Questions:
Case Study
‘Pete’s Cheap Car Sales’ is a small second-hand car yard situated in Melbourne, Victoria. Peter and Alan Moffet own the business and lease the car yard. There motto is ‘We sell great cars at a cheap price’
Peter selects and buys cars at auction and organises road worthy certificates, cleaning and repairs. Alan is responsible for managing the accounts, HR and marketing. They employ four sales staff to handle sales and assist with administration. Cars are sold to both private and fleet customers.
Over the past few months Peter has become concerned about stagnating profits. He notices that, whilst some cars sell quickly, others sit in the car yard for long periods of time. He realises that having cars sitting idle in the car yard is costing them money. He can find no pattern to sales trends. Is it the newer cars that sell well or perhaps smaller cars are more marketable? Should they be focusing on fleet buyers? Perhaps customers prefer Japanese cars? He is becoming extremely confused and frustrated. The one thing he knows for certain is that the car yard is small and the vehicle stock is overflowing. He clearly needs to reduce stock levels. His overall goal is to increase profits and he realises that he needs to focus on selling the most profitable vehicles.
Peter has employed you, a business analyst to help solve his dilemma. He has given you a copy of his ‘sales’ details for the past six months and hopes you can use this data to recommend how he can achieve his goals of increased profits and reduced vehicle turnover time.
In addition, Peter is presently conducting a review of sales staff. Julia Robert, Peter’s senior salesperson, has announced her retirement and Peter hopes to promote a junior sales person to a senior position. You have been asked to conduct a financial review of the profitability and earnings of sales staff and make recommendations re possible promotions. As part of this review you should discuss at least two other factors that Peter might need to consider before he makes a final decision in this regard.
He has asked you to complete any relevant calculations and to use excel ‘tools’ to analyse the relevant data. He then requires you to provide a business report which analyses:
- Options regarding any changes he should make to the range of cars Pete focuses on in the caryard
- Staff performance with regard to a possible promotion.
Peter is interested in clear, detailed advice supported by relevant evidence from past sales data.
A spreadsheet has been provided for you containing the sales data for January 1 to June 30, 2018.
PREPARING THE BUSINESS REPORT
Report Content
The analysis, findings and recommendations which you prepare for Pete should be outlined in a professional business report.
This report should include:
- A Title Page – With a relevant graphic, report title, student name/ number, course name (Business Computing 1), course number (ISYS2056), your workshop time and your workshop tutors’ names.
- A Table of Contents (TOC) generated by Microsoft Word. Default settings for the table of contents should not be altered.
- A brief Introduction that outlines clearly the purpose of the report.
- A brief presentation of the analysis covering the questions concerning Pete and Alan’s stagnating profits and the review of sales staff.
- Discussion regarding the results of your analysis.
- Identification and a discussion regarding other factors that may need to be considered before a final decision can be made regarding the staff promotion.
- A short concluding summary of the content of the report.
- Finally, at least three clear recommendations that Peter and Alan can adopt. These recommendations must be drawn from the analysis that you have carried out, and must have been discussed in the body of your report.
Report Format
The report should be developed using the guidelines covered in the Pearson etext – Chapter 8 Online Business Communication Workshop>>Consolidation Learning Activities>>Online Business Communication – CLA.pdf
Specifically you should:
- Ensure your report is concise: 1000 words. This word count includes title page and TOC. It does not include appendices. (Note: a 10% variance is acceptable.)
- Present the report in a professional, business format with no spelling or grammatical errors.
- Use appropriate headings and subheadings throughout the body of the report.
- Align text using full justification.
- Use double or 1.5 spacing
- Include a page header with a suitably formatted title (the header must not appear on the title page).
- Include a page footer with your name, id number and page number (the footer must not appear on the title page).
- Include at least two charts – which you have created – either in the body of your report (appropriately labelled) or as an appendix at the end of the report. The material in the charts must be discussed as part of the paper.
- In an appendix include screen shots of calculations which you have used to assist in your analysis.
Report Submission
The Business Report must be submitted, in MS Word format, by Saturday September 15, 11:59 pm, via the Turnitin link provided in the “Assignments” area on the ISYS2056 Business Computing 1 site on Canvas. A Student Guide to submission using Turnitin is available at:
http://mams.rmit.edu.au/scs6qq1t7vd0z.pdf
Answers:
Introduction
In a business operation one of the major objectives of the shareholders is the generation and maintenance of profits. In this report the focus is to study the operations of Pete’ Cheap Car sales. This business majors in the sale of small second-hand vehicles with its operations cantered in the city of Melbourne, Victoria.
Following the business activities in the past 6 months, the manager in charge of car auctions Peter has raised concerns over the stagnating profits. The role of the report is to analyse the sales for the period and identify possible trends that may have triggered the situation. Some of the areas of concerns are; if newer cars or sample cars have a better turnover rate, identify patterns in sales trend that can assist predict the profitability level as well as identify features of the vehicles that are in high demand by the clients.
Furthermore, the report will present the results of the sales employee’s review so as to assist Peter identify the right candidate to occupy the senior sales person’s position (Spiro, et al., 2008).
Presentation of the Analysis
The focus of the analysis will be to assist answer some of the questions the managers have and help them identify sales trend that can assist improve the sales profitability. In order to achieve this objective, the analysis will be designed to answer the questions highlighted below (Spiro, et al., 2008).
Are newer cars or smaller cars more marketable?
Do the business need to put more focus on fleet buyers?
Are Japanese cars more preferable?
In addition to the above questions, will also analyse the employee’s profitability trends as well as their earnings.
The results will be presented in form of statistical graphs to assist enhance visual display of the situation.
Discussion of the analysis results
So as to study the vehicle turnover rate, the number of days the cars stayed in the car yard was used as the basis.
The cars which were manufactured in 2004 spent the least number of days in the yard with the vehicle taking an average of one day from auction purchase to sale. This trend was replicated in cars manufactured in 2005, 2006 and 2012 which happen to be among the vehicles which spent fewer days in the yard.
Contrary to this scenario, vehicles manufactured in 2008 happen to stay longer in the yard with the list joined by 2009 and 2013 manufactured vehicles (Thomas & Jeanne, 2007).
When the vehicles turnover is analysed based on the manufacturer, it was evident that the cars from Alfa Romeo, BMW, Audi and Mercedes Benz are slowly moving. In order to improve the cars turnover and raise the firms profits the company should minimise the vehicle stock from this firms.
Farther, vehicles that originate from Honda, Kia, Mazda, Mitsubishi, Subaru, Volkswagen and Toyota have a high turnover rate and should be given more emphasis during the auctions.
Some of the worst performing vehicle descriptions were 135i E88, A4 Quattro, A6 Multitronic and 750 GT Veloce. These vehicles took more time in the yard.
The graph assist visualise the vehicle description hence enable the managers identify the types that have higher turnover rates.
In terms of the vehicle types Prestige and Commercial takes longer time in the yard. In the other hand SUV, hatch, sedan and 4-wheel drive are among the fast-moving vehicle types.
The fleet and private cars do have a small difference in terms of the days spent in the yard though fleet cars happen to move faster.
The regression of the sales price against the number of days in the yard indicates that cheaper cars move faster (González-Vidal & Moreno-Cano, 2016). The statistical analysis indicates that up to 14.29% of the variations in the car turnover rates are due to price differences.
When reviewing the profitability of the sales personnel, Sales001 is the most preferred candidate as his Gross profits from the vehicle sales are higher than the other sales team members. Despite the great performance in terms of sales gross profit sales001 is one of the personnel who earn less amounts. This indicates the dedication of the person. The earning of Sales001 is mainly from the sales commission a farther proof of a hardworking employee.
Identification and discussion of factors to be considered in decision making
Apart from being efficient sales person, before promoting the junior sales team members to the senior position the management need to consider the individual’s management skills. The senior sales personnel will be delegated more than the normal sales responsibilities and therefore need to possess additional skills to assist carry out delegated management tasks.
In addition, apart from the personal skills a person needs to have the required knowledge to carry out the task which will need necessary educational qualifications.
These two features in addition to profitability traits assists identify an appropriate candidate for promotion.
Summary
Following the analysis of the past sales data a number of trends were observed that the managers may use to make appropriate decisions meant to improve and maintain profitability of the firm.
Cars manufactured in 2004, 2012 and 2018 happen to spend less time in the yard. The graphical display also indicates that newer cars move faster and should be prioritised so as to improve the sales volume.
From the manufacturers perspective cars from Honda, Kia, Mitsubishi, Subaru and Volkswagen need to prioritized as they mean higher turnover rate.
Some of the fast-moving vehicle descriptions includes SUV, Sedan, hatch and 4-wheel drive.
To improve profitability the managers should prioritise the vehicles that are preferred by most of the clients.
Recommendations
The following recommendations are suggested to assist improve the firm’s profitability;
- Concentrate in the purchase and sales of SUV, Sedan, Hatch and 4-wheel vehicle types.
- The firm should obtain most of their cars from Honda, Kia, Mazda, Mitsubishi, Subaru, Volkswagen and Toyota manufactures.
- The manages should promote Sales001 to the position of the senior sales as the person is hardworking and generates higher sales gross revenue
References
González-Vidal, A. & Moreno-Cano, V., 2016. Towards energy efficiency smart buildings models based on intelligent data analytics. Procedia Computer Science. , Volume 83, p. 994–999.
Spiro, R. L., Gregory, A. R. & William, J. S., 2008. Management of a Sales Force. 12, New York, NY: McGraw-Hill/Irwin.
Spiro, R. L., R., G. A. & S., W. J., 2008. Management of a Sales Force,. 12th ed. Boston: McGraw-Hill Irwin.
Thomas, D. & Jeanne, H., 2007. A Competing on Analytics. 1st ed. Boston: Havard Business School Press.
