1. Using the information provided, prepare the report that David Bennet requested, assuming that the project will begin immediately. Assume 45days are available to complete the project, including transporting the car to Detroit before the auto show begins. Your report should briefly discuss the aspects of the proposed new business, such as the competitive priorities that Bennett asked about.
a. Assessment of new business
i. Attract new customers
BASS’s current business consist of three car dealership that sell and service several makes od American and Japanese cars, two autopart stores, one large body shop and car painting business and one auto salvage yard. The decision to ...view middle of the document...
By providing different kind of service, we give customer several options to choose from, which is an attractive service since customer would want their car to be unique.
b. Competitive priorities of new business
The cost of restoring vintage car is quite high especially in cost of auto parts. There are two ways to get auto parts for car restoration. The first type is New Old Stock, which is new parts manufactured years ago that is still packaged in its’ original carton. This kind of parts is not easy to obtain as New Old Stock is not produced in large quantities and parts of certain vintage car are no longer exist.
The second type is machine new parts to replicate those that are hard to find or no longer exist. This option is rather costly because BASS has to purchase a new machine to make those parts. BASS would need to produce customized parts in small quantity as different brand of car need different types of parts. So, producing standardized products in large quantity to lower cost structure is not an option for BASS. But, if BASS could increase sales by providing quality products and satisfying customer needs, we could still lower the cost structure and increase our profit margin because we achieved economies of scale by spreading fixed cost over large amount of output.
Another way to get auto parts is to purchase second hand auto parts. Second hand auto parts are cheaper compared to machining new parts but the quality could be compromised. Some customers might not want their vintage car turning into “used car”.
We could also choose to outsource manufacturing of auto parts to outside supplier. Outsourcing could lower the cost for auto parts but it is recommended that we do break-even analysis before making any decision.
Besides cost of raw materials, labor cost will be increased as we need to hire skilled labor who knows a lot about vintage car to do the restoration, especially if we want to restore it to mint condition. This is a niche market so it will be costly to hire the expertise in vintage car.
The process of vintage car restoration is job shop because we need to produce customized product at low quantity. This will increase labor cost as restoration process has to be done by hand. We can’t use machine because machines found on the market are only designed to assemble modern cars, there’s no machine to assemble vintage car.
So, it is not recommended to choose cost as competitive priorities as vintage cars are expensive to restore.
Vintage car is a sophisticated item. Owner or collector of vintage car are usually very rich and are willing to spend a large sum of money to purchase or restore their cars.
Thus, quality is a competitive priority we could focus on. Raw materials used should be of certain quality, so, if we want to use quality materials, we have to sacrifice cost. High quality auto parts are high in cost than used or second hand parts.
We provide service to...