Case Type: add capacity, growth; operations strategy; new product.
Consulting Firm: A.T. Kearney final round job interview.
Industry Coverage: transportation.
Case Interview Question #00226: The client Ryder System, Inc. or Ryder (NYSE: R), is an American-based Fortune 500 provider of leading edge transportation, logistics and supply chain management solutions worldwide. Headquartered in suburban Miami, Florida, Ryder’s global operation has total revenue of more than $6.5 billion in 2007.
Ryder’s product offerings include: LM, which provides leasing and programmed maintenance of trucks, tractors and trailers to commercial customers; SC, which manages the movement of materials and related information from the acquisition of raw materials to the delivery of finished products to end-users; and DCC, which provides a turn-key transportation service that includes vehicles, drivers, routing and scheduling. The focus of this case is on the Leasing & Maintenance (LM) group.
The growth in the overall number of truck registrations has slowed, 2.2% CAGR (Compound Annual Growth Rate). The LM market is declining. However, the client’s revenues within the LM market have been flat. The client has asked your help to put together a growth strategy. More specifically, Ryder is looking at achieving significant growth over the next 2 years and is looking for some major improvements.
Note: This case is a classic growth strategy case which involves penetrating a new segment by offering new products. The candidate will be tested on his thoughts for achieving organic growth and on some light quantitative analysis.
Question #1: In general, what are the different ways to achieve organic growth?
Possible Answer:
Question 5 is about the increase in revenues, not about the increase in the share of the total number of trucks sold per year. To answer the question, one would need to make an assumption about the price for the maintenance-only service to the “private” segment. Then multiply this price by the number of trucks that Ryder could win over (so 1%*60%*4.7m=28,200 trucks) and compare this to the group’s USD6.5bn current annual sales.