V. Angoco Trucking, Inc.: 37 years of service on Guam.

Agahan, Eileen ; Angoco, Gina M. ; Enriquez, Anita Borja 等

CASE DESCRIPTION

This case highlights the importance of effective business strategies that a company must develop to remain competitive. Business strategies that change over time to fit environmental conditions, focus on core competencies, and create value for customers are presented in this case. This case has a difficulty level of three and up, appropriate for Junior level and beyond. The case is designed to be taught in two class hours in an entrepreneurship, strategic management, managerial economics, or marketing course, and is expected to require about three hours of outside preparation for students, consisting mainly of reading the case and familiarizing themselves with the business environments on the U.S. territory of Guam in the Western Pacific region as well as with some knowledge of the transportation industry.

CASE SYNOPSIS

This case is about Vicente S. Angoco, a local entrepreneur, and the successful family-owned trucking business he created in Guam in the early 1970's. The case traces through his history, from his experience launching an entrepreneurial start-up and managing a growing business amid a changing environment. In doing so, the case illustrates an example of a hard worker who is dedicated to a philosophy of sustainability that is applied to every strategic business decision. It also gives a personal account of the economic and socio-cultural environments faced by the entrepreneur, and issues that present a crossroad for further decision-making to survive other dynamic challenges faced by the business.

INTRODUCTION

Upon retiring from 20 years of service in the United States (U.S.) Navy, Vicente S. Angoco found himself embarking on another life long venture. In June 1972, with a single rundown Hino truck, a family to provide for, a vision of independence, and no formal business training, Mr. Angoco established the foundation for a company that has thrived for over 30 years. Mr. Angoco started his business as a sole proprietor under the auspices of V. S. Angoco's Equipment Rental. His wife, Norma, managed the administrative responsibilities out of the family's home. Several years later, the company grew to meet the greater demand in the construction industry. Mr. Angoco obtained more equipment that would later include ten dump trucks, three backhoes, a loader, a farming plow and miscellaneous trailers and accessories to enhance the services offered by the company. V. S. Angoco's Equipment Rental took part in such historical projects as the construction of the Guam Power Authority Power Plant in Piti; the construction of the Ammo Wharf on Naval Station; the ground work for the Micronesia Mall in Dededo; the groundwork for the Pacific Star and Westin hotels in Tumon; the groundwork for the Apra Heights military housing project; the emergence of Ypaopao Estates in Dededo; the construction of the Guam Housing and Urban Renewal Authority housing projects in Agat; the groundwork for the sewer and waterlines in Talofofo; the groundwork for the Sumitomo Golf Course in Yona, the Machananao Golf Course in Dededo and the Mangilao Golf Course; the hauling of boulders from Hawaiian Rock for the construction of the Agat Marina; the groundwork for the fuel tanks on Andersen Air Force Base, along with numerous other projects over V. S. Angoco's Equipment Rental's 20 years in the heavy equipment industry.

After the construction boom declined in the early 1990's, V. S. Angoco's Equipment Rental maintained its business status, but altered its services from that of heavy equipment to the transportation of ocean freight and miscellaneous heavy hauling. The company divested most of its heavy equipment and invested in three tractors and trailers. Although the company remained within the trucking industry, the transformation from heavy equipment to tractor-trailers presented the company with some obstacles. V. S. Angoco's Equipment Rental began hauling containers in 1993 with three tractors and some coaxing from the general manager of one of Guam's domestic shipping lines. The clientele during these initial stages were the military and a single commercial customer. The company was still being operated from the family home. In May of 1995, Mr. Angoco further developed the company by acquiring the assets of another local trucking company. V. S. Angoco's Equipment Rental expanded from having three tractors to a fleet of ten tractors with chassis, trailers and other miscellaneous equipment. With the increase in assets, V. S. Angoco's Rental sought to expand its working parameters by broadening its customer base and that, they did.

Since 1995, V. S. Angoco's Equipment experienced many changes. In March 1997, the owners acquired a commercial lot less than a quarter mile from the entrance to the Naval Base. This became the new home for what is now V. Angoco Trucking, Inc. Within the first two years of acquiring the lot, a 58' x 60' warehouse was erected to house the mechanic shop for the company's tractors and miscellaneous repairs. In June 2000, V. S. Angoco's Equipment Rental changed its name to better suit its current business and became V. Angoco Trucking, and the company ownership changed from Angoco to his wife, Norma. In June 2001, the company transferred its operations and administrative functions out of the family home and in to a 16' x 50' office built adjacent to the warehouse. The company occupies the second floor while the first floor remains vacant, yet available for future expansion. In February 2004, a 30' x 60' open-air shop was completed. This shop will allow for further growth and expansion of the services the company is able to provide for itself as well as a vision to provide these expanded services to outside clients. In 2006, the company incorporated, which provided ownership shares to members of Angoco's immediately family, with his wife possessing the majority of ownership shares.

Over the years, V. Angoco Trucking, Inc. has serviced many local and U. S. based companies. It serves as an in-house trucker for Matson Navigation Company and an approved trucker for Horizon Lines and the various foreign carriers that service Guam. The company transports cargo island-wide, inclusive of all U.S. military installations. V. Angoco Trucking, Inc. is registered with Research and Special Programs Administration (RSPA)--which provides regulations on transportation, loading, unloading, and storage of hazardous materials--and the U. S. Department of Transportation. The operators are Hazardous Material-certified and participate in various hazardous refresher activities that promote greater safety awareness.

By February 2004, the company had grown to include fifteen tractors and had increased its number of chassis and trailers available for service. The company is situated on a privately owned commercial lot where a two-story office, a tractor-trailer maintenance warehouse and an open-air shop for repairs are located. The maintenance shop is managed and operated by the owner's sons Paul E. Angoco and Steven S. Angoco, who have formal training in mechanical skills, and the trucking operation managed by his daughter Gina M. Angoco with formal training in business.

CHALLENGES

V. Angoco Trucking, Inc., has sustained itself over the years, with its very informal and less structured management style. The 2008 global economic crisis and the challenges it faces in its competitive environment has left room for pause to re-evaluate its position and how to avail of new opportunities for growth. The local trucking industry on Guam has experienced the entry of several "new" competitors over the past two to three years. These companies are awaiting the U.S. military build-up on Guam that will span through the year 2014.

The anticipated $10 billion U.S. military buildup involves the transfer of approximately 8,000 U.S. Marines and their dependents from Okinawa, Japan to Guam. Along with U.S. Department of Defense contracting opportunities on the U.S. military base on Guam due to this buildup, and corresponding related activities outside the military base to support an anticipated increase in the civilian population off-base, this buildup promises to generate a tremendous increase in trucking transportation demand on Guam. This has attracted competition across all related businesses, and corresponding threat of large off-island competitors that the company may not be able to compete with. Since the exact timeframe for the buildup is not definite, V. Angoco Trucking, Inc. is unsure of when expansion to meet the anticipated demand should be pursued. If done too soon, it may result in a financial deficit for the firm, and if done too late, it would lag at a competitive disadvantage.

The threat of excessive influx of off-island companies vying for the same contracts that local companies such as V. Angoco Trucking, Inc. depend on to sustain their businesses has been a cause for concern by the company. Although small minority-owned businesses such as V. Angoco Trucking, Inc. is eligible for U.S. Department of Defense small business set-aside contracts, many larger off-island U.S. Department of Defense contractors either qualify as "small businesses" with larger capital to compete with smaller local businesses, or may pursue these contracts as prime contractors with qualified off-island small businesses. Both serve as perceived threats to local small businesses that may not be at a level playing field. The problem is compounded when the larger U.S. Department of Defense contractors or businesses import their own equipment, in lieu of sub-contracting to local businesses.

With little to no significant increase in commercial trucking, competition has grown extreme with trucking rates mirroring that of 1995, but with operating expenses rising at the same rate as the price of the oil barrel. With increase in competition, the industry has become more saturated, decreasing market share for the firm. This posed new challenges for the company, which included how to balance out retention of current customers and acquiring of new ones, the resulting reduction of prices and profit margin, and the need to survive in the process.

There were identified concerns raised by management on market development. V. Angoco Trucking, Inc., does not possess "unique" or "special" services that differentiate it from the competition. Customer demand for trucking services remains fixed. The services offered by the firm are purchased by the same pool of customers that all trucking services are aware of and knock on their doors. Although the services offered are not considered a "specialty," they are also not required by the general population. It faces a concern on how to set itself apart from other trucking companies without having to compete too much on price. In effect, the firm wonders how it can create a niche or bona fide service value to differentiate itself from its competitors.

With regard to financial issues, V. Angoco Trucking, Inc. would like to pursue creative avenues towards obtaining capital. This includes the ability to effectively build capital on its own, given reduced profit markets from slow demand in the market, current fixed costs, and the multiplier effect of increased fuel costs to the cost of doing business across all industries. The company is also assessing the type of resources that will be helpful towards assisting in streamlining operational expenses.

On June 23, 2009, V. Angoco Trucking, Inc. celebrated its 37th year of providing trucking services to the island of Guam. Its owners would like to hold and maintain its current position in the market, while surviving in the process. Its future goal is to grow, but not sacrifice any ownership to outside investors. It has the potential to diversify into the equipment repair business since the firm already possesses a facility and certified mechanics. Despite the ongoing financial challenges and competitive threats, the firm is committed to being a part of Guam's business community for many years into the future.

DISCUSSION QUESTIONS

1. What are Vicente S. Angoco's main business strategies?

2. What occurred that made the company decide it needed to make major business changes?

3. What type of competitive advantage is V. Angoco Trucking, Inc. trying to achieve?

4. What strategic issues does the company need to address?

5. How could V. Angoco's Trucking, Inc. diversify its business, so as to not have all its "eggs in one basket"?

6. With the anticipated U.S. military buildup from the transfer of 8,000 U.S. Marines and their dependents from Okinawa, Japan, how could V. Angoco Trucking, Inc., expand its business to prepare for this buildup, given its current constraints of fixed capital, slow economy, and the need to maintain sole control of the business?

7. How could V. Angoco Trucking, Inc. obtain "reasonable" capital with the current lending issues with banking institutions?

8. What business strategy or strategies could V. Angoco Trucking, Inc. pursue, to sustain itself into the future while solidifying its current foundation and supporting future growth?

REFERENCES

G. Angoco (personal communication, February 10, 2010)

N. Angoco (personal communication, March 15, 2010)

V.S. Angoco (personal communication, March 15, 2010)

Eileen Agahan, University of Guam

Gina M. Angoco, V. Angoco Trucking, Inc.

Anita Borja Enriquez, University of Guam