Page 13 - CIMA May 18 - MCS Day 1 Suggested Solution

SUGGESTED SOLUTIONS

EXERCISE 1 (continued)

MENTA must ensure that it matches its strengths to any opportunities identified when
considering future strategic development options. Failure to do so will leave MENTA exposed to
unnecessary risk by attempting to achieve strategic options without the resources or
competences to fulfil those options.

In addition, failure to address and remove weaknesses may leave the organisation exposed to
future threats. This is particularly relevant for MENTA given the increasing environmental and
social concerns and the resultant increase in complexity associated with public transportation and
service provider options. As with any business, ultimately customer demand governs success and
enhances the manufacturer’s brand.

Customers have considerable choice as to which mode of transport to adopt and which service
provider to use. This means that MENTA will need a detailed and continuous flow of information
on utilisation, customer demand, social trends, environmental issues and spending patterns etc.
to ensure that the right service is available at the right time and in the most cost effective format.

Alternatives available to MENTA are:

 Market penetration. MENTA could opt to maintain or increase its share of existing markets
with existing products but in a fast changing environment, with the industry having to meet
increasingly restrictive emissions and fuel‐consumption requirements (particularly in the
Western world), this is unlikely to succeed. The industry is not used to being at the
forefront of technological change and MENTA will need to maintain an innovative approach
to survive e.g. by responding to environmental, regulatory and socio‐demographic trends
and enhancing their fleet as appropriate.
 Product development. MENTA could develop strategies based on launching new services or
by enhancements to existing PPE which are offered to its existing markets e.g. continuing to
innovate with new fuel technology or driverless buses. Deustche Bahn, for example, trialled
new driverless bus in October 2107 designed by French Company, EasyMile.
 Market development. MENTA could develop new markets for existing products e.g.
expanding its presence in developing countries such as China or any of the top ten to
include Japan, India and Germany. The opportunity does exist with, for example, the
Stagecoach group operating commuter/transit services, inter‐city services, tour and
charter, sightseeing and school bus operations in the USA and Canada with only a market
share of 1%.
 Diversification. MENTA could launch new services into new markets e.g. rail travel. Thus
could be achieved via a joint venture with an existing provider, a competitor, or even a
consortium of public transportation companies. If MENTA has an insufficiently profitable
fleet to meet regulatory emission and fuel economy mandates it might find it makes the
most strategic sense to establish a joint venture with another company to provide them, or
create an alliance to facilitate.

Each of the above suggestions would need to be evaluated before implementation which entails
considering each strategic option in terms of its feasibility and fit with the strengths and core
competences of the business.

KAPLAN PUBLISHING 57