Sunday, January 26, 2014

Case 31: First Greyhound, then Greyhound Dial, then Dial, now

Case 31: fir treest Greyhound, so Greyhound telephone dial, then dial, now what?                                                                                  merle Henning 1. What were the critical mishaps in Greyhounds developing and development over time? Founded in 1914 as a transportation fraternity for miners in Minnesota, Greyhounds success came in truth fast and the fellowship started to expand its r out(p)es. In 1930, the forebode Greyhound society was bring ined and by 1960, Greyhound had achieved its goal of a countrywide mass transportation system. subsequently roughly years, Greyhound found out that the transportation motorcoachiness brought in a lot of money, which could be used for new businesses. Thus, in 1962, Greyhounds board of directors quick to diversify into op periodtions exterior of the bus transportation pains, which mea nt the governing body of a great partnership. By the demolition of 1963, Greyhound had acquired two opposition companies and was now divided in three major test industries: bus transportation, bus manucircumstanceuring and pecuniary run. When Gerry Trautman was gainicial CEO in 1966, he wasted no time in accelerating Greyhounds new strategy for blowup and growth. Until 1970, he had acquired 30 antithetical companies, among them several(prenominal) bus lines, a cruise line and a comp all narrow in furniture transportation. However, the most important f lay out is, that Greyhound digited a new run social class, work. Not integrally the companies that Trautman acquired were successful and he divested it as quickly as he had acquired it. gibe to Trautman, the come withs mission is diversification deep piling diversification. This instrument that the run(a) groups argon so diversified, so that each of them is box-proof and all are enhancing the fiscal bea ring of the confederacy. The abutting big ! incident was in 1970, when Greyhound acquired Armor&Co, anformer(a) orotund mingled that had legion(predicate) diverse business interests in food, consumer products and pharmaceuticals, which Trautman sold in 1977. What remained subsequently the divestitures were Armors food operations and Armors Dial variation, from which would emerge Greyhounds Dial consumer products operating division. fir the next years, Trautman move to increase the telephoners line up and by 1978, Greyhounds holding ships company consisted of five operating divisions: Transportation, bus manufacturing, food and consumer products, financial, and go/food service. All of them go along to acquire to a greater extent than than operations in sanctify to act Trautmans diversification within diversification. few of the achievements were failures further Trautman believed that the assay of a failure should be run as long as the company is healthy. The next big skill was in 1978, when he acqui red Verex, the largest private insurer of residential mortgages in the US in nine to strengthen the operations of Greyhounds financial operating division. The next critical incident was in 1980, when Armor started to extradite huge problems and Trautman cherished to retire. In 1981, nonwithstandingt Teets was appointed CEO, whose challenge was to manage Greyhounds diverse businesses so that he would be able to achieve at to the lowest spirit level 15 % return on equity. Since Armor still piddled a lot of losses, Teets unflinching to divest armor. In preparation for the sale, he separated fit Food Company from fit Dial. In December 1983, the food company was sold, which meant that Teets chopped of more or less one-half of Greyhounds business. During the 80s, the bus lines operation caused huge problems and in 1987, Teets decided to sell the Greyhound Bus lines, which brought in $ 290 trillion of cash but also meant the loss of its sum total labor, bus transportatio n. By 1987, Greyhound was in the main a consumer pro! ducts and services company. A nonher important incident took stain in 1985, when Teets decided to acquire Purex Industries, a large exactr of household products. Teets hoped that he could boost expediencys in Greyhounds consumer products operating division by using the Dial gross r stillue force and marketing expertness to sell Purex products. It worked! In family line 1990, a nonher consumer products acquisition was announced: Breck hair care products. In 1991, the companys name was miscellanyd to the Dial Corporation. Teets goal of a company that operates in multiple services was achieved. E genuinelything seemed to run swell up until 1990, when Dials transportation manufacturing unit begun to bring about downhearted and Teets decided to spin it off. After this incident it seemed that if Dial do strides in one business, problems in another one wiped of the effects of the improvement. Finally, Teets decided to collapse the company in two reversion companies (Dial Corp. and Viad Corp.). The division was scheduled in 1996 but hasnt been run yet. 2. What was the underlying corporate strategy behind the development of Greyhounds portfolio of investments up until the time that Teets was appointed CEO? Was Trautman correct to respect this strategy? What were advantages and pit fire ups? Basically, the underlying corporate strategy was diversification. By operating in as many businesses as possible, Trautman hoped to make the highest kale in each niche the company operates in. He was persuade that a huge diversification would fuck off a absolute doctor on the companys financial strength and would make it more resistant to a recession. fifty-fifty though both(prenominal) acquisitions were failures, Trautman thought, acquisitions are always worse the risk as long as the company as a all in all is better off. Losses in one business could be backed up by profits in other businesses. Furthermore, some businesses are more belike to be com plete by a recession than others. Those, which are no! t effected, fuel help to make the company more resistant to scotch downturns. The strategy of diversification also consists of sharing knowledge, which Trautman expected to strengthen the companys position. I intend, it is problematical to answer the headspring if Teets was honorable or not. To me, he had no other picking than move the strategy, because the company had already expanded too more than which made a miscellany in strategy very difficult. However, I would say, that Teets was wrong to enlist the same strategy, because the struggle of Armour was a sign for it to be wrong. The diversification was too widespread, which int closing that some businesses, Greyhound operates in, are not tie in in any way, which makes it very difficult to manage. Bus manufacturing and soap, for instance, require completely divergent strategies and different expertness. Certainly, diversification has its advantages. Knowledge stinker be share and the company can use different manag erial expertise in order to improve the companys surgical operation. Furthermore, some output lines can be used or several products and trade surface a distribution system, which serves all the businesses, can be naturalised and be can be divided. On the other hand, diversification is very risky. Some businesses are more likely to be effected by a recession than others, which susceptibility boom a negative impact on the integral company. Some businesses are not made to be linked and this is what Greyhound did wrong. It is very risky to combine food with bus manufacturing, because they set about plainly a few things in common concerning their strategies and their likeliness to be effected by a recession. While pursuing a diversification strategy, it is important to stick to one sum industry out of which more businesses may develop. Greyhound mazed its core industry and struggled to find a new and profitable one. 3. What milieu factors taking into custody on Greyhou nds businesses? Could anything feature been done to ! control for butt factors? In what ways did they distort the picture of Greyhounds doing? During the 80s, competition in the intercity bus business was deregulated and declining passenger revenues resulted from the end of the energy crunch. Greyhound found itself paying wages and benefits that were from 30 to 50 % higher(prenominal) than those paid by its competitors. Furthermore, Trailways, its major competitor, having negotiated significant wage concessions from the unify Transit Union, had immediately passed the legal transfers on to customers in the form of lower fares.. This was an offensive attack against Greyhound, which was supposed to fuck off away market share from them. Even though Greyhound reacted, they garbled millions of dollars. In order to prevent them from this loss, Greyhound should have reacted earlier by negotiating new wage contracts, which could have helped them to lower their fares earlier. By doing so, Greyhound could have maintained its competitive ad vantage over Trailways. Furthermore, after the intercity bus business was regulated, Greyhound should have made more efforts to lower its be in order to sustain its competitive edge. Greyhound wasnt elastic enough and then lost its competitive edge. By doing more research and by developing a program for livery costs, Greyhound could have prevented it from these high losses. Apart from that, Greyhound has worse luck and was stirred by recessions, which had high losses as a consequence. Certainly, they couldnt have prevented the recession, but they could have done market research, which would have helped them to realize the danger of a recession earlier. 4.What did Teets do to change Greyhounds corporate strategy and financial position in the 80s? Analyze the sagaciouse behind this strategy? Was it working? Teets cherished to pretend the company a completely new structure. His credence was that some businesses just fit better into Greyhound s plans than others. anyhow se lling Greyhound Bus Lines in 1987, Teets also sold Gr! eyhound dandy Corporation (GCC). GCC had become an underperformer in the face of let down interest rates and changes in the task laws that disallowed investment taxation credits. In 1987, teets tried to sell Verex, because it caused high losses. Unfortunately, the time of the acquisition was very bad and he couldnt find a buyer. Thus, he made Verex a discontinued operation and hoped that it would not be drain on corporate resources. With the sale of Greyhound Buslines, GCC and Armour and with the discontinuation of Verex, Teets announced that he was near the end of his large task of restructuring Greyhound. By 1987, Greyhound was primarily a consumer products and services company. Basically, I would say, that the rationale behind this strategy is logical. Teets cherished to give the company a new structure in order to adopt more control over all the businesses and he wanted to combine those businesses that fit together and can be managed together. He changed the whole core bu siness from bus transportation to consumer products and services because he hoped that these businesses are more recession resistant and criterion more profits. Teets found out that Greyhounds food and ingest house services contributed the highest profits and thus, tries to strengthen them. This is logical and a rational conclusion. By acquiring Purex and Breck, Teets even more specialized on consumer products and he was encouraged to acquire more businesses in this industry. 5. How has Teetss strategy worked in the 90s? In the 90s, things went very bad for Greyhound and Tettss strategy didnt really work. Both, the bus manufacturing and the Purex division started to perform very poorly. Furthermore, all the other divisions started to suffer and had to submit from the cruise-ship niche. According to analysts, Greyhound wasnt more than a hodgepodge of different businesses that had cryptograph in common, were not recession proof and did not even have a secure niche. 6. Do you t hink that Dial should be split into two companies or ! that its assets should be divested? I think, the company should be split off into 2 companies, because I believe, that being one company, the two different division sort of destroy each other than help them. Certainly, analysts are right that there will be two sets of managers, which cause higher costs. But in my opinion, the only way to make the company recovering is, to leave them both operate independently. By separate up the company, each one could focus more on its own business and could focus on the managerial expertise that is necessary to improve the companys performance. Divesting the assets is also a good possibility, because a bidder could then merge a circumstance Dial business into its own operations and thus cringe manufacturing, distribution or marketing costs. The drawback of it is, that the company would fall away in a way and Im not sure that this will be helpful for a break performance. Basically, it doesnt really matter, what will happen, because to me, it seems as if Greyhound became a resort area for analysts, the CEO Teets and the shareholders. It is very difficult to fork out a company, that has suffered from so many changes. At least, a split off could be the start of a new era for the company and king have a positive impact on the company. Things nearly cannot get worse. If you want to get a full essay, order it on our website:

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