Business strategy formulation for OnTime : a management consulting perspective

Theletsane, Sebonyane (2006-12)

Thesis (MBA)--Stellenbosch University, 2006.


ENGLISH ABSTRACT: OnTime is a passenger transport company that was established in 1999 when the insurance giant Sanlam decided to outsource its transport services for its top officials. This document examines the challenges that OnTime faces as it seeks to grow its market by acquiring business from more corporates in order to lessen its dependence on Sanlam. The chauffeur industry in Cape Town is characterised by a lack of regulation and, as a result, there is no official data that can be used to describe the size of the industry. The lack of regulation means competition among industry players favours the two big companies to the detriment of the smaller ones. Smaller companies are constantly experiencing dwindling profits because of the dominance of these two big companies. At the other extreme, there are many pirate operators who compete on price by undercutting everyone else. The industry as a whole is experiencing growth due to the increasing number of corporations and government departments which have outsourced their passenger transport services for their top officials. While this move to outsource the passenger transportation is supposed to create new opportunities for small companies to benefit from the new business being generated, it appears that the smaller passenger transport companies have not yet benefited from this extra business. The main reason is that smaller passenger companies have been created without adequate support systems or a steady client base to sustain them through their early growth phase. On the flip side, the two big passenger transport compames are experiencing increasing volumes of business from those very same big corporations which were supposed to be the lifeblood of smaller passenger transport firms. The main reason for the phenomenal business growth for the two passenger transport companies is the fact that they belong to groups of companies which are constantly growing through the acquisition of other companies. The passenger transport unit then provides the transport needs of the entire group. Moreover, these two big passenger transport service providers have fonned alliances with most of the major airlines, hotels, and guest houses in order to be in a position to capture any business that flows from these airlines and hospitality service providers. In an industry where customers are conscious of the type of vehicles they are driven in, it is not surprising that the two big passenger transport companies are able to offer a variety of vehicles from which customers can choose. This is in sharp contrast to the small passenger transport companies whose fleet size limits the options they can offer their customers when it comes to choosing the type of vehicles they would like to be driven in. The findings contained in this document will influence the recommendations for formulating a business strategy for OnTime. The main challenge for OnTime is to grow its business by implementing drastic changes.

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