GREYHOUND

LINES INC.
Case study
Submitted by:
Carmina Denise B. Doon
Lovely L. Santos
Bhb111 / BMG2e

Submitted to:
Prof. Virginia M. Bautista

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 offer 18,000 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 fair and scheduling
information or to make reservations and purchase tickets. Because travelers
nationwide depend on Greyhound, the companys 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. Lentzschs 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 Lentzchs 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. Lentzchs 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 Laidlaws 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 Greyhounds 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 it, 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

Americas most recognized symbols, which can be credited with restoring

Greyhounds recognition and popularity as well as enticing passengers.

Information Systems

In late July 1993, Greyhound created both the telephone information

service and TRIPS. The TRIPS system proved to be a costly investment for
the company and two months later the system was discontinued. One of the
first decisions by the new management team in 1994, was not to reinvest in
the TRIPS system, instead they decided to fully dismantle the airline-style
reservation system, and replace it with a more customer focused one. The
new system used a basic philosophy; customers would simply walk up to
the counter, pay for a ticket and catch the bus. This simple basic system
began filling seats and buses again.

Service

Greyhound now offers a variety of services. Greyhound Lines not only

provides an extensive route network for passenger travel, but also provides
services for business and group travel. Greyhound has three lines of
services: intercity bus transportation, Greyhound Package Express and
Greyhound Travel services. Greyhound Food service is offered at certain
locations. Moreover, its charter group provides affordable and reliable charter
motor-coach transportation for groups of 20 or more people nationwide.
Furthermore, Greyhound Lines commercial services group offers a valuable
service to businesses that need to provide transportation for employees
traveling to training facilities, for companies repositioning their mobile
workforce, or for incentive travel programs. Additionally this venture has
proven lucrative for group trips to casinos and ski resorts. The company has
reopened many stations and several hundred stops of which many provide
food services for travelers.
External Analysis

Economic Forces

The slow economy has meant tightening of the belt for many people,
which translates into fewer cross-country pleasure travelers. The decline of
this type of customer may hurt Greyhound Lines, Inc. On the other hand,
more people may consider taking a bus rather than a plane because it is
often more convenient and less expensive.

Social, Cultural, Demographic, & Environmental Forces

One major difficulty the new leadership at Greyhound will have to

overcome is the general stigma against taking the bus. This mode of
transportation is often considered an option mainly for low-income travelers.
If travelers are able to look beyond their biases they may discover that travel
by bus is economical and pleasurable.
Another force moving against Greyhounds success is increasing car
ownership. Many American families own at least one vehicle, and vacations
and trips can be made under their own transportation power.
On the up side, Greyhounds alliance with Laidlaw, Inc. will perhaps
overcome some of these mental images as people recognize the same name
that faithfully carries their children to school every day.
Greyhounds customer base is the rapidly growing market of low- to
middle-income passengers from diverse ethnic backgrounds. The average
household income for Greyhound passengers is $27,000, and about 20% of
passengers make more than $50,000 per year (Greyhound.com). Because of
low operating costs, Greyhound can afford to offer extremely economical
ticket prices. Also, the company offers the only means of regularly scheduled
intercity transportation in many key markets, as well as having the flexibility
to provide additional capacity during peak travel periods. Most passengers
have to travel to visit family and friends and enjoy taking advantage of ticket
prices that havent seen significant change since the 1980s. The company
transports over 20 million passengers in the United States, Canada, and
Mexico (David, 2001, p.176). About 75 percent of customers buy tickets
with cash before the bus leaves the station. Many passengers that travel by
bus do so because they feel it is more economical.

Political, Legal, & Governmental Forces

One governmental issue that may prove a boon to Greyhound is the

Amtrak situation. Congress has mandated that Amtrak be operating
profitably by 2003 or they will lose governmental subsidies. That could prove
a fatal blow to the train industry, but mean increased business for the bus
industry.
A political decision in Mexico may also increase Greyhounds rider ship.
Charging a refundable entry deposit to cross the border into Mexico may
prove more than some travelers can afford. Instead of driving their own
vehicle, they can take the bus and avoid having to make such an investment.

Technological Forces

Greyhounds disastrous flirt with technological advances in 1993 left a

bitter taste for employees and customers alike. In late 1994, the new CEO,

Craig Lentzch, did away with the ineffective and overloaded TRIPS program
and went back to the basics. Instead of demanding that customers reserve
seats weeks in advance, Greyhound went back to the classic model of show
up and get on a bus. Considering the companys demographic rider ship
and target market, this was a good move.
However, Greyhound is not a company to stay in the dark ages. Their web
site is highly developed and offers a lot of information, as well as the option
to reserve tickets online or via a toll-free telephone number. There are tips on
how to get the best fares, and discounts for companion fares, senior
travelers, students, and children. The site is also available in Spanish.

Competitive Forces

Greyhound faces competition from a number of sources. First are the

obvious ? the municipal transportation systems (including buses and metro
organizations), the airplanes, and the trains. Aside from these established
passenger carriers, Greyhound must compete with the average car owner.
The company has their work laid out for them as they look for ways to
convince Americans, Canadians, and Mexicans that taking the bus is better
than taking your own car.
SWOT Analysis
Strengths
The only nationwide provider of scheduled intercity bus transportation in
the United States.
Greyhound transports over 20 million passengers in the United States,
Canada and Mexico on a yearly basis.
Merger with Laidlaw provides additional market penetration.
Greyhounds capacity-flexible system meant that customers were
guaranteed a seat on a bus because even with overbooking a bus would
always be available.
Greyhounds pricing strategy change meant a more affordable ticket
price for their primary customer.
Increased market penetration into rural areas where other forms of
transportation no longer provide services.

 The buying of several hundred new buses and relocation of terminals to

better city areas could increase Greyhounds customer base and
demographics.
The selling of advertisement space on buses allowed for additional
revenue.
CEO, Craig Lentzch has industry and Greyhound experience.
Weaknesses
Greyhounds ignorance in understanding their customer.
Lack of planning, more calls received than the system could handle,
inadequate training and low employee morale caused the TRIPS system
to back-up as well as increased customer frustration.
Huge payroll increases for executives during a time of budget
reductions.
Opportunities
To decrease employee turnover to a reasonable level in order to provide
consistency to the process and for customers.
For Greyhound to offer more employee incentives and promotable
opportunities by treating employees as entrepreneurs and challenging
them to find new markets to penetrate.
Other strategic alliances must be considered so that the future of
Greyhound will remain bright.
To promote Greyhound as a viable option for transportation for people
from all walks of life, income levels, and ethnicity.
Increase intercountry routes between the United States, Mexico and
Canada.
Greyhound needs to increase demographic groups in order to find new
potential customers.
Greyhound must compete on a national level with other transportation
forms such as air, train and car, in order to enjoy continued growth.

 As the Asian and Mexican populations continue to grow in the United

States, it will be very important for Greyhound to maintain a diverse
workforce in order to best meet the needs of these customers.
Address image problems by increasing customers perception that bus
riding is for anyone with marketing campaigns targeting the professional
workers traveling intercity.
To increase customer base by offering bus tours to major cities by
partnering with a national travel agency.
Threats
Future of bus industry remains uncertain.
Greyhound has experienced, decades of declining bus travel (David,
2001, p. 177).
Greyhound union employees could strike again, as they did in the early
1990s causing a disruption of service and lost revenues.
If Greyhound fails to increase market share and customer base, the
threat of a takeover or filing bankruptcy, always looms.
Development of more efficient and less pricey automobiles may
decrease Greyhounds customer base even further.
Train and air travel offering discounts could price Greyhound out of the
market for leisure travel.
Recommendations
Investigating new partnerships to increase revenues with diversified
interests, while preparing for trends of the future, should be some goals
Greyhound should attempt. The benefits of these partnerships will yield a
greater increase in their customer base and profits. A partnership with a
national travel agency will provide various vacation packages supporting
tours, lodging, and accommodations. Arrangements and partnerships in
areas such as Las Vegas, New York, Orlando, Los Angeles, Boston, and
Denver, could benefit both the city and Greyhound as a result of the
stimulation of income in the city from tourists and travelers.
Greyhound collects advertising fees from businesses wishing to be
advertised within Greyhound developed maps. Advertising in certain city
locations such as Boston, New York, Las Vegas, and Los Angeles, will allow
tourists to view traits of the city. Therefore, advertising with Greyhound is

promoted within their personally developed maps of city locations at a small

cost to tourists.

Employees

Treat employees with the same respect and courtesy that Greyhound is
renowned for treating its customers with. Support the common goals of the
institutions of higher education by offering tuition reimbursement, and ways
for employees to better educate themselves. Reward employees whose
entrepreneurial mindset allows opportunities for Greyhound to increase their
market share and customer base.

The Fleet

Greyhounds fleet is made up of a variety of buses to transport people

from area to area. Greyhound should take advantage of the size of existing
bus terminals to support car rentals for people to rent as they are traveling
within a new city. Offering a fleet of vehicles would allow Greyhound to
capture the interests of almost every individual. The company should take
into consideration their current demographic customer, but also appeal to
the people who want class, performance, style, and elegance. The fleet could
consist of a variety of cars BMWs, Jeeps, and Saabs.
Adding luxury buses to the fleet for the highly traveled routes over 300
miles could help attract upper-income travelers. These buses would be
heavily furnished with television, radio, and computer connections and would
hopefully encourage business people and others who need high-tech access,
that riding the bus is a viable alternative. This plan should be rolled out only
in markets where there is a high probability of capturing those customers
that fit these profiles. For anyone who cant survive away from their
computer, each seat could offer a power strip and Internet connection. The
power strip could also be used to charge a cell phone, or run any electronic
gadget. The bus would of course have DVD, VCR, and TV capabilities. While
the bus is in operation, food and drink would be readily available, and a mini
bar can offer the chance to have a drink and unwind. Some customers may
want to take advantage of a massage seat to ease the aches and pains of
travel.
For the tourist that prefers these additional options there is comfort and
safety in knowing that they will arrive safely at their destination.
For groups, like families, senior citizens and people on group trips being
able to watch a movie, or a favorite TV show on the bus, is an added
convenience.

Customer Service

The company should implement customer service queries; then follow up

by contacting riders about their good/poor service, and reward customers
who voice their opinions.
Include feedback by customers with answers to their questions.
Evaluate and react to customers seeking changes in service by providing
satisfaction forms in order to better provide a service to the highest
standards.
Provide advanced service by committing to a guaranteed service quality.
Greyhound could provide an enhanced service to its members by utilizing
any means necessary approach to fulfill the members needs requested. It
will provide the advanced services necessary for members on customer
satisfaction, transportation, rates, reservations, Wide Area Network, and
group discounts.
One service that may help improve Greyhounds image is to provide a
Greyhound community that is an online-formed group of people organized by
similar interests, travel plans, and future ventures. Not only could customers
book a trip, they can share bus-stories, travel tips, photos, and highlights
from trips. Promoting a romanticized and exciting view of bus travel could
help expand Greyhounds market share.
Another target market for the Greyhound Community could be the men
and women who require a higher standard of service. Guaranteed
outstanding service and pricing, while being able to customize a bus to their
own groups individuality. By either choosing to be a Greyhound Community
Member, or to have all the bells and whistles in the Preferred Service
Membership, this person demands to have their own uniqueness recognized
and acted upon.

Offering Discounts

Greyhound already offers a variety of discounts, including discounts for

children, students, seniors, and groups. Continuing this money-saving service
for customers will prove invaluable to the company, especially since many
people are always on the lookout for a bargain. One of the important
functions of Greyhound will be to reduce commodity transportation costs to
its members, and to provide increased reliability for those that group
discounts apply to. Businesses wishing to receive a group status could be
eligible to choose the extra features, and technological advances to be put
into the bus.

Another valuable idea may be to implement a points system program.

Members would receive points for travel, of course, and would be offered the
option for earning extra points by completing satisfaction surveys and
submitting reviews or recommendations.
Conclusion
Today Greyhound Lines, Inc. is offering more than 20,000 daily departures
in the forty-eight contiguous United States, Mexico and Canada. Greyhounds
web site reports that since 1994 the consolidated revenue has grown from
$615 million to $1,022 million in 2001. With an increase of approximately
$407 million in six years the company would seem to be on the right track.
However Greyhound ended 1999 with a negative $16.3 million dollar loss.
Which could be attributed to slight increases in every operating expense on
their Income Statement from 1998 to 1999.
Greyhound Lines, Inc. merged with in Laidlaw Inc., in 1999 which gave
much needed financial strength to Greyhound. Laidlaws web site reported in
June 2001 Laidlaw voluntarily petitioned under chapter 11 to reorganize.
Although Greyhound was not part of the filing, the financial stability that
Laidlaw once gave Greyhound is no longer there. Greyhound is still
financially suffering and still unable to recuperate sales from the leisure
travel market and the shutdown of a subsidiary.
In order for Greyhound Lines, Inc. to continue operations much change is
needed. If they continue to offer deals and incentives then people may try
taking the bus on their next trip and hopefully Greyhound can rid the current
perception that people have about buses. Expanding the other services
currently offered by Greyhound may also increase current revenues. As it
stands now the future success of Greyhound does not look good.
Reaction
Greyhound Lines is the nation's largest bus company. However, they face
a big problem when they start to introduce computerization system in the
business. The problem became a major problem to their company because
they took the wrong part in making decision just to increase profit and
customer service. The top level manager face financial problems by
introducing computerize system in their business without taking into the
middle level manager's opinion. Greyhound was facing non-programmed
decision problem where the top level manager's take a precise solution for
an exceptional problem. The software called Trips software. There were
problems such as the customers don't have credit card or telephone to make
use of Trip software. Furthermore, the software sometimes not working and it

take time to print the ticket out, this make the customer frustrated for
waiting in line for so long.
Although Greyhound faces a serious problem in introducing
computerize system in their business especially Trip software which cause
Greyhound suffer losses in their business. However, they still manage to
overcome the problem by changing high-speed Kodak scanners are used to
scan the large volume of data. This optimized high-speed scanning software
was developed by Combined Computer Resources, Inc which helps
Greyhound overcome their problem and increase the business profit. Being
creative is one of the most excellent habits to deal with managerial
transform is to "rev up" the managers natural powers for creative
intervention. Most problems are amenable to creative, innovative solutions.
The only things that frequently persist in this resolution from occur is the
Greyhound's own inner obstacle and nature obligatory boundaries. Creative
crisis resolve all the time contain jeopardy. Suggesting fresh thought
summons disapproval from others.