Strategic expansion of Great Lakes Carriers using RFID technology

Technology

Making strategic plans for a business that deals in transportation and logistics is one of the trickiest plans. This is because Placement is a very important component of a marketing mix for any business and for a business that deals in offering that service to other businesses, the planning gets tricky.

Over the years, the commercial transportation system in the areas surrounding the Great lakes has evolved to a great extent. Although expansion of business using a diversification strategy is a good idea to minimize risks, Great Lakes Carriers, whose business is already on decline, will have to consider a lot of minor technicalities when planning for this new proposed expansion. This is especially necessary because the new proposal's only competitive edge is the incorporation of Radio Frequency Identification (RFID) technology in its logistics system.

Marketing Considerations

Great Lakes Carriers provides a B2B service. Marketing for such businesses is a very technical job. In this case, Great Lakes Carriers cannot be dependent on conventional B2C marketing strategies for obvious reasons. In order to make a rational decision, Great Lakes Carriers will have to take some marketing data into consideration. Firstly, the company will need the demand trends and patterns for at least last five to seven years. Separate demand patterns must be analyzed for different times in a year such as for peak seasons and off seasons. Great Lakes Carriers will need this information to estimate the demand prospects for upcoming years. The company must also evaluate the root causes that resulted in increase or decrease in demand over a period of time.

Since Kate's proposal involves charging higher prices on the basis of providing a RFID-based service, the company will have to carry out an extensive research about how many clients will be willing and able to pay higher prices to Great Lakes Carriers for the RFID technology and will switch away from other lest costly alternatives. Since the costs of the new proposal is higher from other alternatives.

Cost Considerations

The new proposal that involves increasing dependence on the Radio Frequency Identification System calls for huge investments. This will increase the company's fixed costs by a substantial amount. The company should consider evaluating the Pay Back Period, Net Present Value and Internal Rate of Return in case the proposal is implemented. It must the compare it with the returns the company is earning without going for the proposal. The new vessels required for the project will increase the transportation time. Great lakes Carriers must consider the increasing international oil prices and its potential implications on the company's costs.

Recommendations

RFID technology has significant applications for transportation and logistics business. It increases the handling and shipping efficiency of cargo. Lost and damage threats can also be minimized to a great extent (Visich, Li & Khumawala, 2007). However, incorporating this system would mean that GLC will now have to charge higher prices. At the same time, costs will also increase. GLC will have to consider, how many of its clients will want to trade off increased cost and time of logistics with benefits of RFID. A second important consideration is that, currently, GLC can charge higher prices for being the only company that provides this facility. In future, if more logistic companies introduce this technology, GLC will lose its comparative advantage and might be forced to resort to competitive pricing. Under such circumstances, it is recommended that GLC must only opt for this proposal if it can ensure increased brand loyalty and economies of scale so that average costs can be reduced and competitive advantage can be maintained. In a case otherwise, the proposal is not recommended considering the declining demand and increasing transport time and costs.