V. Angoco Trucking, Inc.: 37 years of service on Guam: instructors' note.(Instructor's Note)

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.

DISCUSSION QUESTIONS AND SUGGESTED ANSWERS

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

Vicente S. Angoco's main business strategies include expansion, divestiture and corporate rebranding. Angoco promotes growth when he invests in expansion by obtaining more equipment to enhance the services and broaden the customer base of his company. After the construction boom declined in the early 1990's, Angoco divested most of his company's heavy equipment and then invested in three tractors and trailers, altering services from that of heavy equipment to transportation of ocean freight and miscellaneous heavy hauling. Here Angoco attempted to use a period of retrenchment to stabilize his company and restore profitability and competitiveness after his company may have experienced a drop in demand for its services due to the decline of the construction boom. In June 2000, V. S. Angoco's Equipment Rental changed its name to better suit its current business and became V. Angoco Trucking. The company ownership also changed from Angoco to his wife, Norma. The main drivers for the rebranding include a change in the company's structure, strategy and ownership. Angoco aims to communicate a new message--his company has evolved.

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

Key events prompted the company to undertake expansion, divestiture and corporate rebranding. Due to the greater demand in the construction industry, Mr. Angoco obtained more equipment to enhance his company's services, including ten dump trucks, three backhoes, a loader, a farming plow and miscellaneous trailers and accessories. However, after the construction boom declined in the early 1990's, V. S. Angoco's Equipment Rental 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. In order to better suit its current business and after ownership changed from Angoco to his wife, Norma, V. S. Angoco's Equipment Rental changed its name to V. Angoco Trucking in June 2000.

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

V. Angoco Trucking, Inc. is trying to develop a differentiation strategy because the company 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.

A core competence represents a competitive advantage because the company acquires expertise that competitors do not have. For instance, a core competence may be process efficiency, management skill, or exceptional customer service. The differentiation strategy can be profitable because customers are loyal and will pay high prices for the service perceived as unique. V. Angoco Trucking, Inc. can then create additional value with existing resources, providing a big boost to the bottom line.

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

The company will need to address the entry of several "new" competitors in the local trucking industry, especially with the forthcoming U.S. military buildup. These companies are trying to meet the increase in demand for trucking transportation and vying for the same contracts. It may not be a level playing field for a local small business like V. Angoco Trucking, Inc. when it competes against off-island companies that have larger capital. It is also a perceived threat when the larger U.S. Department of Defense contractors or businesses import their own equipment instead of sub-contracting to local businesses. Since the exact time frame for the buildup is not definite, V. Angoco Trucking, Inc. is unsure of when to further pursue expansion to meet the anticipated demand. The firm may experience a financial deficit if it pursues this expansion too soon, or experience a competitive disadvantage if it pursues it too late. With the increase in competition, the industry has certainly become more saturated, decreasing market share for V. Angoco Trucking, Inc. This poses new challenges, which include the retention of current customers and acquisition of new ones, reduction of prices and profit margin, and the eventual need to survive in the process.

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

V. Angoco Trucking, Inc. has the potential to diversify into the equipment repair business since the firm already possesses a facility and certified mechanics. 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.

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?

A small business like V. Angoco Trucking, Inc. can turn to joint ventures, which is ideal when a project is too complex, expensive, or uncertain for one firm to handle alone since costs, risks and resources are shared. The company can effectively build capital, 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.

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

Small businesses are eligible for loans through the U.S. Small Business Administration with a U.S. financial institution. Depending on the type of loan sought, loans or grants may be available through other U.S. federally-funded programs. Microcredit loans are alternatives.

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

The company must first determine what business-level strategy to pursue. Subsequently, functional level marketing strategies are critical, most specifically related to positioning, product, pricing, and promotion strategies. The company needs to develop its unique value proposition, with regard to the type of positioning it intends to pursue, and the pricing mechanisms that support its business-level strategy. It may cautiously pursue diversifying into the equipment repair business to attract new revenue streams, given its already fixed costs. In preparation for the anticipated growth in demand from the U.S. military buildup activities on Guam, the company could start exploring prospective partners through teaming arrangements or joint ventures that are complementary to its existing capabilities, capacity, and resources.