Case Study: Smith Taxi Cab (STC) Company

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First Step John Should Consider Taking

John’s company, Smith Taxi Cab (STC), has enjoyed healthy connections with customers for more than four decades with a good reputation. Winning clients’ trust and confidence for more than 35 years is one of the most significant achievements for a company that exists in a very competitive environment. Therefore, for a business that heavily relies on quality client-to-business relationships like John’s STC, checking on the customer-satisfaction index when the company’s financial performance starts to deteriorate should be the first step.

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STC should conduct a survey involving their clients and ask them to anonymously give their rating of the company and share their comments and compliments. According to Osman et al. (2019), client surveys can help an organization to gauge its perceived service quality and evaluate its satisfaction level. Moreover, if the study is professionally conducted using various IT techniques available, STC would identify areas that they need to improve to remain competitive. John should try to implement his clients’ recommendations and improve areas of weaknesses that they have highlighted.

Moreover, STC should broaden its scope of the survey to cover employees to gauge their level of job satisfaction, confidence in their employers as well as their beliefs in the organization’s strategic goals. According to Podnar and Balmer (2013), employees play a pivotal role in promoting organizational effectiveness and efficiency and, therefore, should be part of an organizations’ strategic plan. In the transport and logistics sector, just like in the hospitality industry, employees significantly contribute to the building of the company’s reputation. In the taxi business, most customers rate companies based on their drivers’ behavior and conduct. Therefore, there is a possibility that John’s dwindling finances and low business performance could have started from the manner of their employees’ poor handling of clients.

Second, STC should consider reducing its expenses and partnering with other firms with similar ambitions. In times of crisis like the one John’s STC is in, organizations should first make a quick move to cut on their expenditure as much as possible (Cleeren et al., 2017). John has placed every essential service provider to his business on the payroll, which makes it difficult to estimate value for money. For instance, STC has employed four mechanics who are responsible for checking the “health” of the company’s fleet of cabs. Alternatively, STC could have outsourced mechanics and engineers from reputable companies and paid for services rendered. Although hiring professionals helps in maintaining the organization’s culture, it is expensive in the long run since most mechanical services are not offered regularly. By outsourcing motor vehicle maintenance services, John will not only create space in his stores for other income-generating activities but also reduce his salary expenses, as he would not incur employee-related costs such as salaries, retirement benefits, and insurance cover as well as retirement benefits.

Lastly, STC should take advantage of the available cheap internet marketing platforms to promote its services and improve its reputation. Although STC has remained competitive in the industry for more than 40 years, the failure to embrace technology is its greatest mistake. For a company that operates in a highly competitive environment, automation of services and having robust social media platforms is not an option. STC should embark on aggressive marketing and use their long market existence and quality service delivery as their strong selling points. John should also consider service automation as a method of reducing expenses. Automation of the company’s key departments would also help STC to build its brand and improve its competitiveness in a market that is dominated by Uber and Lyft drivers.

Major Stakeholders Related to STC

Stakeholders in a company are people or entities that either impact or are impacted by the organization’s decisions (McDonald, 2020). Based on this definition, the major stakeholders in John’s STC are clients. STC has enjoyed quality client relations for decades, which makes its customers major stakeholders in the firm. Therefore, when making substantial changes in the organization, it is imperative that John methodically informs all his customers. For instance, if John intends to adopt new technologies and automate their systems such as cab booking systems, then his company, STC, could use three essential steps to inform clients.

First, STC could share leaflets with clients during their trip with a list of all significant changes, broken down into simple language. According to Patti et al. (2017), clients tend to react negatively when they are bombarded with quick changes in an organization. Therefore, while communicating to clients on the intended changes, STC should strategically introduce clients to the impending changes and make it clear that the changes are aimed at quality service delivery and clients’ satisfaction. Moreover, as major players in the firm, clients must be informed on when the changes are going to take effect and the benefits they are likely to enjoy from the planned changes.

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Second, New York City’s second-best-operated taxi company should run notices on changes for about three months before the implementation process begins. Being one of the companies that are most preferred by customers in New York City, the organization needs to give their clients time to adjust to the changes and to prepare for the new environment. Furthermore, giving the customers time to adapt to the new changes also creates room for the organization to react to the clients’ feedback and recommendations.

Lastly, after the implementation of changes, the organization should conduct a feedback survey to find out how the clients are reacting to the changes and areas they are not comfortable with. Moreover, the organization should also have an internal monitoring system that will evaluate how the firm adjusts to the new changes and whether the objectives of the firm will have been met by the end of the implementation process.

The second group of stakeholders related to STC is the employees, particularly drivers who are the flagbearers of the organization’s brand. For companies in the hospitality and transport sector, employees’ behavior and attitude directly impact the reputation of the firm. Therefore, STC must involve employees during the decision-making process and make them own the changes the organization intends to make. In order of priority, employees should be on top of the list of stakeholders to be informed on the changes because they can help clients to understand why the organization needs to make the adjustments.

Finally, STC should involve the government both at the state and federal levels on the matter of changes. Since the organization operates within New York City rules and regulations, it must involve the governing body and the relevant government organs to ensure that they are fully compliant. For instance, the New York City regulations require STC to purchase a medallion to be placed on the hood of each car operated by a driver in the company’s payroll. If the company decides to outsource drivers and vehicles like in the case of Uber, then they have to receive necessary licenses from relevant government institutions like Taxi and Limousine Commission to remain compliant.

Impact of New York City Autonomous Zones on STC’s Growth

The decision of the New York City State to introduce autonomous vehicle (AV) zones is one of the most famous developments as it will help to improve mobility in the city, reduce motor vehicle crashes within the city roads, reduce environmental degradation by reducing chlorofluorocarbon emissions and improve city commuters’ safety. However, for taxi companies, STC in particular, this move influences their production and growth.

First, for a company that has existed for more than 40 years, and has a strong client base, this step is likely to improve its products as the company will isolate itself as one of the companies offering taxi services for clients who are not technologically advanced or are reluctant to embrace the “new norm.” Moreover, STC would also identify itself as an alternative means of transport to the newly introduced autonomous vehicles. If STC can improve its brand and build its reputation on this, then the production of the company would increase significantly.

Second, STC would not have to incur an additional cost that comes with automation if they maintain their business model since the cost of operating autonomous vehicles is relatively high, particularly in cases of lawsuits. According to Narayanan et al. (2020), the law on corporate liability on autonomous vehicles goes beyond just manufacture’s negligence to cover other areas, which can result in a significant amount of fines. Moreover, since these costs are usually passed to the users of autonomous vehicles, STC will gain a completive edge by offering clients lower prices compared to their AVs.

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However, the introduction of AV zones in New York City will limit STC’s growth significantly. As the level of technology penetration continues to grow, many people, especially taxi users are likely to embrace technology and lean towards autonomous taxis because of improved security, reduced time of travel, and reduced cases of accidents. Consequently, the market environment for conventional cabs like STC is likely to shrink, making it difficult for the company to grow.

Impact of Initiated Tariffs on International Goods and Services on STC

The passing of the initiated tariffs on international goods and services was intended to create trade balance, promote local production, create job opportunities, and reduce over-reliance on different manufactured products. However, this measure means that netizens will have to pay more for the products locally made than they would otherwise receive at a reduced price abroad. For STC, the tariffs would have a significant negative impact on the existence and growth of the company.

The cost of production for STC is likely to increase, consequently reducing their cost of production. Since the tariffs raise the value of motor vehicle importation, the demand for locally produced vehicles will increase compared to supply, which will then lead to the improved process. An increase in the cost of moto vehicles results in a corresponding rise in the price of production for companies that locally purchase their products like STC. Moreover, the cost of living is likely to increase, which will, in turn, reduce consumer purchasing power. Therefore, the initiation of the tariffs will have a significant financial implication on STC.

However, in the long run, the imposition of tariffs will present STC with an excellent platform for growth. The Reduction of imports in the United States ignites industrialization and creates millions of job opportunities. With many people having a relatively good income, the quality of life and the rate of consumer expenditure is likely to improve. These changes are expected to open up the STC market, as many people in the United States, who are under salaries and wages would be willing to take taxis.

References

Cleeren, K., Dekimpe, M. G., & van Heerde, H. J. (2017). Marketing research on product-harm crises: A review, managerial implications, and an agenda for future research. Journal of the Academy of Marketing Science, 45(5), 593-615.

McDonald, K. (2020). The difference between customers, users, and stakeholders. Web.

Narayanan, S., Chaniotakis, E., & Antoniou, C. (2020). Shared autonomous vehicle services: A comprehensive review. Transportation Research Part C: Emerging Technologies, 111, 255-293.

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Osman, N. S., Khamil, I. A. M., & Sapawe, N. (2019). Customer satisfaction survey on sunflower shell waste animal feed pellet. Materials Today: Proceedings, 19, 1803-1809.

Patti, C. H., Hartley, S. W., van Dessel, M. M., & Baack, D. W. (2017). Improving integrated marketing communications practices: A comparison of objectives and results. Journal of Marketing Communications, 23(4), 351-370.

Podnar, K., & Balmer, J. (Eds.). (2013). Contemplating corporate marketing, identity and communication. Routledge.

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