Environmental Analysis: Yellow Transportation

Environmental Analysis: Yellow Transportation

An organizations external environment consists of three interrelated sets of factors that play a principal role in determining the opportunities, threats, and constraints that Yellow Transportation (YRC) will face. The first factor is the remote environment that comprises of factors originating beyond any organizations operating situation such as economic, social, political, technological and ecological factors. The second factor is industry environment. This more directly influences organizations prospects originating in the environment of its industry like new entrants, suppliers, buyers, substitutes and current competition. Finally, the operating environment comprises factors that influence an organizations immediate competitive situation that could include the factors, specific completion, creditors, and the labor market. These three sets of factors provide many of the challenges that a particular firm faces in its attempts to attract or acquire needed resources and in order to obtain profitably and success. The following paragraphs will give a brief company history, mission and vision and list the core YRC values. In addition, an environmental synopsis of the freight industry will be addressed.

YRC History

According to the website for Yellow Transportation (2007), YRC Worldwide traces its origins to 1924 when A.J. Harrell, an Oklahoma City entrepreneur, founded a bus and taxi company and named it Yellow Cab Transit Co. In 1926, he shortened the name to Yellow Transit Co. In 1929, AJ was concerned about road safety, so he commissioned the E.I. DuPont Co. to determine the color that would be most visible on the tractors from the greatest distance on the nation's highways. DuPont's research found the color Swamp Holly Orange. YRC still use this color on Yellow trucks today (Yellow Transportation Worldwide, 2007).

In April 1952, an ownership group led by George E. Powell, Sr., bought the company. The group included George E. Powell, Jr., and Roy Freuhauf, owner of the Freuhauf Trailer Co. Yellow helped pioneer the concept of consolidating small freight shipments into trailer loads for interstate transport, deconsolidation, and distribution. In 1968, the company name changed from Yellow Transit Freight Lines to Yellow Freight System (Yellow Transportation Worldwide, 2007).

During the 1980s, after interstate trucking deregulation, Yellow embarked on a growth plan that focused on constructing new service centers and large distribution centers in an all-new design. In late 1992, Yellow Corp., the parent company, was formed with Yellow Transportation as its largest operating subsidiary. In 2003, Yellow acquired Roadway Corp. to become Yellow Roadway Corp. In 2005, Yellow expanded its regional capabilities by acquiring USF, which has been renamed YRC Regional Transportation. In 2006, the company changed its name to YRC Worldwide to reflect the expanding, global nature of the business (Yellow Transportation Worldwide, 2007).

YRC Mission

The mission of YRC is “to be the leading provider of guaranteed, time-definite, defect-free, hassle-free transportation services for business customers worldwide” (Yellow Transportation Worldwide, 2007).

YRC Vision

Yellow will “be the leading provider of guaranteed, time-definite, defect-free, hassle-free transportation for business consumers worldwide” (Yellow Transportation Worldwide, 2007).

YRC Core values

The core values of YRC include exceeding customer expectations, to value the YRC people, the ability to work in a safe environment, to demonstrate good citizenship, to act with integrity and to embrace teamwork.

Remote Environment

Economic Factors

“Economic factors concern the nature and direction of the economy in which a firm operates. On both the national and international level, it must consider the general availability of credit, the level of disposable income, and the propensity of people to spend”(University of Phoenix, 2007). The freight demand is primarily influenced by the volume of goods produced and consumed. Expansion in the national economy, or the economy of any region, results in increases in overall demand (in terms of volume) for goods and services, while economic contractions result in demand reductions. Overall economic condition is also indicative of the buying/purchasing power of the population (Bureau of Transportation Statistics, 2007)..

There is a close link between growth in freight transportation and economic growth. Changes in economic activities influence the demand for freight services. Strong growth in the U.S. economy, wholesale trade, and retail trade sales were key factors that affected the level of U.S. freight shipments. Increases in these factors meant greater volume of goods produced and consumed, resulting in increased demand for freight transportation, more freight movements, and increased length of haul (Bureau of Transportation Statistics, 2007).

Cost of fuel is another factor that can impact the way a freight company operates. As for YRC, when fuel prices are high, the cost of shipping is higher due to the increase in the fuel surcharge resulting in lowering sales. There is a direct correlation between cost of Fuel and shipping sales. Another factor affecting YRC is the exchange rates. When YRC is shipping internationally they need to factor the value of the American dollar compared to the currency of the country outside of the United States that YRC is conducting business with. A particular issue arose when 1 euro was equal to $2 in the United States, so basically from Europe’s perspective when importing product from the United States Europe is making a profit, but when the United States is importing a European product the freight costs are less profitable from the US’ perspective.

Social Factors

“The social factors that affect a firm involve the beliefs, values, culture, attitudes, opinions, and lifestyles of persons in the firm’s external environment, as developed from cultural, ecological, demographic, religious, educational, and ethnic conditioning”(University of Phoenix, 2007). Some companies that use freight carriers value price first, service second. For example, certain companies need cheaper freight costs due to the costs per unit when manufacturing the product at hand. Some companies are willing to pay a higher freight cost in turn for a better service due to the dollar value of the commodity being shipped from point