Case Study for North Country Auto, Inc.
North Country Auto, Inc. was a franchised dealer and factory-authorized service center for Ford, Saab, and Volkswagen. The company maintains its competitiveness by providing full services to its customers. For customers looking for a car, the North Country Auto not only provided options for new cars from those three brands, but also provided options to buy used cars from it. In addition, for customers with cars, the company can provide a variety of services to their car, such as service and repair under warranty or at the customers’ expenses. Example service and repair work are quick oil change, auto repair, the body shop work and auto parts supply. Recently, the company adapted a new control system as a strategy to improve its sales and increase its profit. There were five departments within North Country Auto: the new car department, the used car department, the service department, the parts department and the body shop. Originally, these five departments operated as part of one business. And the performance of each department was not individually evaluated. Under the new control system, all five departments operated as an individual profit center. The owner assumed that, by doing this, all managers of the five departments would be encouraged to increase their departments’ profit so as to have better evaluation and better income. However, under this new control system, there were still problems needed to be dealt with, because the business conducted by these departments affected each other. In this case, if one department tried to maximize its profit, it may affect the profit of other departments. For example, when the new car department manager tried to sell a new car, he would offer a very high trade-in price for the customer’s used car so as to attract the customer. If this high trade-in cost was allocated to other departments, it would be unavoidable that the cost of those departments would increase and their...
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