Thursday, April 4, 2013

1)         What were the critical incidents in Greyhound’s growth and

1)         What were the critical incidents in Greyhounds growth and development everywhere time? Greyhound was growing steadily and straight since its foundation in 1914. Their original patronage was deal theodolite. By 1960 they covered tight all of North America with its jitneybar transportation and were gaining so ofttimes profit that they were looking for new opportunities to invest. The decision was make to metamorphose. This resulted in a conglomerate of three different study short letteres in the end of 1963: bus transportation, bus manufacturing, and financial attend tos. Gerry Trautman was found chief operational officer in 1966. He kept on diversifying and expanding Greyhound.

just with this expansion and diversification dodging Greyhound was not forever right. betwixt 1970 and the mid-90s there were several(prenominal) critical incidents which had important influences on Greyhounds growth and development. Trautman try to diversify into many associate and un cerebrate seames to gain from synergies and make Greyhound much(prenominal) recession-proof. After getting many transport related traffices, he purchased outfit & Co. in 1970 (his biggest acquisition), sold of several divisions, and what remained was the profit up to(p) telephone dial division and Armors pabulum division. Greyhound moved into a business where they had no experience. In the 70s several acquisitions proved to be unprofitable, but in 1978 Trautman bought the Verex Corporation a big hole-and-corner(a) insurer. Now Greyhound structure had changed; they had now five study business: run/ nourishment services and solid food and consumer products were added. save the commencement sobering problems became apparent in 1980, when Armors food division dropped from a profit of $22 million in the last year to a loss of $1.7 billion. With making Teets CEO of the food service classify, Armor soon ran to a greater extent streamlined. In 1981 Teets became the new CEO of Greyhound. Greyhounds food division remained a weak competitor, so Teets sold it in 1983. This had been another major incident, as swell as a new deregulated bus transportation market, which caused hard disputation. Because of Inertia and not being efficient (because of being kinda Monopolist in this business), Greyhound paid more struggle (30-50% more than their competitors). In 1987 Greyhound sold its bus lines and nonetheless tried to sell most of its financial businesses. From now on Teets concentrated more and more on the consumer products division; he bought Purex (1985) and some others. The next important incident was that the sold Greyhound peck Lines partnership declared bankruptcy. In order to distance from that Teets changed the phoners name to Greyhound telephone dial (GD), which in any case marked the friendships new center on on the consumer products division. But later reporting a loss of the dials division, GDs stock price plunged. Nevertheless Teets kept on acquiring, and bought Breck. To stress the future focus redden more they changed the companys name in 1991 to Dial Corp. Then Dial sold its financial services division completely. After this restructuring Dial was better off and things developed well for Dial. But inside a short period in the mid-90s serious problems affected Dial throughout most of its businesses. The transportation manufacturing performed badly, so Teets disposed of it. But Purex was doing poorly, too, and Teets cut the advertising budget to 60%, which made Dial loose market share (more than 2%). Teets phased out the Purex bleach line and some later the former(prenominal) successful Lunch Buckets. At the selfsame(prenominal) time Disney intractable to launch its own cruise line and didnt sine qua non to prolong the read with Dials cruise lines for Disney case cruises. As a result Dial withdrew from the cruise-ship business. Even the food services faced problems, because the biggest part of the sales was made by serving airlines and airport restaurants. But airports allowed fast-food chains to move in and the airlines had to cut costs and began to offer snacks or nothing instead of full meals. This hurt Dials catering business badly. The last incidence was the break up of Dial Corp. in 1996 into two individual businesses. Dial Corp. went on operating in consumer products, while the new one, Viad Corp., would distribute all the remaining businesses (some financial, order and catering businesses). Teets retired in 1997. And Dials new dodge was to focus on consumer products and to strengthen the companys portfolio.

2)         What was the be corporate strategy behind development of Greyhounds portfolio of investments up until the time that Teets was appointed CEO? Was Trautman correct to pursue this strategy? What were its advantages and pitfalls? The main strategy was to diversify Greyhounds businesses. In the ancient Greyhound accelerated enormous profits, so the company privationed to diversify its business into other areas, and expanded into the bus manufacturing business and others. Trautmans goals were to make Greyhound recession-proof and to gain from anti-cyclical synergies. But furthermore he tried not only to make the company recession-proof, but even every individual division. So he achieved diversification inwardly diversification. In 1978, Greyhound´s holding company consisted of five operating divisions: transportation, bus manufacturing, food and consumer products, financial, and services/ food service. Trautmann felt that he was shaping a diversified company that would bemuse a powerful base in many lines of business. He was unstrained to take the risk of acquiring some companies that would be failures as long as the overall health of the company was strengthened.

I think its important to diversify, but maybe its better to diversify into related businesses, where you abide profit from you managerial experience and know-how. Diversification has always advantages. In this case he gained from synergies with the bus manufacturing division, and increased the overall revenues. But the strategy had also disadvantages, which were fatal in the Greyhound case. I think he deep in thought(p) the overview and diversified in several unrelated business, where he could not gain from synergies and managerial experience and knowledge lacked. He should have stick to the transportation business, the bus manufacturing, and, maybe, financial services, which have to do with both businesses (e.g. leasing, financing, redress of buses etc.). In these businesses he could have gained much profit and he could focus and concentrate on it.

3)         What environmental factors affected Greyhounds business? Could anything have been do to keep in line for environmental factors? In what ways did they distort the picture of Greyhounds performance? Some environmental factors influenced Greyhounds performance and the strong business. The first factors mentioned in the text were the recession and energy craunch in 1979-1980 and high interest rates in the azoic 1980s. These factors brought high profits to companys bus business and financial operating divisions. Another factor was the change in consumer taste that changed the demand of several products Greyhound offered. In 1982, the bus transportation market was deregulated, and Greyhound got serious problems with competitors, because Greyhound missed to monitor the environment. While being some kind of monopolist in this market for several decades, the company did not care about efficiency, customer response, caliber and innovation. So as competitors entered the market, they paid between 30-50% higher wages than them. They lost market share and finally sold the bus line in 1987. The oil bust in the archean 1980s brought a recession in the real state market. Verex (real estate firm Greyhound growd) suffered huge losses generated by insurance claims. A few years later, airlines cut their cost; with this they did not serve full meals anymore, but instead just snacks or nothing. what is more the airports allowed fast food chains to move in to diversify the airports supply to the customers. This incidence hurt Greyhounds food service business.

Most times you are not able to control the environment, because you shadowt influence it directly. But you washbowl be informed of changes, and you should always monitor it carefully. Sometimes you arsehole foresee some incidents or developments. The next thing is that you should always move on, develop further, and dont stand appease even if times are good. Would Greyhound have been more aware of possible changes, they would have always tried to remain efficient.

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If they had done so, it would have been far more difficult to enter the bus transportation market and gain share.

4)         What did Teets do to change Greyhounds corporate strategy and financial position in the 1980s? Analyze the rationale behind this strategy. Was it working? Teets tried to reconstitute the company. He sold the weak performing Armor feed Company and the bus line, because Greyhound was not able to compete with a new market environment. Even in the financial service group he sold several companies and tried to downsize the conglomerates businesses. Then he focused more and more on the consumer products group and acquired Purex Industries in 1985. The restaurant food services division was contributing the most to total revenues of Greyhound, so he wanted to strengthen it by purchasing Americas second largest airline catering and retailing business, Dobbs International Services. Furthermore he tried to strengthen the financial services group with purchasing Republic Money Orders, Inc., and returned to the cruise ship business with buying Premier Cruise Lines and making a contract with Disney for proposition cruises.

The rationale was to strengthen the main businesses by acquiring better fitting companies and divest bad performing ones. He wanted to focus more instead of diversify as much as before. Then he wanted to manage the existing businesses more efficient, but stay in the same niches.

At first this strategy seemed to work, but as competition became harder in and the economical situation changed in the 90s, the strategy proved to be not working at all. This caused much trouble and ended up in a scatter of the company in 1996 and the retirement of Teets in 1997.

5)         How has Teets strategy worked in the 1990s? In the beginning of the 90s Teets strategy seemed to work. Because of many spun offs of the loss-making businesses and a focus on a more narrow business line, the stock price rose of approximately 150% from 1990 to 1992. Additionally the consumer group was performing very well and strongly. And Teets did not only downsize the add of businesses, but also the amount of managers of one fourth. Even analysts had some hope that this would indicate a turnaround. But they were wrong.

The economic situation changed rapidly and affected or so every of Greyhounds businesses. The bus manufacturing division performed well in the mid-90s and Teets disposed of it. The Purex bleach line also performed badly, so it has been phased out. As a consequence of the weak-performing consumer products group, Teets cut advertising costs. But this caused a lost of shares of more than 2%, because with weak trade you cant compete with strong competitors like P&G. More problems faced Greyhound when Disney did not want to prolong theme cruise contract with Greyhounds cruise-ship line; Greyhound withdrew from the cruise-ship market. As mentioned preceding(prenominal) the airlines cut costs and had a bad impact on Greyhounds food service division. It seemed to be no more than a hodgepodge of different businesses. To create new protect of existing businesses, Greyhound should be blood into two individual companies in 1996. So you can say that Teets failed.

6)         Do you think that Dial should be split into two companies or that its assets should be divested? I think it would be a good idea to split it into individual companies and additionally change the management. The strategy has been proven to be not working at all since Trautman introduced it in the 70s. Greyhound always suffered on any problems. If Dial is split, they could introduce a new management for both companies and every firm could focus on a business. It would probably be much easier to restructure a company and develop a new strategy, if you can concentrate on one business. Later on they could acquire again new companies, but they should be more related to the core business and competencies.

Dial was split in 1996 and Teets retired in 1997. Teets found his own company and operates a real estates business. And if you can see on their homepage, Dial is now performing better.

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