Free Report About Strategic Management Report Of Stagecoach Group
The aim of this professional business report is to address and review the key performance indicators that have been considered for strategic use by Stagecoach Group’s performance. In addition the report provides a significant justification needed for retaining the KPI’s identity. A balance scorecard has been developed by using the present KPI published by the company. It will allow in understanding the relationship between the KPI, stakeholders and the company’s policy.
Stagecoach group is a multinational transportation group that operates buses, trains, and express coaches. The group foundations were laid down in 1980 by Brian Souter and his sister Ann Gloag. Brian Souter is also the current chairman of the group.
Stagecoach is the second largest group in UK and enjoys the 16% of the bus market and 25% of the rail market share including 49% holdings in Virgin Rail Group. The group operates around 8100 vehicles in above 90 major cities in UK and have daily passenger turnover of above 3 million. An Overall fleet of the stagecoach consists of 10700 buses and 2350 trains worldwide.
The group employs more than 37800 employees out of which 18000 are employed alone in UK. The Head office of the stagecoach is situated in Perth, Scotland, and it has its operations in UK and North America. It is listed in London Stock exchange and is the constituent of the FTSE 250 Index (Overview - Stagecoach Group, 2015).
“We are committed to being a market-leading public transport business with long-term growth prospects based on high-quality services and investment in innovation. Our vision is to deliver greener, smarter travel to our customers, create sustained shareholder value and share our success with our people and our communities (Stagecoach annual report 2014)”
The key elements of Stagecoach Group’s business strategy to deliver long-term shareholder value are:
Our strategy is to grow our business in a sustainable way.
Help people to access employment, education, healthcare and leisure facilities every single day of the year. Group believe that being responsible is the core value of business, and it believes in people and partnership
The Vision of the group is to deliver greener and smarter travel to passengers and mutually share the success of the company with its people and communities (Stagecoach Sustainability Report, 2015).
Key performance indicators of Stagecoach Group: Stagecoach measures its progress towards achieving objectives and growth with the help of variety of Key performance indicators. Important areas of focus are profitability, organic growth, safety and service delivery.
KPI 1: profitability – company measures its profitability on the basis of growth in adjusted earnings per share.
Overall strategy of the group is to create value for its share holders on long term basis and provide them profitable return. Measuring profitability using adjusted earnings per share helps the group in achieving its strategy and this measure is hence in harmony with the objectives of the company.
KPI 2: organic growth – group’s objective is to measure growth in every division in terms of revenue and passenger volumes. To achieve this objective, group measure the regional Bus operations on the basis of passenger journey and London operations on the basis of percentage growth in revenue. These KPI’s are not sufficient, and the organic growth comparison among the divisions of the group is not possible since different measures are used for different divisions. Stagecoach should measure growth in passenger journeys and as well as growth in revenue for both the divisions i.e. London and Regional operations. It will help the group analyze the group’s growth both in financial and organic terms.
North America operations performance is measured in terms of revenue growth. Stagecoach should divide this KPI and measure growth in rail operations and bus operations separately. It will help the group getting the real insight into the performance of individual sectors.
KPI 3: safety - stagecoach measure the safety in terms of accidents occurring per one million miles travelled. This measures the performance of the company in providing the safe and sound travelling to the passengers and employees.
Bus operations in UK have a relatively high percentage of accidents. In order to assess the clearer picture of these accidents, vehicle conditions assessment should also be included in the KPI’s. Number of breakdown in vehicle compared to breakdowns in previous year can prove to be the good indicator.
KPI 4: service delivery – stagecoach measure its service delivery on the basis of reliability of the buses and the punctuality of the trains. On time arrival and departure is the heart of service delivery in transportation industry and these key performance indicators are effective in evaluating the performance of the group in terms of reliability and punctuality.
However, services delivery performance indicators are not used for the operations in North America which must be included by the Group as KPI and should be assessed to evaluate the effectiveness of the operations over North America.
Balance scorecard was developed by the Kaplan and Norton in 1990. It is a strategic planning and management tool that is used widely in the industry and commerce and aims to evaluate the activities of the business relative to its vision, mission and strategy (Balanced Scorecard Basics, 2014). It helps in the improvement of the internal and external communication and monitors the performance of the organization against its strategic goals. Balance score card views the organization from four perspectives and requires the company to develop metric, collect data and analyze that data in relation to each of these perspectives:
Learning and growth perspective
Internal business perspective.
Objective: To create value for share holders on long term basis and increase the returns of the group.
Adjusted EPS: earning per share is calculated as a profit attributable to equity shareholders divided buy the average number of shares. They are adjusted to be calculated before intangible assets expenses.Stagecoach’s EPS for 2014 was as follows:
Target: increase in adjusted earnings per share in excess of inflation
Multi million pound investments have been made all across United Kingdom on automatic vehicle system for regional bus fleet. It will provide quick information on services to customer through smart phone apps. It will also help local authorities to deliver timely information to the passengers.
$550 million invested in new buses and coaches for regional services. $100 Million invested in London services since 2010
Learning and growth Perspective
Growth in the customer services to provide the customers with latest available services
UK Bus operations: growth in the journeys by passengers - calculated as a percentage increase in the number of passenger journeys in relation to the journeys in previous period.
Rail: Growth in miles travelled – calculated as miles travelled by passengers in relation to the miles travelled in the previous year.
UK Bus London and North America operations: Growth in revenue – calculated as percentage increase in revenue as compared to previous year.
Target: Positive growth each year in revenue and passenger journeys
Investments in ticketing facilities and waiting areas are made to improve customer services.
Launch of Megabus.com website in North America. This project saved the passengers $1 billion in 2013 by taking discounts on bus services rather than travelling through airplane or train. Additionally, more than 1000 jobs were created in the market as a result of this project.
Alliance with Network Rail at south west trains. This contract will operate till April 2019. Close working with government in order to improve passenger services and respond to infrastructure challenges and capacity problems resulting due to increasing population.
Virgin rail group joint venture has entered in to an agreement with the UK Transport department in which west coast rail franchise will return to normal commercial terms in 18 month management contract.
Investments in social media are made to have direct relation with customers and give support services on timely basis.
Popular destinations are now travelled via train in the same time as it would take in car. On board services are enhanced including free wi-fi which can entertain passengers during their journey.
Internal Business Perspective
Health and safety of employees
Create a great environment to work within and develop a culture that recognize the skills f employees and reward their excellence.
Value the individuality and diversity of every employee
Six KPI’s used by stagecoach to assess its safety environment are as follows:
Motivation and encouragement of employees on regular basis and equal opportunities are provided to employees
Strong vocational training program in both bus and rail businesses.
Continuous investment in people is made to ensure learning and growth. UK Team consist of 18000 bus drivers who have completed more than 90000 training courses to achieve Driver Certificate in Professional competence (CPC). This certificate is accredited by the Driver Standards Agency. Employees at South West Trains were provided with the opportunity to achieve NVQ in 2013/2014. Management development programs were introduced at East Midland Trains which gave the opportunity to employees to enhance their skills and start a career as a manager.
Employees have a free access to flu jabs and confidential health assessments. Bowel cancer and ovarian cancer awareness charities are provided to female workers and they were given the self-examination packs during national breast cancer week and education was given to them about disease.
Stagecoach champions’ awards are given to employees in the areas of safety, health, community, customer services and innovation.
Stage coach has designed a “speak up” policy through which employees can discuss their problems and raise voices on issues without fear of discrimination and victimization.
Stagecoach is increasing the gender diversity as new managers are being recruited. 50% of participants are female in UK Bus graduate training program.
Engineering systems are operated in UK and North America bus businesses which are stricter than legal requirements. Additionally, health and safety audits are conducted at depots and garages. Training programs are conducted in all the activity areas and people are encouraged to report concerns regarding health and safety.
Service delivery: service delivery is measured by the company on the following basis:
UK Bus (regional and London) – reliability of travelling measured on the basis of percentage of planned miles to be operated to actual operated
Rail –rail services are measured on the basis of punctuality. Punctuality is measured as the percentage of trains that arrive at their final destination within 5 minutes of their scheduled time of arrival while stopping at all scheduled stations.
KPI’s are as follows:
Health and safety lessons are conducted at local schools to provide information to young pupils who use public transport.
CCTV cameras are fitted in all the buses to ensure safety of passengers and employees.
Regular safety programs are conducted to address issues of lane changing, speed, and driver fatigue and sleep management. Company’s system monitor buses and coaches to track speed and tire pressures to help in the employees education programs. As a result of such initiatives, British transport police have awarded secure station status to above 100 stations in southwest trains - network rail alliance.
Discounted travel schemes have been introduced for jobseekers which offer one sided and return bus travels. Also, people under 19 years are given 33% discount on all their travelling.
List of References
Balanced Scorecard Basics. 2014. [Online] Available at: <http://balancedscorecard.org/Resources/About-the-Balanced-Scorecard> [Accessed 5 April 2015].
Stagecoach Group Annual Report and Financial Statements 2014. 2014. Perth: Stagecoach Group Plc.
Overview - Stagecoach Group. 2015. [Online] Available at: <http://www.stagecoach.com/about/our-companies/overview.aspx> [Accessed 5 April 2015].
Stagecoach Sustainibility Report. 2015. [Online] Available at: <http://www.stagecoach.com/sustainability/our-strategy.aspx> [Accessed 5 April 2015].
Strategy - Stagecoach Group. 2015. [Online] Available at: <http://www.stagecoach.com/sustainability/our-strategy.aspx> [Accessed 5 April 2015].