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KPMG Strategy Competition Brief Sem a 2007

KPMG Strategy Competition Brief Sem a 2007

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Published by Prince
KPMG provided Scenario base case study.
MBA assignments, Case Study, Business Strategy, Bus Company
KPMG provided Scenario base case study.
MBA assignments, Case Study, Business Strategy, Bus Company

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Published by: Prince on Nov 30, 2010
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12/03/2012

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Scenario Based Case Study
Brief for the 2007 KPMG Strategy Scenario
 
The scenario is that you have been appointed as consultants to a small family owned buscompany to advise them on their strategy. The data available to you includes the case studyscenario plus 2007 Route Data, Market shares and a Route map. These equip you with data tohelp you analyse the situation, identify the issues, develop options and make arecommendation. See guidelines provided in Lecture 8.The problem you are presented with is a real one – over the last few years we haveundertaken numerous studies of this nature for clients operating in the deregulatedenvironment of public transport. Clearly the exercise here has been developed for you, butthe micro-situations represented within it have all been encountered by us during recentassignments for real clients.Read the documents carefully and start to think through how you will address the exercise andwhat supplementary research you may need to undertake. As is always the case with suchassignments, some data is missing – we have to make our own assumptions and justify them.You may wish to acquaint yourself with the sector by conducting some research within theUK business press.You will be asked to make a presentation of your analysis to the family and the company’sDirectors. They have asked a number of consultancies to do this and will select a team to takeon the implementation of their proposal. Your objective is to win that contract.We will schedule an evening slot in the near future when teams can ask Ian and I questionsand perhaps kick around any ideas you have had.
 
UEL Case StudyBetter Buses & CoachesBackground
Better Buses & Coaches is a long established family business operating a mix of  buses and coaches on regular local service work (buses) and schools, day trips and private hire (coaches).
The family are well known in the home town, and the business is affectionatelyregarded and has attracted a high level of customer loyalty over the years.
The business has operated at a small profit for many years, with a loyal localcustomer base for its bus and coach operations. It has pursued conservative policies – unchanged timetables, cheap fares, and settled for a relatively low levelof profitability, sustainable for a family business.
However, the family see problems looming ahead. They have noted thatneighbouring bus companies have invested more regularly and have more modernfleets. They need to modernise the bus fleet to provide an equivalent service toother businesses in the area. Increases in staff and fuel costs have eroded profitability, and although there are reserves of £1 million that could be investedin the fleet and business, this number has not increased for three years.
A further specific threat has been the rumour that the Head of one of the threeschools they serve is thinking of taking his private hire business, about 80 trips ayear, away and handing it to another operator who has offered better vehicles.
The Task 
Better Buses and Coaches is not used to employing Consultants but the family hasdecided it needs help turn round its fortunes and decide its future strategy. Thefamily does not want to close or sell the business, as there are future generationsgrowing up who want to carry on the tradition of providing the service to the localcommunity. However, it realises that it may have to make some radical changes.
Your consultancy has been employed to analyse the situation of the business indetail and to present recommendations to the Board on future strategy. You have been provided with a certain amount of data, which is set out on the attached pages. This is incomplete, and you will need to independently research or ask for additional information you need.
You will have the opportunity to meet with one of the Directors part way throughthe exercise to ask questions, and at the end of the work you are required todeliver a presentation of your proposals to the Directors of the company. Thismust be no more than 15 minutes long, supported by Power Point slides and awritten Executive Summary of no more than one side of A4 in length.
 
Business ProfileBus Operations
Three local bus services are operated, from the base at A to B, C and Drespectively. Sample timetables have been provided – the standard times pasteach hour are repeated throughout each day for the length of the traffic dayspecified.
The business has a fleet of 12 buses, all of which are owned. They are not of thelatest low floor design. They were purchase in three batches of four in threeconsecutive years – the three batches are 4, 5 and 6 years old. All buses cost£80,000 each and are depreciated over 8 years.
The latest new generation low floor buses cost £120,000 each, or can be leased for £2,000 per month. Two year old second hand low floor buses of good quality arecurrently available on the market at £98,000 each.
A sheet has been attached which provides some base data on the bus operations.Direct costs are shown for each route, as are the indirect costs (overheads), whichhave been allocated proportionately to the vehicles working each route. The fleetincludes two spares – their costs have been allocated to route 1.
The main trunk route is profitable but in need of investment. The two localservices are not paying their way but they provide an essential link for thecommunities concerned. They are the only services available to residents of C andD, and the family earns considerable goodwill by continuing to operate them. Thisalso feeds through to the coach business when local groups want to hire vehicles.
Coach Operations
The business has six coaches, all of which are owned.
The company has three school contracts, which employ four mid life coaches (oneis the spare) and three drivers.
The school contracts each earn £225 per day for a 10 mile run in the morning andthe return in the afternoon. The Council has not increased the price for 2 years.The coaches also undertake about 250 short private hire trips per year in total,typically 100 miles per trip earning about £350 per trip.
The school coaches are currently 12 years old, cost £60,000 each and aredepreciated over 5 years. Their current value is £36,000 each. Maintenance andfuel costs are equivalent to the buses.
The drivers are paid £8.50 per hour for a guaranteed 40 hour week 
The other two coaches are luxury vehicles which cost £200,000 each new. Theyare both 2 years old and are depreciated over 10 years. Altogether, they work for 500 days a year on upmarket private hire, tours and trips, earning on average £500 per worked day per coach.

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