Introduction
Big Drive Auto has three alternative strategies to consider so that the company properly navigates through the turbulent economic future. One of its top strategies is cutting back on prices to keep up with expected competition from the rail and air industries. Improved infrastructure in other transportation modes is therefore likely to drag the company into cutthroat competition with other service providers. Secondly, the company has the alternative of taking advantage of the credit market, but with much care in ensuring the company does not suffer high credit costs due to high interest rates or inflation. These extra funds are expected to pay off the company’s debts and safeguard its future profitability. Finally, Big Drive Auto has the option of complementing economic growth especially in light of increased unemployment rates from an increase in military officers coming home in the near future The company is therefore expected to increase job security by safeguarding employment to both its permanent and contractual workers. This study will however concentrate on the first alternative as the most viable.
Decrease in Price Strategy
Considering the fact that the government wants to embark on increasing investments in the country’s rail and air infrastructure, it is paramount that transporting costs will be affected in the next five years or so (Industrial Resources, 2010). This is therefore bound to affect the company’s bottom line when the effects start to trickle down. Considering rail transport gains from economies of operating in large scale, it is bound to be the most competitive transport mode in the near future (Gubbins, 2003, p. 30). For this reason, the company should streamline its pricing strategy so that it can still remain in business.
Unavoidably, the company needs to lower the prices of its products and services. However, the company needs to be tactful while doing so because its needs to remain in business by making profits. This therefore involves an adoption of many cost-cutting measures to reduce the overall costs of the company. This may involve reducing the number of employees or changing the terms of employment to contractual basis (Ziemenski, 2010, p. 1). In this regard, the company will be in a better position to manage its expenses. In the same regard, the company can fire or hire periodically according to how the business will support labor costs. In the same sense, the company will also not be obligated to pay costs like social security or pension for workers because such expenses are relatively long-term costs that may dent the company’s bottom line. This therefore means that the company will obviously have more funds to channel to its cost cutting strategy. Another viable strategy in this alternative would be to increase the efficiency of its services so that the company can stand out from its competitors. This will be a strategy to attract and retain existing and new customers.
Conclusion
Considering the transport sector is bound to change in the coming few years; in terms of increasing competition, Big Drive Auto is likely to contain the competition by modifying its pricing strategy. In this regard, the company is supposed to employ more temporary workers at the expense of permanent workers. This will enable the company have more funds and achieve higher profitability. The biggest advantage to this strategy is that its benefits can be realized on a short-term basis as opposed to the other three strategies that may take a longer time before their benefits start to be felt.
References
Gubbins, E. J. (2003). Managing Transport Operations. London: Kogan Page Publishers.
Industrial Resources. (2010). Obama administration’s $50 billion dollar transportation plan would be welcomed by rail sector. Web.
Ziemenski, N. (2010). Analysis: Temp jobs hint at stronger payrolls ahead. Web.