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Файл:Basics of entrepreneurship in the motor transport industry. Study guide
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4. MARKET OF MOTOR TRANSPORT SERVICES, MARKET
OF MOTOR CAR SERVICES AND THEIR IMPORTANCE
4.1. Formation of the market of motor transport
and motor car services
Motor car transport meets the needs of the population and the economy
due to a range of services and works performed in the sphere of motor transport
activities.
Motor transport activities mean a range of works and services related to
the preparation, organization, and implementation of road transportation of
people and goods, including freight forwarding works, technical operation of
motor vehicles, etc. We are talking about transportation by public motor
transport, which is carried out by the operator (forwarder) under an agreement
with the client or at the request of any citizen or legal entity.
Technical operation of motor vehicles is a range of works and services
on technical maintenance, repair, storage, and instrumental inspection of the
technical condition of motor vehicles, ensuring their safe, operational, or
serviceable technical condition during operation [40].
As stated above, freight forwarding in road transportation refers to the
organization or performance by the operator (forwarder) on behalf of and at the
expense of the consignor or consignee of services related to the conclusion and
execution of an agreement for the road freight transportation. Freight forwarding
should not be confused with agency services in road transportation, which refers
to the activity carried out by the agent in the interests of, on behalf of, and at the
expense of the operator, who carries out the road freight transportation of the
client's freight in accordance with the established procedure. According to the
nature of the operator's activity, road freight and passenger transportation is
divided into transportation carried out on a commercial basis and noncommercial. Commercial transportation is carried out on the basis of an
agreement concluded between the car owner and the client.
Unlike other types of transport (rail, sea, river, or air), road transport is
highly mobile, allowing for «door-to-door» transportation, and the ability to
operate on unsurfaced roads, which allows for savings on costs associated with
the construction and repair of roads.
Over short distances, road transport is indispensable both in terms of
delivery speed and cost level, which is of great importance for users of this type
of transport. Road transport is a link between other types of transport in
combined types of transportation. It ensures high accuracy and reliability of
delivery, which makes it indispensable for the transportation of valuable cargo
and over long distances, thereby displacing rail and other types of transport.
A feature of the development of road freight transport at the present stage
is a sharp increase in the number of light-duty vehicles. For example, the share
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of light-duty vehicles with a carrying capacity of up to 2 tons is about 80 %. The
predominant development of this group of vehicles is explained by the
formation of a mass demand for the transportation of small consignments of
goods over short distances. After all, it is light-duty trucks that ensure the
efficient functioning of small and medium-sized enterprises, the entire service
system, and the infrastructure of the market economy.
Every year the number of foreign-made heavy-duty trucks (over 10 tons)
increases in Russia. In 2005, their share in the country's vehicle fleet was
33,7 %. These are mainly previously used trucks. Their share of the total number
of foreign-made vehicles was 79 %. The share of KamAZ vehicles was 37 %
and MAZ vehicles – 16,9 % in the total fleet of trucks.
In the country as a whole, road transport accounts for more than 85 % of
the total volume of freight transportation and more than half of all passenger
transportation. About 2,5 thousand domestic companies with 15 thousand
tractors and over 11 thousand buses are engaged in international transportation.
It is significant that 80 % of these companies are small private enterprises with
no more than 5 vehicles.
The fleet of passenger cars in the country is increasing especially sharply.
The Russian motor car market currently sells about 1 million passenger cars per
year, with the share of foreign cars increasing every year. Our country still lags
behind other countries in the number of cars sold per year. In Japan, for
example, 10 million cars are sold annually, in the USA – 12-13 million, in the
Western European markets – about 15 million.
At the same time, the patterns of development of the country's car fleet
today are already comparable to the patterns of development in countries with
a developed motor car industry. Currently, at least 40 % of Russian families
own personal cars. The reasons for the current dynamics of the fleet of
passenger cars of individual owners are the expansion of the scale of
production of Russian cars.
The technical condition of the vehicle fleet is largely characterized by the
average age and level of development of the service system. In Russia, the
vehicle fleet has a long service life. The average age of the fleet in the country is
13-15 years, the fleet of foreign cars is also characterized by a significant service
life. At the same time, in developed countries, the average age of the vehicle
fleet does not exceed 5 years.
The high degree of depreciation of the vehicle fleet in Russia is also
affected by the insufficient development of the road network and their
unsatisfactory condition, which predetermines the high level of vehicle
operation costs. It should be noted that the technical condition of the vehicle
fleet is largely determined by the design parameters, which are noticeably worse
for Russian cars than for foreign cars.
The low technical level and poor technical condition of the vehicle fleet in
Russia have a noticeable impact on road safety. The number of accidents in the
country is increasing year after year, in which thousands of people die, and from
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8 to 10 % of accidents occur due to the unsatisfactory technical condition of
vehicles. This is more than due to errors by drivers, pedestrians, and passengers.
In the current conditions, motor car service enterprises are acquiring great
importance, the network of which in the country is expanding every year.
However, to fully satisfy the needs of car owners (owners of personal cars,
enterprises, organizations, and individual entrepreneurs), motor car service
enterprises are not yet sufficient. And the existing enterprises for the most part
need to strengthen the material and technical base, improve the supply of spare
parts and repair materials, and improve the organization of production. To
further improve the level of development of motor transport and meet the needs
of the country's economy and the population for transport services, it is
necessary to:
● expand (increase) by 2-3 times the production of Russian cars, which
are distinguished by higher quality and reliability in operation; unfortunately,
most of our cars do not meet international operational and environmental
requirements;
● increase investments in the reconstruction and construction of new
motor transport enterprises equipped with modern garage equipment;
● pay more attention to the construction of new and reconstruction of
existing highways;
● increase the network of car service enterprises providing technical
maintenance and repair of motor vehicles, and other related services;
● develop and improve entrepreneurial activity in the field of motor
transport and car services, paying primary attention to small businesses. This
will allow in the very near future to increase the efficiency of motor transport
and reduce the share of transport costs in the cost of production of goodsproducing industries, and increase the level of well-being of the population.
Economic science has long concluded that the development of transport as
one of the most important infrastructure elements is a necessary condition for
the progressive development of the economy of any country. Economic interests
require the accelerated development of transport compared to the development
of the industries it serves. This advance is a necessary condition for the high
efficiency of all social production, which has been proven by research by
scientists studying the problems of production and social infrastructure in our
country and abroad. Moreover, some authors believe that the advance in the
pace of transport development is a law based on practical confirmation. This
pattern takes place at any level of the economy, including at the regional level.
Violation of the law of the accelerated pace of development of transport leads to
a disruption of the rhythm in the work of production facilities, disproportions,
etc., accompanied by losses in the economy.
In turn, the infrastructure of the transport itself, including motor car
service, should develop at the same rate as the increase in the number of
vehicles, perhaps slightly ahead. The advance can be explained by the fact that
the share of foreign cars (mostly used) in the vehicle fleet is increasing,
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requiring more attention. In addition, the advance development of motor car
service in the country is influenced by the average age of the vehicle fleet,
which tends to grow. At the same time, there is a pattern: the older the car, the
more it needs to maintain its performance.
The need to exceed the supply over the demand for motor car service was
noted in the work. This fact confirms that in Russia, historically, the sphere of
car service has always lagged behind the rate of development of motor transport
(more precisely, behind the rate of increase in the number of vehicles). At the
very beginning of the 1970s of the last century, the provision of passenger cars
in the country was only 8 units per 1000 people. Now the provision has become
much higher (about 200 passenger cars per 1000 people), but the country still
lags behind in the development of the motor car service sector.
In Russia, in the near future, there will be a change in the ratio of the rate
of development of the motor car service sector and the rate of increase in the
number of vehicles, as evidenced by the scale of the expansion of the network of
motor car service enterprises in recent years. Yet, so far this expansion has
affected large cities of Russia, but the process has begun, and it will cover the
entire country, including small towns and rural areas. Where there are cars for
personal use, there must be a car service, because in market conditions, demand
determines supply.
Until recently, insufficient attention was paid to the issues of motor car
service not only in practice, but also in science, as evidenced by the small number
of publications in this area. Almost no research was conducted, since it was not in
demand in practice. The main attention in the research work was paid to the
problems of increasing the efficiency of functioning and development of motor
transport and auto repair enterprises, and very little – to motor car service stations.
The market for vehicle servicing in Russia is also developing in the
direction of introducing new types of services provided by filling stations. At the
same time, the main attention of entrepreneurs in this area is focused on
improving existing technical solutions and introducing new types of motor fuel
to the market. An alternative to petroleum products are such types of fuel as
compressed gas, dimethyl ether (DME), and others.
The advantages of services provided at filling stations are achieved in the
following cases:
• consumers receive the highest benefit for themselves from the service
provided;
• consumers receive an increase or confirmation of their social status from
the consumption of a service with a high reputation;
• receiving a service is accompanied by a high level of accompanying
service;
• relationships develop and feedback is generated with consumers;
• the service provider receives benefits from the scale of service sales;
• advantages from a legal point of view;
• advantages in marketing technology.
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Advantages in the services market can be achieved by further improving
the consumer properties of motor fuel, establishing a strong reputation for its
brand, and also by increasing the speed of delivery of new types of fuel to the
consumer.
A technological advantage can be achieved by offering fuel with
improved consumer characteristics, and an advantage in distribution – by
creating a unique network of gas filling stations. A franchising system can play
a large role in this.
A cost advantage allows companies producing new types of alternative
fuel to set lower prices or use the income received to develop and distribute
marketing.
Reduction in the costs of production of alternative fuels can occur either
in the traditional way, or by reducing the specific costs of production and
marketing with an increase in the volume of production and sales.
Penetration into new markets provides a higher volume of sales of
alternative fuels due to the use of the following factors:
• increasing the frequency of consumption of a new type of motor fuel by
existing, i.e. attracted, consumers;
• increasing the volume and frequency of refueling with a new type
of fuel;
• turning those consumers who previously used gas stations, but then for
some reason refused to do so into users;
• turning those consumers who have not previously tried to use alternative
power sources into users;
• attracting those consumers who use competitive schedules of motor fuel;
• constant analysis and control in the development of a strategy and tactics
of competitive struggle.
The result of using these types of competitive strategies is a decrease in
the market share of services occupied by competitors.
In all cases, marketing departments of companies entering the markets
with alternative services must develop their own criteria for assessing the market
as a whole or its individual segments, for which their companies intend to
conduct a competitive policy.
Non-target factors influencing the motor car service market include:
1. Reliability of design and quality of cars, i.e. performance characteristics
of motor car vehicles. Improvement of reliability and quality of cars is ensured
by the motor car industry due to production of new designs of cars with greater
operational reliability and manufacturability (repairability).
2. Cost, availability, and quality of spare parts.
3. Availability of motor car services.
4. Taxes.
5. Fleet of cars in personal use by citizens and owned by organizations
(total number and distribution by brands and models).
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The factors that determine changes in the car fleet indicator include:
– production of cars (capacity of Russian motor car industry);
– export and import of cars;
– car sales level;
– car prices;
– car availability.
6. Density of placement of motor car service companies and other
enterprises in the industry, which significantly affects the quality of services and
determines the level of saturation of the considered territory with motor car
service. Optimal placement of motor car service enterprises allows to reduce
unproductive losses of time and money of consumers (transportation of the car
and waiting in line) and thereby increases the level of demand for services.
7. Completeness and quality of services provided.
8. Road network condition: length and density of roads and their
condition.
Road density and traffic intensity form a significant flow of car owners
who are potential consumers of motor car service enterprises in the
corresponding area. The location of a motor car service enterprise to a certain
extent influences the number of consumers and the level of demand.
A change in at least one of these factors leads to a change in supply in the
motor car service market.
The motor car service market and its structure are also affected by
environmental factors, namely:
– economic factors;
– political factors;
– scientific and technological progress;
– socio-cultural factors, etc.
All these factors together create the very possibility and conditions for the
existence of the motor car service market.
4.2. Competition and competitiveness in the market
of motor car transport and motor car services
One of the most important components of the country's economic growth
is the stabilization and development of production and services in all sectors of
the economy, at all enterprises without exception, in businesses of different
levels and in all areas of entrepreneurial activity. The driving force here is
competition, which integrates both consumer demands and the ability of the
manufacturer to ensure the production of competitive products and the provision
of competitive services. The formation of the potential of economic entities in
the motor car transport sector to compete and achieve effective results in these
conditions is complicated by the need for constant adaptation to changing
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conditions, which requires a search for a scientifically based concept of the
competitiveness of motor car transport services. The development of such
a concept necessitates a deep theoretical study of both the motor car transport
services themselves and the influence of the system of scientific values of
competitiveness (forces, factors, essence, competitive relations, strategy, etc.) on
the process of its formation and improvement. With the development of market
relations, the theoretical concepts of «competition» and «competitiveness»
require clarification in relation to motor car transport services, since the theory
reflecting the research sphere must have its own conceptual and categorical
apparatus, and its structure is determined by the specific features of the
competitiveness of motor car transport services.
These specific features consist in the fact that motor car transport activity
represents a variety of works and services related not only to the organization of
transportation of goods and passengers, performance of transport and forwarding
services, technical impacts on rolling stock, ensuring its safe operability, but
also the degree of compliance of the street and road network with consumer
properties: continuity, optimal speed, throughput, the possibility of movement of
vehicles with acceptable parameters at any time of the year and in any weather
conditions, a high level of motor car services. Economic reforms contribute to
the revision and additional consideration of the specific role of motor car
transport activity, its influence on the formation and development of commodity
markets, the functioning of which it ensures. The share of motor car transport
costs in the cost of industrial and food products is too great. Science should
respond to these processes and pay due attention to motor car transport activity,
the development of its infrastructure, the formation of the motor car transport
services market, the study of the degree of manifestation and development of
competition of services in different market segments. These problems are
essential not only from the standpoint of theoretical research, but are of
enormous practical importance.
The study of the system model of competitiveness of motor car transport
services is implemented on the basis of a private methodology. Specifying
theoretical concepts, we will attribute competition to a special type of fair
economic rivalry, when, with equal chances for each side, the more capable and
enterprising one, which has sold more products and services, and won
a significant market share, wins. Competition in a dynamic economy is effective
competition, stimulated by the desire to obtain excess profits and the quality of
the product and service itself. Competition is a rivalry of the new with the old,
i.e. only new goods and services, new technologies, and new sources of meeting
needs can be competitive. We will conclude that competition creates
prerequisites for the development of motor car transport services, expanding the
scope of their application in market conditions, and also stimulates the transition
to effective technologies of the transportation process and contributes to the
reduction of prices and tariffs. Let us highlight the defining features of
competition in motor car transport services:
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− the presence of competitive advantages of motor car transport services
through market comparison in the development of competition;
− categorical nature, i.e. a set of competitors of different categories:
individual, enterprise, industry, inter-industry (national);
− a combination of diversity and openness of competitive motor car
transport services in the conditions of a saturated and differentiated market;
− the prevalence of mutual benefit of motor car transport entities
providing motor car transport services with a part of the external environment,
and the presence of their absolute and relative business sovereignty;
− the transformation of rivalry between competing motor car transport
entities into one of two opposite, but complementary development trends:
competition and integration.
Competition in the field of motor car transport services in all its
combination demonstrates the effect of tolerance of competitors, and the
external environment assists in developing a strategy for competitive actions in
the market of motor car transport and services. No economic entity in the motor
car transport sector (an individual entrepreneur, a motor car transport enterprise)
can achieve superiority over competitors in all characteristics of the services
provided and the means of its promotion in the market of these services. It is
necessary to select priorities and develop a strategy that best corresponds to the
trends in the development of the market situation and best uses the strengths of
the activities of the economic entity in the motor car transport sector. Unlike
tactical actions in the motor car transport services market, a competition strategy
should be aimed at ensuring advantages over competitors in the long term. In
order to identify the reasons for changes in the future positions of competitors,
the characteristics of their internal and external environment, as well as to focus
on their potential and improve their position in the motor car transport services
market, we will conduct a competitive analysis.
Competitive analysis includes two main stages:
– defining the main competitive forces in the industry, with the aim of
identifying favorable opportunities and threats that a business entity in the motor
car transport industry may face;
– formulating the main options for competitive strategies that promote
price leadership, focusing on market niches, differentiation by quality,
technology, and range of motor car transport services.
Here it is appropriate to cite the definition of competition given by M. Porter,
which, in his opinion, should be based on a comprehensive understanding of the
structure of the industry and the process of its change. He combined the forces that
determine the competitive climate in any industry into five groups:
1) the threat of new competitors;
2) the threat of substitute goods;
3) the ability of suppliers;
4) the ability of consumers;
5) rivalry between existing competitors.
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The market share and profit level of an economic entity engaged in motor
car transport are determined by how effectively it counteracts competitive
forces. The higher the pressure of these forces, the less opportunity the existing
economic entities engaged in motor car transport have to increase prices and
profits. Weakening of forces creates favorable opportunities for them. Economic
entities of motor car transport, by changing their strategy, can influence these
forces to their advantage. One of the most important functions of theoretical
research is the explanatory function, which determines the main properties of the
objects under study, reveals existing and hidden patterns. Taking this feature
into account, we will study and explain the manifestation of these forces in the
motor car transport services market and determine the existing and hidden
patterns of influence of each of them on the state of the motor car transport
industry and the ability to use these forces in the intensity of competitive
actions:
1. The emergence of new small enterprises of various forms of
ownership, individual entrepreneurs or those united in companies, and joint
ventures in the motor car transport services market leads to an increase in
production capacity and, as a consequence, to an increase in costs or a drop in
financial results. The main obstacles to the penetration of new competitors
into the motor car transport services market are: the provision of various
types of motor car transport services by existing motor car transport
enterprises and individual entrepreneurs who rely on the loyalty of consumers
of these services; the need for capital, since effective competition in motor
car transport services requires large initial investments. On the other hand, if
a small number of small enterprises appear, then this risk is small and it is
possible to raise prices and increase incomes. The competitive strength of this
factor strongly depends on the height of entry barriers, i.e. the cost of entry
into the industry.
2. Competition can be intensified by motor car transport companies
providing transport services that effectively satisfy the same needs, but in
a slightly different way. Thus, competition can be created by motor car transport
companies that provide their competitive advantages: express and semi-express
bus routes, the introduction of fixed-route taxis on bus routes, the use of
specialized rolling stock for cargo transportation, etc. Obstacles to substitute
motor car transport services can be: price competition, which switches the
consumer's attention from the quality problem to a reduction in tariffs;
advertising influence on consumers; the provision of new transport services,
with an improvement in the quality of customer service. It should be noted that
the growth in demand for motor car transport services leads to moderate
competition while providing greater opportunities for expansion; a decrease in
demand is the main danger of increased competition.
3. Motor car transport enterprises providing motor car transport services
may exert pressure by threatening to raise the tariff or to reduce the quality of
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the motor car transport services provided. A group of motor car transport
enterprises or an enterprise are considered strong if they meet the following
criteria: their concentration is higher than in a motor car transport enterprise
providing similar motor transport services; they do not have to compete with
other motor car transport enterprises providing motor car transport services;
their motor car transport services are of decisive importance for motor car
transport activities.
4. Consumers of motor car transport services, seeking to reduce prices for
services and obtain higher quality services and better service, thus pit intraindustry competitors against each other. Consumer strength depends on the
cohesion and concentration of the consumer group, the degree of importance of
the motor car transport services provided for the consumer, the degree of
homogeneity of the motor car transport services provided, and the level of
consumer awareness.
5. Competition among motor car transport enterprises operating in the
market follows tactical methods of reducing tariffs, advertising, providing
consumers with additional services and guarantees. Under the influence of
various tactical determinants of the strength of competitive behavior of business
entities in motor car transport, the parameters and scale of this strength are
formed. In the process of conducting competitive methods, economic entities in
motor car transport must be stronger than competitors. They must be able to
carry out a greater number of competitive actions per unit of time and more
intensely than their competitors and not be inferior to them in strength.
Therefore, the key conditions for the successful implementation of competitive
struggle methods are overtaking competitors in the amount of competitive
strength, the ability to use this strength in the intensity of competitive actions. In
the daily operational planning of tactical behavior of economic entities in motor
car transport in the motor car transport services market, specific values of the
strength and intensity of competitive actions and competitive methods carried
out by them are important. Let us emphasize that the more diverse the arsenal of
methods of competitive action used simultaneously, the more intense the
competition and, consequently, the stronger one or another economic entity in
the motor car transport sector appears.
The intensity of competition among economic entities operating in the
motor car transport market will be determined by the following factors:
1) a large number of competing economic entities in motor car transport
or approximate equality of their forces;
2) relatively slow development of economic entities in motor car transport
providing motor car transport services;
3) a high level of fixed costs in the form of overhead costs or the cost of
inventories of economic entities in motor car transport;
4) provision of various types of motor car transport services by existing
motor car transport enterprises and individual entrepreneurs;
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