Ryder System Incorporation Harvard Case Solution & Analysis

A.    Porter’s five forces for Ryder Systems Inc.

Ryder System Inc. has been operating in competitive transportation industry. The company has been considered as an expert in maintaining abilities along with its ability to provide other services to the customers. The company makes sure that the customer makes preference of using Ryder System Inc. services over other competitors. The company also leases some of their services rather than doing all of them in house, while they also generate certain margins to increase the overall value. Following is the Porter Five Force model for Ryder System Inc.

Threat of Substitutes: Medium

 

Threat of New entrants: Low

 

 

 

Degree of Rivalry: High

Bargaining Power of Supplier: Medium

 

Bargaining Power of Buyer: Medium

 

Bargaining Power of Buyers: Medium

The bargaining power of buyers in the industry is medium. It  is considered to be medium because along with Ryder System Inc. there are other companies also that basically lease transportation equipment, along with this they offer the option to customer to purchase the products directly from suppliers rather than leasing it. However, as the industry suggests, leasing has been a profitable and preferred method for updating all the fleets currently. However, the cost regarding the fuel and maintenance is passed on to the customer. Large companies of SCS services provide expert pricing power since the top ten make up a large portion of sales and Ryder System Inc. can basically become affected by losing any of these customers.

Bargaining Power of Suppliers: Medium

The bargaining power of suppliers in the industry is medium. It is medium because mostly suppliers consist of large and huge trucks along with the original equipment manufacturers. Moreover, there are small number of manufacturers that the customer demand which allows them to keep OEM part prices higher with the maintenance issues. Ryder System Inc. being a large customer based organization has the command over pricing. Suppliers basically look to sell directly to Ryder System Inc. because of the larger volumes the company deals in and they also offer better negotiation terms to the industry suppliers.

Threat of New Entrants: Low

The threat of new entrants in the industry is quite low. This is because of the high start up cost associated in the industry. Along with this, the government rules and regulations make it tough for new entrants to enter such an industry. The industry requires the ability to raise cash on constant basis to come up with better opportunities. Along with this, not only the new entrant will have to compete with the local manufactures, but it has to compete with foreign brand also which are financially and technically strong. To enter the industry technical expertise are also required, which is quite difficult to match within the industry.

Threat of Substitutes: Medium

The threat of subsitutes is medium in the industry. The industry has quite a few substitutes in the market.  Ryder System Inc. is generally involved in trucking business with its main substitutes being air and rail system to carry cargo. Air being an expensive alternate and rail being slightly lesser in price are both substitutes for Ryder System Inc. Air is although an expensive option, but rail is quite cheap which can carry large number of quantity to long distances at an effective price. Therefore, Ryder has to face quite stiff challenge with the available substitutes in the industry for the company.

Competitive Rivalry: High

The company Ryder System Inc. faces quite a stiff challenge with the number of competitors available in the industry. These competitors compete on services offered, prices, location, quality of vehicles used and also access to maintenance services. Rivalry among competitors in the industry is very high. As the case states, all industry players were competing with one another by offering unique features to facilitate the clients. The industry makes it tough for the rivals because all the players have unique skills and features, which makes them highly competitive for other players in the industry. With such high capital investment in logistic industry, it is next to impossible for industry player to exit the industry.

  • B.     Conclusion on External Analysis

After analyzing the external environment of the logistic industry, it can be said that it is a highly competitive market. Although, there are a number of competitors in the industry but still companies like Ryder System Inc. can find a place for themselves among all the companies because of their long term relationship with customers and their experience in the trucking industry especially. Therefore, the industry is quite attractive for System Ryder Inc. Along with this, the external analysis through PEST analysis indicates that the government rules and regulations are in favor of the industry players and they can actually work in an efficient and effective manner if they commit themselves to perform under the guidelines of government. Along with this, the technical aspect also supports the industry because of the different innovations that have taken place recently..................................

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