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Dubai Taxi Corporation Operation Problems Research Paper

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Updated: Sep 12th, 2019

Introduction

Dubai Taxi Corporation was founded on 1995 with 81 Taxi vehicles &180 drivers and 70 employees from different nationalities& it has been grown to reach 3504 Taxi vehicles, 8000 drivers and 390 employees in 2011. DTC is wholly owned by the government of Dubai and it is directly supervised by Roads & Transport Authority Board.

The vision of DTC is “safe and smooth transport for all” while its mission is “managing a modern fleet of taxis in accordance with the highest international standards. The firm is also committed at ensurig provision of a variety of distinguished services that meet all community needs and expectations”(Dubai Taxi Corporation, 2010, para. 6).

Additionally, the firm is also concerend with providing fast, efficent and friendly transportation services. The core objective is to become the market leader within the United Arabs Emirates taxis industry. DTC consists of 3 departments headed by directors; please refer to (Appendix 1:Organization Chart). In its operation, DTC has gained a worldwide recognition. This has playe a critical role in the firm’s financial success.

As an employee of the company, I work with the firm’s Resources & Support Department as a Contract & Procurement Manager. Approximately 18 employees report directly to me. The following is an outline of my main roles. However, my roles as the contracting and procurement manager are not limited to these.

  • Responsible for buying and approving acquisition of goods and services needed by the corporate.
  • Seeking reliable vendors and suppliers to provide goods reqiured by the departments with reasonable price and good quality.
  • Negotiating prices and contracts.
  • Reviewing technical specifications for raw materials,components, equipments and other issues with concerned parties.
  • Interprets procurement process for vendors; investigates and resolves vendor complaints.
  • Implements best-value and best-practice procurement strategies to improve operational performance.

This paper is aimed at identifying and analyzing the problem that DTC is facing in its operation. Additionally, the various strategies that can be incorporated in order to resolve the situation hence improving its competitiveness are illustrated.

Presentation of the situation (Analysis of the problem)

As the contracting and procurment section, we serve the needs of the entire organisation with regard to their procurement and contracting needs. Every year, we process approximately 100 contracts and 2,500 Local Purchase Orders (LPO). This is a challenging task to undertake. Over the years it has been in operation, the firm has been very successful.

This is evidenced by the fact that the firm has been able to develop a high level of customer loyalty. One of the factors that has led to the high level of customer loyalty relates to its innovative capability and the high quality of customer service offered. The company has integrated the concept of customer focus.

This means that all the decision that the corporations management teams makes are aimed at creating a high level of customer satisfaction. In an effort to achieve this, the company makes an effort to understand the customers needs. This is achieved by conducting a consumer market research in order to effectively identify the customers’ needs.

From the findings of the market research, the company is able to equip its employees with the necessary equipments and technology to facilitate their duties. Considering the change in information technology, the firm has implemented an automatic reservation system in an effort to improve its performance. The system enables customers to call a taxi at their own convinience.

The system entails a database that has the customers names and address. If one need a taxi, he or she is required to call 04 208 0808 and a taxi is dispatched to his or her location (WeKnowDubai, 2011, para. 2).

In its operation, DTC has adopted a heirarchical organisation structure. According to Idowu and Louche (2011, p.12), heirarchical organisational structure limit the effectiveness and efficiency of an organisational decision making process. This arises from the fact that heirarchical organisational structure are characterised by a high level of bureaucracy.

The bureaucracy emanates from the fact that the decision making process has to go through the Decision Making Unit (DMU). In an organisation, the DMU is composed of different parties within the organisation. Therefore, it takes time to for an organisation to respond to market chnges since all the members within the DMU have to be consulted.

As a result of the heirarchical organisational structure, DTC has not been effective in addressing the customers needs since its is not able to respond to their needs in time. This means that the firm faces a limitation when making decisions regarding quality improvement.

For example, a decision to procure some products that will lead to improvement of the firm’s quality takes a lot of time. This is despite the fact that there the increment in the degree of quality consciousness amongst the customers over the past few decades.

According to Burrow, Everard and Kleindl (2008, p.9), customers are increasingly becoming concerned with the quality of the products and services that they consume. This has affected firms in all the economic sectors. This presents a challenge to firms in different economic sectors since they have to adjust their operations to be in line with the changes in the market.

Despite DTC’s effort in serving its customers by improving the efficiency with which the customers make their reservations, the company has not yet automated its contracting and procurement system. This presents a problem to the firm’s future competitiveness.

This arises from the fact that the employees within the Resource and Support departments such as the contracting managers are not able to execute their duties efficiently due to the workload that they face.

For example, the contracting and procurement manager has to assess more than 2500 procurements annually in order to ensure that the company’s management team approves acquisition of products necessary in the firms operation. This is a relatively tiresome process considering the fact that it the firm relies on the traditional method in its procurement proces.

Additionally, failure to automate its contracting and procurement systems limits the reliability of the firms procurement process. For example, the firms effectiveness in responding to the vendors complaints is reduced. This may harm the relationship that the firm has with its vendors. This problem is made worse by the fact that there has been an increment in the intensity of competition within the taxi industry.

The lucrative nature of the industry has attracted a large number of new entrants venturing into the makret. Currently, it is possible to call for a taxi from all the city streets (WeKnowDubai, 2011, para. 1). In an effort to enhance their competitiveness, most of the new entrants are automating their contracting and procurement processes. This is making their contracting and procurement processes to be effective and efficient.

The problem that the firm is facing in its procurement and contracting process does not only affect employees within this particular department. However, it affects all the employees within the organisation.

This arises from the fact that there is a high probability of the firm’s experiencing a decline in its profitability. If no action is taken to address the situation, the firms’ management team may make a decision to lay-off some of its employees in order to minimize the cost of operation.

Investigation and identification of possible solutions to the problem

Upon identification of the problems that a firm may be experiencing, it is critical for the firms’ management teams to identify some of the possible solutions to the problem.

During the 21st century, organizations in different economic sectors have appreciated the importance of improving their competitive advantage and efficiency in their strategic supply management. In order to achieve this, most originations are integrating new tools and technologies in their procurement processes.

With regard to the contracting and procurement problems that DTC is experiencing, one of the solutions that the corporation’s management team should consider relates to integration of Business-2- Business (B2B) electronic commerce. According to Neef (2001, p.2), B2B e-commerce entails undertaking buying and selling transactions electronically between organizations.

For example, Company X may be procuring its products from Company Y. In order to do this, the company may negotiate about the purchase of the product or raw materials through the web. Therefore, B2B e-commerce acts as an intermediary when two or more organizations are undertaking their transactions. Through integration of B2B e-commerce, an organization can be able to improve its competitive advantage.

For example, in its operation, Cisco Systems which is the global leader in the provision of networking solutions has integrated the concept of B2B e-commerce in its operation. This has resulted into the firm being efficient in its operation. In addition to attaining efficiency in their inventory management, integration of B2B e-commerce can result into firms minimizing the cost of procurement since the process is done (Roy, 2005, p.2).

In their operation, most firms within the retailing industry have incorporated the concept of B2B e-commerce. An example of such a firm is Tesco which operates within the United Kingdom. The firm is one of the largest retailing companies in the UK. On a monthly basis, the company receives more than 1 million documents.

Forty two thousand of these documents are paper based. Additionally, the firm also deals with large number suppliers. In order to reduce the paper work, the firm automated its systems. This has enabled it to trade electronically with its suppliers and retailers. Currently, the firm only receives 28,000 paper documents from the 1 million that it used to receive monthly (GXS, 2009, p.1)

Over the years it has been in operation, DTC has undergone a significant expansion. This is evidenced by the growth in its fleet size and its human resource base. Currently, the firm’s organizational structure is hierarchical in nature. Coupled with its growth, there is a high probability of an increment in the complexity with which the firm’s decisions are made.

In order to improve its efficiency in the decision making process, DTC’s management team should also consider minimizing amount of bureaucracy in its decision making process. One of the ways through which the firm can achieve this is by reorganizing its organizational structure.

The organizational structure should be reorganized in such a way that the time required to make a decision is reduced. This will enhance the firm’s ability to respond to market changes.

Evaluation of possible solutions

In order to determine the solutions to the problem, DTC should evaluate the pros and cons associated with the identified options. With regard to B2B e-commerce, DTC should consider integrating the e-procurement system in its quest to achieve effectiveness and efficiency in its procurement and contracting processes. This arises from the fact that DTC interacts with different vendors and suppliers in its operation.

According to Stephenson (2011, para. 1-4), there are numerous benefits that the firm will receive from integration of e-procurement. For example, incorporation of e-procurement will enable DTC to effectively liaise with the suppliers and vendors. This means that the firm will able to manage its suppliers and vendors more effectively.

Through integration of e-procurement, there is a high probability that the firm will be able to increase the number of its vendors and suppliers. As a result, the firm can be able to improve the quality of the raw materials it procures since it will select from a large number of suppliers.

Additionally, the firm will also be able to transact business effectively with the vendors. The resultant effect is that the firm will be able to develop a strong relationship with its business partners.

E-procurement will enable the firm to significantly reduce the processing time it requires in its procurement cycle. This arises from the fact that the documents will be sent electronically. E-procurement will also contribute towards the firm becoming more efficient in controlling its inventory level.

This arises from the fact that the company will be able to effectively determine what it requires to purchase and the required amount. DTC will also be able to make an effective decision regarding the supplier from whom it will procure the required raw materials. The contracting and procurement manager will also be able to access relevant data such as data related to the contract bid prices.

For e-procurement to be successful, DTC will be required to implement the necessary computer technology systems. This will cost the company a substantial amount of finances to purchase these systems. The firm will also be required to outsource the necessary expertise.

This will further increase the cost of implementing the systems. However, the benefits that the firm will receive after effective implementation of e-procurement cannot be associated with the cost.

With regard to minimizing the time required to make a decision, the firm should consider reorganizing its organization structure. One of the structures that the firm’s management team should consider incorporating is the flat organization structure. A flat organization structure does not have many levels of hierarchy. As a result, the structure is characterized by minimal bureaucracy.

The resultant effect is that decision making is easier. In most cases, firms in the services industry adopt flat organizational structures. In its reorganization, the firm’s management team should include all the employees. This will aid in minimizing resistance. However, employees in a flat organizational structure may be required to report to more than one boss. This may result into collision amongst the managers.

Recommended implementation plan to solve the problem

In order to be successful in resolving the problems it is experiencing, DTC should effectively implement the solutions identified. Considering the fact that implementation of these solutions will contribute to a change in the firm’s operations, the company should communicate its intended change to all the stakeholders. These include the suppliers, vendors and the employees.

In its communication, the firm should address the benefits of the intended changes. The table below highlights the proposed actions, timescale and the required resources in the implementation process. After implementation of these changes, the firm’s management team should continuously review its effectiveness.

Some of the elements that the firm should consider include whether the firm has attained efficiency in its procurement system. For example, the contracting and procurement manager should compare the time it takes to complete a procurement cycle with the e-procurement system and using traditional methods.

Additionally, the firm should also review the comments of the suppliers and vendors to determine their response to the e-procurement system. This will play a critical role in the firm’s effort to improve the system.

Action Time scale Resources
Implementation of E-procurement system The firm estimates the company will take 3 months to fully implement the system. A cost of $ 1 million is expected to be incurred. This money is expected to be used in purchasing the necessary software, hardware and hiring of e-procurement consultants.
Changing the organization structure from hierarchical to a flat structure. The firm will require approximately 4 months to fully re-organize the structure. Reorganization will be undertaken by the firm’s top executives in collaboration with consultants. However, it will be an inclusive process.

Appendix

Appendix 1: Organization Chart of Dubai Taxi Corporation

Organization Chart of Dubai Taxi Corporation.

Source: Dubai Taxi Incorporation, 2010.

Reference List

Burrow, J., Kleindl, B. & Everard, K., 2008. Business principles and management. Mason, Ohio: Thomson Learning.

Dubai Taxi Corporation. 2010. About us; profile and history. Web.

GXS. 2009. Tesco; a GXS case study. Web.

Idowu, S. & Louche, C., 2011. Theory and practice of corporate social responsibility. Heidelberg, New York: Springer.

Neef, D., 2001. E-procurement; from strategy to implementation. Upper Saddle, NJ: Prentice Hall.

Stephenson, R. 2011. E-procurement increase profits, enhance control, automate your procurement. Web.

Roy, N., 2005. Cisco B2B e-commerce-business to business. Web.

We Know Dubai. 2011. Taxis companies. Web.

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