The scenario is that you have been appointed as consultants to a small family owned bus
company to advise them on their strategy. The data available to you includes the case study
scenario plus 2007 Route Data, Market shares and a Route map. These equip you with data to
help you analyse the situation, identify the issues, develop options and make a
recommendation. See guidelines provided in Lecture 8.
The problem you are presented with is a real one – over the last few years we have
undertaken numerous studies of this nature for clients operating in the deregulated
environment of public transport. Clearly the exercise here has been developed for you, but
the micro-situations represented within it have all been encountered by us during recent
assignments for real clients.
Read the documents carefully and start to think through how you will address the exercise and
what supplementary research you may need to undertake. As is always the case with such
assignments, some data is missing – we have to make our own assumptions and justify them.
You may wish to acquaint yourself with the sector by conducting some research within the
UK business press.
You will be asked to make a presentation of your analysis to the family and the company’s
Directors. They have asked a number of consultancies to do this and will select a team to take
on the implementation of their proposal. Your objective is to win that contract.
We will schedule an evening slot in the near future when teams can ask Ian and I questions
and perhaps kick around any ideas you have had.
UEL Case Study
Background
• Better Buses & Coaches is a long established family business operating a mix of
buses and coaches on regular local service work (buses) and schools, day trips and
private hire (coaches).
• The family are well known in the home town, and the business is affectionately
regarded and has attracted a high level of customer loyalty over the years.
• The business has operated at a small profit for many years, with a loyal local
customer base for its bus and coach operations. It has pursued conservative
policies – unchanged timetables, cheap fares, and settled for a relatively low level
of profitability, sustainable for a family business.
• However, the family see problems looming ahead. They have noted that
neighbouring bus companies have invested more regularly and have more modern
fleets. They need to modernise the bus fleet to provide an equivalent service to
other businesses in the area. Increases in staff and fuel costs have eroded
profitability, and although there are reserves of £1 million that could be invested
in the fleet and business, this number has not increased for three years.
• A further specific threat has been the rumour that the Head of one of the three
schools they serve is thinking of taking his private hire business, about 80 trips a
year, away and handing it to another operator who has offered better vehicles.
The Task
• Better Buses and Coaches is not used to employing Consultants but the family has
decided it needs help turn round its fortunes and decide its future strategy. The
family does not want to close or sell the business, as there are future generations
growing up who want to carry on the tradition of providing the service to the local
community. However, it realises that it may have to make some radical changes.
• Your consultancy has been employed to analyse the situation of the business in
detail and to present recommendations to the Board on future strategy. You have
been provided with a certain amount of data, which is set out on the attached
pages. This is incomplete, and you will need to independently research or ask for
additional information you need.
• You will have the opportunity to meet with one of the Directors part way through
the exercise to ask questions, and at the end of the work you are required to
deliver a presentation of your proposals to the Directors of the company. This
must be no more than 15 minutes long, supported by Power Point slides and a
written Executive Summary of no more than one side of A4 in length.
Business Profile
Bus Operations
• Three local bus services are operated, from the base at A to B, C and D
respectively. Sample timetables have been provided – the standard times past
each hour are repeated throughout each day for the length of the traffic day
specified.
• The business has a fleet of 12 buses, all of which are owned. They are not of the
latest low floor design. They were purchase in three batches of four in three
consecutive years – the three batches are 4, 5 and 6 years old. All buses cost
£80,000 each and are depreciated over 8 years.
• The latest new generation low floor buses cost £120,000 each, or can be leased for
£2,000 per month. Two year old second hand low floor buses of good quality are
currently available on the market at £98,000 each.
• A sheet has been attached which provides some base data on the bus operations.
Direct costs are shown for each route, as are the indirect costs (overheads), which
have been allocated proportionately to the vehicles working each route. The fleet
includes two spares – their costs have been allocated to route 1.
• The main trunk route is profitable but in need of investment. The two local
services are not paying their way but they provide an essential link for the
communities concerned. They are the only services available to residents of C and
D, and the family earns considerable goodwill by continuing to operate them. This
also feeds through to the coach business when local groups want to hire vehicles.
Coach Operations
Bus No 1 2 3 4 5 6 7 1 2 3
A, depart 1000 1015 1030 1045 1100 1115 1130 1145 1200 1215
B, arrive 1040 1055 1110 1125 1140 1155 1210 1225 1240 1255
B, depart 1100 1115 1130 1145 1200 1215 1230 1245 1300 1315
A, arrive 1140 1155 1210 1225 1240 1255 1310 1325 1340 1355
Bus No 8 8 8 8 8
A, depart 1010 1110 1210 1310 1410
C, arrive 1024 1124 1224 1324 1424
C, depart 1030 1130 1230 1330 1430
A, arrive 1044 1144 1244 1344 1444
Bus No 9 10 9 10 9 10
A, depart 1020 1050 1120 1150 1220 1250
D, arrive 1032 1102 1132 1202 1232 1302
D, depart 1048 1118 1148 1218 1248 1318
A, arrive 1100 1130 1200 1230 1300 1330
Services operate throughout the day and week to these standard times
Better Buses & Coaches
Route 1 2 3
Number of Buses 9* 1 2
Number of Drivers 25 4 8
Notes
* = includes 2 spares