Powell Logistic Case

Introduction

Powell Logistics Inc. has been in the trucking business for over fifty years. The company holds a legacy and has a lot of success stories. The founder of the company, John Powell is a complete family man besides being a successful entrepreneur. The case at hand of Powell Logistics Inc.; however, provides an example where the founder and the president are now in a dilemma as he has a difficult decision to make. The dilemma relates to making the correct strategic choice for a company that he established, having to consider some alternatives available to him. John Powell is in a dilemma because these are tough times for the trucking industry of U.S. and Canada and John needs to evaluate each alternative available to him very carefully to come to a conclusion regarding the future of the company. Moreover, the U.S. trucking industry has undergone intrastate deregulation recently, and a lot of careful analysis of the industry needs to be done to reach at an intelligent conclusion (Trick & Peoples, 2012).

Problem Statement

After a thorough analysis of the case, the problem statement for Powell Logistics Inc. has been identified as follows: “The intense competition and rising costs in the trucking industry of the United States and Canada are causing a serious dent in the performance of Powell Logistics. This is also depicted in the financial statements of the company for the year 2007 when compared with the previous year. Hence, John Powell, president and founder is worried about the future of the company and needs to make a strategic decision which would impact the company in the long-run.”

For this purpose, a few strategic alternatives are available to John Powell, which are discussed and critically evaluated below. The trucking industry had been an important part of the U.S. economy, especially since way back in 1965 when the index calculation of the trucking industry was made part of the overall U.S. business index calculation (Long, 1968).

Strategic Alternative 1

One of the strategic alternatives that John Powell is considering is to expand the company and retain his and his family’s control of the company. Expansion seems a reasonable option to the president as currently the company is heading to a stale position and needs to be revamped. However, expansion plans would burden the company with a heavy investment at a time when the company’s profits and earnings have declined compared to the previous year.

At the same time, the benefits that expansion would bring must be taken into account. With a required estimated investment of $10 million for land and construction of the facilities, Powell Logistics would be able to gain hefty annual savings in administrative salaries, and labor and transportation costs. Moreover, having one central facility would help the senior management and employees