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MBL 915P

Group assignment 1

Strategic ManagementIn

Comet Transport share company

Group Members

SUBMISSION DATE: May 4, 2013

Name Student No Email

%

Contribution

Ali Nasreddin 7805003 [email protected] 100%

Asfawossen Shimelash 77890175 [email protected] 100%

Brhanu Arega 77890183 [email protected] 100%

Daniel Desalegne 77890434 [email protected] 100%

Dawit Derje 77890450 [email protected] 100%

Desalegn Mohammed 77890248 [email protected] 100%

Jemal Edris 77890159 [email protected] 100%

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May 4, 2013 [Strategic Management]

Page 1

Table of content Page

Executive Summary 3

1. Introduction 3

1.1The Background 3

1.1.The Method 4

1.2.Limitations 4

1.4. Company Profile 4

1.4.Mission of the Company 5

1.5.Interpretation of Related Activities of Company Mission 5

1.6.Companys Management 5

1.7.Duration of the Company 5

1.8. Company Location 6

1.9.Vehicles Load Capacity 6

1.10. Closed and Open Space Warehousing 6

1.11.Vehicle Maintenance 6

1.12. Organizational Structure 6

2.Vision of the Company 6

2.1. Core Values of the Company 7

2.2. Customers Profile 7

2.3. Customers Expectation 7

3. Overview of Strategy Management Process in CTSC 7

3.1. Developing a Strategic Vision, a Mission and a Set of Core Values. 8

3.1.1.The Vision Statement 8

3.1.2. The Mission Statement 8

3.1.3. Core Values of the Company 9

3.1.4.Setting Objectives 10

3.1.5.Crafting a Strategy 11

3.1.6.Executing the Strategy 12

3.1.7.Monitoring Evaluation and Corrective Adjustments 13

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4. CTSCs Strategy Strength and Weakness 14

4.1. Market Share 154.2. Financial Strategic Objective 154.3. SWOT Analysis 164.4. The Need for Change 18

5. Significant Factors and their Future Implication 185.1. The macro-environment 19

5.1.1. The Legal and Political Environment 19

5.1.2. Economy 19

5.1.3. Socio-Cultural 20

5.1.4. Technology 205.1.5. The Industry Environment 20

5.2. Internal Factors 215.2.1. Financial Capacity 21

5.2.2. Human resource 21

5.2.3. Service Rendering Capability and Facilities 21

5.2.4. Marketing and Business Development 21

6. Recommendations 22

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Executive Summary

Comet Transport Share Company (CTSC) is one of the freight transport operating companies of

Ethiopia which has strategically planned activities not only to fulfill the objectives of the Growth

and Transformation Plan (GTP) of the country, but also to meet user expectations, with the

objective of to remain competitive and accomplish companys vision. However, to meet such an

objectives and the national transport system requirement and so to address the climate change in

the local and global economy, the company is expected to do cumbersome works and continuous

improvements in the process of strategic planning.

1. Introduction

The cost of operating logistic business in Ethiopia currently became very challenging. To this

effect, problems emanated from the deadlock access to port assumed to have aggravated costs

and rates of transportation to increase cost of living on citizens. Because of these, studies on the

transport sector today would have significant effect in order to reduce the general cost of living

in the country. To fulfill such a requirement therefore, efficient and effective development of

strategic planning process and execution could have an essential significance.

1.1. The Background

According to Thompson et al, (2012, p.69), the process of crafting and executing company's

strategy consist of five interrelated managerial stages. These may include:

i. Developing a strategic vision to company's long-term direction, a mission statement todescribes purpose, and a set of values to guide the pursuit of the vision and mission

ii. Setting objectives and using them as yardsticks for measuring the company's performanceand progress.

iii. Crafting a strategy to achieve the objectives and move the company along the strategiccourse that management has charted.

iv. Executing the chosen strategy efficiently and effectively.

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v. Monitoring developments, evaluating performance, and imitating corrective adjustmentsin the company's vision and mission, objectives, strategy or execution in light of actual

experience, changing conditions, new ideas, and one new opportunity.

1.2. The Method

As it was described above s, one of the inputs in the Government Grand Plan was to strengthen

the road transport sector. To this effect, the GTP described the target as follows:

An effective institutional framework will help to ensure private transport service

providers are competent and provide proper standards of service. The human resourcecapacity for better management and service delivery will be developed. A national

data base for freight and public transport will be created that will reduce the time

processing administrative requirements and the costs of freight transportation (FDREGTP, 2010:79).

Considering the mentioned strategic plan, the group made a reason to choose one of the

renowned freight transportation companies of Ethiopia, CTSC. And therefore, has undertaken a

situation analysis. The major internal and external factors relevant to the company and its

industry have been identified. This has been carried out taking primary and secondary data from

the company in person. Hence, a thorough assessment in archives consisting of the strategic plan

and annual plan-performance reports, trends and decisions made by the Board of Directors has

been assessed. However, minor discussions which were held with company authorities were

limited to time and cost.

1.3. Limitations

Since the core process represent the overall efforts of the company, evaluation of the strategic

plan has more directed to the core processes. Thus, assessment is likely to be constrained as a

result of availability of sufficient data, time and cost. And in turn, inadequate data as a result of

company insecurity may influence the general result of this strategic plan assignment.

1.4. Company Profile

Comet Transport Enterprise was established upon the dissolution of former Ethiopian Fright

Transport Corporation (EFTC) in the year 1994 by the council of Ministers Regulation No. 193

of 1994. The organization further as a Public Enterprise which later transferred to a Share

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Company transferred and merged with Addis Mechanical Enterprise on Commercial Registration

and Business License vested from January 9th

of the year 2002 and authorized a Share Company

under the jurisdiction of the Ministry of Trade and Industry that noticed as one of the Share

Companies of Ethiopia in the year indicated above on Ethiopian Herald, Vol. LVIII No. 212, and

May 15, 2002. Comet has registered a capital of 204,823,000.00 ETB, divided in to 204,823

shares with par value of Birr 1,000 each. All shares are currently held by the government.

Currently, capital of the company reached 225,822,142.59 ETB, including reserve and capital

contribution in kind and legal reserve.

1.5. Mission of the Company

Under the FDRE Proclamation No. 93/94 and license given by the state, the Company has thefollowing mission:

To render road freight transportation service. Agency service to private road freight transport associations. Engage in any other related activities conducive of the attainment of the purposes

mentioned in the mission here above.

1.6. Interpretation of Related Activities of Company Mission

CTSC up until 1994 had established to fulfill its mission persistent to transportation and agency

service to private freight transport associations. Post 1994 companys mission had improved or

reestablished to handle additional services to ensure maximum profitability by delivering full-

fledged services to both internal and external customers. A part from the previous mission, the

company engaged the following new activities as related ones:

Provide vehicle maintenance service to both internal and external customers. Provide vehicle washing and greasing service to internal and external customers. Render warehousing and machinery service to internal and external customers.

1.7. Companys Management

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The overall activities of the company is directed and managed by the authority of Privatization

and Public Enterprises Supervising Agency (PPESA) who has the mandate to assign the Board of

Directors and so the Director General of the company, by the Board of Directors.

1.8. Duration of the Company

Under the license given and Proclamation of Council of Ministers No. 193/94 the company is

deemed to have established for an indefinite period of time.

1.9.Company Location

CTSC is located in the capital city Addis Ababa, at Akaki-Kality Sub-City in Kebele 11 which is

strategic site and situated within the diverse industrial zone around the southern margin of AddisAbaba right before the Ring-Road occupying 423,000 m

2of land.

1.10.Vehicles Load Capacity

The company had a capacity to lift only 4,350 tons of vehicles load at once. However, now a

day, it has been upgraded to a capacity of 89% to handle 8,220 tons of dry cargo at once.

1.11. Closed and Open Space WarehousingOpen space warehouse service can be given for general cargo for customers of which can avail

miscellaneous cargo types on 20,000 m2

asphalted and 100,000 m2

for non-asphalted ground

accommodations facilitated by fifteen different types of cargo handling equipment.

1.12.Vehicle MaintenanceHaving a vast technical plant, the company has been licensed to provide 1

stgrade maintenance

services for the overhauling of heavy trucks and automobiles including machinery repairs, shop

services, washing and greasing services plus vehicles parking, caf and restaurant services for

customers of different needs.

1.13. Organizational Structure

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The company has recently structured and divided into two major core processes supported by

other four sub-processes and two services which accounted for the Director General of the

company.

2. Vision of the Company

Currently, companys vision is to provide an integrated and multifaceted logistics service

under one premise to be the leading customers choice in eastern Africa (CTSC, Report Aug.

30, 2013).

2.1. Core Values of the CompanyComet has an inspiring core values to serve its different size and types of customers. Customers

are the priority targets to the company. Hence, we are committed to serve with.

We serve conveniently transparent with little waiting time. Companys culture is directed to customers beliefs and requirements. We respect and considerate customers. We serve with skilled and knowledgeable employees. We believe in high quality and manageable service with confidence. We have highly dedicated operational teams to ensure care and attention to customers

and their properties.

We are flexible to customers personalized approaches.

2.2. Customers Profile

Customers of the company include governmental, non-governmental and private businesses.

Because there are two core processes in the company however, the transportation process mostly

is supported by government demands and non-government requisitions, while the warehousing

and machinery process or the logistic service mostly is supported by the private, non-government

organizations and government demands respectively. Among which, importers were more of

local governments while international NGOs are very few but highly influential to support the

fleet man.

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2.3. Customers Expectation

Customers are most important for Comet Transport Share Company where the company depends

on. Customers do favor to the company by giving opportunity to develop and enhance its service

capacity. In turn, customers do expect the company to be responsive, reliable, fast delivery,

respectful and high performance of service at least on one key performance basics, likely

timeliness or dependability to be needed as a result of one unique difference from others.

3. Overview of Strategy Management Process in CTSC

Based on the above mentioned background stages of strategic management processes pointed out

by Thompson , A. et al, (2012), the group has been evaluated the basic strategy management

process of CTSC and compared whether the company's strategic management process is in line

with the academic requirements indicated above.

3.1.Developing a Strategic Vision, a Mission and a Set of Core Values.

Thompson, A. et al, (2012), have indicated that:

astrategic vision delineates managements aspirations for the business, providing a

panoramic view of where we are going and convincing rationale why this makes

good business sense for the companycharts a strategic path for thefuturecommunicates to stakeholders and helps steer the energies of company

personnel in a common direction (Thompson, A., et al, 2012, pp.70-71).

3.1.1. The Vision Statement

Accordingly, CTSCs vision read as to provide an integrated and multifaceted logistics service

under one premise to be the leading customers choice in eastern Africa . In this vision

statement, we can understand that, companys vision is directional, focused in areas of what was

intentional, it looks flexible, desirable and easy to communicate. However, the vision lacks

distinctiveness and specificity rather looks like generic which could be used by many companies.

Moreover, it includes what the company does at present, it also shows ambiguity that lacks

selectivity in identification and needs of stockholders, and may not inspire its audience which

also declare incapability of unique identity and not clearly directed to the point as well which

does not lead to a common goal.

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3.1.2. The Mission Statement

As it was indicated in Thompson, A., et al (2012), a mission statement shows who we are, what

we do and why we are here. CTSCs mission generally stated as follows:

To render road freight transport service and agency service to private road freight

transport operators, to provide vehicle maintenance service and vehicle washing and

greasing service, to render warehousing and machinery service to internal and external

customers and engage in any other related activities conducive of the attainment of the

purposes mentioned in the mission statement.(CTSC, 2013).

For clear understanding, Thompson, A., et al (2012. Pp.74-75) have stated that: the distinction

between a strategic vision and a mission statement is fairly clear-cut. A strategic vision portrays

a companys aspirations for the future (where we are going); where as a companys mission

describes its purpose and its present business (who we are, what we do, and why we are he re),

and well-conceived mission conveys a companys purpose in language specific enough to give

the company its own identity."

Accordingly, CTSCs mission identifies and conveys what the companys service is, specifies

the buyers need, identifies the customer groups. However, it doesnt specify its approach how to

please customers and it doesnt give the companys own identity since it uses ambiguous term in

the establishment Proclamation No. 193/94, by saying Related Activities which leads

additional legal interpretation before engaging in a formal activity and formulating its strategy.

Above and beyond, the word related activities also leads to encompass to unnecessary acts of

felony.

3.1.3. Core Values of the Company

The values of a company (sometimes called core values) are the beliefs, traits, and behavioral

norms that management has determined should guide the pursuit of its vision and mission. These

are norms that company personnel are expected to display in conducting the companys business

and pursuing its strategic vision and mission (Thompson, A., et al, 2012, p.75). Thus, as it was

indicated above, CTSCs core values were stated as follows:

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We serve conveniently transparent with little waiting time, companys culture is

directed to customersbeliefs and requirements, we respect and considerate customers,

we serve with skilled and knowledgeable employees, we believe in high quality and

manageable service with confidence, we have highly dedicated operational teams to

ensure care and attention to customers and their properties and are flexible to

customers personalized approaches.

For Thompson, A., et al (2012), fair treatment, integrity, ethical behavior, innovativeness,

teamwork, top-notch quality, superior customer service, social responsibility, and community

citizenship are related to core values. In this respect, CTSCs core values can be evaluated very

well. This is because, starting from company transparency, when we approach through each corevalues, we can find that more emphasis has been given to customers time constraints, beliefs

and respect, including safety to their properties in most value statements that declare

dependability. Likewise, the company has also given a fair respect to its personnels skills and

teamwork flexibility to an ethical way of serving and socializing them up to personal approaches.

Though the company falls under suspicions since Thompson, A. et al (2012) said, Most

companies may not practice what they preach when it comes to their professed values.

3.1.4. Setting Objectives

The managerial purpose of setting objectives is to convert vision and mission into specific

performance targets. Well-stated objectives are specific, quantifiable, or measurable, and contain

a deadline for achievement. Thus, objectives focus efforts and align actions throughout the

organization; they serve as yardsticks for tracking a companys performance and progress and

they also provide motivation and inspire employees to greater levels of effort and the two major

objectives are financial performance objectives and strategic performance objectives (Thompson,

A. et al, 2012, p.76).

Based on the above mentioned explanation, the group tried to evaluate CTSCs objective setting

method. Accordingly, CTSC strategic objectives that are depicted in the strategic plan are more

of financial performances. i.e. financial objectives like maximizing revenue, cost reduction and

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making profit and are related to capacity utilization and on some reform programs. In addition,

these objectives are more focused on short-term profitability other than fulfilling the vision and

mission of the company. What is more, financial objectives those are not both clearly specified

and quantifiable or related to accomplish companys vision. In some cases, there are objectives

which seemed to have been specific, but either might not be measured or quantified. Yet, the

strategic objectives encompass company's marketing objectives and competitiveness. But similar

to financial objectives, they do not show how the company will achieve its competitiveness in

quantitative basis or the strategic objectives do not indicate the process and the how of market

segmentation, market share and penetration at all. Hence, in most cases, those objectives set by

the company do not inspire its audience and meet academic requirements.

On the other hand, as Thomson, A., et al (2012) indicated, company objectives need to be broken

down in to performance targets for each of organizations separate businesses, product lines,

functional departments, and individual work units for desired companywide outcomes and

results. In this respect, no document has been found witnessing companys experience. However,

based on the reform program now a day, the company tries to implement tools like the balanced

score card (BSC) in order to balance the financial objectives with the strategic objectives.

3.1.5. Crafting a Strategy

As Thompson , A., et al (2012), stated; the task of stitching a strategy together entails addressing

a series of how's: how to grow the business, how to please customers, how to outcompete rivals,

how to respond to changing market conditions, how to manage each functional piece of the

business, how to develop needed capabilities, and how to achieve strategic and financial

objectives, choosing among the various alternatives, proactively searching for opportunities to do

new things or to do existing things in new or better ways. For instance, among strategy

formulation the following steps should be followed. These include the corporate level of

strategies, the Business level strategies, the Functional area of strategies and the Operational

level of strategies. In CTSC the following summary of steps are followed.

Table: Summary of Description of CTSC Strategy

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Level of Strategy CTSC Tactic Description Justifications

Business Strategy

Market Penetration

How to strengthen market position andgain competitive advantage

Actions to build competitive businesscapabilities

DiversificationNew Service Development

Backward Integration

Functional Strategy

Cost Reduction Add relevant detail to the hows of the

business strategy

Provide game plan for managing aparticular activity in ways that support the

business strategyImproving Resource Utilization

Operation Strategy

Introduce new technology of truck,equipments and machinery and expandservice capacity

Add detail and completeness andfunctional strategies

Provide a game plan for managingspecific lower-[level] activities with

strategic significanceResearch and Development

In view of that, we have evaluated the strategy making tasks of CTSC as compared to the

academic notion, the company implements only the three levels of strategy-making activities and

yet, on incomplete manner. Hence, even if the company develops some basic assumptions of the

strategy development, it is identified in most cases that signifying poor quality performance and

the process that was stated in the strategic plan also lacks broad based observation analyses

which views and results in targets of very narrow and mismatching the existing industrial

technology, market situation and communication style.

As a result, the company exhibits shorter life span. More significantly, since the company

operates its business more in local import and has a minor involvement records in out boarder

freight transport service sector, it shortly fails to achieve its goal. Because, in this sector, the

Federal Transport Authority of the Government of Ethiopia has registered more than 25,452

heavy trucks to flog in the industry which must result in high and stiff competition where

effective and efficient cost and quality management service companies could win and achieve

the strategic goals to the better. Because of these, for companies like CTSC, which exhibits

generally inefficient and ineffective strategy development measures, as compared to rivals,

neither achieves their goals nor accomplishes their vision. For such a reason therefore, poor

crafting of strategy for CTSC could be very challenging business to succeed.

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3.1.6. Executing the Strategy

"Converting strategic plants in to actions and results , tests manager's ability to direct

organizational action ,motivate people, build and strengthen company competencies and

competitive capabilities--"( Thompson et al; 2012:86)

Executing a company's strategy has to be done efficiently and effectively. The action at this stage

begins with what management will have to do to achieve its financial targets and strategic

performance. The implementation process can take as long several months to several years---

"(Thompson et al; 2012:75)

The strategic execution in CTSC star with creating awareness /shared strategy / to the

employees. This is done to make the implementation process smooth thereafter, the company

fulfils/allocate/ the human and other resources which are planned to facilitate the strategy'simplementation through the company's incentive program system, which is given to employees

for their achievements.

According to Thompson et al, in the most situations, managing the strategy execution process

includes the following principal aspects:

Staffing the organization with the needed skill and expertise. Building and strengthening strategy- supporting resources and competitive capability. organizing ample resources to the activities critical to strategic success Ensuring the policies and procedures facilitate rather than impede effective strategy

execution.

Installing information and operating systems that enable company personal to carry outtheir roles effectively and efficiently

Motivating people and tying people and trying rewords and incentive directly to theachievement of performance objective.

Creating a company culture and work climate conducive to successful strategy execution

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Exerting the internal leadership needed to proper implementation forward and drivecontinuous improvement of the drive continuous improvement of the strategy execution

processes.

As mentioned above, CTSC follows almost all of the principal aspects of managing the strategy

execution process thereby improving its successes.

3.1.7. Monitoring Evaluation and Corrective Adjustments

Thompson, A., et al; 2012, p.87) have pointed out that: "Monitoring new external

development, evaluating the company's progress, and making corrective adjustments" is the

trigger point for deciding whether to continue or change the company's vision, mission,

objectives, strategy and/or strategy execution method."

CTSCs vision, mission and objectives will not be exposed to yearly evaluation and the vision

may not even compare with the yearly achievements. This may be done when its necessary.

However, the strategy execution process has to be evaluated by the higher official body before

implementation. If the strategic plan needs adjustment for corrective actions, it will be carried

out which the process again may take very long period of time. This is because; it must again be

evaluated and approved by the Board of Directors on its part, after all, the final approval takesplace by the Federal Privatization of Public Enterprises and Services Agency (PPESA). PPESA

on the other hand, many take its own time for the execution to approve. And initiation will be

based on the criteria that satisfies PPESA after evaluated and approved by the Board of Directors

by the fact that it must fulfill government needs and requirements not only the evaluations that

had taken by CTSC will implemented or placed into effect or executed. Nonetheless, there are

consecutive monitoring and strategy evaluation processes monthly, quarterly, half a year and on

annual basis that may or may not request an adjustment to be made, that may also need swift

decisions as soon as possible.

4. CTSCs Strategy Strength and Weakness

Evaluating the strategic managing process of CTSC, we observed the following strengths and

weaknesses.

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Strengths

Company's financial strategies are clearly stated in the company's strategy. The strategy of diversifying the business well fits the industry situation.

Weakness

Company's strategy is focused on short-term goals rather than long-term goals. Companys strategy fails to incorporate strategies that enhance the companys

competitive advantage.

CTSCs Situational Analysis

This section provided synoptic analysis of industry under which CTSC operates and the impactson its activities. Thomson, A., et al (2012, p.52) have pointed out that "what is our present

situation?" prompts managers to evaluate industry conditions, its competitive strengths and

weaknesses, and changes taking place in the business environment that might affect the

company". Based on such concept, CTSCs situation analysis has been assessed as follows.

4.1. Market Share

It should be noted that other freight transport operating companies can be the major competitors

of CTSC who can easily access better technology and technical capabilities. As it was discussed

in the introductory part above, freight transport business in Ethiopia is highly stiff and not easily

penetrable sector. Hence, competition in such a sector requires cumbersome work to survive. To

have a competitive advantage therefore, the company must introduce new technology, relatively

offer lower tariff and credit seal could be the strategy of the market to compete with those giant

companies and sustain the market share of the company as well.

4.2. Financial Strategic Objective

Service revenue is collection of integrated logistic service fee, operational and administrative

expenses and payable tax. The following table shows planed and actual revenue from services

rendered by the CTSC during the past five years. As it can be seen from the table bellow, there is

a similar pattern of service provision with that of the physical performance.

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CTSCs Service Revenu

0

50000

100000

150000

200000

250000

300000

2008 2009 2010 2011 2012

PLANND('000)

ACTUAL ('000)

Source: CTSC Strategic Plan and Performance Report (2008-2012)

Average growth rate for the past five years is plane from actual it decreased by 2.2%, thus we

can understand that the sales growth opportunity of comet transport Share Company is

unattractive.

Financial Statements

The major component of profit and loss statements are revenue from operation, other incomes,

cost of sales and administrative expenses. The summary of planned and actual profit before tax

from operations for the fiscal years of 2007/2008 -2011/2012 is shown in the table below. As it

can be observed from the table, the Share Company was profitable throughout the five years

trend.

Fiscal Years

Planed Service

Revenue

ETB('000)

Actual Service

Revenue

ETB('000)

Performance (%)

2008 13577.70 14951.00 110

2009 20747.90 44906.00 216

2010 56643.80 69124.30 122

2011 81379.00 59712.90 73

Salse routh rate of comet trans ort share com an 2008 -

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2012 62133.60 51920.00 84

4.3. SWOT AnalysisAn essential element in evaluating a company's overall performance entails examining the

company's resources and competitive capabilities in terms of the degree to which they enable it

to pursue its best market opportunities and deafened against the external threats to its future well

being. The simplest and most easily applied tool for conducting this examination is widely

known as SWOT analysis, so named because it zeros in on a company's internal strengths and

weaknesses, market opportunities, and external threats. Just as important, a first rate SWOT

analysis provides the basis for crafting strategies that capitalizes on the company's resource

strengths, overcome its resource weaknesses, aims squarely at capturing the company's best

opportunities and defends against the threats to future well-being (Thompson, A., et al, 2012,

pp.150-151).

Strength

CTSC has strong financial position in the last ten years. CTSC has 858 employees with long term work experience and professionals. Reasonable workshop. CTSC has 120000 m2 areas for handling of containers with fully equable

machineries.

The location of CTSC is suitable for logistic business.Weakens

Incomplete marketing strategy (pricing, product development, distribution,promotion.)

Poor market segmentation skill. Weak utilizations of workshops. Poor collection of account receivable. Unwise use of human resources.

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Opportunities

Government policy focus on agricultural and industrial products to overall economyof the country supports the opportunity to enable the fright transport business.

The import/export goods are increased every year which also support the opportunityto enable the terminal and the fright transport business.

Treats

41% of the trucks are obsolete models and are 30 tons of carrying capacity while 40tons or above are trucks of competitors.

Introducing the railway service in the country will be the most rival of the companyin the near future.

High cost of imported spare parts. Limited capacity in research and development works to introduce new technology to

provide high quality service.

The SWOT Matrix

Internal

External

Strength(S)

Strong financial positionBeigest work shopSuitable for logistic

business

Weakness(W)Incomplete marketing strategyUtilizations of workshops usageUn collected of account receivable

Opportunities (O)

Government economics policefocused on agricultural and

industry products

import and export goods areincrease

OS OW

Threats(T)

Introducing the railwayservice in Ethiopia

41% of the truck is old and 30ton carry capacity

TS

TW

4.4. The Need for Change

CTSC

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"Every company operates in a market and business climate that is changing to one degree or

another and that, in turn, requires internal operating response and new behavior or the part of

organizational member"(Thompson, A., et al; 2012, p.448). From the analysis undertaken above,

it has been observed that CTSC although it was profitable in the previous years, the management

must revise and change the strategy of the company in order to improve and rehabilitate itself to

more competitive advantage and sustainable progress of the company. Concentration may direct

towards the marketing strategy, on performance of account receivables, and vehicle replacement

policy to fully utilize its resources.

5. Significant Factors and their Future Implication

"Every company operates in a larger environment that goes well beyond just the industry in

which it operates. This "micro-environments" includes seven principal components: populationdemographics, societal values and lifestyle, political, legal and regulatory factors, the natural

environment and the ecological factors, technological, general economic conditions, and global

forces"(Thompson, A., et al, 2012, p.98).

5.1. The macro-environment

As Thompson, A., et al (2012, p.98) pointed out, "The macro-environment encompasses the

broad environmental context in which a company's industry is situated." And for our purpose the

following were taken into account.

5.1.1. The Legal and Political Environment

This referred to the regulatory framework in which the organization with the share company

proclamation no 146/02 under the supervision of PPESA to compete and perform the following

action.

Render freight road transport service. provide maintenance and washing and greasing service Agency service to private road freight transport associations. Engage in any other related activity.

The Constitution of the Federal Democratic Republic of Ethiopia (FDRE) guarantees foundation

freedoms and rights, including undertaking of business and own property in Ethiopia. This and

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other issues related to the organization has created a conducive environment for promoting and

attracting the business based on the vision of the organization and in turn are expected to induce

the demand for integrated logistic services .

5.1.2. Economy

The government has committed to ensure private capital plays a significant role in the economy

by launching a free market economic system. There is a change of reform in issues that are

related to the government need which can be controlled and there has been major and positive

change in the government's policy towards the market economic policy in general and foreign

investment in particular. The fundamental development objectives of the country are to build a

free market economic system that will enable rapid economic development change. Hence,adopting this economic system strategy the company may earn the better from the growing

market. Moreover, the situation would also attract local and regional states as well as attracting

other companies and investors to be partner with us.

5.1.3. Socio-Cultural

"Social forces include the societal values, attitudes, cultural factors, and life styles that impact

business."(Thompson; 2012:100). In addition to stable fiscal and monetary policy setting, the

availability of adequate social and physical infrastructures in a country is very crucial for the

business environment. In this regard, positive measurements are generally being undertaken by

the government as part of its endeavor to stimulate economic growth and reduce poverty through

education and job opportunity in the country. This development will have a positive contribution

to the creation of better business environment by way of ensuring a sustainable supply of skilled

and healthy labor force.

5.1.4. Technology

"Technological factors include the pace of technological change and technical development that

have the potential for wide ranging effects on societies including activities and institutions

involved in creating new knowledge and controlling use of technology (Thompson, A., et al

2012, p.100). Since freight transportation service is in the advent of science and technology in

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the invention of telemetric in particular, the world of information science and the spread of such

technologies in the country will favor their influence and rendering capacity to the industry.

Thus, spread of automobile technology including the GPS will create an opportunity for the

fright transportation service industry to become more effective in the near future.

5.1.5. The Industry Environment

"To gain a deep understanding of a company's industry and competitive environment, mangers

do not have gathered all the information they find and spend lots of time digesting it rather, they

can focus more directly on using some well-defined concepts and analytical tools to get clear

answers."(Thompson; 2012:100-101)

In Ethiopia, the situation relies on local freight transport service who will be contending for

freight road transport service market. The business requires relatively medium investment in

addition to the possession of necessary skills and profession. As a result there has been a lot of

new entrance in the freight transport service. However, most of them are one-man business

organization without adequate facilities. Hence, it is expected that most of them could dropout

very soon. Nevertheless, it should be borne in mind that some of them could be strong

competitors to CTSC. This is particularly true if they are different share companies in freight

transport services. CTSC with its better organization and experiences, and integrated logistic

service that it provides could be the preferred company in Ethiopia.

5.2. Internal FactorsThe internal factors are the resources and capabilities of the organization and we focus to assess

the following issues.

5.2.1. Financial Capacity

The financial position of CTSC has been good since the last five years. However, its liquidity

position has been affected as a result of dividend payables to the government that constitutes

100% of its profit.

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5.2.2. Human resource

Currently, CTSC has a total of 858 permanent employees. This much of human resource will be

expected to remain for the planed period. On job training shall be necessary to refresh the

existing staff. In addition, collaboration with higher institutions and researchers is vital for the

organization during the strategic plan period.

5.2.3. Service Rendering Capability and Facilities

CTSC has rich and accumulated experience in undertaking and utilizing opportunities related to

road freight transportation services for the last two decades. It also has built good experience in

undertaking tasks related to dry port activities, vehicle maintenance, car washing and greasing

services and other related activities in the service sector.

5.2.4. Marketing and Business Development

The need for strong and effective business development unit for service providers like CTSC, it

is important to include the marketing plan at the business level strategy to help the organization

stay on tracks of competitive strength. Hence, business development and promotion tasks shall

be accorded special emphasis during the plan period to promote and advertise CTSCs activities

to potential customers.

6. Recommendations

To take advantage of opportunities indicated in situation analysis and promising industry market

profit comet transport Share Company shall have the following strategies for the coming five

years. Hence, the strategy is expected to be deliberate (Top-down strategy),

Business level strategy

Market strategy for CTSC, have a promising and sustainable profit comparing with strong

competition from rivals change to benefit from huge opportunities is its potential market. To

exploit these opportunities the company needs to have complete marketing strategy include

marketing mix (Service development, pricing, Promotion, placing).

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Functional Level Strategy

From the detailed assessment of the strategic plan of CTSC, it is found that the cost of service

has increased year-to-year on significant proportion. Therefore, the company shall give attention

to decreasing cost of services. On the other hand, it must introduce new technologies in order to

reduce delivery time the coming five years.

Operation Level Strategy

Research and development is necessary to take sustainable competitive advantage to become

quality service provider. CTSC needs to have strong and high standard research and development

center.

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References

Comet Transport Share Company, (2008), Strategic Plan and Performance Report. Vol. 14, No.

Addis Ababa.: Ethiopia.









Comet Transport Share Company, (2008-2012), Strategic Plan Report for the Five Years Period


Gattorna, J., (1983). Hand Book of Distribution Management. 3rd

edition, Gower Publishing

Company Ltd. Aldershot, Hants, England.

Ministry of Finance and Economic Development, (2010).Federal Democratic Republic of

Ethiopia-Growth and Transformation Plan 2010/11-2014/15. Volume I: Main Text.

Artistic Printing Enterprise, Addis Ababa Ethiopia.

Thompson, A.A., Peteraf, M.A., Gamble, J.E. and Strickland, A.J. (2012). Crafting and

Executing Strategy: The Quest for competitive Advantage; Concepts and Cases. 18th

Global Edition, McGraw- Hill, Irwin.

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