Company Analysis for BUS 4999

Team Members:

Zane Gallman

Ambre Franc

Joel Brown

Julieanna Rosa

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TABLE OF CONTENTS

SUMMARY OF THE COMPANY Page 3

KEY PERSONAL Page 5

ORGANIZATIONAL STRUCTURE Page 8

MISSION, GOALS AND OBJECTIVES Page 9

ORGANIZATIONAL CULTURE AND LEADERSHIP Page 11

CURRENT STRATEGIES Page 12

INDUSTRY/COMPETITION Page 17

MARKETING AUDIT Page 19

FINANCIAL REVIEW Page 22

ANALYSIS OF MODELS Page 29

SWOT Page 29

FOUR FACTORS OF THE COMPETITIVENESS ENVIRONMENT Page 35

PORTER’S FIVE FORCES Page 39

BCG MATRIX Page 41

ABEL’S STRATEGY OF DEVELOPMENT AND EVOLUTION Page 42

HOFER’S MARKET LIFE CYCLE Page 43

PRODUCT LIFE CYCLE Page 44

HALL’S COMPETITIVENESS Page 45

VALUE CHAIN ANALYSIS Page 46

MCKINSEY’S 7S Page 47

STRATEGY OPTIONS FOR DOMESTIC V. GLOBAL COMPETITION Page 49

HUSSEY’S DIRECTIONAL POLICY MATRIX Page 50

PORTER’S DYNAMIC DIAMOND Page 51

MAIN PROBLEMS AND ALTERNATIVE STRATEGIES Page 52

WHO, WHEN AND HOW Page 54

FINAL CHOICES Page 55

APPENDICES Page 56

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SUMMARY

TravelCenters of America (TA) is one of the largest full-service travel centers in the

United-States. Their main Customers are mainly professional truck drivers but they also serve

regular high way customers as well. As of November 2015, TA has over 254 locations. Although

stores are concentrated on the East Coast, TA has stores all over the U.S. and few stores in

Canada. TA’s current headquarters is located in Westlake, Ohio. TA operates in the specialty

retail travel service industry, against rivals like Love’s Travel Stops & Country Stores and Pilot

Flying J. The company is traded on the New-York Stock Exchange (NYSE).

Historic

Phil Saunders founded the company in 1972, they were originally called Truck stops of

America. Until the 1990s, the company changed owners frequently. In 1993 The Clipper Group

bought Truck stops of America which then merged with the National Auto/Truck Stop chain in

1997. Following that merge, the company’s name changed to TravelCenters of America.

Since 1997, TA has been in the process of buying new Travel Stops across the U.S. and in the

early 2000s, became international after the acquisition of truck stops locations in Ontario,

Canada. In 2007, TA experienced a break through as it acquired one of its direct competitors

Petro Shopping Centers. To this day TA still continues to use the Petro name at the acquired

locations.

Presentation

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TA’s core business functions revolve around fuel and truck repair services. Along with

the fuel and truck repair services Travel Centers of America also operates restaurants,

convenience stores, office centers, financial services centers, laundry and medical services

based on the location. TA is Also publically traded over the NYSE so anyone interested in

investment with the company may purchase their stocks. Over third quarter of 2015, total

revenues were up to 1.5 billion dollars (vs. $2b in 2014). From those revenues, 68% was Fuel,

31% was on non-fuel products/services and 1% was for rent and royalties.

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KEY PERSONAL

Phil Saunder: Creator of TA. In 1972, Phil Saunders created TA under the name Truck shops of

America. He sold the company the same year to Standard Oil of Ohio which would be bought by

BP in 1987, then sold to The Clipper Group in 1993 which changed the name to Travel Center of

America in 1997.

Thomas M. Obrien: Chief executive officer, President, Managing director and Director.

Thomas Obrien has been the Managing Director since 2006 and the President and Chief

Executive Officer since 2007. Mr. Obrien has also been Executive Vice President of Reit

Management & Research since 2008. He was Senior Vice President of RMR prior to that time

since 2006, and he was Vice President prior to that since 1996. Mr. O’Brien was the President

and a Director of RMR Advisors, Inc. and President and Chief Executive Officer of each of the

RMR Funds since their founding beginning in 2003 until 2007. From 2002 through 2003, Mr.

O’Brien served as Executive Vice President of Hospitality Properties Trust, where he had

previously served as Treasurer and Chief Financial Officer since 1996. Prior to 1996 Mr. O’Brien

was a Senior Manager with Arthur Andersen LLP.

Andrew J. Rebholz: Chief Financial Officer, Executive VP, and Treasurer.

Mr. Rebholz Has served his positions with Travel Centers of America since November 2007. Mr.

Rebholz has also served as Senior Vice President of Reit Management & Research LLC, since

November 2007. Previously, Mr. Rebholz served as our Senior Vice President and Controller

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from January 2007 to November 2007, as Vice President and Controller from July 2002 to

January 2007 and as Corporate Controller prior to that time.

Mark R. Young: Executive VP, and General counsel.

Mr. Young is the executive Vice President and General Counsel and has served in this capacity

since August 2007. He has been Senior Vice President of Reit Management & Research LLC, or

RMR, since 2011. From November 2001 through November 2006, Mr. Young was Assistant Vice

President and Associate General Counsel of Reit Management & Research LLC and from

November 2006 through July 2006, Mr. Young was Vice President, Leasing and Associate

General Counsel of RMR. Prior to November 2001, Mr. Young held various positions at CMGI,

Inc., Staples, Inc., Wilmer, Cutler, Pickering, Hale and Dorr LLP and Sullivan & Worcester LLP.

Michael J. Lombardi: Executive VP of sales.

Before joining Travel Center of America, Mr. Lombardi worked in the retail marketing division of BP for

over thirteen years as well as working for over seven years with Ford Motor Company in a senior

position in global marketing and customer service. Mr. Lombardi joined Travels Center of America in

2006 as Senior Vice President of Sales then was promoted to Executive Vice President of Sales in 2007.

Barry A. Richards Executive Vice-President.

Mr. Richards joined TravelCenters of America in 2000 with over 25 years in the food service and

hospitality industries. Since then, Richards has served in numerous operating leadership

capacities. He began his duties for TA as a District Manager in the Southeast part of the U.S.

He quickly ascended into roles of Regional Vice President and Senior Vice President, Food

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Operations. Then in 2009, he was named to his current role as Executive Vice President,

Operations.

(Source for Key Personal: http://www.ta-petro.com/about-us/for-investors/Leadership)

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ORGANIZATIONAL STRUCTURE

The organizational structure for Travel Centers of America is set up full of talented and

proven executives and managers. The current president and CEO Tom Obrien has been in his

position since 2007 and has done a good job with taking the company to where it is today. Tom

Obrien was a big pusher for their acquisition of Petro, which has profited Travel Centers of

America greatly by allowing them to increase their market share along with their locations. The

other top Executives Andrew J. Rebholz, Michael J. Lombardi, Mark R. Young, and Barry A.

Richards all have quality experience in related industries and together they all build a strong top

management team that the company needs to remain successful.

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MISSION, GOALS, AND OBJECTIVES

Mission:

“Refuel. Replenish. Refresh.”Travel Centers of America’s mission as a company is to service all highway commuters

with the best possible service that can be attained. Travel Centers of America prides themselves

on having the best service facility’s on the roads with a range of services to be offered. By

offering a range of services including everything from restaurants to fill up stations they are

able to provide the consumers with all the necessary needs for their highway travels. With over

30 years of experience, Travel Centers of America has established itself as a leader in the

specialty travel retail industry.

Goals and Objectives:

As of September 30th, 2015 CEO of Travel Centers of America Tom O’Brien stated that

the goals and objectives for the future of company would be growth by acquisition. After

September, TA will purchase more than 150 more Convenience stores to go along with their

250 plus current properties they currently operate. In a conference call in September, CEO Tim

O'Brien explained their growth strategy to investors by stating “The company's growth

strategy rests on three legs: New development, largely of sites the company has been sitting

on; diversifying through convenience stores and internal growth.”

1. New Development: According to Tim O’Brien the CEO of Travel Centers of America, the

company has been sitting on many sites they plan to develop in the upcoming year. By

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integrating these new facilities into Travel Centers of America portfolio, they could

potentially see their largest profit growth in years.

2. Diversifying Through Convenience Stores: Truckers and drivers spent seven percent

more on fuel at Travel Centers of America than any other company in their industry.

While they have a seven percent advantage in fuel purchases the fuel industry is subject

to change based on the growing ecological trends. TA knows they must make the

convenience store aspect of their business larger in order to continue growth. By

investing in more convenience stores and making them a more integral part of their

business along with the fueling they will potentially see growth in profits for the years to

come.

3. Internal Growth: For Travel Centers of America, Internal Growth is something they look

to achieve in the years to come. In regards to internal growth, the company will want to

hire more executives who have more insight into the convenience store aspects of the

business. As stated above for Travel Centers of America to remain profitable they will

have to invest and grow the convenient store aspect of their business. By hiring

executives with insight into the industry they will be able to market, place, and

distribute better in their convenience store sector.

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ORGANIZATIONAL CULTURE AND LEADERSHIP

Travel Centers of America is set up full of talented and proven executives and managers

who pride themselves on having a positive management culture. Many of the executives have

been obtained through the acquisitions of Petro, Reit Management, and their predecessor and

remain around to help provide the company with the best chance to make the acquisitions

work through their expertise. The only problem stated in annual reports from Travel Centers of

America would be the possible lack of cohesion between the executives from the acquisitions.

This is stated to be a possible risk for the company and could end up causing problems in the

long run in regards to culture if they cannot see eye to eye on their plans for the future of the

business.

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CURRENT STRATEGIES

Grand/Corporate:

Travel Centers of America’s current strategy is a growth strategy. Their strategy of

growth is being done via vertical integration and purchasing of new land to open more

convenience stores. Travel Centers of America has taken notice of the recent decline in the

price of oil and has begun to focus on different forms of growth for their company. As stated by

the CEO Tom Obrien “The company's growth strategy rests on three legs: New development,

largely of sites the company has been sitting on; diversifying through convenience stores and

internal growth.”

Business:

TravelCenters of America (TCA) is in the fuel, food, and relaxation business for the long

haul. The company's network of nearly 280 interstate highway travel centers in more than 45

US states and Ontario, Canada, is one of the largest of its kind in North America. Its TCA and

Petro locations provide fuel, fast-food and sit-down restaurants (Country Pride, Buckhorn

Family), convenience stores, and lodging. With professional truck drivers as its main customers,

some outlets also offer "trucker-only" services, such as laundry and shower facilities, TV rooms,

and truck repair. TCA leases 185 of its locations from Hospitality Properties Trust (HPT), its

largest shareholder.

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Functional:

Marketing:

Product

Travel Centers of America locations provide fuel, truck service, fast-food and sit-down

restaurants (Country Pride, Buckhorn Family), convenience stores, and lodging.

Price:

Travel Centers of America has competitive pricing with other companies in their

industry. Whether it be with their convenience store items, fuel, food, or lodging they maintain

a competitive pricing strategy to that of their competitors. They focus on their brand and the

products they offer in order to bring the customer rather than attempting to be a low price

competitor.

Promotion:

Travel Centers of America’s main focus is to continue to grow its brand so it can better

compete within its industry. With the lowering price in fuel, Travel Centers of America has

made its way through hard times by vertical acquisitions and the growing of its brand by

focusing more on updating and expanding their convenience stores while still focusing on their

other services such as fuel. As for promotional strategies to promote their brand Travel Centers

of America focuses on their membership cards, their Road King Family Magazine, and their

roadway Billboards.

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Place:

As of September 2015 Travel Centers of America operates 256 locations in the United

States and Canada. Along with the 256 they currently operate they plan to acquire 150 more

stores in late September to continue to grow their brand. Travel centers of America locates all

of their locations near highways and interstates so that they can service the travelers of the

road and their main consumers which would be truckers.

Finance:

Over the past three years, Travel Centers of America has seen decent growth financially

especially as of 2014 but they also have a good amount of debt. As of last year, Travel Centers

of America’s debt to equity ratio was 45.62 which indicates high risk for investors. Although

they do have a lot of debt, with the Economy rebounding they have found a way to keep their

companies sales growing in a declining fuel industry. For example, In Travel Centers Annual

Financial report for 2014, they reported even with the decrease in gas prices Travel Centers of

America was still able to profit around 19 percent per gallon with that value expected to

increase to 23 cents next year. Travel Centers of America is able to profit more on their fuel due

to directly purchasing their fuel from refiners rather than paying wholesalers which in return

has made them able to profit more.

Operations:

Their operations revolve around obtaining their inventories whether it be fuel, food, or

miscellaneous products through distributors, suppliers, and/or wholesalers who provide the

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best prices and values for Travel Centers of America. Travel Centers of Americas operation

strategy is service focused, in that their inventory items all provide a service for the consumer.

Human Resources:

Travel Centers of America has an up to date and pretty good human resources

department. They have a 24 hour phone number for any questions, comments, or complains as

well as an online report form for those who do not prefer to call. This indicates that Travel

Centers of America wants to hear what the customers or employees have to say and are

interested in the comments, concerns, or good words coming from anyone involved with their

company.

Information:

Travel Centers of America offers many way for you to able to access information about

all aspects of the company whether you are an investor, supplier, renter or simply a customer

of Travel Centers of America. They offer a very in depth company website that offers everything

you would need if you had an interest in any way with Travel Centers of America. For example,

on their website they offer annual reports for viewers to view in order to see all aspects of their

business, even including how they are doing financially. Along with their company website, they

also are a public company leaving their information to be able to be viewed and easily

assessable through many websites such as Morningstar.com or Yahoo financials.

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Management:

The management team for Travel Centers of America is very diverse and full of

executives from within Travel Centers of America and also from the company’s previous

acquisitions of Reit Management and Petro. The management team works together to plan,

organize, lead, and control the Travel Centers of America brand. By keeping previous and

acquiring new mangers from previous acquisitions they are able to operate their business and

help grow a changing and improving brand. Their management might be seen by some as weak

due to possible lack of cohesion between the executives due to the acquisitions but to be able

to continue to succeed the executives will need to work together and be able to make the best

decisions for the future of the company.

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INDUSTRY/COMPETITION

Travel Centers of America operates in the specialty retail travel service industry. Within

their company they offer everything from fuel, truck service, fast-food and sit-down

restaurants, convenience stores, and lodging. The Travel Center industry is a multibillion dollar

industry that is in the mature stage of the industry life cycle. Due to the Industry being in its

mature stage the barriers of entry into the industry would be hard and not recommended due

to the already established companies in the industry already owning most of the industry.

Moreover, I would state that the industry is not competitive due to the high cost of entry into

an already heavily established industry.

In regards to competition, Travel Centers of America’s main competitors are Love’s

Travel Shops & Country Stores and Pilot Travel Centers. Both Love’s Travel Shops & Country

Stores and Pilot Travel Centers are larger than that of Travel Centers of America and have

higher customer bases and profits due to them both having more stores and with that comes

more customers. Travel centers of America had an estimated annual revenue of 7.78 billion

compared to love’s at 22.2 billion and pilot at 33 billion for 2014. Furthermore, Both of their

main competitors are also privately owned companies who are ranked in the top 15 largest

private companies with Pilot Travel Centers ranking in at number 7 and Love’s ranking in at

number 13, while Travel Centers of America ranks in the top 300 public companies. In

comparisons to stores operated Travel Centers of America Operates 256 stores, loves operates

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315 stores, and Pilot operates more than 650 stores. All of these companies operate in North

America. With the industry being so competitive this has lead Travel Centers of America to

ramp of up its purchasing of new locations and development of new locations to further

compete with their two larger competitors.

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MARKETING AUDIT

Objective:

Travel Centers of America’s objective is to focus on increasing the value perception of its

services and brand name. In order to achieve this, Travel Centers of America must provide the

best products, services, and facilities all while continuing to expand their business. This is

evident due to their recent expansions in locations, Upgrades of facilities, and releasing of new

marketing materials.

Target Markets:

Travel Centers of America focuses its marketing strategy on professional truck drivers

and interstate and highway travelers.Travel Centers of America main target market focus however

would be professional truck drivers. They tend to these customers by offering "trucker-only" services,

such as laundry and shower facilities, TV rooms, and truck repair.

While they mainly focus on truck drivers as their main consumers they also do tend very well to

cater for the highway and interstate commuters. They do this by offering a multitude of services

including fuel, fast-food and sit-down restaurants (Country Pride, Buckhorn Family), and

convenience stores. These services help bring the customer back through quality choices and

exceptional service.

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Products:

Travel Centers of America offers a variety of products and services to appeal to every

consumer who choose to shop or stay at their locations. These products and services include

fuel, truck service, fast-food and sit-down restaurants (Country Pride, Buckhorn Family),

convenience stores, and lodging. Each of these products and services appeal to their everyday

consumers and hope to bring joy and happiness to the consumer as they purchase one or more

of their products or services.

Pricing:

Travel Centers of America has a competitive pricing strategy. No matter the product

or service they offer, they maintain a competitive pricing strategy so they can compete directly

with their competitors Love’s and Pilot. They focus on their brand and the products they offer in

order to bring the customer rather than attempting to be a low price competitor. In regards to

gasoline one of their main drivers of capital they have been able to cut cost and compete better

with competitors due to buying their oil and gasoline products right from refineries rather than

wholesalers.

Place:

Travel Centers of America has 256 locations in the United States and Canada. As of

September 2015 they plan to start purchasing and developing around 150 more stores to add

to their already large roster. They locations are all located along interstates and highways so

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that they can cater to their target market of professional truck drivers and interstate and

highway drivers.

Promotion:

Travel Centers of America’s main promotional efforts are to focus on continuing

to grow and expose their brand to their target markets. As for promotional strategies for their

brand Travel Centers of America focuses on their membership cards, their Road King Family

Magazine, and their roadway Billboards. These three types of promotion have tended to work

very well for their business. To better improve promotion for the future Travel Centers may

need to focus on possible sponsorships of athlete and commercials.

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FINANCIAL REVIEW

Liquidity

Current Ratio:

Current Ratio (or the Working Capital ratio) is used by companies to show their ability to

pay the current liabilities that they have, current ratio is helpful because it determines if a

company has a sufficient level of liquidity to pay liabilities during the short term. In theory,

the larger the ratio the more liquid the business will be foreseen to be. The current ratio for

TCA in the years 2012, 2013, and 2014 were 1.39%, 1.55%, and 2.11% respectfully. IF we

were to compare that to the industry average during those consecutive years at 1.55% we

can say that TCA is very efficient with using their assets according to their balance sheet.

Quick Ratio

Quick ratio is used (just as the current ratio is) to measure short term obligations. So if a

quick ratio is high, that potentially means the company is more invested into liquidity. In

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the years 2012, 2013, and 2014 TCA had quick ratios of 0.72%, 0.89%, and 1.46%

respectfully. IF compared to other companies in the Global Specialty Retail industry during

those consecutive years at an average of 0.84%, I’d say TCA has a high quick ratio.

Indicating that they have more liquidity than other companies within the industry.

Liquidity Ratios: B+

Overall: TCA has had an upward trend of growth when analyzing their current and quick

ratios. With high fiscal years in 2013 and 2014, TCA put themselves ahead of the industry

with this rapid growth, allowing them to be a viable competitor in the Global Specialty

Retail Industry. In this case TCA has more cash and cash equivalents, while also achieving

their goal of less liability. That’s the reason why TCA deserves a B+ in this category.

Profitability

Net Profit Margin: Net Profit margin is the measure of dividing Net Profit of the year by

the Net Sales of that same year and multiplying by 100. The net profit margin is used in

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determination of the overall success of a business, generally a high net profit margin or one

in excess of 10% is considered to be exceptional in the Global Specialty Retail Industry. In

2012-2014, TCA’s Net Profit Margin was 0.4%, 0.4%, and 0.75% respectfully compared to

the rest of the industry at 5.4%.

ROI: ROI or Return on Investment is a financial ratio that helps an investor understand

the benefit that will be obtained from investing in such company. If an investment has a

positive ROI while there are no other opportunities within the industry with an even higher

ROI, that investment should be accepted. A higher ROI means that investment gains

compare favorably to investment costs, so to calculate ROI it would be how much you

gained from that investment subtracted by how much it cost you, then divide again by how

much the investment cost you. In 2012-2014 TCA’s ROI reports were 5.63%, 5%, and 5.65%

compared to the industry at 7.9%.

ROE: ROE or Return on Equity is the measurement of a company’s profitability by

dividing Net Income by Shareholder’s Equity. This is a useful number because it calculates

how much profit is created with each dollar of shareholder’s equity. In 2012-2014 the ROE

reports for TCA were 9.58%, 7.83%, and 11.93% compared to the industry average of

23.1%.

GPM: Gross Profit Margin shows the amount a company earns from its sales before it

subtracts the price of selling and administrative expenses. The importance of this is that it

gives a detailed analysis of a company’s pricing structure and how they compare to others

in the industry. In 2012-2014 the Gross Profit Margin numbers for TCA were 13.58%,

14.51%, and 16.95% compared to the industry average of 21.9%.

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EBT: EBT or Earnings before Tax is a metric that determines pretax profit margin, but it

isn’t the best source to analyze profit. It is recommended that “By removing tax liabilities,

investors can use EBT to evaluate a firm's operating performance after eliminating a

variable outside of its control.” TCA’s Earnings before Tax in 2012-2014 were 0.42%, 0.03%,

and 1.23% compared to the industry average of 1.35%.

Operating Margin: Operating margin gives a detailed outlook on how much a company

makes after paying all variable costs that come with production (Operating Income) and

then divide that by how much revenue they made in the fiscal year. An increase in a

company’s operating margin means that they have profitability, and it is improving. Travel

Centers of America had reports of operating margins at 0.52%, 0.27%, and 1.46%

compared to the industry average of 4.69%.

Profitability Ratios: C+

Overall: Surprisingly even though the numbers were mostly single digits and low

percentages this isn’t bad for Travel Centers of America. The reason for this is because in

previous years the industry was rising while TCA was actually in decline and didn’t exactly

have a comparative advantage to combat their low Profitability outlook. Also another

reason for the low Profitability outlook in this case compared to the industry is that TCA

relies heavily upon gas outlook. So with various price changes in gas taking affect, in-

between the years, and elevating the Cost of Goods Sold it made TCA have a lower

Profitability. A way for the company to curve this would be to cut costs and maybe diversify

themselves from being solely a truck stop attraction.

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Activity or Efficiency Ratios

Asset Turnover Ratio: Asset turnover ratio is the metric that presents how much

revenue is being earned for every dollar the company spends when it comes to assets. It

embodies how well a company uses the assets it has to make money. TCA’s Asset Turnover

ratio for 2014 was 5.80%.

Inventory Turnover: Inventory Turnover is the measurement of how well a company is

able to turn its products into cash. So the way to figure this formula would be to take the

Cost of Goods Sold during a period of time and divide that by the inventory that was on

hand during that same period of time. The Inventory Turnover in 2014 for TCA was

34.73%.

Days in Inventory: Days in Inventory is how many days on average a company turns its

inventory into sales. Value of DIO varies from industry and company because of the

multiple factors that it applies to. In general though, a lower DIO is better. DIO for TCA in

2014 was 10.51%.

Accounts Receivable Turnover: Accounts Receivable Turnover is the measure of the

average collection period with sales. The higher a number means the company will make

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sales that they have become cash faster. The Accounts Receivable Turnover ratio in 2014

for TCA was 49.3%.

Overall: I’d give the overall outlook for Travel Centers of America Activity and Efficiency

Ratios a solid B. The reasoning behind this is that you can see that there is a decline in

almost all aspects of the inventory and asset turnover percentages, which is actually good.

But the rise in the amount of days in turnover, and the decline in millions of the Accounts

Receivable Turnover is a cause for concern, when looking at the future output needed to

sustain stability in the company. This is an opportunity for Travel Centers of America during

this time to improve their operating and logistic strategy.

Activity and Efficiency ratios: B

Long-Term Debt to Equity Ratio

Long-Term Debt: Measures the total debt of the company (both short & long-term

obligations that are outstanding) and then divides the total amount with shareholder’s

equity. Basically this number is the difference between liabilities and assets. In summary

this ratio looks at Travel Centers of America’s amount of money remaining for stockholders

once all their debt has been paid off. The more leverage you have the higher the ratio

should be, but in this case Travel Centers of America ended with a ratio of 1.15, since their

company was being aggressive in financing growth with debt. This is after having 3 years of

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conservative growth overall in 2012-2014 with showings of 1.07, 1.07, and 1.15

respectfully.

Overall: Travel Centers of America in this case has a high Long-Term Debt to Equity

Ratio, and in this case (and within this industry) that means they have more leverage. In the

upcoming years, if this trend continues, with them having positive growth in the next few

years, it’s foreseen that they will keep pace with the industry and not have to suffer from

long term debt issues when compared to the industry.

Long Term Debt to Equity Ratio: B+

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ANALYSIS OF MODELS

SWOT

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II. Limted Options I. Growth

III. Survival IV. Change

Weakness Strengths

Threats

Opportunities

STRENGTH 

General: TravelCenters of America would be considered as a strong brand as it operates in over

43 states in the United States and also has a few locations in Canada. There are two brand that

operate through this company: TA and Petro. 173 stores operate under the TA brand while 75

operate under the Petro Brand. As of now, the company owns and operates 218 TA & Petro,

and 30 are franchised.

Human Resources: TravelCenters of America is very dedicated to knowing what type of

improvement in their services should be done or whether or not their customers are satisfied

and what’s their position toward other competitive brands. Every year TravelCenters of

America conducts a survey under the name « Voted Best survey » where truck drivers give their

feedback regarding the different type of services that TravelCenters of America proposes and

also what is the best brand between TravelCenters of America and their main competitors. The

company has been doing this survey for over nine years, and the last report was given in

October 2015.

Marketing: TravelCenters of America’s marketing strategy is different from most companies.

Their main way to advertise is by using advertising billboards on the roadways. However,

TravelCenters of America puts a lot of effort into trying to gain their customers loyalty: they

created a membership card that allows customers to get discounted prices on food, gas and

goods. Recently, the company decided to create a journal called RoadKing magazine that

focuses on the truck driver lifestyle with news, stories, tips etc. This year, the company issued

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an annual special edition of RoadKing magazine called RoadKing Family magazine that focuses

more on families featuring cooking recipe, games for kids.

Operation: TravelCenters of America currently has 254 different locations across the United-

States and Canada. Due to an effort to improve operations, TravelCenters of America has

focused on how to lower expenses and improve guest experience. The main difference

between TravelCenters of America and their competition revolves around the wide range of

services that TA offers to its customers. These services include fueling, full service restaurants,

QSR’s, truck service repairs, and travel stores. TA and Petro also propose amenities such as

information centers, banking services, Wi-Fi internet access, video game rooms, laundry areas,

private showers, exercise facilities and also big screen television rooms with comfortable

seating. They are all also open 24 hours a day 365 days a year.

)))In regards to their number one source of revenue their fueling operations, TA & Petro, buys

their gas and diesel products straight from the refineries. By doing this they are able to save a

considerable amount of money due to not having to deal with purchasing their fuels from a

wholesaler.

Management: In order to improve their services, TravelCenters of America’s management

conducted a survey where people would rate every type of service offered by TA to see what

they should better focus on to give their customers better satisfaction. This survey has been

going on for the past nine years and allows the customers to vote on their experiences, who

they felt were the best employees, the stores customer service process, parking lot situations,

fueling times, best restaurants, and how clean the amenities were. In addition, this survey also

asks to compare TA and Petro versus their competitors. This type of survey allows the

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management team of TravelCenters of America to clearly understand the want and need of

their customers and to bring satisfaction to their customers.

Information: Information is a key responsibility for a company regarding the supply chain

importance for both gas and food. As mentioned earlier, the TA’s survey plays a big role

regarding customer satisfaction and this information helps with improving the business as a

whole.

WEAKNESSES

General: TA’s overall business is good. However, the company is operating in the very tangible

market of petroleum. Considering the geopolitical aspect of their main resource, a company like

TA could suffer from a conflict over the petroleum and won’t be able to have any leverage on it

due to it being more of a conflict between the government than the companies (USA, OPEC

etc.)

Marketing: TravelCenters of America and Petro are limited in their marketing plan. Their

marketing plan to attract customers relies mainly on billboards on the roadways to advertise

about the different products that are offered by the company. While they do have a Facebook

page and a twitter account, they do not offer too much optimism in their marketing due to only

containing 12,596 likes on Facebook and 4000 followers on their twitter page.

Operation: TA’s main weakness is that like any company that offers fuel as an item of sale, they

are exposed to price changes and are also effected by the interruption of the supply. Due to

their dependence on suppliers, their operations can be directly affected at any time a shortage

comes or prices raise. Therefore, companies like TA have no real power over their suppliers.

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OPPORTUNITIES

Market environment: TA’s competitive advantage revolves around the quality and the larger

amount of services that they offer. These services not only help them bring in professional truck

drivers, but also families and non-professional drivers. TA must continue to develop and

revolutionize their services over the next few years to keep bringing in more customers. Freight

volumes are also expected to increase by 29% over the next 11 years, which favors more

business for Travel Centers of America. The overall U.S. Economy also keeps growing which can

lead to more travelers on the road which in the end is an economic opportunity for TA.

Economic: the 2015 3rd quarter sales for cars has been one of the best in history the United

States. Meaning that the number of cars in circulation keeps growing, which make more

customers for the industry. Also the increasing freight volumes will be a major economic

opportunity for the industry.

The bigger, the greater is TA’s known strategy. The company keep acquiring competitors

through vertical integration and opening new locations which is the best strategy in order to

grow in the already consolidated truck stop/convenience store industry. The more locations

you have, the more customers you are able to attract.

Socio-cultural: TA is not only a gas station they offer a variety of amenities to their consumer

as explained above. Providing customers with not just fuel but also other unique amenities

allows TA to have an advantage over other competitors. This is a main competitive advantage

for the customers TA is focusing on.

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THREATS

Political-legal environment: the most critical point in the political-legal environment revolves

with the petroleum industry. Political conflicts between the United States and the OPEC

(Organization of Petroleum Exporters Countries) countries have a direct impact of gasoline

prices, which in return affect the whole gas industry. If a real crisis were to occur, like when the

economy collapsed in 2008, companies like Travel Centers of America linked to the petroleum

industry could encounter problems.

Economic: As long as the U.S. Economy continues to recover, the industry should continue to

rise. Nevertheless, the prosperity of the Economy is never a given. The frequency between

crises are getting closer every time. If a new economic crisis should take place over the country,

the businesses will suffer. Therefore, freights volumes should not remain the same and

companies like TAs would lose customers.

Socio-cultural: even if the problem hasn’t shown up yet, the ecological trend could somehow

affect the industry. For example, recent studies revealed that diesel fuel is less ecological than

regular gas. With both types of fuel being bad for the environment, people will continue to

push for different types of sources for fuel. If movements against fossil fuels continue to rise,

companies could struggle from this trend which would affect their directly affect their industry

if they do not change to the new demands of consumers.

Market Environment: As is true with every business, if activity slows, it will get harder to keep

going. In an industry like TA’s, the capital intensity puts some more risk over the business. All of

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the processes to run the activity is complex. Supply chain is tough, strategic partnership with

gas supplier is essential in order to offer the best price.

Four Factors in the Competitive Environment

Macro

Heavy political/Legal industry (regulations, laws, etc.)

Must Comply with quality standards due to offering fuel services

Food hygiene policies regarding the restaurant food services aspect of their business

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Grade: C+

Economic

Approximately 178 million gallons of gasoline consumed every day in the United States

(source: Department of Energy)

Slow and steady expansion in U.S. economic growth

Freights volumes expected to increase 29% over next 11 years (source: 2015 study by

American Trucking Associations and HIS Global Insight)

Increases in fuel price

Grade: B

Sociocultural

Increase of the number of cars and trucks in circulation

Grade: B+

Technological

Ability to offer further services to consumers such as Wi-Fi, Business centers, video

game rooms, fitness facilities etc.

Grade: B

Ecological

CO2 emissions causing environmental issues

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Grade: C

Global

TA’s truck stop operation is one of only three nationwide truck stop networks in the

U.S.

Multiple growth avenues: Fuel; C-stores; Truck repair/maintenance; Restaurants;

Alternate sources of fueling energy

Grade: B

Industry

Regarding the Porter’s five forces, the overall industry is unattractive considering the

number comptiors and alternatives along with the price of start of being very costly.

Grade: C

Direct

TA has a clear scale competitive advantage to smaller companies due to its position in

the market

Differentiation of TA comes from its large facilities location (2-3x size of average

competitor)

All of TAs travel centers are at or within ¼ mile of an Interstate Highway exit (likely

impossible to replicate)

Grade: B+

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Internal

TA’s Internal strategy is focused on expansion either by opening new locations (for

example: Mars 10, 2015 – opening in Brooklyn) or acquiring competitors through

vertical integration (for example: October 15, 2015 – acquired convenience store in

Western Wisconsin OR last announcement to acquired Quaker Steak & Lube in

November 2015)

Grade: B

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Intensity of rivalry- Large number of competition

- 2 similar competitors - Growth rate of freight volumes are expected to increase by 29%

over the next 11 years

Threat of new entrants- Relativly low

- Large mature market - Well established brand

names - Capital intensive

- Regulatory and legal obstacles

Buyers' bargaining power- Due to the premium and large service offers by TA all over the U.S., buyers

bargain is not substantial.

Threat of substitutes- Every gas station accross

the country nearby a highway

- Motel and resttaurants spread around the

country - Electricity and hydrogen providers in a near future

Suppliers' bargaining power

- Fuel market is directly linked to the petroleum

market which fluctuates a lot due to geopolitical

issues

Porters Five Forces

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Threat of new entrants: the risk is relatively low for many reasons. First of all, the market is

already mature and highly exploited. A lot of companies have already undertaken the market

and have worked in it for a long time with established brands and networks. Secondly, entering

this market would be very expensive. Not only because of the location and accommodations

but also because of the high level of the working capital required to operate such a business.

Finally, selling a good such as gas is highly regulated and policies around the business are

complex and hard to handle.

Intensity of rivalry: The number of competitors is high. Depending on the state or the area,

different brands and companies are highly implanted. Considering TA, there are two main

competitors: Love’s and Pilot. Although, the business is not expected to experience a recession

leading to suppression of established names in the sector considering growth rate forecast of

freight volumes (29% increase expected over the next 11 years).

Suppliers’ bargaining power: obviously one of the most important characteristics of the

business. As long as petroleum is used to create gasoline, companies like TA are under the

power of manufacturing petroleum companies and petroleum suppliers from all around the

world. Leading to a complex situation followed by geopolitical issues.

Buyers’ bargaining power: With the services provided by TA being the most competitive and

largest in their industry, this variable is not consistent. Also, due to the business itself, location

is one of the keys competitive advantages in the market and TA is perfectly positioned.

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Threat of substitutes: every independent gas station in the country is a potential competitor.

Even though TA offers more services, a client looking for gas or other services on the road can

always have the choice between TA’s and any other service provider. Moreover, independent

motels, restaurants or any place to park in general are all potential substitutes to TA. As long as

trucks and cars are using gas to run, only gas providers can actually compete with the core

source of business for TA. However, considering new technologies and especially, new

resources such as electricity and hydrogen, new substitutes providing those resources could

become new competitors.

BCG Matrix

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I would place Travel Centers of America the star section of the BCG matrix. They are

placed in the star section due to their high market growth along with their large market share in

their industry. As of September 2015, Travel Centers of America purchased 150 convenience

stores to go along with their already 250 plus operational businesses. With these purchases

they were able to obtain the growth needed to better compete with their competitors Love’s

and Pilot travel centers. Travel Centers of America are labeled as a star due to their market

growth along with their market share inside the travel center industry.

ABEL’S STRATEGY OF DEVELOPMENT AND EVOLUTION

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In an industry that mainly remains the same, there needs to be some sort of innovation.

The current situation for the truck stop industry is in a decline. The only way to move forward is

to anticipate change, join in and to follow the leaders of the industry which right now would be

their main competitors Pilot Travel Centers and Loves Travel Centers. It is inevitable that there

will be a change in the industry that will create more competition between their competitors.

For Travel Centers of America they must continue to put focus in their research and

development so that can develop new technology that will put them ahead of the game. Travel

Centers of America must also look into what their larger competitors are doing and take that

into mind while they continue to grow their business.

Hofer’s Market Life Cycle

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As shown in the Hofer’s Market Life Cycle Graph above, we have placed Travel Centers

of America in an above average stage of growth along with their industry being in maturity.

Travel Centers of Americas purchased 150 stores in September of 2015 to go along with their

already 250 plus stores that are currently operating, this shows growth in the company. In

regards to the industry being mature, Travel Centers of America’s industry has been around for

years and the risk of new competitors catching up is very low.

Product Life Cycle

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Harvest or Divest

Selective Growth

Average Growth

!'Decline

!'Maturity'Growth'Introduction

'High'Low

'Weak

'Average'

'Strong

!!!!

!!!!

!!!!

!!!!!

This model is used to show the growth rate in sales based on competition and stabilization.

The many factors that are involved in the company’s placement lead us to put Travel Centers of

America between growth and maturity on the product life cycle.

Halls Competitiveness

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Time

SalesUnit

DeclineGrowth MaturityIntroduction

TravelCenters of America is a leader in their industry and have a certain amount of

differentiation when it comes to competitors in their industry by offering a range of different

products in their centers. They not only provide oil they also offer to their customers the

possibility to eat at a various type of restaurants, Shop at their convenience stores, use their

WIFI free of charge ,and even offer lodging for those who need it. By having key distribution

facilities all over the United-States and over 250 centers, Travel Centers of America is able to

deliver their services and products at a low relative delivered cost. Due to all of these factors,

TravelCenters of America falls within the zone of competitive battle and the cost power alley.

Value Chain Analysis

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By analyzing Travel Centers of America’s value chain we have come to the conclusions

that their biggest strengths are inbound logistics and outbound logistics. As for their biggest

weaknesses we have determined that marketing and sales is their weakest link in the value

chain. We believe their operations and customers services aspects were strong but could use

some improvement in the future.

McKinsey’s 7’s

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Strategy: Travel Centers of America has a clear cut outlook on future plans, and a lot of that has

to deal with their investment into diversity, Also their strategy is firmly sent because the

company has adequate resources, and revenue that goes into the hundreds of millions. Since its

establishment in 1972 it has always had a strong positive strategic outlook.

Structure: Travel Centers of America uses a hierarchical structure that is led by a CEO with other

officers in different categories underneath. This helps the company not be micromanaged at a

corporate level and maintain efficient management teams. The CEO doesn’t have absolute

control, he still reports to a Board of Directors that helps regulate.

Systems: Travel Centers of America uses Technical and Human Resource systems to help

promote an active relationship between company and consumer. TCA utilizes technical systems

by encouraging the use of clean fuel at all stations, since 25% of its gross profit is from gas.

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Style: Travel Centers of America uses a central figure CEO and various Senior Vice Presidents

within its different categories of the broad ranging travel center business. Such as Sales,

Environmental Maintenance and Operations which are all essentials, but needed to be headed

by various individuals who have more expertise than one central figure with absolute control.

Equally sharing leadership but still showing qualities of Corporate Business Responsibility, with

strong Corporate Social Responsibility.

Staff-Travel Centers of America uses employee recognition as an incentive, but there is a huge

difference (basically a cultural split) when you compare corporate to store. Micromanagement

is what is used, as a manager is placed at every location with staff reporting directly to the

manager only. Travel Centers makes sure representation is always positive of their company

with seminars conducted regularly to implement the idea in the employee’s daily activities.

Shared Values- TCA has more of an emphasis on employee satisfaction along with customer

satisfaction. Travel Centers of America used their buyout of Petro to prove they are socially

responsible, because they made sure to not destroy and rebuild and used what was previously

there and kept Petro’s name so as not to deter potential customers because there was “new

ownership”. Now that they’re the largest full service/stop travel centers in North America they

went to make it known they’re loyal not only to the people but the environment.

Skills- Again in reference to the difference between corporate headquarters and store locations

is the difference in their actual responsibilities when related to skill. While the stores operate to

bring income through activities they’re trained for, the corporate level uses highly qualified and

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degreed individuals to expand operations domestically. However at the store level education

assistance is offered, so skills can be expanded further with teaching.

Strategy Options for Domestic v. Global Competition

Defender- Take advantage of Domestic stability due to the growing car market in the

United States, Travel Centers of America can appeal to various consumers instead of specifically

truck drivers. While fuel consumption is a large part of business, the other amenities that Travel

Centers of America offers also are extremely important to the business objective. Due to this

there is little doubt that TCA belongs in the defender strategy. TCA needs diversify product and

not be so focused on gas but broaden their horizon to other fuel resources like electric car plug

ins and ethanol stations. This would help expand business to those traveling that have those

types of vehicles and in return gain the business more money in the long run. The restaurant

aspect of the business is a step in the right direction, also the expansion of business

domestically through the acquisition of pre-existing business helps Travel Centers of America to

grow at a steady pace.

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Hussey’s Directional Policy Matrix

Generate Cash

Based on Travel Centers of America’s profitability portfolio, it was determined that the industry

is moderately attractive, because the company has already established itself as a mainstay in the Global

Service Retail Industry. Selective Growth by the leadership and Gas Price Fluctuations will have future

effects on this business, however with the revenue trend proving a steady rise in the last half-decade

(showing positive growth) because of these acquisitions, it seems that Travel Centers of America should

keep to the path they’re on.

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Porter’s Dynamic Diamond

Above is our Analysis of Travel Centers of America in context to Porters Dynamic

Diamond model.

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MAIN PROBLEMS AND ALTERNATIVE STRATEGIES

After further analysis of Travel Centers of America we’ve come to the realization that

they have a few problems that need to be corrected to continue the company’s success and

growth.

Problem 1: America is getting more ecological

Alternative Strategy: For the future of their business, TA could be the first major Travel center

to initiate new sources of more ecological energies such as electric fueling stations.

Pros: Travel Center of America would be able to gain the first mover advantage into this type of

market. This would attract more customers to their company and in return generate more

profits in the long term. Furthermore, charging ones car only costs 540$ on your electricity bill

every (average number) year which would be substantially cheaper than purchasing gasoline.

Cons: Implementing this strategy would be very costly at first but in the long term with the

growing ecological trends could generate great profits. For example, right now buying an

electrical charger is expensive, a regular car charger price is between 500$ and 1000$.

Problem 2: Lack of marketing

Alternative Strategy: Lack of marketing is a big problem for Travel Centers of America. Their

main sources for marketing they services relay strictly on their roadway billboards, loyalty

cards, and their Road King Magazine. An alternative strategy to better improve their marketing

could be through major television commercials and possible sponsorships of athletes.

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Pros: By developing a marketing strategy and advertising more about the company,

TravelCenters of America will be able to attract a larger audience such as regular interstate

drivers, which will generate more profit and will be favorable for the company to keep growing.

Cons: the main con for this strategy would be the cost of developing such a big strategy.

Marketing Strategies are never cheap especially commercials and possible sponsorships so

Travel Centers of America would need to find a way to budget this marketing strategy.

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WHO, WHEN, AND HOW

Our first strategy of implementing electrical chargers to our facilities would take place between

five to ten years and we would acquire a new executive in the electronics industry to help with all the

aspects of the implementation of this strategy. For the first couple years, Travel Centers of America

would only implement these new chargers to the areas of the more prevalent electronic car usage to

track the demand for their new service. By using a trial basis they will not only be able see if customers

will use the service but they will also be able to see where the electronic car industry will go.

The second strategy should be implemented as soon as possible, and would be initiated by

hiring a marketing firm to produce their television advertisements and search for possible athletes who

could represent their company in the right way. TravelCenters of America wants to keep growing along

with gaining more profits and by implementing a better marketing plan they will be able to growth they

want to achieve.

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FINAL CHOICES

For growth to continue for Travel Centers of America they must anticipate the future

trends and initiate a strategy to market and produce these trends. By America, and the rest of

the world becoming more ecological Travel Centers of America should focus on this growing

market by adding electrical chargers to their travel centers to focus on the growing market of

electrical car users.

Travel Centers of America should also ramp up their marketing strategies for their

services and locations if they want to continue to grow their customer base. Their current

strategy is very limited and increasing their advertising avenues may cost them a lot at first, in

the future they could benefit greatly.

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APPENDICES

Financial Ratios

LiquidityCompany(2012) Company(2012) Company(2012) Industry (2014)

Current Ratio 1.39% 1.55% 2.11% 1.56%Quick Ratio 1.72% 0.89% 1.46% 0.84%Debt to equity Ratio .99 1.00 1.09 113.51

Profitability

Activity and Efficiency Ratios

Long Term Debt to Equity Ratio

Financial Highlights (10K)

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