The Montreal Transit Corporation
Essay by Egor Mur • February 9, 2019 • Essay • 971 Words (4 Pages) • 1,021 Views
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Montreal Transit Corporation
Problem:
The Montreal Transit Corporation (STM) and its procurement director Jean Belanger requires to provide detailed information, recommendation and procurement methods to choose from a sole-source contract negotiation or an RFQ for a modernization contract of 336 metro cars with an estimated value of over $1 billion dollars. Jean is aware about competitors in this industry and has a tight deadline to submit his findings to Board of Directors of the Company. He has to make a strategic decision based on several criteria such as:
- The added value for the customer
- Planning
- Financial considerations
- Organization and control
Cause:
The Montreal Metro subway system was introduced and operated since 1966 with rubber-tired trains and it is outgrown by the volume of daily passenger usage, by technology, with high maintenance cost and energy inefficiencies.
Analysis:
Bombardier Sole-Source - SWOT Analysis
Strengths
- Well known and well recognized Brand name
- Expertise and strong specialization in Planes and Trains manufacturing
- Global leader in Transportation
- Local Company with support of local business and community (Factory in La Pocatiere)
- Focus on supplier’s long-lasting relationships with improving their own CSR performances
- Faster and less cost logistics
- Contract negotiation focus on project’s cost controls, terms of contract, train specifications and warranty only
Weaknesses
- Financial backlog for the transportation subsidiary from $7.6 billion to $6 billion
- Technology dependency and integration from other innovators - Not in-house
- Lack of competitive strength
- Less advanced technology
Opportunities
- Positive impact on supporting local business with creation of 4,600 direct and indirect jobs for the next eight years
- Public support and positive public influence from developing local economy and continues growth
- Lead time and cost reduction
Threats
- Possibility of higher cost with no competition
- Delays in delivery and not supporting deadlines
- Financial problems
- Negative Public impact for not offering bidding competition
Alstom Sole-Source - SWOT Analysis
Strengths
- French global company with worldwide operations in rail markets, passenger transportation, signaling and locomotives
- Financial growth and stability
- Increase life and performance due to modern solutions to all phases of a train’s life
- CSR integration in their products and services in exchanging information between Alstom and its suppliers and partners to understand and meet local requirements
- Innovative solutions and more advanced technologies to all aspects of transportation
Weaknesses
- Geographical presence – head offices and production are outside of a Country
- Logistics delays and possible damages, returns (ex. union strikes, tariffs)
- Production delays or shortages due to natural disaster
Opportunities
- Time saving in awarding a contract
- Innovative solutions to lower total cost of ownership
- Better price due to multiple selection of suppliers
- Dedicated CSR team will focus on company short- and long-term business decisions with producing and improving products and processes and will work together towards the sustainable and profitable business model
Threats
- Possibility of higher cost with no competition
- Negative Public impact for not offering bidding competition
- Negative Public impact to STM for not offering contract to a local company
- Negative impact on local economy growth
- Currency fluctuation/Exchange Rates
RFQ – SWOT Analysis
Strengths
- Competitive bidding
- Wide variety of products
- Rational decision making
- Trade Agreements and Purchasing compliances
Weaknesses
- Time consuming and long process
- High competition in the industry
- Possibility of not meeting deadlines in delivering from staff management
Opportunities
- Opportunity for high quality, innovative and sustainable product
- Lower cost of ownership
- Opportunity to share contract with other vendor for different product or services
- Opportunity to have not only A but B or C vendors for different products or services if A partner cannot meet the requirements
Threats
- Negative Public impact to STM if contract not offered to a local company
- Negative impact on local economy growth if contract not offered to a local company
- Increase in the cost
- Currency fluctuation/Exchange Rates
- Logistics, production, political or natural disaster delays
Solution:
Jean Belanger has a very difficult decision to make as it might have big impact on STM as public sector transport agency and local economy. He has to understand and evaluate different options in a timely manner.
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