Luwingu plc, a company established some three decades ago in the Northern province of Zambia as a local enterprise, has now evolved into a big business with an international presence in Central Africa. Luwingu plc is in passenger transportation business. She started with some taxis thirty years ago and later on added the ‘bus’ segment. The taxis’ business segment has performed exceptionally well mainly due to effective branding, its name being associated with lower fares but quality service. The bus segment has not done so well. This segment has frequently been criticized by the public for providing services which do not run on time.

Comparative financial information relating to the ‘taxi’ segment and the ‘bus’ segment for the last two years are given below:

	2018	2019
	K’000	K’000
Turnover
Taxis’ segment	570,000	678.000
Buses’ segment	410,000	423,000
Before tax profit
Taxis’ segment	60,000	80,000
Buses’ segment	30,000	32,000

Continued	2018		2019
Capital Employed
Taxis segment	750,000		790,000
Buses segment	530,000		640,000
Other performance indicators
	Taxis		Buses
Year	2018	2019	2018	2019
Number of customers carried	300,000	350,000	2,250,000	2,150,000
Passenger kilometer travelled	750,000,000	825,000,000	80,000,000	75,000,000
Ratio of staff to passengers:
Ordinary	1 to 3	1 to 5	1 to 100	1 to 120
Business	1 to 4	1 to 5	1 to 20	1 to 25
Number of road routes operated	40	44	25	25
In.

Note: The taxi segment sells seats as ordinary or business to its passengers. The ‘buses segment’ alike sells ordinary and business seats to its passengers. The difference in price of the ordinary and business seats for both the taxis and buses segments reflect the level of comfort and service.

An independent market consultant’s, consumer research results, predict a general increase in the number of taxi passengers by 5% in the next two years and a 7% increase for bus passengers in the next five years in the markets in which Luwingu is operating in.

The research results further indicate that luwingu’s customers are specifically dissatisfied with the services offered by the buses segment in that punctuality of the services is poor.

Required:

1. Assess the performance of both the ‘taxi’ and ‘ bus’ segments using the comparative financial and other performance indicators above. Offer suggestions based on this analysis on the ways in which the two segments can individually contribute to the growth of the company, Luwingu plc, as a whole.

2. Explain the term ‘benchmarking’ and briefly discuss the process and potential benefits that can be obtained as a result of undertaking a successful programme of benchmarking.

Answer rating: 100% (QA)

SOLUTION Meaning of benchmarking Benchmarking is a process of setting goals and measuring the produc... View the full answer