Comprehensive Business Analysis: Ryders system Inc.

By

Vivekanandan A (PGP32345)

For partial completion of the course International Business Environment

At

Indian Institute of Management, Lucknow

Lucknow-226013, Uttar Pradesh, India
February 2017

I, Vivekanandan A do hereby declare that the report is my individual effort and that no part
of the report is copied from published/unpublished sources without proper citation.

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 TABLE OF CONTENTS

1. Company Summary
a) Introduction.. 3
b) Business structure. 3
c) Vision,Mission. 4
d) Value proposition 4
e) Organisational Structure,Goals,Culure 5
2. Strategy and knowledge based capital. 6
3. Financial Analysis. 7
4. Competitive environment. 8
5. External Environment 9

COMPANY SUMMARY

Introduction:

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 Ryder system inc. is a fortune 500 company which mainly operates in the area of
fleet management,Dedicated Transportation services, supply chain solutions.Under fleet
management . It provides variety of services like fleet leasing, freight brokerage, fleet
maintainence etc. In supply chain solutions it provides services like optimizing supply chain,
warehousing and distribution. It operates mainly in USA, Canada, Mexico and singapore. It
provides dedicated logistics solution from the procurement of raw materials to the delivery of end
products. Under DTS it provided the businesses a dedicated fleet which can be adjusted based on
the requirements.It serves large corporates to SMEs.

Company Background:

Ryders inc was established in the year 1933 with one ford
truck.
By 1939 it expanded itself to a fleet size of 50 trucks. In 1952 it

acquired great southern trucking company. It formed ryder inc

in 1955 to integrate existing business and the newly acquired
company. It went public in the same year and got listed in the
newyork stock exchange. In 2008 ryders inc expanded itself further by acquiring 3 regional
companies Pollock, Lily Transportation and Gator Leasing to have an inorganic growth. Ryders
Inc. managed to be in fortune 500 list of companies since 1980s.

Currently Ryder Inc. headquarters is situated in miami, florida. It has a total workforce of 34500
people and a fleetsize of 185,100 vehicles which are either owned or leased. Main competitors of
Ryders Inc. includes AMERCO, Avis Budget Group, Hertz Global holdings, eHi Car Services
Limited etc.

VISION:

Vision of ryders inc. is to bring compelling value through outsourcing. This can be construed as
the companys main aim is to put forward a value proposition for the customer so that the
outsourcing becomes more attractive than the in-house facilities.

Mission:

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Mission of Ryders Inc. is to provide innovative supply chain and fleet solutions that are safe,
reliable and efficient, enabling its customers to fulfill their promises.

Value proposition:

Ryder Inc. value proposition is to provide its customers a variety of fleet, dedicated transportation
solutions, supply chain solutions to establish their competitive advantage. By outsourcing the
logistics and supply chain to Ryders its clients can concentrate on their core business.

Business units:

Fleet Management Solutions:

Ryders provides solutions with greater flexibility, apart from leasing those Ryders also provide
their customers to rent or maintain its fleet based on the requirement which reduces the fixed
costs of the clients. It also provides value added services like insurance, fuel services and vehicle
administration. Ryders also has a used vehicle sales division which has a huge base of used
fleets which the customers can make use of, if they want to own a fleet. Ryders main goal is to
become a leading fleet services provider in the industry.

Dedicated Transportation system:

Through DTS, Ryders combines the maintenance, equipment and administrative services to gain
a competitive advantage, effectively manage the risk and integrate the logistics in the supply
chain. Ryders also provides services in routing, manage the size of the fleet, compliances,
technical supports etc. These services provides the clients with a competitive edge over their
peers. The cost is also low due to its flexibility and scale in which Ryders is carrying out.

Supply chain solutions:

SCS unit in Ryders focuses on providing cutting edge logistics services to its clients and help
them in optimizing their supply chain to their key business requirements. It provides solutions
based on the industry and its requirements. SCS leverages its IT and engineering knowledge pool
to achieve its full potential.

HUMAN RESOURCES

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Organizational Structure:

Ryders Inc. is being overseen by a board

which comprises of 11 members from
diverse companies to provide their insights
to the company and actively participate in
the decision making process.
The board is headed by the CEO Robert
Sanchez, in the next level there is core
management team. EVP and CXOs of
various domains like FMS, DTS, sales and
marketing are there. Core management
directly reports to the CEO and the
presidents of the respective domains
reports to the management team.

Organizational culture:
Organizational culture in Ryder systems
Inc. is respecting its employees and it
customers. High amount of thoughts and
care is employed in how to serve its
employee and their communities. Ryder
gives a personalized services to inspire
its employees in order to reach their
potential. Ryder encourages collaboration
and innovative thinking among its
workforce and the organization is always
open to new ideas. Ryder strive to be an
innovative company in its field. They do
this by working with latest technology and
supplying its employees with an
empowering work environment. As an
organization which has one man rental
satellite hubs to large corporate offices
they are able to maintain these resources by a closely interconnected organization.
Organizational Goals:
Ryder systems has separate goals for their divisions. In case of FMS the goals of the
division is to successfully leverage the marketing and sales initiatives to attract the potential
customers to outsource their fleet management to Ryders. To create and deliver innovative
products and solutions in order to establish new relationship and reinforce the existing

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relationship. Ryder strives to optimize the asset utilization of the maintenance facility for used
vehicles.
For DTS the goal is to concentrate on industries which have high amount of logistics
requirement. DTS leverages the FMS sales team and aligns its operation with the scs to achieve
high synergy. SCS division has set of goals which includes developing innovative solutions and
services for the customers with in its industry segment. Successfully executing sales and
marketing strategies. Work on network
optimization and kaizen.

Strategy:
Ryder Systems strategy is to
Improve its fleet management and supply
chain services by focusing on private
Markets (via FMS) and key industry
Verticals (Via SCS) with
Solutions that are innovative, operational
excellence, best in-house talent and IT.
Leaders in Ryder system engage the
employees to innovate, follow vision and
build on its core values.

Knowledge Based Capital:

In the year 2000 Ryders system

partnered with Accenture to create a
knowledge portal using the internet technology. This is created in order to enable the employees
of Ryder all over the world to share their ideas and views. This also includes insights about sales,
operations, Marketing etc.

Financial Analysis

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In order to find out the financial health of the company we have to analyze the financial health of
the firm. The data for the analysis has been taken from NASDAQ and companies annual reports.
In this analysis we have analyzed the liquidity, turnover and profitability ratios.

Current ratio:
Current ratio denotes the ability of the firm to meet its financial obligation in the near future. Higher
the current ratio healthier is the companys finances. For the years 2014, 2015, 2016 respective
current ratio is given as 0.94, 0.65, and 0.63 respectively. The reduction in the current ratio
denotes that either the firm is having less current assets or higher current liabilities. In either case
the firms ability to meet its short term liabilities is less. Whereas its industry peers has a current
ratio of more than 1.

Working capital:
Working capital is the measure of difference between current assets and liabilities. As the current
ratio is less than 1 this denotes that the working capital will be negative and the firm has to borrow
in short term to meet its financial obligations. As the firm borrows more and more the credit rating
of the company is decreased.

Debt-Equity ratio:
Debt-Equity ratio gives the detail about a firms capital structure on how much capital is from debt
and from equity capital. More the debt equity ratio is there is a high a credit risk involved. For
Ryders systems the D/E ratio is 2.627, 2.769 and 2.600 for the year 2016, 2015, and 2014
respectively. Whereas its competitors has D/E ratio as 9.449, 56.52. So we can conclude that
Ryders system is in relatively better position when compared to industry peers.

Asset Turnover ratio:

Asset turnover ratio indicates how well the organization making use of its assets. Higher the asset
turnover ratio there is a greater utilization of its assets for the year of 2016,2015,2014 AT ratio for
Ryders is 0.62,0.63,0.70 this figure is comparable to the industry peers.
Receivables Turnover Ratio:

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Inventory turnover ratio gives an idea about how efficient is the company is in collecting its debts
from the customers. If the Receivables turnover is high this means that the firm is efficient in
extending credit to its customers and collecting back from it. The ratio for receivables is 8.08,
8.07and 8.00 for the years 2016, 2015 and 2014.

Profitability:
The company has an operating margin of around 64% whereas the industry average for the same
is around 67 % which denotes that the company is not able to control its cost when compared to
its competitors and the net operating margin is around 2.79% whereas the industry average is
around 4.89%. This data clearly indicated either Ryder system is not efficient in delivering its
services or it is underpricing services when compared to the competitors.

INDUSTRY ANALYSIS-Porters Five Forces

Threat of New Entrants: - LOW

Logistics and fleet management is a highly capital intensive business. Even though a company
succeed at a local level but in order to become successful in national or global level they need a
lot of initial investment. Differentiation is also high in this industry. So the new players cannot
substantiate their premium pricing which they mark in order to cover the higher initial costs. As the
industry is already having high number of competitors they will make sure the new entrants dont
sustain by giving discounts.

Threat of substitutes: - LOW

Even though there are lot of substitutes available for the road transport companies they are not
efficient and cost effective. Substitutes such as Train, Airplane and Boats are considered as
substitutes. Train is relatively slow and again once it reach the destination we need to cross dock
it to the ware house which is an extra cost. Flights are cost effective for long distances but for
intercity transportation the Road transportations are best.

Bargaining Power of Buyers: - HIGH

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With large number of players available in the market for the logistics services the bargaining
power of buyers is very high. Product Services are not differentiated and the switching cost is also
very less for the customers so they can easily switch to other vendor.

Bargaining Power of Suppliers: - Low

Ryder system mainly operates in automobiles and the supply and maintenance in that industry is
very high with intense competition among its rivals. Above that Ryder does not purchases truck
from the truck manufacturers but it purchases the trucks from the individual customers whose
bargaining power is not as significant as a corporation.

Intersegment Rivalry: - HIGH

Ryder is operating in a highly competitive industry which consists of several national, regional and
local players. Firms are consistently looking for long term contracts to ensure a future stream of
cash flow. Exit costs from this industry is also high so the price and discount wars are imminent in
this industry to save one from going bankrupt.

External Environment Analysis

POLITICAL:
Ryder system operates in logistics, transportation and supply chain domains. These
industries performance are highly influenced by government policies on other heavy industries as
they are main clients. Ryder mostly operates in USA, Canada, Mexico and Singapore. With the
election of Donald Trump as the US president the opportunities for the firm will increase in the
near future. As he mandates the American corporations to produce in America the demand for the
services provided by the Ryders will also increase exponentially. But this policy also has a
downside as the American corporations are going to shift their plants from Mexico to US there will
be a lost opportunity in Mexico. Other policies on environmental pollution will also have an impact
on the industry.
ECONOMIC:
After the 2008 crisis the industry has taken a hit in the US as the consumption decreased
there. As the US economy has slowly recovered from the recession now the unemployment rate
has been decreased from around 10% to 4.8%. Consumption per capita is also increasing
steadily from 5300 to 5900$ in 2017. More consumption means more production and it provides
business for the logistics companies. Canada and Mexico are facing some trouble lately with the

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devaluation of its currency since the election of Donald trump. Ryder system is exposed to
foreign exchange risk.
SOCIO-CULTURAL:
Mindset of the people are changing, online shopping has become a popular culture in this
period. People prefer paying more for faster deliveries. They have started to value time more than
money. This E commerce and the changing consumer behavior opened up ample of opportunities
for the logistics companies to carry out the delivery services for the ecommerce companies.
TECHNOLOGY:
With the advent of the cloud computing and the GPS systems the logistics companies can
leverage them to optimize their services and reduce their cost. Cloud enables the companies to
integrate their systems in an online server which can be accessed anywhere without the physical
purchase of the server. More accurate GPS system enables the logistics and transportation
company to optimize their routes and save fuel costs. More innovation are being done in
alternative fuels which will help these companies to reduce cost and the carbon footprint.

ENVIRONMENTAL:

As the world is getting more polluted day by day there several voices against burning of fossil
fuels. With no innovative solution for the reduction of burning fossil fuels the firms with more
vehicles are increasingly looking forward for alternative technology. Even though the electric car
segment is significantly upscaling truck will take more time. This also makes the efforts of the firms
to reduce their carbon footprints unfruitful.

Parameters are highly positive for the industry and the external environment is also conducive for
the doing business.

References:
1) Online websites for financial details of the company
2) 10-K annual report of the company.
3) Other online news websites and the companys official website for the data about the company.

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