Commuter Cleaning is a company that will provide dry cleaning services to office workers who live in the suburbs of large metropolitan areas. Their specific target comprise of single men and women as well as married couples who both work in the office and have no time to go to a traditional dry cleaning service. The drop-off and pick up points will be located in places where potential customers will meet their trains or buses on their way to the city. Commuter Cleaning will rent space within these transit stations.
The company is thinking of offering same-day or next-day service. There are only a few questions that need to be answered before investors start pouring money into this venture. First of all, is there a market for this type of dry-cleaning service? Secondly, can Commuter Cleaning sustain a high level of morale within their workforce? And finally, can Commuter Cleaning offer additional service aside from dry cleaning? Aside from answering these three questions the proponent of this study will assert that although the business model is promising it seems more likely that Commuter Cleaning will initially have a hard time building their customer base.
In response to the first question it can be argued that there is a market for this type of express dry cleaning service because the company is targeting single men and women and even couples who have no time within the week to bring their business wear shirts. The one who prepared the business plan argued correctly that an office worker will need one clean business wear shirt a day and add to that the fact that these office workers live in the suburbs and therefore they need to leave their homes early for their commute and when they get home it is already late for them to go to the local dry cleaners. Therefore, there is a demand for this type of service.
With regards to the second question, Commuter Cleaning will have a difficult time in their goal of maintaining a high employee-morale. First of all, the company needed their workers to come in early while others have to work till late in the night and one has to remember that most of their workers are college students doing part time job, this is to minimize cost but at the same time attempting to get the most qualified students. For those who will be there for the first shift which starts at 6:00 A.M., these college students will have to wake up as early as 5:00 A.M. to be able to reach their respective Commuter Cleaning stations before 6:00 A.M. Secondly, those who are assigned to the second shift, they will have to stay late up until 8:30 P.M. and close shop at 9:00 P.M or even later.
These two work shifts will not be easy for students who work and study at the same time. This is especially true for workers who are going to work on the first and second shifts. When this happens then the student will have a hard time studying his or her lessons whether early in the morning or late at night because of the schedules that the company requires them to follow. There is also another issue with regards to the drivers because based on the salary they are giving at $6 per hour it is safe to assume that the company will also hire college students and yet this will go against their strategy because they initially thought of hiring college students because of their class schedules that usually gets hectic between 10 A.M. and 3:00 P.M. this coincides with Commuter Cleaning’s delivery and pick-up schedules.
There is also concern regarding the work shifts. With regards to the first shift college students who have class beginning at 10 A.M. will have to commute or walk from the train station or bus station the moment that his or her shift ends at 9:00 A.M. They might find it difficult to maintain a zero tardiness record. For those who have to work in the second shift they have to deal with going home past the 9:00 P.M. mark because they still had to close the pick-up and deliver station.
With regards to the third question Commuter Cleaning will never be able to offer additional services aside from their same-day dry cleaning service. What they are offering is already a challenge for a fledgling company and so it is difficult to imagine expanding their range of services offered to include dry cleaning for men and women’s business suits. In order to understand more about the company the following S.W.O.T. analysis will even highlight some of the problems and challenges that Commuter Cleaning will have to hurdle in the first few months of operations.
S.W.O.T.
The strength of this business model can be found in its ability to serve a growing base of clientele – single men and women working in an urban center and have no time to wash and dry their business shirts. They will also generate demand from couples who are both working and also have no time during the weekdays to deal with their laundry needs especially when it comes to the shirts that they will use in the office.
The strength Commuter Cleaning’s business model is also seen in the way the shops or pick-up points are located. These are located near train stations, bus stations, and other transport hubs that white collar employees go through in every working day and so they do not need to take a detour or walk a considerable distance just to drop their laundry for some dry cleaning. They will only need a few moments of their time to check-in their clothes and then go to their respective stations and then to their offices.
The convenience is not only limited in the strategic locations of the pick-up and delivery centers but also in a relatively new scheme that uses credit cards to bill customers at the end of the month. Thus, there are no long lines expected as people try to pay the cashier. They just simply drop their laundry bags, let the attendant process it and in a few moments they are already headed to their respective transporter and ready for work.
By outsourcing their dry cleaning requirements to dry cleaners that have excess capacity, Commuter Cleaning can focus on other aspects of the business and need not worry about buying equipment and overhead expenses associated with a large business operation.
The weakness of their business model is the limited range of services offered. This is a major problem for those who use suits every work day. It does not make sense for the customer to choose Commuter Cleaning to dry clean their business wear shirts and then go to a traditional dry cleaner to do dry cleaning for their suits.
The business model severely restricts the company from expanding even further and opening new pick-up and delivery stations because their system is tied to a color coded scheme. This will undoubtedly increase their efficiency because sorters will no longer have to deal with looking at the account details of a particular laundry bag, the moment he or she is aware of the color code then the employee knows exactly where the laundry bag is supposed to be headed. This will work if there are under 7 working stations bout after they are forced to open the eight one then they will have to think of another color variation to provide a new color code scheme to accommodate the new station.
The second major weakness of the business model was already identified by those who made the business proposal. They pointed out the fact that outsourcing will make it extremely difficult to maintain consistency. They will surely experience quality problems. They will have less control when it comes to delays. But the most important aspect of outsourcing is that Commuter Cleaning will have to charge more for their service. Even if Commuter Cleaning will seal a deal wherein dry cleaners will give discounts because of the bulk orders, the company wil still have to account for bus driver’s salary as well as fuel expenses and repair and upkeep of their vehicles. In traditional dry cleaners customer will have to drop and pickup their business shirts but in the case of Commuter Cleaning the dry cleaning of the business shirts will be done off-site.
If the company will not spend money on advertisement then it would also be doubly hard to attract new customers. Potential customers will not spend their time loitering bus and train stations. They move fast without glancing at new stores trying to find out what they are selling. There must be an effective marketing campaign for their target market to be made aware of the new service offered by Commuter Cleaning.
Opportunities can be seen in the potential market for those who cannot find the time to go to traditional dry cleaners. There is demand especially for single men and women as well as couples with dual careers. If this business model is established, customers will find it easy to simply drop their laundry bags in train stations or transport hubs and not to worry a thing about their clothes because the moment they get off from work they can immediately receive their business shirts the same day.
The moment Commuter Cleaning becomes a success then the company will be able to crate their own dry cleaning facility and when this happens the company can lower costs. Aside from that the customers will be able to see an improvement in the quality of dry cleaned shirts. At the same time Commuter Cleaning will be able to increase its capacity and therefore open more pick-up and delivery centers all over the city.
Threats come in the form of competitors. If their competitors are offering same day service then Commuter Cleaning will have to follow even if it will cost more to operate in such manner. If the competitors will lower their prices even further then Commuter Cleaning will have to reduce their rates as well.
There is also a threat in the form of non-satisfied workers because the company could no longer keep up the high morale of the workers. And it is easy for the workers to feel frustrated. There is a particular shift that requires some to wake up early and for others to sleep late. If the company is bent on getting college students this can be problem for them.
Based on the S.W.O.T. analysis and other factors it can be argued that the company will initially have a hard time building their customer base. The company will have to deal with their limited range of services. There is also a possibility that customers will be turned off by the use of credit cards although this is a minor concern. The higher cost of using Commuter Cleaning as compared to traditional dry cleaners may also be a major factor why others will not sign up. It will cost at least $1.15 cents with Commuter Cleaning while traditional dry cleaners will only charge a dollar or less. They have to adjust their pricing scheme and reduce overhead by reducing salary and if they have to hire non-college students then they have to do it.
Conclusion
Commuter Cleaning will have a hard time attracting customers if they have limited range of services and if it is more expensive to do so. Aside from that quality problems as a result of outsourcing may turn off customers. It was not also mentioned that they company will spend money on advertising. If this is the case then no one will know that Commuter Cleaning is in existence. It is also a challenge to maintain high-morale within the ranks of employees because of the time of the work shifts. Taken together it can be said that Commuter Cleaning will have a difficult first year and may not even last that long if the business model is not adjusted to eliminate potential problems and threats.