The problem of the firm
The brief shows the problem of the firm (i. e. flat profits), cause (i. e. changing environment) and proposed action (i. e. catchments expansion). This research will focus on the proposed action. Further, the brief specified four concerns which implicate supply and demand analysis. In effect, the study will focus on researching the nature and level of passenger demand for the proposed new routes. The University of Hertfordshire has one of the biggest university town populations in the country that attracts cultural diversity.
In effect, the proposed action is exposed to varying preferences and opinions. The demand for new routes will be established by studying passenger behaviour of the staff and students of the University. Investments for new buses and staff for new routes in Cambridge and other areas are risky because Unibus has no experience operating in these routes. Also, demand is unknown. As a result, potential demand will also be studied using staff and students of the University. Does regulation and competition imposed support or constraint in new route operations?
Support can mean routes that have safety cameras that attract passengers due to increased safety. Constraint can mean competitors that enjoy subsidies from local government. Other demand inputs for the new routes are population trend, car ownership and service requests. These are data useful for describing the “expanded” operating environment which the firm has lack of knowledge and experience. Supply of resources (i. e. buses, staff) is almost supported by demand side. However, the research is not directly related to the problem (i. e.
flat profits) because they are qualitative. Route metrics are inevitable tools to address this issue. They will offer financial basis that will polish the decision-making regarding the supply side. Specifically, the research has the following objectives: 1. For the old and new route passengers, to determine how the proposed new routes add value to their current needs. 2. To execute PESTEL, SWOT and Five Forces analyses to identify the operational availability of new routes and how regulation and competition address the current needs of target passengers.
3. To develop route metrics and use them to provide numerical appraisal for the new routes (e. g. break-even analysis) However, there are some limitations which the research does not intend to tackle: 1. The passenger sample will only include staff and students of University of Hertfordshire. 2. Environmental analysis of competitors is only a derived-information gathered from passengers, authorities and secondary data which offers no direct access to their strategies and financial position.
3. Authorities are located only to firm’s current and proposed routes in which the former has jurisdiction. It is assumed that they have direct influence in the future of route regulation in their towns/ counties than the national government. 4. Secondary information is highly drawn from past data while primary information are mixture of past, present and future data. Meeting of them can cause distortions of assessments and inaccuracies.