Company Analysis for Golden Arrow Bus Service

Capabilities Analysis

The Golden Arrow Bus Service’s line of business is providing transport to people within their larger Cape Town Metropolitan Area. Consequently, its key capabilities are identified as the factors perform the value-added activities to develop the company’s service offerings and support the growth of its market¹. Theoretically, a company’s key capabilities are the value creation engine whose function is to establish and advance the business competitive advantage². Consequently, analyzing the capabilities of the Golden Arrow Bus Service implies examining what the company does and what it is capable of doing, given its current value-adding activities in the market. With over 2,500 employees and over 1,200 buses, the company is a strong competitor in the public transport market in the larger Cape Town metropolitan area³. One of the major capabilities that the company enjoys is its competitiveness compared to the existing competitors. For instance, the company has a strong pricing strategy that sees its customers enjoy reduced transport prices, especially those residing in the middle and low-income neighborhoods within the metropolitan.

It is worth noting that the pricing strategy is designed to meet the needs of the commuters who use the buses on a daily basis and whose price sensitivity is quite high. Currently, the company tickets cost between R8 and R20 depending on the routes⁴. Another important capability is its wide coverage, which includes a network of routes covering almost every neighborhood in the city. With a regular schedule, the company is able to serve a large population compared to the Metro Train Rail Service, its largest competitor. Therefore, the company’s wide coverage and the large number of employees add value to its business.

At the same time, the wide coverage and the pricing strategy ensure that the residents enjoy its services as they are cost-effective and accessible from any point within the metro. However, an important capability that the company should embark on achieving is the introduction of online ticketing services that are largely lacking at the moment⁵. Purchasing tickets from the bus company’s sale points in the city is time consuming and many residents would prefer purchasing them from their computers or mobile phones⁶. This is a huge business potential that the company is capable of achieving, given that is has a large number of employees who can drive the new venture⁷. Moreover, introduction of better functions and assets such as electric buses is an achievable capability that the company should consider as they are set to add value to its business. Indeed, the future transport sector will rely on environment-friendly transport systems and failure to venture into this field will heavily affect the company’s performance.

Value Chain Analysis

The human resource factor is the primary support activity of importance for Golden Arrow Bus Service. Human resource implies the whole workforce, whether trained or untrained, that helps the company run its processes⁸. Currently, the company employs more than 2,500 employees to oversee its business function and meet the needs of the millions of commuters who use its businesses every year. An important factor that contributes to the presence of dedicated and professional employees is work culture. The company, with a history of about 160 years, has survived as one of the largest employers in the city because of a strong work culture. Employees are treated as corporate assets and are trained and encouraged to develop a sense of belonging. They feel that they somehow own the company and that its success means that they also succeed in their individual goals and objectives.

VRIO Analysis

Valuable

The financial resources of Golden Arrow Bus Service are highly valuable because they help in investing into arising external opportunities and to combat external threats. The company’s transport services are a valuable resource because they are differentiated and customers perceive them as critical to meeting their daily needs⁹. Second, the company employees are a valuable resource to the business. A large proportion of the workforce consists of highly trained employees who are an integral part of the business. In addition, the employees are loyal and remain within the company for longer periods. All of this translates into a greater value for the commuters who use the company’s busses to meet their daily needs.

Rare

Golden Arrow Bus Service has strong, rare financial resources that only a few bus companies in the country possess. In fact, in the larger Cape Town Metropolitan area, the main competitor is the Metro Rail Transport system whose financial resources compete with the company. Indeed, Golden Arrow’s financial resources help fight companies that are seeking to enter the business¹⁰. The company’s employees are trained and thus they are a rare asset to the company because it uses internal training approaches that other competitors in the area do not know.

Imitable

The company’s financial resources have been acquired through prolonged profit over a period of 160 years. Therefore, other competitors cannot easily copy this model because they need to have a long period of experience and profitability¹¹. However, the company’s human resources are imitable because it only takes a few months of training and exposure to achieve a similar kind of workforce.

Organizational

The company’s financial resources are used to strategically invest in the appropriate sectors such as combating threats, acquiring new technologies, and improving services to fight competition. Therefore, they are a source of sustained competitive advantage for the bus company¹². These resources are necessary for the company to ensure that it has adequate strategies to keep new entrants away.

Current Strategic Position

Over the years, Golden Arrow Bus Service has been using corporate level strategies to improve its performance and fight competition in the sector. Specifically, two corporate level strategies are dominant in the company’s business approach- stability and expansion strategies. Because the company has been doing well in its traditional business model, it continues to use it in the modern times and might not change in the near future. The bus company has been employing young people as conductors, drivers, and clerical officers and training them to acquire important skills necessary to handle customers¹³. In addition, it has been using a pricing strategy in which prices remain relatively low compared to competitors but still make profits, given its large size of freight. In addition, the company has a tradition of focusing on coverage to ensure that it has buses playing almost all routes in the greater metropolitan. In the expansion strategy, the company has been focusing on increasing the number of buses to expand its transport network and reach out to as many neighborhoods as possible. In addition, the expansion strategy involves purchasing modernized buses that can carry more passengers at a time and reduce the cost of fuel. As the city expands in population and geographical size, the company responds by including more buses and employees to play the new routes. It is also worth noting that the company is currently expanding its business into the electric bus service that will see a number of routes have buses running on electricity instead of diesel to reduce costs and environmental impact.

The Ansoff’s theory of corporate level strategies is applicable to determine the nature of strategies that the company is applying. From a theoretical perspective, Ansof developed a matrix that businesses and analysis can use to determine product and market growth strategies¹⁴. The Ansoff’s Matrix product and market growth strategies fall within at least one of the four major categories- market penetration, product development, diversification, and market development¹⁵. According to Ansoff, market penetration involves selling existing products or services in the existing market. The aim of this strategy is to increase the number of products or services sold to the existing market as a means of maintaining or increase the company’s market share. A business using this strategy will dominate the market. On the contrary, market diversification implies selling a new product to a new market. The rationale is to spread the risks associated with the failure of one market. Ansoff states that market development involves using an existing product or service to sell in a new market. The rationale is to reach expand the market base with the same product such as selling in the overseas markets. Finally, product development implies introducing new products or services to existing markets. The idea is to reduce risks because the company understands the market well and will only need to reach out to the same customers with a new product.

In the case of Golden Arrow Bus Service, it is clear that they are using market penetration and product development strategies. The company only operates within the Cape Town Metropolitan area and sells the same services- transporting commuters on a daily basis. However, it is seeking to dominate the market by increasing its carrying capacity to serve more people in the city, which means that it is selling the existing services to the existing market. In the same way, the company is using product development as outlined by in Ansoff’s theory. In this case, the company is introducing new products such as digital ticketing and electric bus rides to its traditional market through innovation and invention.

Gap Analysis

Analysis of the Current State

Currently, Golden Arrow Bus Company is applying corporate level strategies to achieve its objectives and improve it competitiveness in the market. Specifically, the company focuses on its human resource, market penetration, and expansion aspects to meet the increasing demand for public transport services in the metropolitan region¹⁶. It is worth noting that the company’s main competitor is the Metro Rail Transport Company, a government-owned public transport system that operates the city’s railway system. It is also important to note that the railways system in the city is not wide enough to cover all the neighborhoods. Indeed, most people depend on road transport, with the majority using public buses rather than private cars or public vans.

Since the road network is well established and reaches out to all neighborhoods, including the newly developing areas, buses remain the best and most convenient transportation method because they can reach almost all neighborhoods. Furthermore, buses can pick and drop passengers at almost any point along the roads across the city and the metropolitan region, which makes them more convenient for people’s transport¹⁷. Despite the existence of this large market, the several bus companies that have attempted to challenge the Golden Arrow Company have failed. Indeed, the Golden Arrow remains the most popular public transport service in Cape Town despite having other companies trying to penetrate the market¹⁸. This is an indication that the company’s current strategy is effective enough to fight competition and keep potential entrants at away.

Furthermore, the company has rarely made losses in its 160 years of service in the region. Its financial performance has remained strong throughout this period and has always attracted additional sales as the city grows in terms of population and geographical coverage. It appears that the expansion strategy helps the company penetrate the newly established neighborhoods way before other companies realize. This strategy helps the company dominate most routes within the larger metropolitan area¹⁹. It should also be noted that the company’s strategy of adding more buses with time works well for its overall performance. For instance, the company ensures that it has enough buses, whether new or old, in each route to achieve convenience. Customers want to spend very little time waiting or queuing for buses. They also want to board and drop at any point as they wish in their daily activities. It appears that the Golden Arrow has realized this aspect of customer behavior and responded with additional buses in the most populous routes, which has helped maintain customer loyalty.

In regards to the human resource, the company has retained a strong strategy that supports its business process. In particular, the Golden Arrow has retained its strategy of sustaining a well-trained workforce that understands their customers’ needs and preferences. In the company offices and buses, the employees behave accordingly and always prioritize their customers’ needs. They retain commendable codes of dressing and conduct during the bus rides, which makes the customers develop a strong sense of affiliation with the buses they ride every day.

Currently, the company is adopting two important technologies in its business- online ticketing and electric bus systems. Indeed, the company has partnered with the provincial government to establish new routes for its electric-powered buses along the major highways and roads as a pilot study. Already it has a number of electric buses playing some routes and customers appear to enjoy such rides, owing to the modern knowledge that electric cars and buses have minimal impact on the environment²⁰. In the same way, the company is in the process of introducing a new ticketing method that uses online platforms to sell tickets. As more and more people accept and adopt new online payment methods, the company is also ensuring that each customer pays for the tickets using his or her preferred method. This will help attract new customers while also retaining those who still want to pay in cash or bank cards. Consequently, the company will continue dominating the market because customers are less likely to look for alternatives.

Ideal Future State

The global business technology will be technology-driven in the near future. Already, most business processes are under the influence of technology. Over the last two decades, such processes as payment, audit, advertising, promotion, manufacturing, logistics, and others within the value chain have adopted various types of technologies. Specifically, automation of tasks and reduction of redundancies via technologies are the main goals²¹. Every organization will want to have a seamless business process where technologies will reduce redundancy, costs, and time needed to accomplish tasks.

Based on this view, one can predict the future of the transport business in the city and South African in general. Noteworthy, the entry of online payment, booking, ticketing, and other business processes will continue to dominate the industry in the next few decades²². Technologies will perform most of the tasks and customers will enjoy these services as they are error free, fast, and reliable²³. Furthermore, the introduction of the electric-powered business in the metro will become a necessity for transport companies. Indeed, the regional and national governments might consider forcing companies to adopt this technology or place heavy taxes on those that will continue to use petroleum-powered buses.

Identification of the Gap

Based on the analysis of the current state and the ideal future, there is evidently no significant gap that can affect the company’s business. Indeed, the steps that the Golden Arrow Service is taking to improve its competitiveness in the market are commendable and effective to secure a good future. Consequently, it can be concluded that the current strategy is acceptable, suitable and feasible. The strategic theory applies in this case as it considers the study of ends and means in a business approach. Michael Howard’s strategic theory denotes the need to relate ends to means²⁴. Therefore, strategic analysis approaches implies the use of the available or current resources to gain an objective or goal. Financially, the Golden Arrow Bus Service has the necessary resources to acquire and adopt new technologies that will improve its performance and competitiveness in the future.

Bibliography

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Anokhina, M. E., M. I. Maksimov, and N. S. Seredina, ‘A guide to contemporary strategic analysis’, 2019, pp. 194-194.

Bitencourt, Claudia Cristina, et al, ‘The extended dynamic capabilities model: A meta-analysis,’ European Management Journal, vol.38, no. 1, 2020, pp. 108-120.

Chen, F., Kodono, Y., and Fuzzy N, ‘VRIO and SWOT Analysis of Chery Automobile. Journal of Advanced Computational Intelligence and Intelligent Informatics’, vol. 18, no. 3, 2018, pp. 429-34.

Conboy, Kieran, et al., ‘Using business analytics to enhance dynamic capabilities in operations research: A case analysis and research agenda,’ European Journal of Operational Research, vol. 281, no. 3, 2020, pp. 656-672.

Evwiekpaefe, Abraham E., Stella C. Chiemeke, and Mohammed Z. Haruna, “Individual and organizational acceptance of technology theories and models: Conceptual gap and possible solutions,’ Pacific Journal of Science and Technology, vo. 10, no. 2, 2018, pp. 189-197.

Ferraris, Alberto, Filippo Monge, and Jens Mueller, ‘Ambidextrous IT capabilities and business process performance: an empirical analysis,’ Business Process Management Journal, 2018, pp. 385-389.

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Yudiono, Nur, Wilopo Wilopo, and Mohammad Iqbal, ‘VRIO Analysis to Measure E-Business Readiness in the Automotive Industry in East Java (Study on Otobus Company Kalisari and Otobus Company Menggala),’ Wacana Journal of Social and Humanity Studies no. 22.4 , vol. 4, 2019, pp. 213-221.

Footnotes

1. Kieran, Conboy, et al., ‘Using business analytics to enhance dynamic capabilities in operations research: A case analysis and research agenda,’ European Journal of Operational Research, vol. 281, no. 3, 2020, pp. 672.
2. Claudia Cristina, Bitencourt et al, ‘The extended dynamic capabilities model: A meta-analysis,’ European Management Journal, vol.38, no. 1, 2020, pp 111.
3. Golden Arrow. About us [website]. Web.
4. Golden Arrow. About us [website]. Web.
5. Craig S Fleisher and Babette E. Bensoussan, p. 76.
6. M. E. Anokhina, M. I. Maksimov, and N. S. Seredina, ‘A guide to contemporary strategic analysis’, 2019, p. 194.
7. Gema, Albort-Morant, et al., ‘Assessing the origins, evolution and prospects of the literature on dynamic capabilities: A bibliometric analysis,’ European Research on Management and Business Economics vol. 24, no. 1, 2018, pp. 52.
8. Alberto Ferraris, Filippo Monge, and Jens Mueller, ‘Ambidextrous IT capabilities and business process performance: an empirical analysis,’ Business Process Management Journal, 2018, p. 387
9. Nur, Yudiono, Wilopo Wilopo, and Mohammad Iqbal, ‘VRIO Analysis to Measure E-Business Readiness in the Automotive Industry in East Java (Study on Otobus Company Kalisari and Otobus Company Menggala),’ Wacana Journal of Social and Humanity Studies no. 22.4 , vol. 4, 2019, pp. 214
10. Kodono Chen, F., Y., and Fuzzy N, ‘VRIO and SWOT Analysis of Chery Automobile. Journal of Advanced Computational Intelligence and Intelligent Informatics’, vol. 18, no. 3, 2018, p. 429
11. José G, Vargas-Hernández, ‘Circular-Green Economy: Analysis Based on the Theory of Resources and Capabilities,’ Examining the Intersection of Circular Economy, Forestry, and International Trade, IGI Global, 2021., p. 11.
12. Wahyu Sardjono et al., ‘Competitive Advantage Strategy Model in The Banking Industry through The Implementation of The National Payment Gateway,’ 2020 International Conference on Information Management and Technology (ICIMTech), IEEE, 2020.
13. L. S Ganesh, and Rahul R. Marathe, ‘Dynamic capabilities: A morphological analysis framework and agenda for future research,’ European Business Review, 2019, p. 37.
14. Zuzana Papulova and Andrea Gazova, ‘Role of strategic analysis in strategic decision-making,’ Procedia Economics and Finance vol. 39, 2016, p. 573
15. Vineet Kumar, V., ‘Seven stroke strategic analysis for business improvement,’ Research Journal of Management Sciences, vol. 2319, 2017, p. 1171.
16. Behrooz Jamali, et al., ‘The study on the theories’ gap of technological entrepreneurship opportunities Emergence,’ International Business Research, vol. 11, no. 2, 2018, p. 83.
17. Johnathan Mun, Real options analysis: Tools and techniques for valuing strategic investments and decisions, John Wiley & Sons, 2002.
18. Abraham E Evwiekpaefe, Stella C. Chiemeke, and Mohammed Z. Haruna, “Individual and organizational acceptance of technology theories and models: Conceptual gap and possible solutions,’ Pacific Journal of Science and Technology, vo. 10, no. 2, 2018, p. 191
19. Mercy Ejovwokeoghene Ogbari et al., ‘A comparative analysis of small business strategic orientation: Implications for performance,’ Academy of Strategic Management Journal, vo. 17, no. 1, 2018, pp. 1-15.
20. Ningthoujam Sombala, ‘Training and Development: Theories and Applications,’ South Asian Journal of Management vol. 24, no. 4, 2017, p. 176.
21. Stuart Yeh, ‘Contradictions resolved: An analysis of two theories of the achievement gap,’ Teachers College Record vol. 119, no. 6, 2017, p. 17.
22. Abraham E. Evwiekpaefe, Stella C. Chiemeke, and Mohammed Z. Haruna, “Individual and organizational acceptance of technology theories and models: Conceptual gap and possible solutions,’ Pacific Journal of Science and Technology, vo. 10, no. 2, 2018, pp. 189
23. Ralf T. Kreutzer, ‘Tools for the Strategic Analysis,’ Toolbox for Marketing and Management, 2019, p. 93.
24. Behrooz Jamali, et al., ‘The Study on the Theories’ Gap of Technological Entrepreneurship Opportunities Emergence,’ International Business Research vol. 11, no. 2, 2018, p. 88.