Potential of Stobart Group - Assignment Example

Eddie Stobart Introduction Stobart Group is a public company that specializes in the transport business; it is one of the UK’s front runners in the fast developing sector of multimodal freight, logistics and ware housing sectors. The company was founded in the 1960’s and has continued to grow capturing more European markets, its headquarters are based in Penrith England. Eddie Stobart was incorporated on 23rd November in 1970; the company will be celebrating its 40th 2011. The founder of the company Mr. Eddie Stobart recently passed away in 2011.Currently Eddie Stobart operates in forty sites that are well distributed across Europe and it employs over 5,300 people .It has more than 2000 tractors and more than 6000 million square feet for the purpose of warehousing. The business empire is divided into Stobart Ports, Rail divisions and Stobart Air. Macro Economic Environment Stobart is one of the most respected enterprises in the transport and warehousing industry. To attain a positive macro business economic business environment, the Company responds to any challenges that crop up and works day and night to meet the ever changing business environment. Stobart employs innovative approach to projects besides having a highly skilled and motivated workforce which make it possible for it to compete some of the most complex projects smoothly. Amidst the broad economic climate, moving forward looks uncertain but the Board of governors insists that Stobart has the right strategy and people who show resilience that is needed for prosperity even in tough economic hardships. Stobart aims at becoming UK’s leading provider in multimodal solutions. The company works under conducive environment in within the UK and other European countries, after the establishment of the European Union, the business has continued to flourish due to relaxed rules in the cross border trade and movement. Other factors that have enabled is growth is the use of one currency, government cooperation in establishment and completion of a number of projects and fair competition in the market. For example in 2010, the government approved the London Southend Airport plans after the company had presented the plan to the government .When a company gets adequate support from the government and the industry it is involved in ,it is likely to grow and flourish. The biogas production has branded Stobart as an environmentally conscious company this has achieved it public approval compared to their companies in the industry (Paladino, 2007). Fig 1. Stobart Ltd Corporate History Micro Economic Environment The micro economic business environment of Stobart company can be said to be a competitive one, first of all the company does not operate alone in the transport and warehousing sectors .It is faced with other competitors in the market where it has to look for strategies of gaining a bigger market share. One of the aspects that give it an advantage over other player in the field is the acquisition of the Railway Safety Case (RSC) in 1999. RSC allows the company to operate rail mounted plant independently of the third parties. The ownership of rail, road transport and airports places Stobart at a competitive advantage, any given customer can be start a transacting in the supply chain management in Stobart and complete it from the same company. Stobart has entered into joint ventures with quite a number of companies, acquisitions and mergers, for instance Stobart Limited was created through a merger between The Westbury Property Fund Limited and Eddie Stobart Group. The merger played a very big role in the growth of the company’s asset and aspirations. After the merger, the company had net assets of more than £250m, having been listed on the stock Exchange the company was in a better position in accumulating capital for its expansion. Even though Stobart has steadily been performing well, it faces some threats which should be dealt with if it remains one of the most reliable transporters across Europe (Paladino, 2007). The company has put risk management measures to ensure the future of its business is secure, some of the risks that Stobart should take care of include customer confidence,competition ,seasonality and abnormal weather, nature of lease obligations, fuel prices, commercial property acquisitions, airport security and safety, government regulations capital expenditure ,increasing demand for integrated and outsourced transport and logistics (Stobart Group, Annual Report,2009 pg 25) Eddie Stobart Core Competency Eddie Stobart provides transport and warehousing services, its main competency lies in the road transport. In addition to road transport other services that fall under Stobart Group are, a well developed General Distribution Division, Chilled transport division, warehousing division, international division and special transport division. The rail transport is divided into freight transportation and infrastructure engineering. The Group also deals in Port activities in which it handles inland and waterway ports. Stobart also has competencies in the air transport and environmental conservation initiatives through its Biomass projects .To ensure that all the services provided are in their own class the company gives a lot of focus on setting up and monitoring the required systems to ensure that all the sectors fulfill the demands and needs of its markets, deals with any challenges and adopts a continuous adaptation of innovative approaches. The reasons behind these competencies are; the company has a constant drive and investment that ensures that the work place is safe for its employees, through its initiatives, the companies employees are dedicated and motivated lot who innovate new ways or improving the services of their company. The company’s has heavily invested in the training department ,it has purposely built an air conditioned ,150 sq meters facility and hired highly qualified training teams who continuously train the employees on upcoming technologies. The company’s strategy in underpinned by its brand, people and systems. IT believes in forming partnerships and collaborating with customers to drive efficiencies, it aims at delivering operational synergies, coming up with systems and technologies that ensure that the business is protected form operational and financial risks, it focuses on organic growth of the business when dealing with both old and new customers. Other factors that lead enable the company to achieve and maintain its core competencies are the development of its extensive assets within the Group’s air and port divisions , continual increase of business in the UK, Europe and Ireland and leveraging the intrinsic value of its brand. Recommendations for future growth Stobart Company has illustrated that hit has great potential for growth; it can achieve any anticipated growth from by undertaking number of initiatives. One of them is getting into new markets, although this may be expensive and speculative, one the company becomes established and it accepted in the new markets, the total revenue is likely to shift upwards. In this regard, the company should consider moving together continents like Africa, Asia, and Australia to extend and expand its business. In case foreign direct investment prove to be challenging, then the Company can enter into joint venture or merge with foreign companies with totally different business perspective or similar one to the company. Company mergers have a number of advantages such as pulling together of recourses thus having a solid capital base, formation of stronger shield in the face of calamities or challenges, putting of ideas together to come up with viable ones that are likely to lead to profit formation. Another strategy the Company can employ is by diversifying its business, although this is already on track through the production of Biomass products through a venture it entered into by A.W Jenkinson Forest Products, it still has the opportunity to invest more in field. Furthermore, the Company can engage in other businesses apart from the biomass, transport and warehousing. Practical Suggestions To venture into other new and foreign market, the most practicable way of doing it is through the acquisition of already established businesses .Business acquisitions only needs some paper work, compared to full incorporation of the company, in a foreign market, entering into new markets is made simple and fast. This I because the existing business that is being acquired has already set a good will that will enable Stobart to pick up faster. Another option would be the formation of merger by foreign companies; this is in fact the most east and practicable way of moving into new markets. In its bid to diversify on the scope of business, Stobart does not need to stat design for new products, finding new markets or constructing manufacturing companies. This can be achieved through the purchase of shares and equity in other industries, for example, Tesco supermarket is one of the company’s customers, incase Tesco floats its shares to the public, Stobart can choose to purchase majority of the floated shares. This will enable it to own partly own the company comparatively to the amount of shares bought .This can be done in several companies that the company finds interesting. Majority of companies have thrived through its policy and such companies continue to perform well without too much effort put in. In conclusion Stobart has great potential, this potential is already being witnessed in all the forty plus operation sites across Europe. With a clear vision of becoming UK’s leading provider in multimodal logistics solutions, valuing its employees, satisfying its customers and gaining the confidence of its investors are the key strategies to achieve its vision. The economic future for Stobart group is in good shape as the company has outlines strategies that will enable it become the most preferred multimodal logistics service provider by customers, its employees and the investors in the UK (Paladino, 2007). References Paladino, Bob, 2007 Five Key Principles of Corporate Performance Management , Prentice Hall, London. Stobart 2010 About Group. Accessed on 1st April 2010 from http://www.stobartgroup.co.uk/ Stobart Group. Annual Report and Accounts Accessed on 2nd April 2011 from http://www.stobartgroup.co.uk/Images/file/Stobart%20ARA%202009.pdf Read More