1 Green Transport Group
The Green Transport Group (the group) is based in the country of Meeland.
The principal activities of the group are the transportation and storage of goods on behalf of
large commercial customers. The group consists of three operating companies: Terry Green Road
Transport (TGRT); Terry Green Warehousing (TGW); and Terry Green Rail (TGR).
The group has recently commissioned a consultancy firm to provide advice on a range of
strategic issues.
The current date is October 20X6.
The following exhibits available on the lefthand side of the screen provide information relevant to
the case study.
•
Exhibit 1: Summary of group operating company performance data (20X1-20X5) prepared by
a member of the consultancy project team
•
Exhibit 2: An extract of financial statements for Marston airport for the year ended 31
December 20X5 provided by Derek Horsnell, the Finance Director of the Green Transport
Group
•
Exhibit 3: An extract from a business newspaper commenting on the proposed acquisition of
Marston airport
•
Exhibit 4: An email received from Gary Walsh, the Logistics Manager at Terry Green Road
Transport (TGRT) concerning the issues facing the company
•
Exhibit 5: Extracts from the website of Action Now!
•
Pre-seen information, which you have already used to familiarise yourself with the Green
Transport Group and the industry in which it operates, also available on the lefthand side of
the screen.
This information should be used to answer each task within your chosen response option(s)
The task requirements are included in the tasks shown below:
Task 1
Required
You are the lead management consultant overseeing the consultancy project at the Green
Transport Group. You are in the process of preparing the findings for your report which will be
provided to the group board of directors.
Prepare a report which addresses the following matters:
(a) Analyse the current performance and the contribution of each of the three operating
companies in the Green Transport Group portfolio, and assess their relative significance in its
(20 marks)
future strategy.
Professional skills marks are available for demonstrating analysis skills in assessing the
performance of the three operating companies and their relative significance.
(4- marks)
(b) 'The Green Transport Group has announced that it has signed an initial agreement in
principle to purchase Marston airport from the Marston Airport Company for the sum of $7m,
funded from retained profits from within the group. Sir John Watt stated that "We see this as
a natural extension of our transport capabilities. Road, rail and air have long been
complementary forms of transport and we are pleased to be able to offer our customers all
three, using our innovative mini-container system as an effective transhipment method
between transport modes. We also hope to attract a low-cost airline to the airport,
encouraged by low landing fees and a population of over 150,000 people living within 20
miles of the airport." Marston Airport Company will become an operating company within the
Green Transport Group, and renamed Terry Green Air.'
Critically evaluate the proposed acquisition of Marston airport.
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(16 marks)
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Professional skills marks are available for demonstrating scepticism skills in evaluating the
proposed acquisition of Marston airport.
(4 marks)
Task 2
You are business advisor to Terry Green Junior, the Managing Director of Terry Green Road
Transport (TGRT ). You are reviewing the email received from Gary Walsh, the Logistics Manager of
TGRT. Gary's email was prompted by an earlier request for details of the major issues facing the
company. This information is required as it will form part of a presentation that you have been
asked to give to Terry Green Junior and the management team at TGRT concerning the future
viability of the Ice World contract.
(a)
Prepare two presentation slides and detailed supporting notes to be presented to Terry Green
Junior and the management team at TGRT. The first slide should evaluate the issues
surrounding Terry Green Road Transport's performance of the Ice World contract and the
(10 marks)
second slide should evaluate the likelihood of the contract being extended.
(b) Prepare a report to the management of TGRT which illustrates how the use of big data
technologies and data analytics could improve TGRT's performance of future frozen food
{10 marks)
contracts like the current one with Ice World.
Professional skills marks are available for demonstrating commercial acumen in discussing
(4 marks)
the use of big data technologies and data analytics.
Task 3
You are a representative from the Meeland Chamber of Commerce. Part of your role involves
providing advice to organisations on a range of business and ethical issues. The group board of
directors have asked for your advice in handling the planned protests as outlined by the extracts
taken from the Action Now! website. Sir John Watt has informed you that he is keen to hire extra
security guards from a Meeland-based security firm to patrol the TGRT depot which has been
targeted by the protestors in order to minimise the disruption caused. The group board of
directors are also keen to find out more about the role of corporate social responsibility (CSR) in
business. One of the directors has suggested that a good starting point would be to compare the
Action Now! group's approach to CSR with that of a commercial entity.
Prepare a briefing paper which:
(a) Assesses the decision to hire extra security guards when dealing with the planned protests.
{12 marks)
Professional skills marks are available for demonstrating evaluation skills when assessing the
(4 marks)
decision to hire extra security staff.
(b) Explains the term CSR and discusses the ways in which CSR and ethical stance might differ
{12 marks)
between the Action Now! group and a commercial 'for profit' business.
Professional skills marks are available for demonstrating communication skills which explain
(4 marks)
the term CSR and how the ethical stances may differ.
{Total = 100 marks)
Exhibit 1: Summary of group operating company performance data {20X1-20X5}
prepared by a member of the consultancy project team
J
l
Financial data for operating companies in the Green Transport Group
20X5
�-
20X4
20X3
�
20X2
-r
20X1
Green�ndus�reen L1ndus£'reen L1ndus �ree�ndus lGree�ndus.
Terr� Green Road Transport
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575
2,050
565
2,025
550
2,015
520
2,050
500
2,000
Operating
profit
10.80%
9.98%
10.75%
9.95%
10.80%
9.93%
10.45%
9.50%
10.25%
9.57%
ROCE
12.25%
11.50%
12.15%
11.45%
12.05%
11.45%
11.95%
11.30%
11.95%
11.35%
315
3,200
275
3,010
270
3,050
255
2,950
250
2,850
Operating
profit
14.55%
14.50%
14.25%
14.15%
14.20%
14.25%
14.00%
14.25%
13.85%
14.15%
ROCE
14.50%
14.15%
14.25%
14.10%
14.15%
14.10%
13.95%
13.90%
13.95%
13.85%
112
3,150
110
3,000
105
2,850
105
2,650
105
2,500
Operating
profit
4.75%
12.45%
4.50%
12.35%
4.85%
12.25%
4.95%
12.75%
5.15%
12.85%
ROCE
3.50%
8.75%
3.65%
8.55%
3.75%
8.55%
3.85%
8.35%
3.85%
8.25%
Revenue
Terr!:J Green Warehousing
Revenue
Terr!:J Green Rail
Revenue
The performance of each group compan !:J is shown under the columns headed Green. lndustr !:J
figures (provided b !:J Freight Line International) are shown under the columns headed lndustr !:J .
Operating profit and ROCE figures are averages for the industr !:J while revenue figures are totals.
All revenue figures are in $m.
Notes.
1
Terr !:J Green Warehousing first traded in 20X2. The 20X1 figure is compiled from companies
which were consolidated into Terr!:J Green Warehousing.
2
Terr !:J Green Rail was formed after the takeover of FDRC. 20X3 was the first reporting period
for Terr !:J Green Rail. The 20X1 and 20X2 figures are for FDRC.
Exhibit 2: An extract of financial statements for Marston airport for the year ended 31
December 20X5 provided by Derek Horsnell, the Finance Director of the Green
Transport Group
Marston airport is situated on the outskirts of Marston town where TGRT alread !:J has three
transport depots and warehouses. The airport occupies a site of 450 hectares and it has two
tarmac runwa !:J S, four hangars and a small terminal / fl !:J ing club facilit !:J . The airfield is exclusivel !:J
used b !:J private fl !:J ers and two fl !:J ing clubs. The airport is adjacent to the motorwa !:J which
connects North and South Meeland.
Financial information for Marston airport is below.
$, 000
Assets
Non-current assets
Propert!:J, plant and equipment
6,000
250
Goodwill
Total non-current assets
6,250
Current assets
I nventor !:J
550
Trade receivables
80
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$'000
Cash
370
Total current assets
1,000
Total assets
7,250
Equity and liabilities
Share capital
Retained earnings
Total equity
Non-current liabilities
Long-term borrowings
Current liabilities
Trade payables
120
Short-term borrowings
250
Current tax payable
Total current liabilities
30
400
Total liabilities
4,450
Total equity and liabilities
7,250
STATEMENT OF PROFIT AND LOSS
Revenue
975
Cost of sales
(700)
Gross profit
275
Administrative expenses
(125)
Finance costs
(100)
Profit before tax
50
Tax expense
(10)
Profit for the period
40
Exhibit 3: Extract from a business newspaper commenting on the proposed acquisition
of Marston airport
The renowned aviation consultant, Peter Brown, appears much less optimistic than Green
Transport Group about the potential contribution that Marston airport can make to the Group.
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Mr Brown has recently carried out an analysis of the 20X5 financial performance medium-sized
light aviation airports (like Marston) in Meeland. This revealed the following performance statistics
across the sector as a whole:
17.5%
8.5%
2.25
1.50
40%
(The standard payment terms in Meeland is payment within 30 days of the invoice date.)
Peter Brown has also cast doubt on Sir John Watt's plan's for attracting a low-cost airline to
Marston airport. He says that a local regional population of at least 500,000 people is required to
make such a service attractive. As such, Mr Brown believes that the population of the Marston
area is much too small to make passenger services from the airport economical.
Exhibit It: Email received from Gary Walsh, the logistics manager at Terry Green Road
Transport concerning the issues facing the company
To:
b.advisor@BusinessAdvice.com
From:
From: g.walsh@tgrt.com
Subject: Issues affecting Terry Green Road Transport (TGRT)
Thank you for your email.
Having reflected on your request for input, I can honestly say that the biggest issue TGRT
faces at the moment concerns the Ice World (IW) contract. TGRT recently won a hard-fought
tender process to transport deliveries for the rapidly growing supermarket chain, IW. The
contract is initially only for a six-month trial period. We are already half-way through the trial.
At the time of signing the contract representatives from IW stressed that TGRT's performance
during the trial period would be central to extending the deal. Unlike the other supermarkets
which TGRT has contracts with, IW does not sell dry goods or chilled products, it only sells
frozen food products. As a result this requires us to use adapted trucks which are capable of
transferring frozen goods. We have had to hire 15 specialised trucks for the six-month duration
of the contract from our usual truck supplier.
The contract obliges TGRT to collect deliveries from IW's central Meeland distribution centre
and make deliveries to the company's 50 stores, all of which are located in town centres
nationwide. IW operates by selling high volumes of a limited range of frozen food products at
low prices. The limited range means that every IW delivery contains the same products
regardless of which store it is going to. Although the contract represents a great the
opportunity for us, it has caused some problems.
Increasing road congestion increases the likelihood that our deliveries will miss their allocated
delivery slots. The contract stipulates that late deliveries require TGRT to pay a flat penalty
charge of $5,000 per occurrence. Since the contract began TGRT has made $60,000 of
penalty payments. Our drivers complain that the problem is made worse by the difficulty of
accessing the 50 stores. Navigating through town centres is problematic due to restrictions on
the roads that larger trucks (such as those used by TGRT) are permitted to use, which adds on
time when making deliveries. TGRT is obliged to pay a penalty for any food which spoils while
in transit; this occurs when the on-board freezer unit fails to keep the temperature below zero
degrees. This has happened twice. Interestingly, the other day I noticed that one truck
appeared to have used more fuel than would have been expected given the distance covered.
Upon investigating the matter, I discovered that the freezer unit was operating at temperatures
lower than required to keep the goods frozen!
I hope the above proves useful.
@ePP
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Exhibit 5: Extracts from the website of Action Now!
Action Now!
About us
Action Now! is a not-for-profit, voluntar !d environmental action group which emphasises the
importance of taking action in tackling climate change. The effects of climate change are all
around us from rising temperatures causing drought in some parts of the world, to rising sea levels
causing flooding in other regions. Although it is an inconvenient truth, we all know that man-made
activit !d and the burning of fossil fuels is the central cause of global climate change. This needs to
stop before it is too late.
Politicians in Meeland and around the world have for too man !d !d ears simpl !d paid lip-service to
the growing need to take the issue of climate change seriousl !d , Therefore we urge all our
supporters to get involved to help us put the issue of climate change firml !d on the agenda.
Newsfeed
A recent United Nations report ranked Meeland in the Top 10 worst polluters, as measured b !d CO2
emissions per head of population. The report highlighted the need for global governments to
promote the use of alternative environmentall !d friendl !d fuel sources in business.
Forthcoming campaign events
In recognition of Meeland's ranking in the United Nations report Action Now! is planning a series of
protests aimed at some of the countr !d 's worst CO2 polluters. We urge all Action Now! supporters to
join us at the following locations next week:
• The gates of the main depot of Terr !d Green Road Transport, near Central Cit !d , Terr !d Green
Road Transport is ranked the 52nd worst CO2 Meeland polluter b !d Action Now!
• The entrance of the logistics firm Chestnut Road Haulage, located near Marston Town.
Chestnut Road Haulage is ranked the 67th worst CO2 Meeland polluter b !d Action Now!
If \dOU can join us then please do. In order to cause maximum disruption and to highlight our
campaign to lower the levels of CO2 pollution caused b !d private enterprise in Meeland please
bring warm clothes as we are planning on chaining ourselves to the entrance gates at both sites.
Even if we can stop both firms from getting their polluting trucks onto the roads for a couple of
da !d s then it will have been worth it. Hope to see \dOU there!
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