shown over the past year is a clear indication that the services HFS offer, are well in demand. The industry norm for freight management growth, according to Third Party Logistics (3PLs), is 15% and can be considered to be between 15% and 20% in countries like Asia and the United States of America. (Third Party Logistics, 2010). â€Å"HFS, in relation to this growth trend, has shown a 39% increase in turnover, year on year†, Mr. Liebenberg confirmed. To summarize the strengths, one could say that HFS is committed to delivering an excellent service to their customers, thus having the slogan: investment†. â€Å"Where service is an SWOT Analysis – Hardap Freight Services Page 4 2. 2 Weaknesses HFS does not have a Marketing strategy or department focusing on advertising their services or develop special promotions for customers. The company does not focus on Customer Relationship Management (CRM), nor has any customer retaining strategies in place. HFS does not capitalize on the use of technology in comparison with their competitors. Logistics industry trends indicate that in the years to come the following factors, which guide the logistics industry is reckoned to strengthen further. The factors facilitating the effective functioning of the logistics industry are integration, confederations, technology, legislation and globalization. † (Third Party Logistics, 2010). The company has no proper organization structure and line of authority, allowing each employee to report to different individuals on different matters and in certain instances reporting directly to the owner of the business. This causes employees to be confused on when to report to whom and since there is no direct line of report/authority; it also complicates performance management and proper individual and departmental goal setting. HFS also experience challenges in the maintenance of their fleet, as well as obtaining more vehicles and strengthening their fleet, as stated by Mr. Liebenberg. Thus the company cannot focus on expanding the type of services offered to the public and become a preferred service provider, offering a bigger variety of services than their competitors. This unfortunately does not only limit them with regards to expansion opportunities, but also with regards to delivering a superior quality service to their current customers – especially if vehicles break down and they don’t have sufficient fleet backup. Through the interview with Mr. Liebenberg, it has become clear that the management of HFS tends to distrust their employees, believing they must be controlled, directed to perform and threatened with punishment very much based on McGregor’s Theory X principle, according to Stuart Crainer when he refers to McGregor’s The Human Side of Enterprise. The Ultimate Business Library). SWOT Analysis – Hardap Freight Services Page 5 This unfortunately leads to employees acting according to the way they are treated, having an â€Å"I don’t care† attitude and ultimately abusing or misusing company assets for their own benefit. This could lead to the company having to compromise on their promised quality of service. The confirmed cash flow challenges that the company is experiencing, according to Mr. Liebenberg, might lead to the company not being able to offer attractive salary packages, hence not being able to attract reliable and committed staff or alternatively spending money in the right places, like maintenance of fleet, for example. The lack of a benchmarking strategy contributes to the lack of a Vision and Mission statement and SMART (Specific, Measurable, Achievable, Realistic and Time-bound) strategic goals/objectives. HFS pretty much run on a day-to-day principle instead of having a clear long term objective in which they don’t only concentrate on the idea of â€Å"one day become like Nampost† (according to Mr. Liebenberg), but rather incorporate specific goals, human resources plan, marketing strategies and best practices to ensure sustainable business development and financial growth. SWOT Analysis – Hardap Freight Services Page 6 2. 3 Opportunities During recent years we have seen an increase in logistical businesses in the country focusing specifically on transportation of goods via freight services. One of the reasons for this mushroomed growth could be contributed to the expansion and development of the Port of Walvis Bay. Along with the increase in the goods being imported and exported to countries like Zambia, Botswana, Zimbabwe and Angola, logistical services, and specifically freight services offer huge promises to entrepreneurs. Due to the legislative requirements, as well as the level of technical, practical and business knowledge required to run a successful logistical department or section, combined with the costs involved in running such an operation, companies started to outsource logistical needs to other companies that do not only focus on logistics, but can deliver a cost effective service. HFS focuses on exactly that – delivering a cost effective logistical solution to companies like The Namibian newspaper, Justine Beauty Products, Democratic Media Holdings and House of Wines. The opportunity would exist in marketing this service to other companies that currently still do their own distribution, such as other daily and weekly newspapers in the country, as well as companies like Office Economics, Waltons and MTC, to name a few. HFS’s success is mostly contributed to the fact that they cover the entire Namibia on a daily bases. They offer guaranteed delivery times and therefore became the preferred logistical service provider for industries specializing in fast moving goods. The opportunity would be to market themselves on this strength and build further on the opportunities that exist with other companies needing the same type of logistical services. Further opportunities in the current business environment that HFS can capitalize on for expansion are:  §? to market HFS through local media, making the extent and quality of their services known to the business industry and the public throughout the country. Another means of marketing could be the use of technology and an extensive Customer Relationship Management program (CRM program), defining strategies to retain the current customer base and build a bigger customer base at the same time SWOT Analysis – Hardap Freight Services Page 7  §? making their services known to students at the various educational institutions, through either offering in-service training opportunities or inviting students to do projects, based on the business. This allows them to strategically focus on future marketing opportunities, considering that that the students of today will be the employees and employers of tomorrow who could potentially make use of the company’s services in future.  §? possibly expanding their business through implementing a proper warehousing strategy and potentially providing storage facilities for clients who have goods in transit.  §? capitalizing on the advantages presented by technological breakthroughs. This is a huge opportunity that HFS is currently not focussing on. There are so many logistical systems to choose from, as well as warehousing management systems to be investigated and potentially implemented. And of course technology could not only be used to improve control and management of a company, but to market a company to current and potential new clients. None of these are currently in place or considered at HFS, and therefore could be seen as perhaps an opportunity, turning into their biggest weakness if not explored and implemented. Most successful companies have either a cost strategy or a differentiation strategy, or perhaps a combination of the two in order to maintain a sustainable competitive advantage. Both these strategies will be discussed under the section covering the competitive advantages of HFS. To summarize, HFS should not only use their current strengths in the context of these two strategies, but also ensure to build on those strengths, allowing them the opportunity to remain on top of their game. SWOT Analysis – Hardap Freight Services Page 8 2. 4 Threats HFS is but one of a minimum of 20 companies in Namibia, offering the same type of logistical services. Some of the bigger companies, such as Nampost, DHL, Formula and Parcel Force offer logistical services to international destinations as well – something that HFS is not currently doing or considering for the near future, according to Mr. Liebenberg. As mentioned above under â€Å"Opportunities†, the need for logistical services is becoming increasingly high due to the Walvisbay Port expansion, which proves to be an instigation point for other individuals to start offering the same type of services, increasing the competition in this field. A lot of logistical companies start to capitalize on technology, focusing on Customer Relationship Management (CRM) and developing methods of not only retaining the existing customer base, but improving services in order to grow their customer base – attracting other logistical companies’ customers with more inviting and rewarding services. It has been noted by Mr. Liebenberg that HFS currently has difficulty in controlling and managing its cash flow, which makes it a potential high risk company with regards to financing future endeavors. Employee turnover is fairly high and employees speak about staff dissatisfaction openly. They lost 14 staff members over the two past years. Currently no exit interviews are done; therefore no justified reasons were given for the staff turnover and therefore no measures could be put in place to address potential weaknesses within the organization. Fuel has increased by 15% over the past year. Considering that this company travels approximately 185 000 km’s per month to deliver the services to their customers, this increase has huge effects on their expenses. These expenses should therefore be managed very carefully in order to ensure that the company does not run into potential financial problems. SWOT Analysis – Hardap Freight Services Page 9 3. Competitive Advantages †A competitive advantage is an advantage over competitors gained by offering consumers greater value, either by means of lower prices or by providing greater benefits and service that justifies higher prices. † (Competitive advantage: Tutor2u. net) Michael Porter proposed four advantage-gaining strategies that could be used within a business. These strategies are based on the scope of business activities, specifically referring to a â€Å"narrow† versus â€Å"broad† area of focus, as well as the extent to which a business focuses on the differentiation of their products/services delivered. Herewith the four strategies: (Competitor advantage: Tutor2u. net) SWOT Analysis – Hardap Freight Services Page 10 â€Å"Strategy Differentiation This strategy involves selecting one or more criteria used by buyers in a market and then positioning the business uniquely to meet those criteria. This strategy is usually associated with charging a premium price for the product (service) often to reflect the higher production (service) costs and extra value-added features provided for the consumer. Differentiation is about charging a premium price that more than covers the additional production (service) costs, and about giving customers clear reasons to prefer the product (service) over other, less differentiated products. Strategy Cost Focus Here a business seeks a lower-cost advantage in just a small number of market segments. The product will be basic perhaps a similar product to the higher-priced and featured market leader, but acceptable to sufficient consumers. Such products are often called metoos. † (Michael Porter, Competitive advantage: Tutor2u. net) Based on our research, HFS’s competitive advantage could be defined within these two strategies specifically. Firstly, HFS has the fixed term, exclusive contracts with companies such as The Namibian, Democratic Media Holdings and Justine Beauty Products, which differentiate them from their rivals, who do not focus on fixed term contracts. HFS, opposed to other logistical service providers, offers a unique service by transport goods daily throughout the country and in addition to this guarantee delivery times to their customers. Based on HFS’s differentiating strategy, they could also implement a cost focus strategy, as the operating expenses are mostly covered by the fixed term contracts that they have in place. price. This allows them to offer more competitive prices to their other day-to-day customers in Namibia, based on the fact that they offer a premium service at a premium SWOT Analysis – Hardap Freight Services Page 11 4. Findings When presented with the opportunity to do a SWOT analyses, we chose HFS as a suitable company to do this analysis on for two main reasons: a) In the field of logistics and the huge opportunities presented in this field lately, it can be seen as the new playing field for entrepreneurs and since most of us are studying Logistics and Supply Chain Management, we placed our focus on this field; b) We believe HFS is a logistical company with huge potential because of the fact that big companies such as The Namibian, Democratic Media Holdings and Justine Beauty Products decided to enter into fixed term contracts with them. It was of interest to us to know whether HFS uses the opportunities presented to them through these contracts to increase their market share. Therefore, looking into depth at the internal strengths and weaknesses of the company, as well as the opportunities and threats presented by the external environment, we found the following: Strengths †¢ The company guarantees delivery times, which allows them to focus on a differentiation strategy. HFS has fixed term contracts, which covers the day-to-day operational expenses. This allows them to focus on a cost strategy to make their services cost effective †¢ HFS has been in existence for 6 years and has a legal entity of its own, which should contribute towards allowing this company to obtain financial assistance much easier than a newly established company †¢ HFS is currently showing good turnover growth