GenMax is a large package delivery service company. While the company was once an industry leader with more than 30% market share, you now see that lead declining to 27% and continuing to slide. Your nearest competitor has gained ground and is now at 25% market share. The CEA has asked you to develop a strategy to regain market share and industry leadership. You have decided on the strategy of installing a real-time tracking system on the trucks, so that drivers can report the exact moment when a package is picked up and delivered. This information can then be made available to end-users through the website. The GenMax IT department has already selected the application that will be used for this project. The application is called ALLTRACK and is provided by an outside third-party supplier. Your team will pick a wireless transport technology and a wireless carrier to run the application.
As telecommunications manager, your group is responsible for picking and implementing all wireless communications systems for GenMax. Your job for this project is to lead a team that will recommend to management a wireless data solution for implementing the ALLTRACK system. Your team will develop the budget, design the system, and put together an implementation plan for the solution. In your position, you must ensure that all departments agree with the solution. Since your group is also responsible for implementing the solution picked, your group will also have to make sure that all groups that are going to use the solution are comfortable with it and have no problems using it. You are the key player. You are the liaison to upper management. The ALLTRACK vendor says that their application will run on either GSM or CDMA. Since you also want a national wireless carrier, you will only consider Sprint/Nextel, Verizon Wireless, Cingular, and T-Mobile. Your first assignment will be to decide if you want to use GSM or CDMA. After you make this decision, you will decide which data transport technology to use. Once you have picked the data transport technology, you will have to pick a national wireless carrier. Following these discussions, you will need to lay out an implementation plan. Finally, you will put together a report for the CEA covering the above challenges and recommend how you will meet the threat of declining market share.
James Wiley - Male
We have selected the specific application for GenMax. It is called ALLTRACK. It is a very nice package that uses bar code scanners to track packages and a fax reader to scan in the name and the signature of the person sending and picking up the package. The trucks are also equipped with GPS navigation systems and the ALLTRACK system knows exactly where each package is real time. This will allow customers the ability to know exactly when a package will be delivered so they can make sure someone will be there. The cost of the ALLTRACK system is $500 per device. It will take 6 weeks to enhance the website to provide the end-users with the tracking information. ALLTRACK will only send small amounts of data - approximately 30 Megabytes of data per month. The data can be sent over a low speed transport method. There is no need for high speed data transport. The most important thing is "coverage" by the wireless carrier. It is critical that the service work in most places. Another important issue is quality of service. GenMax is a high-quality provider, and we want this service to be available as much as possible. It will cost approximately $250,000 to update the website to be able to handle the new information.
We have looked at the wireless carriers and received a bid from the different wireless carriers. Verizon Wireless is $2 per MB for 1xRTT and $0.50 per MB for EVDO. Cingular is $0.50 per MB for GPRS; $1 for EDGE; $1.50 for UMTS HSDPA. Sprint Nextel is $1 per MB for 1xRTT and $1 per MB for EVDO. T-Mobile is $.35 per MB for GPRS and does not offer any other data transport method. The devices for 1xRTT are $250 and $500 for EVDO. The devices for GPRS are $150 and $400 for EDGE, UMTS, and HSDPA.
We have 20,000 trucks and 200 shipping hubs. The trucks return to the shipping hubs every night, so the installation of the ALLTRACK system can be done at that time. It takes approximately 1 hour to install the ALLTRACK system in each truck, at a labor rate of $200 per hour.
We do not plan to charge any more to ship a package after we deploy the service. So you need to cost justify the ALLTRACK system by an increase in customers that use our package shipping service.
Create brief report to the CEO addressing each of the bullet points below. Each section should be approximately two paragraphs in length . Provide a high-level financial business plan evaluating the different carriers. Make a carrier recommendation based on the financials and any qualitative differences, such as quality and/or coverage. Sketch out a preliminary implementation plan. You do not need full details about who will do what parts, but you should put together a list of action items and steps necessary to implement and test the entire service. Make a brief summary addressing how the organization should handle the reality that data speeds will increase over the next few years. Discuss whether the solution should stay with the transport chosen or migrate to faster technologies as they become available.
Recently Asked Questions
- Please refer to the attachment to answer this question. This question was created from Case2 Chapman Coal Corporation-Capital Budgeting-Uncertainty.
- You own $10,000 of Denny's Corp stock that has a beta 2.9. You also own $15,000 of Qwest Communications (beta=1.5) and $5,000 of Southwest Airlines (beta=0.7).
- How do you evaluate risk and rates of return? what is the difference between a stock and a bond