Comprehensive Organizational Strategic Analysis: COTA

Central Ohio Transit Authority

A comprehensive organizational strategic analysis entails a review of the organization’s strategic orientation or its strategic intentions within its competitive environment and a diagnosis of the entity’s readiness for change (Armstrong, 2012). This analysis inquiries into the environment around the organization, both externally and internally. The internal environment analysis determines the organization’s ability to handle environmental forces that surround it. This internal study investigates the firm’s strengths and weaknesses by focusing on factors that are specific to the organization. The external analysis, on the other hand, reveals its capacity to deal with external aspects affecting operations. In view of Lewis, Goodman, Fandt, and Michlitsch (2007), the comprehensive organizational strategic analysis also identifies the core competencies that are crucial for an organization’s success through the VRIO framework. This paper represents a thorough analysis of the Central Ohio Transit Authority (COTA).

COTA’s Current Performance

An examination of COTA’s current performance reveals its focus on four components contain in its Short-Range Transit Plan (SRTP). This SRTP describes the COTA’s planned service improvements through identifying capital projects to support planned service improvements. The four elements in COTA’s LRTP are the fixed-route and paratransit bus services, intelligent transportation systems, and strategic investments (COTA, 2014). Utilizing the fixed-route bus service element, COTA has been able to provide dependable, safe and convenient transportation that included an addition of about 60,000 annualized service hours. In 2013-2014, COTA was hit by a decline of local sales tax receipts emanating from an economic downturn. Therefore, in the process of combating this challenge, COTA revised its service growth to a sum of 30,000 annualized service hours.

Still, under the LRTP, COTA has been acquiring 30 new fixed-route coaches yearly for purposes of expansion, replacement, employing, and training new bus operators to fulfill its service objectives and increased demand for transit amenities. Under the paratransit bus service component, COTA follows the mainstream expansion and growth approach of growing its paratransit and capacity services as their fixed-route options expand (COTA, 2014). However, this component is not yet fully developed as COTA is examining its mainstream options through inspecting the likelihood of growing partnerships with resident establishments to deliver superior demand-response services for specific people groups. Under the intelligent transportation systems, COTA relies on technologies in its operations to enhance the quality and efficiency of customer service. These improvements include information on real-time bus arrivals at busy bus stops, signal urgency to alter traffic light scheduling and quicken the bus services, as well as smart card technologies, to name a few.

COTA also focuses on pursuing the acquisition of right of way (ROW) and land for potential new park and rides along with the transit centers under its strategic investments. Additionally, COTA also focuses on investigating the potential of alternative modes of transit within the context of its strategic investment plans. These four elements of the fixed-route bus service, paratransit bus service, intelligent transportation systems, and strategic investments have defined COTA’s performance in its competitive markets as they have been the pillars that define its services. Thanks to the development of these cornerstones of its structure, COTA boasts of 68 fixed-bus routes as 2014 that included 11 Crosstown, 19 local, and 37 express lines and the CBUS (COTA, 2014). Additionally, within these activities, COTA addresses the increasing customer demands for fixed-route bus service by regularly reforming and tailoring their services for the benefit of end-users. These changes concern four main areas of upgrading services frequency, expanding areas of service coverage, expanding the hours of operation and decreasing travel times.

Key Issue Identification

The key concerns COTA constantly faces are finding appropriate and relevant local establishments to partner with, under the strategic alliance arm. The focus is on providing alternative modes of transportation. A key challenge with COTA is that it focuses on bus transit services, which could be hampered if an innovative investor manages to enter the market with cheaper alternatives to bus transport. Another issue is the prospect of expanding beyond Ohio. However, the management does not harbor such intentions, given that the transit agency is owned by the state of Ohio, which funds it annually through a renewable 0.25% sales tax. Another potential challenge is the overreliance on gasoline, which tends to affect the bus fares, reliance on state funding, as well as the increase in prices of key materials and maintenance costs.

COTA’s Mission, Vision, and Objectives

In most instances, organizations need a mission to focus and guide their operations and a plan to see through that mission. David (2015) views the mission as summarizing and describing the organization’s market, product and technological capacities of emphasis as to mirror the values and priorities of the firm’s strategic decision-makers. Furthermore, the mission together with the vision and objectives serves as the statement of philosophy revealing what an establishments want to be and whom it wants to work for (David, 2015). COTA’s mission, vision, and objectives are geared toward creating an organization that is always in an ever-in-transition with a focus on building a corporate culture on continuous learning and living by the values set and understanding that their existence is to avail transport services to every visitor and resident of the Ohio community. In this respect, COTA has a three-pronged mission statement.

The first element of COTA’s mission statement is a commitment to excellence in serving COTA’s stakeholders. These stakeholders are COTA’s customers, taxpayers, and employees. The second element is to avail quality transit services and conduct business in a manner that is ethical, reliable, courteous, and safe. The third aspect is to demonstrate an environmentally conscientious and fiscally accountable leadership. The vision statement of COTA is to be the region’s leader in transit services. The objectives of this regional transit agency are to create an operating environment where employees are honored and devoted to work, treated impartially, feel prized, and are prolifically involved as conjoint associates in the attainment of the agency’s goals. According to Lewis et al. (2007), a conventional mission statement should have nine important of products or services, consumers, markets, growth concerns, profitability and survival, philosophy of the company, firm’s self-concept, public image concerns, employee concerns and, quality issues.

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Most of the nine mission components are well covered in COTA’s vision apart from the concerns of profitability, survival, and growth. David (2015) asserts that an effective statement should not be too lengthy and general, rather it needs to be clearly verbalized and capable of arousing constructive feelings and sentiments. Apparently, COTA’s mission does not satisfy these requirements given that it is wordy, broad and fails to arouse positive sentiments and feelings. Besides, COTA’s mission statement fails to inspire and lacks a clear articulation. Due to these shortcomings, this mission statement is not appropriate for COTA’s future growth plans, profitability, and survival in this age of technological innovations and fast-paced market growth.

COTA’s Corporate-Level Strategies

According to COTA (2014), from the time it began its operations about 40 years ago, the region of Central Ohio has gone through tremendous reforms. As COTA looks forward to expanding and improve, it becomes necessary for it to adapt services to satisfy the needs of the developing region. In line with this desire to adapt service to meet the needs of the region, COTA completed in 2014 a Transit System Review (TSR) to define its growth and stability strategy. The main focus of this TSR is to continuously analyze COTA’s entire bus system and services, functioning budget, application of technology, road network and changes in the use of land in central Ohio. This TSR focuses on making COTA’s service more convenient and appealing to clients through designing a Transit System Redesign.

COTA’s mission is a strive for excellence in serving its stakeholders (customers, taxpayers, and employees); facilitating quality transit services and conducting business in a manner that is ethical, reliable, courteous, and safe; and to demonstrate an environmentally conscientious and fiscally accountable leadership. The vision statement is to become and remain the region’s leader in transit services. The other goals include creating an operating environment where employees are honored and devoted to work, treated impartially, feel prized, and are prolifically involved as conjoint associates in the attainment of the agency’s goals. The TSR and the resulting Transit Redesign System are geared towards achieving this vision and mission.

COTA’s Business-Level Strategies

According to Frynas and Mellahi (2015), a favorably chosen business-level strategy clearly positions the firm relative to the competitive forces in the market. Being superficially positioned, enables a firm to simultaneously create value for its customers and returns for shareholders. There are five business-level strategies a firm can choose from. These are the differentiation, cost leadership, focused cost leadership, focused differentiation, and integrated cost leadership/ differentiation (Kachru, 2006). Such tactics have two major dimensions: competitive scope and competitive advantage. The business level-strategy a firm chooses is a function of the basis for the competitive advantage (either cost or uniqueness) that it seeks to achieve or maintain and the breadth of the target market it intends to serve.

COTA positions itself as a focused differentiator with an emphasis on uniqueness target a populous but narrow market, the rider or consumer of transit services. Its choice is fueled by its LRTP containing the elements of fixed-route bus service, paratransit bus service, and intelligent transport systems. COTA also has the Mainstream which is a demand-response, shared-ride paratransit service offered to individuals with disabilities who cannot access COTA’s fixed-route bus system. These decisions have enabled COTA to better serve the transit consumers in central Ohio, offering them a comfortable, trustworthy, economical, and reliable means of transport. The intelligent transportation system enables COTA to enhance its customer’s ridership experience by providing real-time bus arrival information at busy bus stops. Information regarding the arrival time and timely-observation of the schedule has endeared COTA more to the customers.

COTA’s Structural Type and Characteristics

Frynas and Mellahi (2015) assert that there are two different approaches in defining the organizational structural type. These methods are the mechanistic structure and the organic structure. The mechanistic structure is defined by a relatively high degree of job specialization, rigid departmentalization, numerous layers of management, narrow spans of control, centralized decision making, and a long chain of command. The organic one, on the other hand, is characterized by a relatively low degree of job specialization, loose departmentalization, fewer levels of management, wider spans of control, decentralized decision making, and a short chain of command. In terms of the underlined structural types, COTA sees itself as a more of the mechanistic firm.

According to Frynas and Mellahi (2015), an organization can be defined as organic or mechanistic based on its choice of competitive strategy. Mechanistic entities strive for competitive advantage through maximizing productivity and efficiency, whereas organic organizations focus on maximum adaptability and flexibility. One of COTA’s key objectives is to offer efficient transit services and maximize productivity in terms of making its buses available to its populous customer base. Additionally, COTA has an executive leadership team having various heads of departments and over 850 employees, 180 of whom represent administrative roles. The chain of command is up-down, a characteristic of a mechanical organizational structure. This structure fits COTA and the transit industry given that it is relatively stable, has low uncertainty, and they still exist chances to exploit the market using technology.

COTA’s Culture and It’s Fit with COTA’s Strategy

COTA’s culture is an ever-in-transition one, with a focus on enabling continuous learning development. This environment lives by the values they have set and understand that their existence is to provide transit services to every visitor and resident of the Ohio community. This corporate culture is upheld by the values of having a work surrounding where employees are delighted and committed to work, treated equally; where they feel appreciated, and are constructively involved as joint partners in the realization of the structural goals. One of COTA’s important stakeholders is its employees. In fact, COTA seeks to serve the employees through carrying its business in an ethical, reliable, courteous, and safe manner; and through demonstrating environmental conscientious and fiscal accountable leadership. The mission statement embodies COTA’s overall strategy and the business culture has been incorporated into it.

COTA’s Marketing Efforts

COTA’s marketing efforts can be assessed accurately using the 4Ps of marketing or the marketing mix. These 4Ps are the controllable marketing variables of product, price, promotion, and place (or distribution).

Product

Product refers to anything that can be offered to satisfy a need or want of a counterparty (Dogra, 2013). This definition also includes both intangible services and tangible goods and involves decisions on the number of variants, sizes, packaging, color, logo and brand name. However, a product has to deliver a minimum needed level of performance, otherwise, even the best works on the other elements of the marketing mix will not do any good in the long run. COTA understands this and has positioned its products in line with it. COTA’s products are its transit services offered under the fixed-route bus service, paratransit bus service, and intelligent transportation system. COTA has also been experimenting with environmentally friendly transit recently, which uses hybrid coaches together with ultra-low sulfur diesel fuel to compressed natural gas (COTA, 2014).

Price

Price signifies the amount the customer has to pay in order to acquire a product or service (Dogra, 2013). According to Schultz, Barnes, Schultz, and Azzaro (2009), pricing decisions are influenced or broadly determined by the 4Cs of customer value, competitor’s price, the cost to the company, and strategic and pricing objective of the company. In terms of pricing, COTA is advantaged with its large fleet of 340 fixed-route buses which enables it to charge lower fares. Additionally, COTA receives funding from the local state that subsidies the cost to the company in serving over 19.3 million passenger trips it makes. Furthermore, the company has the CBUS, which is a downtown circulator service designed to serve downtown residents, visitors, and employees with a free rise and travels.

Place

According to Schultz et al., (2009), the place is the point of sale or the manifestation of a strategy of establishing how and in what manner it wants its products and services to be made available to the customers so that a profitable exchange can be instituted with the customers. A good distribution or ‘place’ strategy should be able to catch the eye of the consumer and make it easy for the consumer to buy a product or service. COTA’s place strategy is affected by its intelligent transportation system that provides real-time bus arrival information at bust bus stops. Additionally, the organization at hand has and still pursues the advanced acquisition of right of way (ROW) and land for potential new park and rides and transit centers. Moreover, the company has invested in bus stop passenger shelters to provide its consumers with clean and safe places from the elements to wait for the bus.

Promotion

Schultz et al., (2009), defines promotion as all the measures and actions undertaken to make the product or service known to and preferred amongst the user and trade. COTA takes advantage of its bus shelters to design and promote its services. Additionally, it participates in a number of community events that work towards promoting its brand name and service at a low cost. These events include the August 27 40th Anniversary Community Stakeholder Luncheon among others. Apart from these non-traditional avenues, the firm also engages in print and TV advertising where it is currently promoting its green fleet dubbed as the environmentally-friendly transit.

Table 1

COTA’s Financial Analysis

From the ratio analysis, COTA has a current ratio of 0.74, an acid-test ratio of 0.67, an operating income return on investment of 10.9%, an operating profit margin of 21%, a total asset turnover of 0.52, a debt ratio 0f 56.8%, and a return on common equity of 30.7%. These figures are well above the recommended average and industry means, signifying that COTA is better placed to handle its debts and remain profitable. Additionally, the DuPont analysis using the Return on Assets shows that the firm is at 10.9%, indicating that COTA is better positioned in terms of growth relying on its financial structure.

COTA’s Research and Development

COTA has invested greatly in research and development, resulting in the expansion of the LRTP, the SRTP, the Mainstream demand-response paratransit service, and the experimentation on powering vehicles by hybrid-electric or by compressed natural gas (CNG). Within the CNG program, COTA is embarking on a 12-year conversion program that commenced in 2013 to phase all diesel- and gasoline-powered fixed-route buses out of their fleet. This conversion project aims to acquire only buses powered by CNG and, as of December 2014, 66 CBG buses have already been added to the company’s fleet. Apart from these additions, COTA is continuously innovating and seeking for partners and methods to furnish their customers with better quality services.

COTA’s Operational Characteristics

COTA recently conducted a transit system review and redesign to keep up with the tremendous changes happening in central Ohio (COTA, 2014). These modifications were made to adapt the corporation’s services so as meet the needs of the growing central Ohio region. As such, operational areas like the entire bus system and services, application of technology, operating budget, road network, as well as changes in the use of land in central Ohio were reviewed. The result of this operational change was a Transit System Redesign (TSR) that created a grid-like network of very frequent bus lines, reduction of Downtown travel needs, improving major lines services, and increasing frequencies on nights and weekends among others. The implementation of these changes began in January 2015 (COTA, 2014). These changes define COTA’s operational characteristics in line with its differentiation strategy and vision of being the leader in the transit industry.

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COTA’s Human Resources Competencies

COTA boasts of being one of the largest employers in central Ohio, having more than 841 workers. Besides, the company is committed to making use of public transportation resources to support workforce development. The analyzed firm has also come up with a strategy known as the NextGen, which is aimed at identifying public transportation opportunities and needs for the next 35 years. This strategy also entails identifying areas needing personnel and the qualifications that will be required. As such, this strategy helps COTA identify human resources they need at the present and what they will need in the future. The project is scheduled for completion by the spring of 2016 and will serve as an HR recruitment tool and policy at the same time.

COTA’s Information Systems Capabilities

COTA has incorporated and heavily relies on Information Systems to monitor its grid-like networks and provide timely information updates on bus arrival and departure times to customers. As a matter of fact, the corporation’s information systems capabilities are defined by its Intelligent Transportation System. This arrangement focuses on pursuing technologies to enhance customer service, smart card technologies, signal priority for the purposes of adjusting traffic light timing to expedite bus service, and efficiency in the real-time bus arrival information. Besides, COTA works in partnership with Ohio State University to find ways of enhancing its IT infrastructure and offer more efficient services to bus transit consumers.

COTA’s VRIO Analysis

The VRIO framework is an internal analysis tool, whose acronyms stand for valuable, rare, inimitable and organized for usage. This framework suggests that abnormal performances can be achieved when resources are valuable, rare and difficult to imitate (Armstrong, 2012). Below is the VRIO analysis of the COTA.

Table 2

COTA’s VRIO Analysis Framework

A firm can gain two competitive advantages provided that its resources have at least two attributes. The first one is that it has to be valuable in terms of seizing an opportunity, neutralizing any threat, or shielding the firm against one. Secondly, the resource has to be rare in the current and potential markets. From COTA’s VRIO analysis, it can be concluded that the firm has sustained competitive advantage in its grid-like network, large fleet of buses, facilities and networks, acquisition of right of way and land, bus park and shelters, intelligent transportation systems, NextGen, transit system redesign, CNG renovation, innovational capacities, brand name, and DBE to enhance equity in business, and the capacity to combine its intangible and tangible assets. These are the areas that can maximize the incomes of the company if it concentrates on them.

COTA’s Internal Factor Evaluation Matrix

According to David (2015), the Internal Factor Evaluation (IFE) matrix is a strategy construction mechanism that encapsulates and assesses chief strong points and flaws in establishments practical areas. The matrix is vital in answering questions related to the business’ in-house strategic situation. COTA’s IFE is described below

Table 3

COTA’s IFE Matrix

As portrayed above, the total weighted score for the firm is 3.02 which is above the norm of 2.5. This signifies that COTA has slightly greater than the normal capacity to fully utilize its internal factors. Moreover, this score of 3.02 clearly indicates that COTA boasts more strengths than weaknesses. The key strength is the 0.25% sales tax state financial (0.4 weighted score). This funding ensures that the company’s operations do not stop even during the times full of losses. The other rigidities include the disabilities key card program of discounted fares (0.32), product innovation (0.32), largest public bus transit agency (0.32), and access to major routes in Ohio (0.32).

COTA’s Societal Environmental Analysis

The key strategic factors from COTA’s external environment can be identified through the EFE matrix. David (2015) defines the EFE matrix as a set of practices that attempt to explain an establishment’s opportunities and threats emanating from its external environment. Below is the EFE matrix for COTA.

Table 4

COTA’s External Factor Evaluation Matrix

According to the above-described analysis, COTA’s has a total weighted average of 3.41. This score is above the mean of 2.50, suggesting an enhancement in COTA’s capability to exploit of making the greatest use of its external factors. Moreover, this result shows that COTA competitively advantages in relation to its external factors.

COTA’s Industry Analysis

COTA’s Industry analysis can be best illustrated by the competitive profit matrix (CPM). According to Lewis et al. (2007), this matrix ascertains a company’s chief competitors and their specific strengths and weaknesses (David, 2015). Below is the CPM matrix of COTA.

Table 5

COTA’s Competitive Profit Matrix

COTA scores 3.76, which is beyond its competitors’ results. Such a superior position implies that the firm is competing aggressively in its local markets. However, the competitors in the market do not pose any tangible threat as such to COTA, partly due to the fact that COTA is a state agency. Its close competitors, who function as charter bus services, are Lakefront Liners and Columbus coaches.

COTA’s SWOT

According to Armstrong (2012), the SWOT matrix cogitates groupings of strengths-opportunities, strengths-threats, weaknesses-opportunities, and weaknesses-threats to come up with the best stratagem that makes the most of the advantages and opportunities, as well as diminishes the threats and weaknesses.

Table 6

COTA’s SWOT Matrix

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It can be concluded from COTA’s SWOT matrix that the transit agency should consider following Strength-opportunity strategies of concentrating on its huge float