For office use:

Grade

Communication for Managers

Case Assignment No. 2/2
Case Analysis Report on
Beck Taxi

Submitted by:
Name: Avishek Mukherjee
Roll No: 161212
Section: B
Batch: MBA FT (2016-2018)

Institute of Management, Nirma University

Date of Submission: 01/10/2016

Beck Taxi
DIAGNOSTIC REPORT

SITUATIONAL ANALYSIS
Beck Taxi is Torontos leading taxi brokerage cab company. It was founded in May 1967 by
Jim Beck. The company was vastly expanded by Jim Becks daughter Souter. It currently
processed more than 22,000 calls in a day and made more than half a million dispatches per
month. Beck Taxis fleet size (1476 cabs) was more than three times the size of its closest
competitor, Diamond Taxi.
Supply of cabs in Toronto was around 50% higher compared to other metropolitan cities.
There was one cab for every 500 Torontonians, while in most metropolitan cities it was
around one cab for every 1000 people. This over supply caused increased competition in the
industry and hence it was crucial that cab companies provided the best service in order to
gain and hold market share. It was also important to retain the drivers so that they did not
shift to competitive companies. The commoditization of the cab service industry in Toronto
made customer service a key factor for company success.
Due to the oncoming summer season Beck Taxi is foreseeing reduced revenue due to the
closing down of educational institutes and people preferring to walk and cycle rather than
take a taxi. Souter is evaluating options as to how to maintain a steady stream of revenue in
spite of the lean season limitations. Souter needed to weigh her options seriously as any
change in pricing by Beck Taxi would affect the entire Toronto cab service industry. She also
didnt want to affect the drivers adversely as she recognized the troubles that they already
faced due to the nature of the industry.

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PROBLEM STATEMENT:
An increase in radio cab fees leads to increase in revenue but effects drivers incomes
adversely.

OBJECTIVES:
1.
2.
3.
4.

Increasing revenue in the lean season.

Maintaining drivers earnings and loyalty.
Not overburden Beck Taxis logistic operations.
Maintaining high level of customer service.

OPTIONS:
1.
2.
3.
4.

Increase the fixed radio fee.

Reduce the fixed radio fee and charge for each dispatch.
Reduce the fixed radio fee only for the summer.
Continue with current pricing structure.

EVALUATION OF OPTIONS:
1. Increasing the fixed radio fees would result in an increase in revenue. However, it would
cause dissatisfaction among the already exploited drivers. It might cause them to shift to
other companies with cheaper options. Souter personally also didnt want to affect
adversely affect the drivers incomes.
2. Reducing the fixed radio fee and charging for each dispatch would increase revenue,
however it would cause a logistic overburden on Beck Taxi. Keeping track of each
individual usage of dispatch service for 1476 vehicles driven by 2,500 to 3000 drivers and
crediting their accounts on a monthly basis would be a huge task which would entail added
cost.
3. Reducing the fixed radio fee only for the summer without charging a usage fee could
cause more drivers to transfer their allegiance to Beck and would give Beck the chance to
test the repercussions of a larger change in price.
4. Continuing with the current pricing structure could be a viable option as Beck was already
the market leader. Its fleet size was over three times the size of its nearest competitor. They
had also launched a television commercial which was sure to increase its brand equity,
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resulting in an increased customer base and more drivers switching over from their
existing brokerages.

DECISION:
Objective 1
Objective 2
Objective 3
Objective 4

Option 1

Option 2

Option 3

Option 4

Looking at the above option-objective matrix it can be seen that option 2 and 4 have the same
advantages as three objectives are being achieved in both of them, while one objective is not
being achieved. Option 1 is not viable as increasing the radio fees would result in drivers
defecting to other cab brokerage companies and it would also cause dissatisfaction among the
drivers which would adversely affect customer service. The decision that is the most viable is
to reduce the fixed fee only for the summer as this would help in achieving all the
aforementioned objectives. It would lead to an increase in the number of drivers, as drivers
would be willing to leave their existing brokerages due to the lower fee offered by Beck.
Beck has also released an advertisement which would increase customers. Both the above
factors would lead to an increase in revenue. Option 3 would also help achieve the other 3
objectives.

ACTION PLAN:
The action plan would be to reduce the fixed radio fees and inform the drivers accordingly.
This could be done sending them a message that would inform them about the details of the
new fees. Sending them the message via text messaging service would help reduce the time
and cost of calling them up to inform them individually. The new fees would be taken from
them on a monthly basis. Beck Taxi could print advertisements in the newspapers that inform
potential drivers of the reduced radio fees. This would increase the chances of getting more
drivers to defect from other cab brokerage companies.

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After the price lowering Beck would need to closely analyse the repercussions on revenue
and check to see if new drivers were indeed joining them. They would also need to see if the
reduced prices were increasing the frequency of per day travels.

CONTINGENCY PLAN:
The contingency plan would be to Option 4. If the repercussions of the lowered pricing do
not yield the changes in revenue that Beck expects then the best option would be to make the
price the same as it was before. This tried and tested price would help maintain the current
revenue and also not cause the logistics overburdening that an increase in charge per dispatch
would cause. Beck was already the market leader. Its fleet size was over three times the size
of its nearest competitor. Hence the retained price would not cause them much harm. They
could also rely on the advertisements to improve brand equity and increase the number of
customers.

EXECUTIVE SUMMARY:
Beck Taxi, founded in May 1967 is Torontos leading radio cab company. They are the
market leaders with a fleet size that is over three times the fleet size of their nearest
competitors. The cab industry in Toronto is highly competitive due the lesser supply of cabs
per person as compared to other Metropolitan cities.
As the lean season is approaching Beck Taxi is forecasting reduced revenue due to the closing
of educational institutes and people preferring cycling and walking. Souter the companys
owner is considering options that would help increase revenue during this time. After
analysing the different options against the different objectives the best course of action
arrived upon is to reduce the fixed radio fee only for the summer as this would lead to an
increase in the number of drivers which would directly increase revenue. The best
contingency plan would be to keep the prices the same as Beck Taxi is the market leader by
far.

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EXHIBITS:
Exhibit 1: Daily Revenue and Expense statement of Beck Taxi:
Revenue: (Daily)
1

Charges from Shift Driver for Cab Rent ($65 per

shift)

37440

Charges from Long term lease for Rent of plate

(900 plate)

34500

Charges from all 1476 for Radio fees ($450 /

month)

22140

9408
0

Total Revenue

Expenses : (Daily)
1

Independent owners (576) and rent for their plate

22080

900 Nos. large fleet from single agency

34500

Repair and maintenance cost ($5 per Cab for 576

Cab)

Salary for Staff (150 Nos. avg. $ 2500 / Month)

12500

Other administrative expenses

N.A.

2880

Total Expense

7196
0

Total Profit (Daily)

2212
0

Main Report Word Count: 1291

Executive Summary Word Count: 160

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UNDERTAKING

To Whom It May Concern:

I, Avishek Mukherjee hereby declare that this assignment is my original work and is not
copied from anyone / anywhere. If found similar to other sources, I shall take complete
responsibility of the action, taken thereof by, CFM Team.
Signature :
Name

: Avishek Mukherjee

Roll No.

: 161212

Section

: B

Batch

: MBA FT (2016-2018)

Date

: 01.10.2016

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