Strategic Performance Management SPM 400

The CEO of Mkango transport Thom Banda, a small haulage contracting company
which he founded in 2000. Thom has passed his heavy good vehicle driving test at
18 at has been driving on a freelance business ever since however in 2000 Thom
decided to set up his own business . Thom has had no formal training in strategy
planning and more relied on his instinct and experience to develop the strategies
required for the business. He is considering developing a mission statement for his
organization as a friend of his had stated that it would bring significant benefits to
the company. However as yet no progress has been made on this area.
Thom originally obtained a loan of MK10, 000,000 from the bank and combined
this with personal savings to start his own business ventures. Thom originally
started with one truck and purchased a small piece of land near to his home to act
as an office and stores depot for the trucks. Over time the business expanded and
now Mkango Transport operates a fleet of 16 heavy goods vehicles and 32 trailers
which are hooked on to the vehicles. The fleet can only handle dry haulage and
none of the vehicles in the fleet are equipped to handle fresh food (which would
require refrigerated trailers)
The fleet is relatively new much of it purchased in the last three years although
Thom has had to borrow substantially to increase the size of his fleet. Thom has
employed three mechanics to repair the vehicles as and when required. Mkango
transport now employs 10 full-time and a varying number of part-time drivers. The
part-time staff work as and when required.
Thom original piece of land is now too small to store accommodate the business so
he has moved the business to a nearby industrial estate which has not only space
for up to 50 vehicles but also a large workshop / garage and some company offices.
The site is now open 24 hours a day and this has caused some problems with the
residents of houses that are adjacent to the Thoms piece of land as they complain
of the noise of vehicles moving in and out of the site in the early hours of the
morning. Some residents have started a petition to stop Thom operating 24 hours
a day and are seeking the support of the local MP, the local council and
newspapers.

Many companies are now reviewing the use of the latest technology such as global
positing systems and satellites which can be used to monitor traffic volumes and
help the company to avoid traffic jams. This technology is now being used by
competitors but Mkango transport have decided not to introduce this in their
business.
Business development
In addition to haulage, Mkango transport obtained a license to undertake heavy
goods vehicle training. This has proved to be a successful diversification as there is
a regular stream of customers who want to get into the business. The size of their
existing site allows this training to take place in the current premises.
Acquisition of land
One year ago, Thom entered negotiations to lease some land which would more
than satisfactorily accommodate all the tractor units and trailers. The land is
situated on an industrial estate 5 km from the existing facility. In addition, there is
room to build a repair and maintenance facility which would be adequate for the
needs of the fleet. Thom believes that surplus land on the site can be used for
storage of trailers for local companies.
Following agreement of a lease arrangement, which was concluded just before the
completion of the last financial year, Mkango transport occupied the land on which
there were no buildings erected or utilities supplied. The company has since spend
heavily on building amenities on the site and upgrading the facilities to include large
diesel tank, storage warehousing and workshops.
Customer base
The company faces strong competition for haulage contract work. Typically,
haulage contractors operate on a low-margin basis and smaller companies often
sub-contract from large-scale hauliers. The large hauliers have started to dominate
the market and use their size to win customers because they are able to operate
through a large network of local distribution centers. Some of these large
organizations have developed major brand names within the market.

Mkango transport carries haulage for a variety of customers as well as undertaking

some sub-contracting. However they face the problem that the haulage work the
company carries out is seasonal. Approximately 70% of its turnover is derived from
GDM Haulage LTD, a local company which manufactures soft furnishings such as
cushions and pillows.
Following the recent appointment of a new transport manager, GDM Haulage LTD
has begun to employ other hauliers besides Mkango transport. Over the last two
months, the haulage work Mkango transport has received from GDM Haulage LTD
has reduced by about a third. The market is also suffering recently due to a
downturn in the economy and the recession that has now overtaken the whole of
the Malawi and southern Africa.
Required
(a) Assess the benefits to the organization of developing and introducing a
mission statement within the company (10 marks)
(b) Using appropriate tools or models analyse the environment in which Mkango
transport operates. (20 Marks)