Greyhound Bus Company

Introduction

Greyhound Lines, Inc., headquartered in Dallas, Texas is the only nationwide provider of scheduled intercity transportation in the United States. As seen on Greyhound's web site in 2001 they had more then twenty five million passengers aboard their bus lines and consolidated revenue was $1,022.4 million. Greyhound's fleet consists of more then 2,300 buses which arrive and depart from one hundred and twelve company-operated terminals and approximately one thousand seven hundred agency-operated terminals. In 2001, the number of employees nationwide on payroll was twelve thousand and of that amount, approximately thirty six percent are drivers.

Greyhound bus lines operate a vigorous schedule of twenty-four hours a day, seven days a week. All buses are equipped with air conditioning, restrooms, tinted windows and reclining seats and since its inception in 1914, Greyhound has also expanded into other lines of services which include food, package express services and charter services.

In 1998, Greyhound Lines, Inc. showed a profit of 35.2 million dollars which was much to celebrate considering that a profit hasn't been seen since 1993. However, in 1999 there is a net loss of 16.3 million dollars. This Greyhound Lines, Inc. case study will address many key issues that must be examined in order to put Greyhound back on track, and the recommendations that will follow will try to help Greyhound stay on the road to recovery.

Summary of Business & Case

Americans hit the road most often during the traditional Thanksgiving and Christmas holidays and the summer vacation months, so successful travel firms have adapted their operations to take advantage of these seasonal highs and lows.

Greyhound Lines, Inc., experiences large seasonal fluctuations in both passenger volumes and incoming customer service calls. In response to these broad swings in travel volume, Greyhound has shown how a travel industry leader applies advanced technology to maximize efficiency, call center productivity and passenger satisfaction.

Established in 1914, Greyhound got its start by transporting miners between the villages of Hibbing and Alice, Minnesota. Today, Greyhound Lines, Inc. delivers efficient and dependable service to over 2,600 destinations in the United States. The fleet consists of approximately 2,400 buses, which allows Greyhound to offer18,000 daily departures from various terminals (David, 2001, p. 176).

To maintain its unique leadership position, the company employs more than 11,000 people, including 850 customer service representatives who respond to incoming Greyhound customer calls. Greyhound customers can call a nationwide toll-free telephone number to receive fare and scheduling information or to make reservations and purchase tickets. Because travelers nationwide depend on Greyhound, the company's call center representatives must be available 24-hours-a-day, seven-days-a-week to provide scheduling and passenger ticketing services.

The course of the company has not been smooth as it seems in the figures of their balance sheets. The company has had several changes in its management style and in its approach in maintaining a customer base as well as in an acceptable margin to operate. The main concern for Greyhound is that most Americans have changed their pattern of travel to a more comfortable and faster means than a bus. The market for the potential travelers in buses is reducing as there is little glamour in riding a bus and passing through terminals.

The future of Greyhound is debatable but it has not lost its image or its core customers. With some research and development in supplying customers with a better product, hopefully this will lead to greater market penetration. However, this will remain one of the biggest challenges of Greyhound.

Internal Analysis

Management

Craig Lentzsch, the current President and Chief Executive Officer of Greyhound Lines, Inc., has done a great job bringing the management team together. Lentzsch's 21years as a veteran of the bus transportation industry has been of great benefit to Greyhound. His leadership has brought the company out of a tight spot, and Greyhound began to show a turn-around in 1998, even though the company was in debt prior to that year. Moreover, Craig Lentzch's "back-to-basics" approach has pointed the company in new areas and has capitalized on previously untapped revenues such as package delivery, an idea the previous management team thought was not worth the effort. Through the merger with Laidlaw Inc. the company now has some financial strength. Lentzch's leadership has done well for the company by limiting costs, reducing the age of the fleet, adding new stations, decreasing high employee turnover and producing a profit.

Finance

Greyhound initially was not a financially sound company but since 1998, and under good leadership, it is capable of turning a profit and being successful. After five years of negative earnings the company had its first full-year profit realized in 1998, unfortunately the company ended 1999 with a -$16.3 million and increased long-term debts (David, 2001, p.180). When Greyhound made plans to merge with Laidlaw Inc. some people thought it was a bad move for the company. However, strategically the merger with Laidlaw Inc. holds many advantages for Greyhound, primarily because it now has access to financial markets and Laidlaw's financial strengths gives the company a needed boost.

The company has also taken a few initiatives to cut costs and improve profits by finding new unexplored markets to increase revenues such as offering express package delivery. Considering that the buses are already transporting passengers, revenues derived from transporting packages are mostly profit. At one point revenue produced from delivery of packages amounted to 15% of Greyhound's total revenue, estimated at approximately $90 million annually (www.greyhound.com). The company is also generating revenue by selling advertising inside and on the sides of their buses. Greyhound has great potential to be successful, however it will need some time to prove that these good ideas are worth the investment.

Marketing

Along with the "back-to-basics" strategy the company is also regaining rider ship with its, "take the bus and leave the driving to us" campaign (David, 2001, p.184). This slogan along with its icon running dog is one of North America's most recognized symbols, which can be credited with restoring Greyhound's recognition and popularity