5. Strategies and Implementations
5.1. SWOT Analysis
5.1.1. Strength
5. Strategies and Implementations 5.1. SWOT Analysis
Based on our competition research and comparing with Trans-City planned service, we developed the following SWOT analysis which will allow us to create strategies based on our strength and weakness, as well as market opportunity and threats.
5.1.1. Strength Skilled human resources
Cheaper price compared to private motor vehicles-increasing petrol price Less impact on climate, pollution, noise
Fewer road accident 5.1.2. Weakness High cost of operation Financial pressure
Lack of cooperation between actors Existing transport culture
5.1.3. Opportunity
Rising demand for public transport Increasing population density Increasing concern for environment
Campaigns for improving service and image of public transportation 5.1.4. Threats
Unfavorable fiscal regime
Competition from other actors who love the status-quo Unviable fare fixed by the Government
Poor enforcement of laws and rules
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5.2.1. Customers ResearchWe conducted many surveys to the metropolitan area. Surveys were handed out in classes at schools as well as outside of workplaces. Using the percentages of our customers survey results, we concluded that 80% of the population of each city use public transportation to go to their daily activities. Furthermore, we estimated 65% of those who use public transportation would be interested in using our service.
5.2.2. Target Market
Trans-City’s target market includes two main categories.
5.2.2.1. Customers
Our main target includes professional workers and students in the metropolitan area. Within this market we are looking to target the niche group of enthusiast commuters. Breaking it down even further, we are aiming to attract a percentage of these enthusiast commuters who have trouble finding reliable transportation into the city.
5.2.2.2. Sponsors
Since Trans-City plans to generate additional revenue by selling bus advertising (mobile advertising). We are targeting large companies, manufacturers, and local retailers to pay for this service.
5.2.3. Positioning Statement
Trans-City will position itself as the ideal service for the commuters who are looking for a comfortable way to ride in the metropolitan area. Trans-City believes all people must have access to safe, reliable, affordable, and accessible transportation to connect them where they live with where they need to go
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Figure 5: Positioning Maps 5.2.4. Product/Service Strategy
In the first year of operation, Trans-City will run six buses from Monday to Sunday, and service three zones in the metropolitan area: Port-au-Prince, Petion-Ville, and Delmas. By the third year, Trans-City will increase its fleet of buses for servicing other parts in the metropolitan Area.
Our schedule of pick-up/drop-off times will better meet the need of our customers. Our biggest competitors, the small buses, currently starting to operate from 5:30 am to 10:00 pm;
but don’t have a specific time to pick-up passengers. After conducting our surveys, we found that approximately 39% of our target market would prefer the operation time between 5-6:00 am to 11-12: pm; therefore, Trans-City will operate from 5:30 am to 12:00 pm, and the pick-up time will be every 15 minutes. This is one way Trans-City differentiates itself from competitors.
Trans-City will have some basic features that differentiate itself from competitors. Trans-City will also be equipped with more entertainment features, (such as TVs and music systems) than
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5.2.5. Pricing Strategy
Single ride to the city: 15 HTG (0.32 $ US)
Due to our high costs, variable and fixed, we are forced to do a cost + markup pricing strategy.
Our target is extremely price-sensitive, but our advantage comes in the fact that when our costs increase (i.e. gas prices growing) the cost of our competitors (small buses) increase even more because of economy of scale, and they always solicit the help from the government to sponsor the gas price. So our pricing will be focused on keeping a median between our costs and the price of riding set-up by the government.
Partial Bus Advertisement: $ 3000 per year Full Bus Advertisement: $ 5000 per year
When it comes to our sponsors, we plan on pricing our advertisements at a point that gives comparable value to the cost of magazine ads, something that almost all of these companies are familiar with. To do this, we compare our price with the potential number of people exposed to the ad (i.e. people using public transportation to go to their daily activities).
5.2.6. Sales Strategy
Trans-City distribution channel will focus on our customers’ safety and security, as well as their comfort. Our market survey worked as a good source of information to know more about the payment method which our potential clients might be interested on using. The options provided were: cash payment, online payment with debit card, or using easy card.70% of our target customers will prefer cash payment, and 30% would choose online payment.
Trans-City distribution channels will be:
Our buses: customers will be able to pay the driver directly, before boarding Trans-City. However, in order to guaranty the safety of the transaction, the cash payment will be deposited in a secure box on the bus.
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Our store partners: customers will be able to credit their easy-card at our store partners.
Once the transaction is completed, customers will receive a confirmation of the deposit amount which will work as a proof of service.
5.2.7. Revenue Model
Table 5: Revenue Model Petion-Ville
Year 1 Year 2 Year 3
Number of Customers
1,215,500 1,276,272 1,340,089
Fee per Customers $ US 0.32 $ US 0.32 $ US 0.32
Total $US 388,960 $US 408,407.04 $US 428,828.48
Delmas
Year 1 Year 2 Year 3
Number of Customers
1,233,752 1,295,440 1,360,212
Fee per Customers $ US 0.32 $ US 0.32 $ US 0.32
Total $US 394,800.64 $US 414,540.8 $US 435,267.84
Port-au-Prince
Year 1 Year 2 Year 3
Number of Customers
1,252,836 1,315,478 1,381,252
Fee per Customers $ US 0.32 $ US 0.32 $ US 0.32
Total $ US 400,907.52 $US 420,952.96 $US 442,000.64
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Sponsorship Advertising
Year 1 Year 2 Year 3
Number of Customers
6 8 10
Fee per Customers $ 5,000 $ 5,000 $ 5,000
Total $ 30,000 $ 40,000 $ 50,000
Net Revenue
Year 1 Year 2 Year 3
Total $ 1,214,668.16 $ 1,283,900.8 $ 1,356,096.96
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6. Management and Organization
Trans-City will lead by its founder, who will act as General Manager. The company will start operation with a small 20-staff team which can expand depending on sales and market acceptance. Given the small scope of our initial operation, some roles will be outsourced in order to maximize efficiency.
6.1. Organizational Chart
Figure 6: Organizational Chart
6.2. Management Team
General Manager
Trans-City founder will also serve as General Manager. He will responsible for the overall operation, growth and ultimate success of the company. He will establish the working plans and priorities aimed to increase revenue growth, and propose new investment to shareholders.
He will hire, train and evaluate all the staff.
General
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He/ She will be responsible for the overall service of our website, making ensuring its proper and continuous working. He/ She will also manage our presence in social community (Facebook, Twitter, YouTube), making sure we create a proper positioning in customers mindset.
Marketing and Service Coordinator
The Marketing and Service Coordinator will be responsible for establishing and directing marketing and sales activities for the company, including social media, for which He/ She will have to work closely with the webmaster. He/ She will also be in charge of creating strategic alliances, potential key clients who could advertise in our media. Finally, He/ She will manage customer service, channeling potential customer’s complaint.
Operations Coordinator
He/ She will play a key role of supervising our operations, ensuring an excellent service to our customers. He/ She will be responsible for planning and controlling our daily operations, including buses and staff; permanently tracking position to ensure we can provide on-time service. He/ She will also be responsible for keeping our units under the best condition, planning regular maintenance.
Accountant
He/ She will answer directly to the General Manager. All cash collected will be reported to Him/ Her who will prepare daily consolidated sales balance. He/ She will also make sure that all cash are deposited at the bank. Finally, He/ She will be responsible to prepare the financial statement of the company and also make sure all financial information is properly presented to the tax agency.
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6.3. Payroll, Headcount and Projections
Table 6: Staff Plan Staff Plan
Year 1 Year 2 Year 3
General Manager 700 1,400 1,442
Webmaster 700 721 743
Operation Coordinator 1,000 1,030 1,061
MKT Coordinator 1,000 1,030 1,061
Accountant 900 927 955
Drivers(12) 6,000 6,180 6,365
sales staff(3) 1,200 1,236 1,273
Total Headcount 20 20 20
Total Payroll 11,500 12,524 12,900
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Some important guidelines for our financial projection are:
Long-term Liabilities: We will engage in a Bank Loan to buy our buses. This loan will carry a 6% annual interest rate.
Initial Investment: 4 out of 5 investors will submit US $ 117,500.00 which will use as initial operations capital. The fifth investor, who will serve as General Manager, will submit only US $ 25,000.00.
Depreciation: Given the intensive use our buses will go through, we will use a straight-line depreciation method on a 5 years scenario.
7.1. Long-Term Bank Loan
Amount of the Loan: 365,000.00 Maturity : 10 years Annual Rate : 6%
Annual Payment : 49,591.80
Table 7: Describe Long Term Bank Payment Years Payment Interest Principal Book Value
0
365000.00 1 49591.80 21900.00 27691.80 337308.20 2 49591.80 20238.49 29353.31 307954.88 3 49591.80 18477.29 31114.51 276840.37 4 49591.80 16610.42 32981.38 243858.99 5 49591.80 14631.54 34960.27 208898.72 6 49591.80 12533.92 37057.88 171840.84 7 49591.80 10310.45 39281.35 132559.49 8 49591.80 7953.57 41638.24 90921.25
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7.2. Break-Even Analysis
Figure 7: Break-Even Analysis
We estimate Trans-City needs to sell 1,930,213 tickets to achieve Break-Even point. Based on our sales forecast, we will achieve this point during our 7th month of operation.
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7.3.1. Projected Profit and LossYear 1 Year 2 Year 3
Sales
Fares 1,184,668.16 1,243,900.80 1,306,096.96
Advertising 30,000 40,000 50,000
Total Sales 1,214,668.16 1,283,900.80 1,356,096.96 Direct Costs of Sales
Fuel 315,813.72 331,604.41 348,184.63
Total Direct Costs of Sales 315,813.72 331,604.41 348,184.63 Gross Margin 898,854.44 952,296.39 1,007,912.33
Gross Margin (%) 74% 74.20% 74.32%
Operating Expenses
Payroll 138,000 150,288 154,800
Sales, Mkt and Website 60,000 63,000 66,000
Rent office 35,000 35,000 35,000
Depreciation Equipment 80,000 80,000 80,000
Utilities 15,600 15,600 15,600
Insurance 42,000 42,000 42,000
Bus Maintenance 60,000 60,000 60,000
Office Supplies 5,000 5,000 5,000
Personal Training 12,000 12,000 12,000
Bus Registration 1,000 1,000 1,000
Miscellaneous(Start-up
Fees) 130,000 5,000 5,000
Total Operating Expenses 453,600 468,888 476,400
EBITDA 320,254.44 483,408.36 531,512.33
Interest Expenses 21,900 20,238.49 18,477.29
Gross Profit 342,154.44 463,169.87 513,035.04
Tax (30%) 102,646.33 138,950.96 153,910.51
Net Profit 239,508.11 324,218.91 359,124.53
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7.3.2. Projected Balance Sheet
Year 1 Year 2 Year 3
Assets
Current Assets
Cash 533,816.31 950,681.9 1,400,691.9
Prepaid Insurance(5 Years) 168,000 126,000 84,000
Total Current Assets 701,816.31 1,076,681.9 1,484691.9
Long Term Assets 450,000 450,000 450,000
accumulated Depreciation 80,000 160,000 240,000
Total Long Term Assets 370,000 290,000 210,000
Total Assets 1,071,816.31 1,366,681.9 1,694,691.9 Liabilities
Current Liabilities
Long Term Liabilities 337,308.20 307,954.88 276,840.37 Total Liabilities 337,308.20 307,954.88 276,840.37
Paid-in Capital 495,000 495,000 495,000
Retained Earnings 239,508.11 563,727 922,851.53
total Capital 734,508.11 1,058,727 1,417,851.53 Total Liabilities and Capital 1,071,816.31 1,366,681.9 1,694,691.9
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7.3.3. Projected Cash Flow
Year 1 year 2 Year 3 Operating Activities
Net Profit 239,508.11 324,218.91 359,124.53
Add: Depreciation 80,000 80,000 80,000
Decrease Prepaid Insurance 42,000 42,000 42,000
Cash provided by Operating Activities 361,508.11 446,218.91 481,124.53 Financing Activities
Paid Long Term Debt (27,691.80) (29,353.31) (31,114.51)
Cash provided by Financing Activities (27,691.80) (29,353.31) (31,114.51)
Increase Cash Flow 333,816.31 416,865.60 450,010
Beginning Cash Flow 200,000 533,816.31 950,681.91
Ending Cash Flow 533,816.31 950,681.91 1,400,691.93
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8. Appendixes
Graph shows Trans-City forecasting sales
1,214,668.16 1,283,900.80 1,356,096.96
239,508.11 324,218.91 359,124.53
Y E A R 1 Y E A R 2 Y E A R 3
TRANS-CITY
Sales Net Profit
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Evolution of Gas Price
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Satellite view of Port-au-Prince, Petion-Ville, and Delmas
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Haiti’s key strategic advantages
Broad International Support
Over US$10 billion of foreign assistance has been pledged to help rebuild the country
Inter-American Development Bank (IDB) offered over US$2.2 billion alone for recovery and development projects
Over 3000 non-government organizations (NGOs) are operating in Haiti providing much needed support services
United States HOPE and HELP Acts will help rebuild Haiti’s diminished garment industry
Strategic Location
Located between the world’s largest economy (USA) and emerging economies in South America (Brazil and Colombia), Haiti is well-positioned to benefit from economic growth throughout the region
Situated within the Caribbean provides the country with prime access to maritime trade
Increasing trade integration
Introduction of Special Economic Zones provide exemptions on tariffs and taxes
Close proximity to large economies ensures lower costs for transporting goods to international markets
WTO member since 1996
Untapped Resource Potential
Copious, untapped mineral deposits of bauxite, copper, gold and calcium carbonate
Young, low-cost labor – median age is 21 years
Advantageous Labor Conditions
It has one of the world’s lowest-cost workforce
Abundance of hard-working, trainable workers
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Natural sea ports at Port-au-Prince, Cap-Haitien, Gonaives, and Jacmel
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References
Strategic citywide spatial planning: A situational analysis of metropolitan Port-au-prince,Haiti file:///C:/Users/Saint-Preux/Downloads/strategic-citywide-spatial-planning-un-habitat,-2009.pdf
Institut Haitien de Statistique et d’Informatique : http://www.ihsi.ht/
Ministere de l’Education Nationale et de la Formation Professionnelle : http://menfp.gouv.ht/
NationMaster : http://www.nationmaster.com/
Le Nouvelliste : www.nouvelliste.com
Wikipedia : www.wikipedia.org
Larry M. WALTHER & Christopher J.SKOUSEN: THE ACCOUNTING CYCLE.
Ventus Publishing ApS, 2009, USA, 98 p.
Marco MONGIELLO: INTERNATIONAL FINANCIAL REPORTING. Ventus Publishing ApS,2009, USA, 53 p .