Beck Taxi is the leading taxi brokerage with the highest number of taxis in the city of Toronto. Beck Taxi was founded by Jim Beck and is still a family run business. Today the founder’s daughter, Gail Beck-Souter carries on the tradition of excellent service. With Ms. Beck-Souter’s attention to detail and leadership, she has made Beck Taxi the largest and most successful taxicab company in the country. With over 1,400 available taxis operated by our professionally trained independent contracted drivers.
Issues faced by Beck:- The issue faced by Beck Taxi was the pricing challenge in a three months summer season. Summer was the lean season for the taxi trade in Toronto, because educational institutions were closed, people were on vacation and many people were prefer to walk, cycle or take public transport instead of using a taxi. The challenge was to do business in this season. The Beck Taxi’s CEO Gail Beck Souter was finding a solution to deal with this and need to do some modifications in current taxi fares.
In this time Souter wondered to reduce the radio fee. Drivers and plate holders were also affected by this lean season. Toronto had 4,851 cabs. At one cab for every 500 Torontonians, which opposed to one cab for every 1,000, which is the ratio of other metropolitan cities around the world. This is also an important issue related with Beck. Direct and indirect stakeholders and their interests:- There were two types of stakeholder in this case study. The direct stakeholders were company, taxi drivers and plate holders.
Any kind of decision taken regarding fare change or any change in the policy was going to affect directly to these stakeholders, because they are directly connected to company. A total of 9,898 drivers and 1,476 plate holders were attached to Beck. The interests of these stakeholders were to sustain their position in the market. As they were having a good name and fame in cab industry of Toronto. Also there are 3,000 drivers already working for beck taxi most of them for more than 20 years now, they were also attached emotionally to Beck Taxi.
The indirect stake holders in this case were the customers and the competitors. And the major competitor of Beck was Diamond Taxi. Any decision taken by Beck was going to affect then as well. They also have to adjust pricing in comparison to Beck to retain in the market and do business. Customers were also affected why Beck’s decision as they will be choosing a low fare and first available cab. The interest of the competitor would be to attract more customers and to defeat Beck and attract more drivers and plate holders from Beck by giving good offers and compensation to customer and drivers.
In this case study available in this case study are money and relationship. As Beck is the major brokerage in cab industry, and they also having good relationship with their customer. Beck is capable of adjusting with their money for their customer. Alternatives: The major three alternatives can able to meet the demand of the Beck taxis are: 1)Reduce the fixed fee for the radio and charge a fee for dispatch: This means cutting back the radio fee but the usage could be fixed. But here the competitors can reduce the fixed fee too and can still be in market.
Stake holder’s analysis: A. Drivers/ Plate holders: It is a batter idea to reduce fixed fee and charge a fee per dispatch. It can be good for both drivers and plate holders. They will be charged according to no. of dispatches. B. Beck Taxi: Although it is not much beneficial for Beck. But they can reduce the fixed fee for their drivers and stake holders. C. Indirect stake holders: It will not affect much indirect stake holders. 2)Reduce the radio fee during summers: It can be a good alternative from the view point of drivers and plate holders.
This means that radio fee can be reduced without the need to charge for usage fees and this will even allow more drivers to shift to beck taxi. Stake holder’s analysis: A. Drivers/ Plate holders: Reduce radio fee will really a good decision from the view point of drivers and stake holders. Reduce in radio fee means less loses to drivers. B. Beck Taxi: Beck taxi can also go for reducing their radio fee. But it’s not a proper solution to the problem. Although reduction in radio fee can attract more drivers and stakeholders.
C. Indirect stake holders: If we talk about competitors, they also have reduced their radio fee to compete in the market. Beck taxi is the giant in cab industry immediate to Beck is Diamond, which has only 475 vehicles in compare to over 1,400 taxis of beck. Out of the box alternative:- Beck was having problem in the summer season only, the batter alternative is go to the big organizations and tie up with them to use their taxis to pick up and drop their employees living in same areas, so they can share their fare. It can be useful for all, company, drivers and employees as well.
It can be a best alternative for all the direct stake holders which include drivers, plate holders and Beck itself. Stake Holder analysis:- A. Drivers/ Plate holders: The direct stake holders which include taxi drivers and plate holders. If the idea or alternatives above succeed then all the direct stake holders will be having profits, not only they will be retaining the old employees but also new drivers and plate holders will give them business too. B. Beck Taxi: Absolutely, this will be the best alternative which can able to give business to all the direct stake holders.
According to me this alternative is balanced and would be bringing profit not only to Beck taxi but also to the organization and employees associated with it. C. Indirect stake holders: The indirect stake holder which are Customers and Competitors of Beck. The customers will also be affected as if Beck will provide them transportation they will no need to use their personal vehicle and they can save lot of money, but the competitors would have been problem with their status in market as more people and drivers want to be doing business with the Beck taxi.
Risk Analysis:- As Beck is major brokerage in cab industry and the giant in market. Immediate to Beck taxi is Diamond taxi which has only 475 vehicles in compare to more than 1,400 vehicles of Beck, so even if Beck taxi take any risk of reducing radio fee or another step. I don’t think they will also dare to compete to Beck, if they also reduce the radio fee and it would not work than they will be thrown away from the market. Beck can afford any risk as they are three times stronger than Diamond, and having a good name and approach in market. Preferred alternative:-
The alternative mentioned above, according to my preference is to reduce the radio fee during summer. This means that radio fee can be reduced and this will even attract more drivers and plate holders to shift to beck taxi. This decision also not going to affect driver’s salary and stake holder’s commission. Costumers also prefer first available taxi so Beck also having highest taxi’s in market costumer will also prefer to Beck’s taxi only. From my point of view this alternative is balanced and would be bringing profit not only to Beck taxi but also to the drivers and costumers associated with it.
Report to CEO To: Gail Beck-Souter, CEO, Beck taxi, Toronto Regarding: Fee changing A. Situation review: In this report I am mentioning the issue of low business in summer season. As you know we are facing a pricing challenge in summer season from last few years. It is a lean season for our taxi trade because educational institutions gets closed people goes to vacation and most people prefers to walk, cycle or take public transport. We have needed to change in our pricing to outcome this problem. B. Solution recommendation: Although there are many solutions to outcome the situation. •Increase the fixed fee Reduce the fixed fee for the radio and charge a fee for each dispatch •Contact with the big organizations to use our taxi services •Reduce the fixed fee only for the summer Before going to any final decision we should thing on each and every aspect of the situation. We should not think only about our own profit. We have about 3,000 drivers working with us, not only drivers their families are also associated with our company. So our decision should be good for each and every person belong to us. According to my recommendation the best decision would be to reduce the fixed fee without the need to charge fee only for the summer season.
C. Solution explanation: After going through the whole case study and thinking from the view point of all including Company, drivers and plate holders, I have decided that we should reduce the fixed fee only for the summer season. The present fixed fee for each driver is $400. It can be reduced $20-30 in summer season. It will not reduce our profit, instead more drivers and plate holders would likely to allegiance to Beck and would give Beck an opportunity to taste the water before making a larger change in pricing.
The Diamond taxi which is our immediate competition, may think or act to reduce or even if they reduce their fixed fee they still can’t outnumber us as they have just a small fleet of 465 taxis compared to our 1,467 taxi. But I don’t think they can afford to take this risk. We have also a good reputation in market so, more costumer would prefer to use Beck’s taxi. I believe that reducing the rates would only give us profit and make our position more strong in the market. If we can not able to do business as good as other season of year, still we will be do good business in compare to our competitors.