1.Started by Walter Sullivan in 1983. The current site of operations is located at a busy urban highway intersection. Extensive renovation of the 30 yr. old building was done. 2.Walter Sullivan is well known in the community.
3.The company has both front-end (sales department) and back-end (service department) operations. 4.Sales department is composed of: a sales manager, seven salespeople, an office manager, and a secretary. 5.Service department is composed of: a service manager, parts supervisor, nine mechanics, and two service writers. 6.Sells both new and used cars. Large proportion of new car sales included trading-in old cars. 7.The company would also buy well-maintained cars at auctions and resell them at the lot. 8.Uses a third-party detailer and body shop for restoration of old cars 9.Considered at the lower end of the mid-sized dealership category with annual sales of 1,100 cars (both new and used). B.The Decision Maker
1.Carol Sullivan-Diaz has a bachelor’s degree in Economics as well as an MBA degree. 2.She is familiar with the operations by working for his dad during her student days. 3.She worked in the Health Care Industry with expertise in new service design, complaint handling, market research, and innovation of the day care programs. C.Status and Finances of the Company
1.Company financial position has been deteriorating for the past 18 and the company has been in the red for the 1st half of the year. 2.Car sales and service revenues are dropping and Industry forecasts of future car sales are looking grim. 3.In the last 12 months, Sullivan Auto World’s gross margins were 4.6% and 24% for car sale and services, respectively. These were insufficient to cover the dealership’s fixed expenses and are below industry standard for contribution margins. 4.The trend in selling gross mix is now shifting from sales to service while sales margins for new cars were substantially lower than that of the used ones. D.Service Operations
1.The service department has new machinery and ample space for additional customers. 2.The service writer position has a high turnover rate.
3.Miscommunication in the Services Department is evident.
4.Bad service environment and wrong customer interphase.
5.The service work orders are not computerized; most of the paperwork is handwritten. 6.Service manager is very gruff and argumentative when dealing with customers. E.Customer Survey Results
1.Level of customer satisfaction is low - placed at bottom 25% of all Ford dealerships. 2.Worst ratings for service included convenience of work schedule, service hours, and appearance of the service department. 3.They scored average on promptness of service, availability of parts, and quality of work. 4.Poor ratings scored on politeness, understanding of problems, and explanation of work by the service department. 5.More than half of customers say they would use other Ford center for service repairs. F.Options
•Sell the business to Bill at fair value of the net assets plus $250,000 in goodwill. •Turn the company around in a year or two for a better selling price and higher goodwill. Problem Statement
Should Carol Sullivan pursue turning around the financial performance of the business? If so, what business strategies must she implement to revive Sullivan Auto World? Case Analysis
To be able to provide appropriate resolution to the problem, it is important to have an in-depth scan of the company’s internal and external environments. Table 1 below provides a look at the Strengths, Weaknesses, Opportunities and Threats present in the company’s business environment. Table 1. Sullivan Auto World SWOT Matrix
•Located in a busy urban area
•Walt Sullivan is well known
•Contribution margins for services is higher than car sales •Service department has new machinery and ample space for more customers •Business include trading in old cars for new ones...