Sullivan Auto World Case
S [pic][pic] Case Background Company History … hate doing this part he he he…. Products, Services, and Personnel Sullivan Ford Auto World operated both the Sales and Service departments. The Sales Department’s functions include sale of cars/trucks and used vehicles. It is also involved in trading of a buyer’s previously-owned vehicles and buying of well-maintained used cars at auction for sale. The department is composed of a sales manager, seven sales people, office manager, and secretary. However, one sales staff has given notice of his resignation.
The Service Department is composed of a service manager, parts supervisor, nine mechanics, and two service writers. Infrastructure and Facility The dealership is located at a major suburban highway intersection and the surrounding area has many new housing developments. While the showroom was impressive, the service facility was not visible from the highway and hidden behind the showroom. Statement of the Problem How should the new general manager of Sullivan Ford Auto World resolve its current financial problems and decide on the future of the company?
Objectives • To identify the marketing and operational problems affecting the over-all performance of the company; • To examine the strengths and weaknesses of the company, as well as, the opportunities and threats to the industry affecting it; • To determine if the company can sustain a competitive advantage in the car dealership industry despite threats from other competitors; and • To present alternatives for the company in planning for its future. Areas of Consideration Point –of- View
The study and recommendations shall be focused on the point of view of the new general manager, Carol Sullivan-Diaz. Her primary duty was to ensure the profitability of the entire dealership by selling vehicles, controlling expenses, and maintaining customer satisfaction. As a general manager, her responsibilities also include planning, motivating, and coordinating the dealership’s management through leadership and solid business practices. Limitations Then analysis was based on information on the company, market, and economic conditions provided in the case as set in 1999.
However, research was made to verify the existing economic situation at that time. Data, charts, and additional information were incorporated in the case to provide a realistic assessment of the industry and business environment. Situational/Environmental Analysis The 1997 Asian Financial Crisis and Its Effects on the US Economy The Asian financial crisis was initiated by two rounds of currency depreciation that have been occurring since early summer 1997. The first round was a steep drop in the value of the Thai baht, Malaysian ringgit, Philippine peso, and
Indonesian rupiah. As these currencies stabilized, the second round began with downward pressures hitting the Taiwan dollar, South Korean won, Brazilian real, Singaporean dollar, and Hong Kong dollar. Governments have countered the weakness in their currencies by selling foreign exchange reserves and raising interest rates, which, in turn, have slowed economic growth and have made interest-bearing securities more attractive than equities. The currency crises also has revealed severe problems in the banking and financial sectors of the troubled Asian economies.
The International Monetary Fund has arranged support packages for Thailand, Indonesia, and South Korea. The packages include an initial infusion of funds with conditions that must be met for additional loans to be made available. This financial crisis is of interest to the U. S. government for several reasons. First, attempts to resolve the problems are led by the IMF with cooperation from the World Bank and Asian Development Bank and pledges of standby credit from the Exchange Stabilization Fund of the United States. Second, financial markets are interlinked.
What happens in Asian financial markets also affects U. S. markets. Third, Americans are major investors in the region, both in the form of subsidiaries of U. S. companies and investments in financial instruments. Fourth, the currency turmoil affects U. S. imports and exports as well as capital flows and the value of the U. S. dollar; the U. S. deficit on trade was rising as these countries import less and export more. Fifth, the crisis is causing economic turmoil that is exposing weaknesses in many financial institutions in Asia; some have gone bankrupt.
The economic problems of the troubled Asian economies are adversely affecting the United States, Japan, and others. Target Market/Segment Based on population size, the auto industry was seeing the rapid retreat of the Depression Generation (those born from 1925 to 1945) from the marketplace. The same time period shall see the arrival of Generation Y (born from 1977 to 1994) into the automotive market, as well as, Generation X (born from 1966 to 1976) moving into their peak earning years. Therefore, selling efforts and promotions should be directed at Generation X.
However, since this generation would still be raising their families, they would buy cars that cost reasonably which means that they can afford to purchase vehicles that fall between the low-end to middle-low end models. Positioning Sullivan Ford Auto World should position itself as a distributor of low-end to middle-low end models of Ford cars to capture its target market. It can sell its low-end models to Generation Y and Generation X, with both generation buying moving to middle-low end models as their income increases. Key Growth Factors 1. Driving Population.
The growth of the driving population shall increase the market for sales of new cars. 2. Economy. A robust economy means more jobs and income for the population that would afford them to buy goods and services. 3. Jobs. A stable and rising employment rate provides a promising market for car sales. 4. Credit. An easing of credit rates shall make buying a car more accessible and affordable to customers. SWOT Analysis |STRENGTHS | |Strong Brand. The dealership was popular and one of the well-known in the area. |Strong Public Relations. Founder Walter Sullivan was very popular and has appeared in his own radio and television commercials and active | |in community affairs. | |Trade and Promotions. The company has actively resorted to promotions, discounts, and deals to maintain volume. | |Highly Competitive Sales and Service personnel. Both the sales manager and the service have strong sales record and technically skilled, | |respectively. In addition, both managers have strong managerial capabilities | |Location.
Situated at a major suburban highway intersection in the city with many new housing developments. | |Technology. The company has modern and well-maintained equipment. | |Capacity. The Service Department has sufficient capacity to handle more repair work. | |WEAKNESSES | |Declining Revenue from Sales. Revenue growth rate was down to around 8% in the late 1990s from an annual growth rate of 20% in the early to| |middle 1990s. | |Infrastructure.
Customer waiting area was poorly maintained and the service facility was not visible and looked old and greasy. | |Poor Customer Relationship Skills by Managers and Staff. The Sales Manager has a laid-back personality while the service manager was gruff| |and argumentative. | |Manual Processes. Service work order process are written manually on large yellow sheets. | |Debts. The company has not paid its mortgage for the past two months and its accounts payable has increased for the past six months. This | |could lead to bankruptcy if the company does not increase its revenue. | | |OPPORTUNITIES | |Shift in Services. Big revenue from car dealership is expected to shift to services. The company can capitalize on its highly skilled | |technical staff to generate more revenues and increase its contribution margin. | |Increase in Driving Population.
The rise in the percentage of Generations X and Y for the next five years would expand the market for car | |sales. | |THREATS | |Economic conditions. New car sales projections are not good due to declining consumer confidence and recent lay-offs at several local | |plants. | |Survey Rating Results. The company ranked low in a customer satisfaction survey placing it in the bottom 25 % of all Ford dealerships. It | |got the worst ratings in service (of vehicles) scheduling and processing.
Likewise, it was graded down on its Service Department’s | |interpersonal skills. | |Intense Competition. The presence of a four dealerships in the area provides customers in the area with a wide array of options in choosing| |a dealer for their needs. | Alternative Courses of Action ACA # 1 Sell the Company The new general manager may choose to accept the offer of Bill Froelich to buy the company. Pros: 1. The company gets a price that reflected a fair valuation of its assets and an additional amount of $250,000 in goodwill; 2.
The company would be able to pay all its obligations to its debtors, pay-off its employees, and prevent the further deterioration of its finances; and 3. The current owners could free themselves from the problems of running the dealership. Cons: 1. Offer price was substantially lower than a previous offer which was rejected by its former owner Walter Sullivan 2. The owners and its employees would forego the opportunity to revive the company and increase its value. 3. The strong brand and customer relationship created by its former owner would be laid to waste. ACA # 2 Continue Operations
The company may choose to continue its operations and promote its service/repairs business Pros: 1. The company can earn additional revenues and increase its contribution margin 2. Improve the company’s financial position 3. Build customer loyalty 4. Develop a steady and more predictable revenue flow 5. Sustain the company’s survival and growth waiting for company to improve 6. Increase value of company Cons: 1. Entail additional expenses in re-training of staff, renovation, and promotion 2. Local economic conditions may slow down growth
Conclusion/Recommended Course of Action Based on the analysis of the foregoing, ACA # 2 is recommended. The dealership should continue its operations and promote its services/repairs business with Carol Sullivan-Diaz retaining the position of General Manager. Operations It would be beneficial to the company’s stakeholders to continue operations to finds ways and means to improve the company’s performance and make it profitable again. Considering the current economic conditions, car sales growth were projected to slow down which means that there will be less revenue from sales.
Thus, the company has to look for other sources of revenue and this can come from services. It can rely on its highly skilled service staff to generate additional income for the company from going bankrupt. The company has to make several changes in its operations to remedy the dismal ratings it got from the dealership surveys. Improvements have to be made on processes, customer relations, and facilities. This can be achieved by adopting new technology to expedite its processes, trainings for employees, and renovations of the premises.
However, these changes would entail additional costs for the company. To address its financial problems, the General Manager has to re-negotiate with its debtors and request for restructuring of its loans. This would free up some funds that it can use to implement the proposed changes. In case the debtors do not agree to a restructuring, the General Manager can tap on the proceeds from the insurance policy of its former owner, to pay its debts. General Manager Carol Sullivan’s education and exposure in the dealership business qualifies her to the position.
Her previous tasks doubling as a service writer gave her a clear understanding of the customers’ needs and her current employees’ capabilities. In addition, her work experience and good track record in the health care business can help her plan, design programs, and make decisions that could address each customers’ individual needs. As in the healthcare business, each customer has its own unique set of problems, requirements, preferences, and budgets. Therefore, the managers and staff should be trained to be flexible and work around these perimeters. Action Plan
In order to achieve the objectives of ACA # 2, the following Action plan shall be implemented. Marketing and Business Strategy While the prospects for new car sales are low, the company can put more emphasis in promoting its car repair services. The management should prepare promotional materials for its services that can stand alone or come with its regular promotional advertisements intended for the sales department. The service promotional materials should emphasize the importance of having the vehicles regulary checked and maintained while accentuating the excellent techncial skills of its service staff.
The “Sullivan Ford” brand will be going through a series of brand re-development activities with equal emphasis on sales and service to develop a solid identity in the market. The concept will be structured to include promotional campaigns using testimonies from existing customers and messages from its sales and service staff to give credence to the company’s capability. This will be communicated to the public by print advertisements. Marketing collaterals will also be distributed to places frequented by the public such as malls, groceries, parks, gas stations, etc.
The company should also consider a direct marketing program by participating in and sponsoring community events to build a good corporate image. The marketing strategy for its service business is to come up with a saleable brand that can effectively compete with the other dealerships that provides the same services. The main tactic is to sell its services and ensure that customers will be completely satisfied, and make them buy their cars in Sullivan Ford because of the service. During the initial stage of the promotional activities, the company may istribute “service coupons” that car owners can use in availing discounts for using the dealership’s services that can be redeemed within six months. Each type of service would have a corresponding discount rate. The objective is to attract as many potential customers as possible. As the service business become established, the service department has to work on maintaining its present pool of customers. The promotion should also highlight its extended operating hours to attract more customers. On other hand, the Sales Department can call on these “service” customers.
They can also call on its existing customers and other potential car buyers to offer privileges such as free charge on its initial maintenance check. Just as important as the company’s marketing strategy, is the improvement of its customer relations, processes, and facilities. All the employees of the company has to undergo training in customer relationship management to build customer loyalty. In addition, the company has to re-design its processes like hiring at an additional service writer during peak days, and employing computerization where it will be most effective.
Finally, Sullivan Ford has to renovate its facilities for the customer waiting area and move the Service Area where it can be very visible to the public. With these strategies , the objective stated above will be met, and the company will be perceived positively by its target market. The following schedules will exhibit the timeline and tasks required to implement and monitor each strategy of the sales and services. The person/s responsible for the task/s, and a completion target date are indicated for each specific task.
This plan of action will ensure that the details are clear and achievable, and that specific persons are accountable. Advertising Program This advertising program will include the following activities: • The heads of the sales and services team should develop materials for advertisements in leading local newspapers. • Posters and leaflets will be posted and distributed at malls, groceries, parking areas, and gasoline stations. • Print advertisement will be placed twice a month in the leading newspapers. SCHEDULE OF TASKS Task |Description |Person Responsible |Duration | |1 |Meeting between the Sales and Services Departments to establish a common |Sales Manager and staff|Days 1 to 3 | | |objective for the marketing plan | | | | | | | | | | |Services Manager and | | | | |staff | | |2 |Presentation to , revisions, and approval by the General Manager |Sales and Services |Days 4 to 6 | | | |Managers | | |3 |Prepare ad campaign for newspapers, posters, and leaflets |Sales and Services |Days 7 to 15 | | | |Managers | | | | | | | | | |Secretary | | |4 |Prepare leaflets and posters |Sales and Services |Days 16 to 25 | | | |Managers | | | | | | | | |Secretary | | |5 |Place advertisements in newspapers; distribute marketing |Sales Staff |Day 26 onwards | | |materials/leaflets in malls, groceries, parking areas, and gasoline | | | | |stations |Secretary | | Direct Marketing Program The Direct Marketing Program will include the following activities: • Participation and sponsorship during community events and celebrations. SCHEDULE OF TASKS Task |Description |Person Responsible |Duration | |1 |Meeting between the Sales and Services Department to pinpoint the major |Sales Manager and staff|Day 25 | | |events that the company should participate in | | | | | |Service Manager and | | | | |Staff | | |2 |Get the schedule of the identified events that company will join |Marketing Staff |Day 26 | |3 |Prepare and present a proposal on the events participation of the company |Sales Manager and |Days 27 to 28 | | |to the General Manager for approval |Service | | | | |Manager | | | | | | | | |Secretary | | |4 |Prepare letter for the signature of the heads of organizations of local | Secretary |Days 29 to 30 | | |government offices to signify the interest of the company to join their | | | | |event | | | |5 |Send letters to the identified event organizers | |Days 31 to 33 | | | |Secretary | | |6 |After receiving an invitation from the event organizers, meet with sales |Sales Manager and |As needed | | |and services staff on details of the presentation or activities |Service Manager | | |7 |Preparation of the marketing materials for the events |Secretary |As needed | |8 |Actual presentation of the company’s services and products |Sales and Service |Event date | | | |Managers | | Public Relations Program • Creating customer testimonials for the services and products. • Guestings of the General Manager, Sales and Services Managers in television and radio programs twice a month to promote the company’s services and products CONTROLS
The General Manager will be in charge of monitoring and controlling the following: Marketing Budget The General Manager shall monitor and control the expenses, and will be the approving authority for all disbursements made from the fund. Marketing Materials and Activities The General Manager shall review and approve all materials, press releases, and events participation. Market Feedback The Managers of the Sales and Service Departments shall submit a monthly report to the General Manager to monitor revenues generated from services and sales. The Sales and Service Managers shall monitor the response of customers including the public from events participation. Operational Improvements
In order to support the company’s marketing thrust and to remedy the low ratings that the dealership got from the surveys, the general manager has to implement the following programs to improve its relationship with its customers as well communication among its staff: 1. Processes Improvements • Review of Functions of Each Department and its interdependencies. The three managers have to identify the bottleneck in their processes and determine how they can correct it so provide a smooth flow of operations. After which, they have to educate their staff and make them understand how important it is that they support each other. Like the Sales Department can promote their service while the Service Department must ensure that they do their job well so that the sales staff can sell more cars. • Extend Operating Hours.
The dealership should operate on extended hours to give customers more flexibility in their activity and schedule. It should be open by 8:00 am and close at 6:30 pm. The service writer can report at 8:00 am and leave at 5:00 pm while the office secretary, who should also be trained to cover the service writer’s tasks, may come at 9:30 am and leave at 6:30 pm. A flexible schedule must also be adopted by the service staff depending on peak hours and days. • Computerization. The company has to take advantage of the latest computer technology to expedite its processes. Computer systems or software on sales, inventory, scheduling, billing, and accounting should be put in place. SCHEDULE OF TASKS Task |Description |Person Responsible |Duration | |1 |Review of functions, processes, and interdependencies |Sales, Services, and |Days 16 to 19 | | | |Office Managers | | |2 |Department meetings to discuss the possible modifications on operations |All Managers and Staff |Days 19 to 21 | | |and processes | | | |2 |Preparation of proposal for process modifications for approval by the |Sales, Services, and |Days 22 to 26 | | |General Manger |Office Managers | | |3 |Approval by the General Manager |General Manger |Days 27 to 28 | |4 |Implementation and feedback from employees | All Managers and Staff|Days 29 onwards | 2. Personnel Development Programs • Customer Relationship Management. A workshop shall be provided by an expert. All employees shall be required to undergo trainings in Customer Relationship Management so they can learn how to properly communicate with customers and how to effectively respond to customer requests and complaints. SCHEDULE OF TASKS Task |Description |Person Responsible |Duration | |1 |Search for expert provider on Customer Relationship Management training |Secretary |Days 1 to 3 | |2 |Preparation and finalization of trainings needs of employees and |Training Expert |Days 4 to 7 | | |scheduling |Office Manager | | | | |Secretary | | |3 |Training |All Managers and Staff |Days 10 to 16 | • Technical. Trainings in computer systems and software should be provided to staff to make their jobs easier and aid them in decision making. The Sales Department can benefit from keeping electronic records of their sales and customers that they can use for customer profiling and sales projections.
The Service Department would need systems for documentation of the types of services, customer’s request and budgets, inventory of parts, and other special accommodations to help the Service Manager in the scheduling of repair jobs. The Support Office, which covers the service writer, must have a computer system for preparing service work orders, scheduling repairs, customer records, keeping and monitoring of records of repairs and maintenance. This database can be used by the dealership in providing additional service and building a relationship with their customers by calling or sending them messages thru mobile phone or email reminding them that their vehicles are due for check up and maintenance. SCHEDULE OF TASKS Task |Description |Person Responsible |Duration | |1 |Study of manual processes, acquiring of systems/software |IT Company |Days 30 to 40 | |2 |Training |IT Company |Days 41 to 45 | |3 |Implementation |All Managers and Staff |Day 46 onwards | | | |with assistance of IT | | | | |Company as required | | 3. Facilities Improvements and Renovations • Customer Waiting Area. The dealership has to provide a customer lounge where customers can wait while the work orders, billings, and payments are processed. The lounge should contain comfortable chairs, a television, and reading materials on various subjects. A number tag should be given to each customer for queue. • Service/Repairs Shop.
A portion of the services/repairs area must be re-located to the part of the premises where it would be visible. The area should also look presentable to the customers. SCHEDULE OF TASKS |Task |Description |Person Responsible |Duration | |1 |Contracting for design and costing |Office Manager |Days 7 to 12 | |2 |Renovation |Office Manager |Days 12 to 33 | • Service Personnel Appearance. The service personnel should be given a uniform to give them a more “professional” or “skilled” look. SCHEDULE OF TASKS Task |Description |Person Responsible |Duration | |1 |Designing and approval of uniforms for service staff |Service Manager |Days 10 to 13 | | | | | | | | |General Manger | | |2 |Acquisition of uniforms |Office Manager |Days 14 to 28 | |2 |Implementation of new uniforms for service staff |Service Manager and |Day 29 | | | |Staff | | ———————– Sullivan Ford Auto World [pic] [pic] [pic] Group 7 Leah Lavadia , Cristina Reyno , Elizabeth Santos MKT609M Service Marketing 9/30/2011
