Case Stud Powell Logistics Essay

Words: 1067
Pages: 5

Assignment #3: Powell Logistics Case Study
A. Defining the issue
The immediate issue is to make a decision on the future of the family company.
B. Analyzing the Case Data
* The truck transportation industry is a vital part of the Canadian economy with $43 billion in sales annually and employing 400,000 people
* The for-hire sector accounts for 40% of the transportation industry in Canada
* The for-hire sector has 2 service offerings: TL – Truck load, only full load between 2 locations and LTL – Less than load, pick up from various locations reorganize then deliver to end customer. Traditionally LTL charge more.
* Trucking industry experiencing 3 major issues
* Cost of fuel, increased operating costs forced
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* Provide continued employment for the Powell children.
* Maintaining their loyal customers.

E. Assessing Alternatives:

1. Buy New Warehouse and Combine Operations
* Industry experience * Decrease operating costs | * Long term debt * Some additional long term debt from other Powell companies still outstanding throwing off debt ratio |
* Streamline Operations | * Economic downturn * Competition |
2. Sell the Business
* Interest from 3rd party * Pay off all Powell Debt | * Family member work future questionable * Cash flow |
* Partnership possibility | * Economic downturn |

3. Pass the business on to his children
* John Powell retires * Powell children available and able to take on the family business * Customer base remains * Restructure and plan to streamline and gain on debt ratios | * Multi site inefficiencies still exist |
* Plan to achieve financial position to support new warehouse in the future * Restructure plan development | * Economic downturn |

F. Selecting the Preferred Alternative
Passing the business on to his children is the preferred alternative.
Financial Analysis
* Although PLI is forecasted for continued growth with revenue expected to reach 28 million dollars in 2010, PLI still