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The Montreal Transit Corporation

Essay by   •  February 9, 2019  •  Essay  •  971 Words (4 Pages)  •  21 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:

  1. The added value for the customer
  2. Planning
  3. Financial considerations
  4. 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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