In working out an individual responses to the discussion question, an individual should choose examples from our own experience or find appropriate cases on the Web that individual can discuss. Credit will be given for references individual make to relevant examples from real companies.

Address the following scenario, providing two distinct options and arguing the benefits and costs of each.

A person is the Vice President for Transport of a medium-sized company. Due to favorable economic conditions, strong performance and an expanding market his company is poised to consider whether to continue to rely on commercially available transport from third parties, either into partnerships with his suppliers and customers, or develop his own, wholly-owned transport network. Consider the following factors in proposing his two options:

• Raw materials come from both domestic and imported sources, currently primarily via a port that is 200km away from his manufacturing center and via a distributed rail system.
• Some raw materials also come in via van, using the main national highways and motorways as well as secondary roads that will only accommodate medium-sized trucks.
• 80% of his customers are national, but the vast majority of those are located 500km or more from his manufacturing center, in a mix of urban and rural locations.
• 20% of his customers are off-shore, with half receiving goods by maritime distribution networks and other half via air. The transport costs exceed 20% of his total costs, however, and average approximately 35% of overall expenditures on transport.