Gangway Subway Cars Project Essay
Gangway Subway Cars Project Essay
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Running Head: MTA’S OPEN GANGWAY SUBWAY CARS PROJECT 1 MTA’s Open Gangway Subway Cars Project Sandy Camacho Professor Suzanne Brock Southern New Hampshire University MBA-560-Q2512 1/28/18 MTA’S OPEN GANGWAY SUBWAY CARS PROJECT 2 Executive Summary The Metropolitan Transportation Authority (MTA) is in the process of planning out one of its biggest projects ever in the provision of public transportation services. The project which is focused on targeting their customers in New York City is one of the greatest changes that the New Yorkers have never experienced in the transportation sector. The project involves the introduction of the new generation subway cars that are referred to as “open gangway” subway cars (Plitt & Lynch, 2017). This new service is being provided in collaboration with the MTA’s New York subsidiary that provides commuter transportation services to the people in New York City and the surrounding counties. The plan is to introduce modern subway cars to replace the old ones expected to be more efficient and which are expected to be more competitive. This is a plan to upgrade the public transportation services from one that is old and worn out to modern and efficient systems. The authority has the responsibility of making sure to provide safe and effective transportation services to the public and the new open gangway cars are expected to achieve these expectations. According to Plitt & Lynch (2017), New York City has the largest subway system in the whole world, therefore availing such a modern service to the people is a way for the authority to gain a competitive advantage over the other service providers. The Metropolitan Transportation Authority brand Metropolitan Transportation Authority is a brand in the United States transport industry, it is a public corporation that was created to benefit the public by implementing and developing unified transportation policies in the areas that it serves. This responsibility is carried out directly by the authority or through its affiliates and also its subsidiaries. As mentioned, the transit system in New York is huge and the ridership cannot be compared to any other in the world. This market of New York having many players, but MTA has been MTA’S OPEN GANGWAY SUBWAY CARS PROJECT 3 able to build the brand by providing the commuter service from 1965 when the authority was founded to date (“Metropolitan Transportation Authority,” n.d.). The authority prides itself with a daily average carriage of approximately 8 million commuters. It also operates in an area that has approximately 14.6 million people and the majority of them rely on public transport. The reliability of the services has been one of the aspects that have helped build the brand and also the commitment to the vision and the mission. The mission of the authority is to enhance the lives of the people of New York and the other counties that it operates in (“Metropolitan Transportation Authority,” n.d.). Most of the decisions made by the business are meant to enhance the people’s economic health mostly by providing affordable and safe transportation services. The plan for the new cars is in line with this mission and also it is the best measure to take considering how popular this transportation service is. Being able to provide commuter services at a pocket-friendly price is also another aspect that makes the brand popular among the people of New York, therefore, introducing new subway cars that maintains the low charge is a way of fulfilling its commitment to the people. The new plan of the new open gangway cars is a brand extension strategy of the MTA. Brand extension opens up greater demand for the offering because the new product or service is able to cater to the needs of the clients better (Garcia, 2014). The plan is a part of the existing brand of MTA and it is expected to ride on the already existing popularity of the brand. Through research and analyses, the authorities of the New York subsidiary determined that there was a need to avail better services to the people and also develop a strategy to increase the demand for the service. Therefore, they started making plans on how to introduce bigger and more efficient subway cars. People in New York appreciate comfort and reliability and being able to provide a service that fulfills these was the basis of the strategic plan. Once the cars start operating, they are expected to entice more users than the old subway cars. MTA’S OPEN GANGWAY SUBWAY CARS PROJECT 4 So far there are no plans on how the new service is going to be marketed. The only initiative that the Metropolitan Transportation Authority has taken to hint to the customers about the new service is by placing a prototype of the new cars in the subway station for viewing (Plitt & Lynch, 2017). Various bloggers have taken the discussion into the internet, to air their opinion about the “coolness” of the open gangway subway cars. This initiative by third parties comes at an advantage to the project because without knowing, they are already making the new service popular with the people. Being a public transportation system, prospective commuters may hear about the service from other users and decide to give it a try. This is not an unusual way of gaining popularity because even the existing service was never marketed extensively yet it became popular. The decision not to market is because it is part of a brand that already stands out from the rest and therefore no need of incurring unnecessary costs. The project is an upgrade to the existing brand. Since the old service is characterized by inefficiencies such as delays, congestion, and discomfort, the management is interested in providing one that is able to make the experience much better. The old subway cars have been in operation for years and they are no longer capable of meeting the needs of the people (Wang, n.d.). The new project is aiming at offering what the old cars are incapable of, even the competition cannot match to this new service. The target market of the new MTA’s subway cars Using public commuter service is more cost efficient than using private services. Providing cost-effective services to the public is one of the main reasons for the plan. The cost of living in New York City is high and to be specific, the cost of housing is ridiculously high; therefore the people in this region look for ways to save themselves from more costs by choosing to use the most affordable means of transport (Bloomberg, 2017). Saving a few dollars per month goes a long way to sustaining the life of a low-income individual living in the city. For this reason, Metropolitan Transportation Authority takes it upon themselves, as a MTA’S OPEN GANGWAY SUBWAY CARS PROJECT 5 public corporation, to meet this need of the people. The open gangway subway car will be an affordable service to the people of New York. New York City is the most populous city in America, 55% of this population prefer to use public transport system while 28% use personal means to work. This statistic indicates that the target market for the new subway cars is huge and it is an opportunity that MTA is seeking to embrace. The plan is to introduce many open gangway cars that have a big carriage capacity so as to increase the average number of people that are ferried per day. In planning, the business should recognize the opportunities that are there so that they can come up with a product or service that is tailor-made to meet these market needs, this is the only way that a new product or service can be able to survive and beat the other competitors (Wang, n.d.). MTA management recognized that the congestion in the cars and in the station reflected the high demand for the service and therefore they began the plan on how they can be able to sustain this demand. A study conducted by the University of Michigan in 2014 revealed that the greater half of the New York households do not own a car. This is because most consider it to be an unnecessary liability due to the cost of gas, insurance, and the parking fees, this is why most of the population are using the public transport. The target market for the subway service is not tied to a specific age bracket, gender or social status. The people of all ages, the rich and the poor all are part of the MTA’s target market. This is why in order to satisfy the demands of each category, it is important to be able to provide a service that the young, the old, the rich, and the poor can all appreciate. The plan for the new subway cars is that to provide a service that meets the common needs of all the people. Generally, consumer behavior refers to factors that influence the consumers purchasing behavior. One of the common determinants is the purchasing power of the customer (Mishra, 2015). Before making the decision to buy a service, consumers first analyze their purchasing MTA’S OPEN GANGWAY SUBWAY CARS PROJECT 6 power. Even if the product or service is appealing, they cannot buy if they do not have the purchasing power. MTA offers services at a low cost in order to increase the purchasing power of the users. The service can be easily afforded by the low-income earners because it is lower than their purchasing power. The other factor is the personal preference of the consumer; consumer behavior is influenced by how the customer feels about a certain product or service. With most people preferring to use public transportation in New York, MTA is able to tap into this opportunity through the new subway cars. The economic conditions are also the other determinants of the consumer behavior. The economic situation affects the willingness of a customer to make a particular purchase (Mishra, 2015). This is seen in the case of New York, because of the high cost of living in this city most people prefer to use the public transport in order to save on cost. Their willingness to ride in the subway is influenced by the economic conditions prevailing in the city. Apart from the high population of commuters in New York, there is a need to establish an efficient commuter system. The old subway cars have been the source of inefficiency in the MTA service provision. According to the MTA records, the number of delays by the old cars has risen to about 237% from the year 2012. The users of this transport system have been victims to the delays and the loss in the work hours per year is estimated to be at $307 million (“Metropolitan Transportation Authority,” n.d.). This is a huge loss to the people and also to the state as a whole. New York City is in dire need of a subway system that has no delays. In a study conducted by the New York City comptroller on 1200 people who are daily users of the metropolitan subway cars, 74% have had instances of getting late to work due to the delays and more than half revealed they had to seek other means at a particular time in order to avoid the delays. The delays have not only cost the commuters a lot of money due to the lost working hours, but it has also had effects on their personal lives as well with some missing important MTA’S OPEN GANGWAY SUBWAY CARS PROJECT 7 appointments such as hospital appointments or even job interviews. It is also unfortunate that most of these effects are more severe to the low-income earners than the high-income earners. The people who are casual workers are more likely to lose their jobs when they report late than those who are in permanent employment. There are also more likely to be reprimanded than those that are earning good money (“Metropolitan Transportation Authority,” n.d.). The delay is being blamed on the congestion which began a few years ago. The congestion in the subway stations normally causes the trains to delay at picking and dropping off the commuters at the stations. The huge numbers of commuters have a hard time getting in or out of the cars. When the old cars were beginning operations, they were ferrying an average of 4 million passengers every day. Because of the rise in the population, the number of commuters has doubled but the size of the train remains the same. Therefore it has become almost impossible for the cars to absorb more riders and the huge crowds cause the frequent breaking down on the cars. They are incapable of carrying large numbers of people without breaking down frequently. The new open gangway cars are expected to get rid of this menace. The plan is to purchase 640 open gangway cars that are built to ferry more people than the old subway cars. Introducing more cars with bigger carrying capacity, the congestion inside the stations will be an issue of the past and delays will therefore not be experienced. This will help save a lot of the money through lost working hours and people will become more appreciative of the service. This new service is able to meet some of the qualities of a successful product or service. A successful product is the one that is capable of solving an existing problem. If the service is capable of solving a problem that is affecting the lives of the people, then more people will be interested in it (Ashe-Edmunds, n.d.). In our case, the new plan is a part of a solution to a problem of delays and congestions. A successful product or service usually has unique features that set it apart from the rest. Being able to provide a service that is more efficient and that is MTA’S OPEN GANGWAY SUBWAY CARS PROJECT 8 able to offer comfort and reliability is the main objective of the MTA’s project. This is a service that is expected to have a mass appeal to all people regardless of their age or social class. New York City is the best target market for this new service because the needs of the people can be fulfilled by it. As a region that has a high number of commuters, it is a good strategy for the Metropolitan Transportation Authority to fulfill the promises that they have sworn to fulfill as part of their mission. The vision of the corporation is to provide better services to the people. Even if the cost of these cars is very high, it does not deter MTA from ensuring it is completed (Bloomberg, (2017). Strengths and weaknesses of metropolitan transportation Authority The implementation and the success of this new service depend highly on the strengths of the corporation. The weaknesses within its management can cause failure of the plan or the project can end up creating more losses than benefits. To begin with, the management of Metropolitan Transportation Authority is made of qualified individuals who have good leadership skill, critical thinking skills, problem-solving skills and many others. These are the people who came up with this plan after seeing how the public is suffering from the inefficiency of the old subway cars. The management is comprised of people from different locations where the subway cars operate, this diversity is so as to ensure that the voice of the people is heard from all regions and so as to ensure equity in the quality of service offered in all regions. The management has been at the forefront in ensuring that the corporation goals are in line with the mission. They use the mission to develop strategies that can help improve the quality of service (Bloomberg, 2017). It is true that the character of a leader determines the performance of the subordinates; good management has helped to develop highly productive teams within the corporation. The company ensures to recruit qualified people for all business functions so as to keep the quality of work high. Having people within the team that have different talents helps to create strong MTA’S OPEN GANGWAY SUBWAY CARS PROJECT 9 teams (Ashe-Edmunds, n.d.). The productivity of the workers has not only been influenced by the management but also because of the effective compensation programs that are used in the corporation. When the staffs are recognized for their hard work, they are able to increase their level of contribution to the organization. Having competent staff is an assurance to the management that the new service will be a success. They have already begun conducting training on the staff to prep them for the changes soon to come. MTA is a strong corporation in terms of the client base. Established in 1965, throughout the years it has been the transit system that carries the largest number of commuters as compared to other systems. The flow of clients has been its greatest asset because without them, then the purpose of the authority would be lost. Averaging at 8 million customers per day means that it is a financially stable corporation that is able to sustain all its expenses. Having a ready market is one of the things that will enhance the success probabilities of the new service. One of the weaknesses of the corporation is their weak safety culture. MTA has been criticised for being a corporation that does not keep a lot of emphasis on safety of the workers. The corporation should enhance its safety measures that put the safety of the passengers and the workers into consideration. There have been cases of lives lost or accidents within the areas of operations. Being able to develop a culture of safety goals a long way in preventing employee turnovers and loosing of customers to safer transport systems. (“Metropolitan Transportation Authority,” n.d.). The current trend in the New York transport industry is the rise of the app-based transport services such as Uber and also there is Lyft. These have created a decline in the ridership of the public transport systems. From the year 2012 to 2016, the change in the subway and the bus ridership declined while the users of Uber and Lyft increased significantly. Data from the transport sector has shown that from 2015 to 2016 the subway ridership decline of 0.3%. Also in the first four months of the year 2017, the decline in the subway ridership was MTA’S OPEN GANGWAY SUBWAY CARS PROJECT 10 similar to the one experienced in 2013. The app-based providers have introduced the feature of ride sharing where multiple users can split the fare and therefore they end up paying very little for a convenient transport service. However, data shows that the use of these services especially peak during the weekends because most of the subway services are disrupted at that period (Bliss, 2017). The Metropolitan Transportation Authority has the opportunity of turning this threat into an opportunity by introducing the new service which is expected to be operating throughout the week even on the weekends. Since customers are turning to app-based modes of transport due to the convenience, MTA can compete with this by introducing the new subway cars that are expected offer 100% reliability and convenience. The major reason why businesses and organizations pay a lot of attention to ethics is due to the fact that a violation of the set business ethics can lead to their downfall. It can damage the reputation and create losses to the business. A single misstep can be detrimental to the business. An ethical violation can affect the culture of the organization in a negative way if the organization prides itself with having a working ethical code they might not be able to sustain it if the management tolerates misdeeds within its functions (Mishra, 2015). For a business that operates globally, it may be forced to navigate the areas that the prevailing ethics differ from those at home. They might have to apply “situation ethics” which is when the organization adjusts the practices depending on the arena they are operating in. An ethical violation can cause customers to boycott the products of or the services of the organization, this can create losses for the business and the in case the damage is not contained on time, the business might end up closing. MTA plans have incorporated the aspect of ensuring that the new service is in line with the ethical standards that it has been able to maintain for the years it has been in operation. The corporation realizes that a small mistake violating the ethics of the people can cause a lot of damage to the brand. In this environment where there are many competitors willing to offer MTA’S OPEN GANGWAY SUBWAY CARS PROJECT 11 similar service, the corporation stands to lose a lot. They plan on introducing customer care agents who will be working on the subway stations, interacting with the customers in order to get feedback that can help them make their services better. Protecting the brand is key because, without it, the company would be struggling to continue operating (“Metropolitan Transportation Authority,” n.d.). The core competencies MTA is a state-owned corporation and this aspect alone sets it apart from the rest of the competition who are privately owned. Being a public corporation means that most of the policies within its operations are developed by the state for the common good of the people. The management of this corporation is under very competent and qualified individuals and it is this good management team that has been able to develop effective teams within the corporation. Therefore, having good leadership and hardworking staff is one of the greatest assets of this corporation. These are people focused to uphold the ethics of the business and protect what the brand represents. The management ensures that the staffs are well trained on the ethics, the vision, mission, and the goals of the corporation. They are also trained in the development of soft skills that are essential in conducting their daily responsibilities (“Metropolitan Transportation Authority,” n.d.). The corporation does not have doubts that the new service will pick up smoothly because it has a team of competent and qualified staff. The staffs have already begun training on some of the changes that might be necessary with the new service. MTA has the resources that the other transport corporations do not have. The total revenue collected by the corporation is incomparable to any other. With an average of 8millin passengers every day, the total amount collected is huge. This is why the cooperation has confidence in rolling out a $27 billion project. This is a service that no other competitor can be able to duplicate. It is a service that will require resources in order to start operating and the MTA’S OPEN GANGWAY SUBWAY CARS PROJECT 12 corporation is ready. Most definitely the competitors will react to this new service by MTA, but even their actions will not be able to affect MTA client base. The new service is expected to increase the carrying capacity by 10 % compared to the number that is ferried by the old cars. Even with the introduction of the app based transport service providers, they are incapable of matching the number of people that will be using the open gangway cars. The new cars are expected to offer WIFI service to the riders, a service that is not available in the other transport systems. There will also be USB charging ports to allow the commuters to charge their mobile devices when they are in the cars. These plans are expected to entice more customers to choose the new subway cars as their daily mode of transport. When most of the competition is looking forward to increasing their clients so as to declare high profits at the end of the year, MTA is only interested in using the revenue to provide better services for the people and better working environment for their employees (Garcia, 2014). Pricing of the new MTA service The competitive advantage of the Metropolitan Transportation Authority is derived from the affordability of their services. The commuters would rather pay $2.75 for a subway ride than $14 for the cab or $6 for a bus ride. Price of a service is the major determinant for its demand in the target market (Garcia, 2014). The consumer would rather settle for the cheaper service even if their purchasing power is high. The corporation is hoping to maintain the cost for the service at $2.75 even with the new service but there is a probability it might change if the current economic factors change such as the cost of fuel by the time the cars are introduced. The cost of the service will depend on the ability of the corporation to sustain all the expenses of operating the subway. The pricing of the new service is dependent on the corporation’s ability to meet some its variable and fixed costs (“Metropolitan Transportation Authority,” n.d.). The fixed cost of the corporation is the employees’ payroll costs and other benefits offered MTA’S OPEN GANGWAY SUBWAY CARS PROJECT 13 to them such as insurance. The variable costs are the electricity cost, the cost of buying fuel, the overtime payments, the costs of maintaining the cars and the subway and other miscellaneous expenses of materials and supplies FIXED COSTS Health and welfare Payroll Pensions AMOUNT ($MILLION) 1,580 5,930 1,370 VARIABLE COSTS Fuel Electric power Overtime Payment Maintenance Materials and supplies AMOUNT ($MILLION) 186 566 922 598 800 Fig 1. Annual costs of the new MTA open gangway subway cars. (“Metropolitan Transportation Authority,” n.d.). The associated costs of this new service are way more than the annual budget of the old cars. However, this difference will be catered for of the anticipated increase in the demand for the new service by 10%. The goal is to have a self-sustaining subway system to avoid running the corporation on a deficit. If the corporation will be able to offer services to at least 9 million customers per day, then the amount collected is enough to cater for the variable and fixed costs amount indicated above. The people of New York are willing to pay the least amount for transport on the subway. Since most of them avoid using the taxis or the bus, it shows that they are comfortable partying with the least amount of fare for the commuter service. MTA currently charges $2.75 for the customers to move from point A to point B. When the new service is introduced, it is important to maintain the low charge to avoid pushing the clients to the competition. Increase in the fare price may reduce the purchasing power of the low-income earners (Laja, 2016). Compared to MTA’S OPEN GANGWAY SUBWAY CARS PROJECT 14 the competition, the MTA service is several times cheaper, taxis are the most expensive, and charging a minimum of $14 and not everyone can be able to spend a lot of money on transport. In New York City, there is a portion of the population that would be willing to pay more for the subway service; however, they do not represent the commuters of the entire city. The larger part of the commuters population is comfortable paying $2.75 because then they can be able to save for expenses of other basic commodities such as food and shelter. More so, the mission of the corporation is to be able to provide cost-effective services to the people of the city and not to charge them according to their ability to pay. For the profit-oriented competitors, increasing the costs of the services is a way for them to increase their revenues. Analysing the target market capacity to pay is the first step towards determining the prices of the goods and services that the business produces (Wang, n.d.). Of all the pricing strategies that can be used in a business, the best strategy for MTA’s new service is the economy pricing strategy. This form of pricing takes advantage of the low operating costs to reduce the prices of the goods and services so that they can become more affordable to the people. MTA has the responsibility of availing cheap transport services, and therefore, they have a great responsibility of ensuring that the operating costs and expenses are as low as possible so as to be able to sustain the corporation in the short-run and also in the long-run(“Metropolitan Transportation Authority,” n.d.) . Evaluation of the project success The factors that have to been looked into to determine if the project is successful are the ability top to launch the service as per the budget, its ability to solve the needs that it was meant to fulfill and to determine if the subway cars have been introduced within the planned time. Every project is usually allocated a specific amount of money that is supposed to utilize. MTA’S OPEN GANGWAY SUBWAY CARS PROJECT 15 In this case, the budget of the project is at $27 billion, therefore, the project will be deemed successful if it is provided within the budget (Bloomberg, 2017). The open gangway subway cars are meant to ease the problem of congestion and delays in the subway transport. After the service has been rolled out, MTA can carry out a survey to determine if the new service has been able to reduce the congestion and if it is more reliable compared to the old subway systems. The service will also be deemed to be a success if the number of people ferried per day is more than the ones ferried by the old cars by approximately 10%. The feedback loops can also be created in order to be able to acquire the customer feedback on the new service, this can be carried out by the use of short interviews, questionnaires and conducting online surveys. Customer feedback will help the corporation determine the areas that need improvement so as to make their experience better (Laja, 2016). It is important to also look at other factors that might influence the success of the new service. An internal factor such as the job satisfaction of the employees is critical for the service to succeed. Using unmotivated worker to provide a service can lead to failure of the cooperation strategy. This is why it is important for the authority to provide a good working environment for the workers to raise their morale and ensure the new the service is a success (Garcia, 2014). The external factor, in this case, is the competition. Competition is expected to react once the new service is rolled out, so the corporation should keep their eyes on them. MTA’S OPEN GANGWAY SUBWAY CARS PROJECT 16 References Ashe-Edmunds, S. (n.d.). Corporate Strategy Vs. Marketing Strategy. Retrieved January 2018, from smallbusiness.chron.con: http://smallbusiness.chron.com/corporate- strategy-vs-marketing-strategy-63753.html Bliss, L. (2017, February). Stop Asking Whether Uber Is Transit’s Enemy. Retrieved January 2018, from www.citylab.com: https://www.citylab.com/transportation/2017/02/uberLyft-transportation-network-companies-effect-on-transit-ridership-new-yorkcity/517932/ Bloomberg. (2017, December). Company Overview of Metropolitan Transportation Authority, Inc. Retrieved December 2017, from www.bloomberg.com: https://www.bloomberg.com/research/stocks/private/snapshot.asp?privcapId=162976 Garcia, R. (2014). Creating and Marketing New Products and Services. Florida: CRC Press. Laja, P. (2016, May). How to Create Customer Feedback Loops at Scale. Retrieved January 2018, from conversionxl.com: https://conversionxl.com/blog/generate-customer- feedback-loops-scale/ Metropolitan Transportation Authority (n.d.) Retrieved from http://www.mta.info/ Mishra, A. (2015, May). 4 Key Strengths of Successful Businesses. Retrieved December 2017, from www.entrepreneur.com: https://www.entrepreneur.com/article/245017 Plitt, A., & Lynch, S. (2017, December). Go inside the prototype for the NYC subway’s new open-gangway trains. Retrieved January 2018, from ny.curbed.com: https://ny.curbed.com/2017/12/1/16722088/nyc-subway-mta-open-gangway-carphotos Wang, K.-J. (n.d.). Evaluation Criteria for New Product Development Process. Department of Industrial Management, 1-20. Retrieved from: https://pdfs.semanticscholar.org/9952/a50fc5774475ad9289a4d633186b911bacea.pdf MTA’S OPEN GANGWAY SUBWAY CARS PROJECT 17
