Ask Question, Ask an Expert

+61-413 786 465

info@mywordsolution.com

Ask Financial Management Expert

Purpose:

The primary purpose of this assessment task is to help students develop skills in the use of Operations Management principles, theories and models in the analysis of the current operations of a service industry organization. The assignment requires you to analyze the current situation, identify the operational problems within the organization, and develop a set of recommendations that when implemented, will overcome the identified problems without creating new ones. In this assessment piece you are expected to solve the case.

The secondary purpose of this assignment is to give students the opportunity to further develop analysis and problem identification skills, as well as skills in presenting an argument for change within the framework of a business report.

Before starting this assessment please read the marking criteria (below) and Report Writing on the Academic Learning Centre (ALC) website:

Description:

Assessment task 2 requires the writing of a business report. The report should be designed as a management document that can be used to implement recommended changes. It should include a comprehensive analysis of the current situation using Operations Management theory, models and frameworks including a root cause analysis. The report should also contain recommendations and an implementation plan. Students are expected to engage in extensive research within the academic literature relating to operations management.

Some research into the industry in problem might also help students develop a more robust understanding of the information in the case.

Case study: Purchasing and Inventory at Best-Buy Auto Group

Helen Harrington, CEO of Best-Buy Auto Group, has just returned to her office after visiting the company’s newly acquired automotive dealership. The new dealership was the fourth Best-Buy Auto Group dealership in a network that served a metropolitan area of over two million people. Beyond the metropolitan area, but within a 45-minute drive, was another half a million people. Each of the dealerships in the network marketed a different make of car and historically had operated autonomously.  Harrington was particularly excited about this new dealership because it was the first “auto supermarket” in the network. Auto supermarkets differ from traditional car dealerships in that they sell multiple makes of cars at the same location. The new dealership sold a line of Hyundais, Volkswagens and Cherys. This brought the total number of brands to six.

Starting 15 years ago with the purchase of a bankrupt Mitsubishi dealership, Best-Buy Auto Group had grown steadily in size and in reputation. Harrington attributed this success to three highly interdependent factors. The first was volume. By maintaining a high volume of sales and turning over inventory rapidly, economies of scale could be achieved, which reduced costs and provided customers with a large selection. The second factor was a marketing approach called the “hassle-free buying experience.” Listed on each automobile was the “one price—lowest price.” Customers came in, browsed, and compared prices without being approached by pushy salespeople. If they had problems or were ready to buy, a walk to a customer service desk produced a knowledgeable sales person to assist them. Finally, and Harrington thought perhaps the most important, was the after sales service. Best-Buy Auto Group had established a solid reputation for servicing, diagnosing, and repairing vehicles correctly and in a timely manner—the first time.

High-quality service after the sale depended on three essential components. First was the presence of a highly qualified, well-trained staff of service technicians. Second was the use of the latest tools and technologies to support diagnosis and repair activities. And third was the availability of the full range of parts and materials necessary to complete the service and repairs without delay. Harrington invested in training and equipment to ensure that the trained personnel and technology were provided. What she worried about, as Best-Buy Auto Group grew, was the continued availability of the right parts and materials. This concern caused her to focus on the purchasing function and management of the service parts and materials flows in the supply chain.

Harrington thought back on the stories in the newspaper’s business pages describing the failure of companies that had not planned appropriately for growth. These companies outgrew their existing policies, procedures, and control systems. Lacking a plan to update their systems, the companies experienced myriad problems that led to inefficiencies and an inability to compete effectively. She did not want that to happen to Best-Buy Auto Group.

Each of the four dealerships purchased its own service parts and materials. Each location had its own purchasing officer and parts manager. Purchases were based on forecasts derived from historical demand data, which accounted for factors such as seasonality. Batteries and alternators had a high failure rate in the winter, and air-conditioner parts were in great demand during the summer. Similarly, coolant was needed in the spring to service air-conditioners for the summer months, whereas antifreeze was needed in the autumn to winterize cars. Forecasts were also adjusted for special vehicle sales and service promotions, which increased the need for materials used to prepare new cars and to service other vehicles.

One thing that made the purchase of service parts and materials so difficult was the tremendous number of different parts that had to be kept on hand. Some of these parts would be used to service customer vehicles; others would be sold over the counter to retail customers, whilst others (particularly genuine replacement parts) were on-sold to the trade. Some had to be purchased from the car manufacturers (genuine replacement parts and accessories), to support, for ex, the “guaranteed genuine parts” promotion. Non-genuine replacement parts and accessories were purchased from a variety of suppliers and other parts and materials such as oils, lubricants, fan belts and other generic service parts, could be purchased from any number of suppliers. The purchasing department had to remember that the success of the dealership depended on (1) lowering costs to support the hassle-free, one price—lowest price concept, and (2) providing the right parts at the right time to support fast, reliable after-sales service.

As Harrington thought about the purchasing of parts and materials, two things kept going through her mind: the amount of space available for parts storage and the level of financial resources available to invest in parts and materials. The acquisition of the auto supermarket dealership put an increased strain on both finances and space, with the need to support three different car lines at the same facility.

Investment dollars were becoming scarce, and space across all the locations was at a premium. Harrington wanted a ‘whole of organization’ approach, and wondered what could be done in the purchasing, supply chain, and inventory areas to address some of these concerns and alleviate some of the pressures.

Task:

As a newly appointed Purchasing Manager at Best-Buy Auto Group you are required to prepare a report for Helen Harrington that addresses the following problems:

1. How might purchasing and inventory management policies and procedures differ because the dealerships purchase different types of service parts and materials (e.g. lubricants, non-genuine parts versus genuine parts) from different types of suppliers?

2. What do you see as the main weaknesses of the current purchasing and inventory management practices at Best-Buy Auto Group, and how could these weaknesses be affected by the new acquisition?

3. How can supply-chain and inventory management concepts help Helen Harrington reduce investment and space requirements whilst maintaining adequate service levels?

4. What recommendations would you make to Helen Harrington with respect to restructuring the purchasing and inventory functions for the Best-Buy Auto Group dealership network?

The report should be a confidential report for the CEO, and be presented as a suitably professional document.

This assessment item involves researching your assigned topic to enhance your understanding of Operations Management concepts and utilization of academic literature.  You will be expected to present information and evidence from, and cite, at LEAST twelve (12) relevant peer-reviewed, academic journal articles (minimum requirement).  Refer to your recommended readings for exs of academic journals. The quality and number of citations will demonstrate the breadth and depth of the literature used to answer the problems. Your marker is interested in the analysis that you have developed from YOUR review of the literature and how well you use the literature to respond to the topic.

Financial Management, Finance

  • Category:- Financial Management
  • Reference No.:- M963

Have any Question? 


Related Questions in Financial Management

Questions 1 when can there arise a conflict between

Questions 1. When can there arise a conflict between shareholders and managers goals? How does wealth maximization goal take care of this conflict? 2. A company has just tested the market for a new product. The test indi ...

Using the framework discussed in the background readings

Using the framework discussed in the background readings, critically analyze General Mills' strategic choices at the Corporate level (remember that "corporate" level is the very highest level of the organization, with lo ...

Please respond to the following discussion not an essay

Please respond to the following: {Discussion, NOT an Essay. Under 350 WORDS} a) Suggest one key factor that a financial manager should evaluate when determining whether to invest in stocks or bonds. Provide support for y ...

Your assignment consists of three parts1go to the internet

Your assignment consists of three parts: 1. Go to the internet and find a news article published within the last one year that discusses capital expenditures of the company, summarize key points and post in the Discussio ...

Qestionsforecast 2019 revenue column m by estimating the

Questions: Forecast 2019 revenue (Column M) by estimating the % growth drivers (Column R). Forecast 2019 expenses (Column M) by estimating the expense as % of revenue drivers (Column X). Write your rationale for each ass ...

Answer the following question bullthe importance of

Answer the following Question : • The Importance of Reserves to a Bank • The connection between the availability of mortgage financing and home ownership rates? • Profits and Risks of Off-Balance-Sheet Activities • The S ...

1 from everything youve learned in the past weeks did your

1. From everything you've learned in the past weeks, did your decision-making skills improve based on the problem-solving model? Please provide an explanation. 2. Did the analysis tools provided throughout the course hel ...

Please respond to the followingnbsp under 300 wordsa

Please respond to the following:  UNDER 300 Words a) Justify why a small investor would benefit from investing in a mutual fund, as compared to the many other investments that exist. Provide support for your justificatio ...

Deliverable length 10-12 pages body of paper excluding

Deliverable Length: 10-12 pages (body of paper, excluding title page, abstract, references and appendices, if any) Comprehensive Analysis of a Fortune 500 Company For this Individual Project you will analyze publicly ava ...

Topics to choose frombullfailure of the Topics to choose from • Failure of the

Topics to choose from • Failure of the Originate-to-Distribute Model and the Financial Crisis of 2007-8 • Monoline Insurers and the Subprime Financial Crisis and Problems with Rating Agencies • The Liquidity Crisis and t ...

  • 4,153,160 Questions Asked
  • 13,132 Experts
  • 2,558,936 Questions Answered

Ask Experts for help!!

Looking for Assignment Help?

Start excelling in your Courses, Get help with Assignment

Write us your full requirement for evaluation and you will receive response within 20 minutes turnaround time.

Ask Now Help with Problems, Get a Best Answer

Why might a bank avoid the use of interest rate swaps even

Why might a bank avoid the use of interest rate swaps, even when the institution is exposed to significant interest rate

Describe the difference between zero coupon bonds and

Describe the difference between zero coupon bonds and coupon bonds. Under what conditions will a coupon bond sell at a p

Compute the present value of an annuity of 880 per year

Compute the present value of an annuity of $ 880 per year for 16 years, given a discount rate of 6 percent per annum. As

Compute the present value of an 1150 payment made in ten

Compute the present value of an $1,150 payment made in ten years when the discount rate is 12 percent. (Do not round int

Compute the present value of an annuity of 699 per year

Compute the present value of an annuity of $ 699 per year for 19 years, given a discount rate of 6 percent per annum. As