Case Analysis Of Sullivan Ford Auto World Essay

Question:

Discuss about the Case Analysis Of Sullivan Ford Auto World.

Answer:

Case Analysis of Sullivan Ford Auto World

The Company Details

  • Bought by Walter Sullivan in 1983
  • Currently located at a metropolitan junction
  • The 30 –year old structure was extensively refurbished
  • Walter Sullivan was well known in the society for attending functions
  • Has both front-end and back-end processes
  • The sales department is made up of sales and office managers, secretary personnel and seven salespersons.
  • The back-end is made up of service executive personnel, parts supervisor, two service writers and nine mechanics.
  • Deals in both used and new cars
  • Also bought and sold of cars from auctions
  • Uses a third party and body shop for restitution of old vehicles

Information of the Industry

  • It was a famous showroom in the city
  • Annual sales of 1,100 (New & Used cars) cars
  • Managed $26.6 M from all types of cars and $2.9 M from service parts
  • 4.6 & 24 % margin on selling of cars

The symptoms and problems facing the automobile company

The symptoms

  1. The firm being in the red for the year’s 1st half and its financial situation had been worsening for the previous 18 months
  2. Decreasing service revenues and car sales together with the company’s predictions Industry future car sales looking unrelenting,

III. The business’s insufficient gross margins of 4. 6% and 24% for car sale and services, respectively during the past one year, could not satisfy the dealership’s fixed expenses as well as being insatiable for contribution margins.

  1. Substantially, lower new car sales margin than those already used ones together with the shift of selling gross mix from sales to service

The problems

  1. Low level of customer satisfaction, which was posted at, below 25% of all Ford dealerships.
  2. Poor Service ratings ranging from, service hours, service department appearance and work schedule convenience.

III. Average score concerning service motivation, quality of work and availability of parts.

  1. the service department Poor rating feedback regarding work description, politeness as well as an understanding of problems
  2. a high number of customers stating their dissatisfaction and saying they could use other similar companies for their repairs

SWOT Analysis

Strengths

Weaknesses

Threats

Opportunities

Strategic location, at the city’s busy junction

Unstable financial position

The possibility of closing down the business if poor performance continues

Fair satisfaction of clients due to service immediacy

The owner, Walter Sullivan was well known even in the community functions

Nonstandard contribution margins of 25%

The threat of losing customer loyalty if they go to other similar shops

Higher sales margin for second hand cars as compared to new cars can be exploited

There is higher contribution margins for services as compared to sales from cars

There is also high workforce turnover

Customer dissatisfaction

The change of gross mix from sales to services

The new machinery and extensive space for clients

The aspect of Poor service

Low business growth forecast

The business is wide ranged, including sales of both old and new cars

Absence of automated customer connection in the department of service

The company enjoys leadership of new customers

Poor perception of the service department as just being supplementary section to the business

What Needs To Be Resolved

There is a need for enhancement and expansion of the service repairs so that customers don’t go away to look for services elsewhere

Concerning the stocks, new cars’ inventory could be lowered by concentrating on other transaction’s promotions

For customer service and performance of the service department to be improved, there’s need to establish staff motivation at that department

The service department could also be automated to enhance efficacy and effectiveness of services offered to clients

In addition, refurbishment of the service department to modern and classic styles needs to be resolved for customers to feel that the environment gives them the value for their money.

Making service department visible to the clients will also create awareness amongst the customers who might visit the business without realizing the service department, which is a back-end, exists

The general customer services need to improve

A service manager together with interpersonally connected service team should be resolved also.

Alternatives

Selling the firm to Mr. Froelich

This means that Bill takes the company at the low that he price specifies due to the desperate condition of the firm.

Turning around the company’s performance in a period of 1-2 years

The family still is in control of the business and runs everything under the family’s business name but having new systems in place that ensures performance for the business

Retaining the business until its performance picks then selling it to Bill

This means that as long as the business is performing, it will be having high returns hence attractive to many buyers. This will make it easier to sell the business at a higher price

Evaluation of the Alternatives

Alternative

Pros

Cons

Selling the firm to Bill

Relieve the family of obligations and headaches of having to come up with comprehensive means of returning to glorious days

The risk of further losses from the family and Carol will also have been taken care of.

Only leave the family with $250000

It is too low in relation to the standard goodwill of $1,200 per car

Turning around the company’s performance in a period of 1-2 years

A successful roll out of plans will lead to better values for the firm

The business can then be sold at a higher price to Bill

Successful achievements could also mean enough returns for the business’s retention and even hiring of competent and skilled personnel to take the business to the next level.

It’s an extensive and tedious task for both Carol and the family

It will also require additional funding which means more costs, which could backfire in the end and causes losses to the company.

Retaining the business until its performance picks then selling it to Bill

Blocks chances of any losses due to rushed decisions

Would be beneficial in the long run

There is is very high chances of failure, which could lead to losses and other damages.

Alternatives Relevant to Opportunities

Introduction of new culture and remembering that service industry remains crucial department of the organization.

For improved customer service and network, establish staff motivation plan for the service department.

Service automation as well as refurbishment of the service area as an opportunity alternative

The Execution Plan

Functions

Responsibility

Timeframe

Resources

Looking for a famous Public Relation to handle diverse programs

The marketing research department

1-3 months

$10,000

Identification of various promotions to lure clients

The department of marketing

2-3 months

$15,000

Hiring of competent and experienced services management employees

The HRM department

1-4 months

$5,000

Hiring a skillful and knowledgeable business partner

the HRM department

1-2months

$4,000

quality management enhancement for reliability of products

Operations Department

1-4 months

$6,000


The Recommendation and Rationale

Service outlook renovation

The service scene requires a re-engineering , which could to create the desired impression not only to the workforce but also to the clients . the advantage of this activity is that it will improve service quality as well as the morale of the workforce and hence boost performance. The disadvantage of this recommendation is that it will require an extra investment.

client network improvement

Here automated customer service connectivity will ensure quick and effective feedback and a happy customer. The advantage of this is that there be enhanced customer service then higher customer influx and eventually best returns. Automation comes with cost of equipment installation, hiring personnel, which means an extra coin.

Improvement of staff motivation

Staff morale can only be improved through incentives and good working conditions, which goes to all employees. Leads to better performance

Dealers’ services enhancement

Improving the dealers’ services means they will be satisfied and remain in the business.

Increase investment in service department since customers are inclined in buying used cars.

Increasing personnel and equipment in the service repair will mean efficient services to the customers thus creating the customer loyalty; this will in return be transformed into business loyalty. The benefit of this is that it will ensure happy and satisfied clients. The disadvantage is that it might lower business profits since new cars have high returns comparatively.

Establish complain handling and delivery of service

To ensure customers are taken care of and faster problem solving process

Employee training

Especially the service connected ones on how to treat and handle customers


References

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