Background
Roberts Auto Sales and Service (RASAS) is a reasonably diversified and well-established business that focuses on selling and servicing vehicles, as well as producing auto parts. Furthermore, Vicki Roberts is an owner with extensive experience in both vertical and horizontal business development. The company focuses on American and Japanese models and has a relatively large network. Business owner Vicki Roberts is looking to diversify the company’s line of services to include the restoration of old, vintage cars, both in the process of restoration itself and in the sale of refurbished exhibits.
Marketing Potential and Competitive Advantages
The best advertisement for marketing purposes would be a visual example of the work; in this case, it could be a 1965 Shelby Mustang GT 350, a legendary model for the American auto industry. Roberts’ decision is logical, based on the increased interest in the market for car restoration and the need to take the business in a new direction by showing the Mustang at various shows and events. Still, it should also be evaluated from two additional perspectives. The first aspect is the financial side of the issue, while the second is the project’s profitability and actual demand in the face of potential competition.
It is worth noting that the new RASAS offer is quite flexible and mobile for any customer segment by interest. The development of a library of parts for various models, combined with experience in car repair, in principle, makes it possible to offer comprehensive restoration work. For those who prefer to work in the garage, RASAS can assist in selecting parts or, for a fee, provide access to a library of spare parts with the option to purchase them. In this situation, the advantages are evident due to the receipt of a margin from the resale and net income from the provided library service.
However, in this case, one should also consider the potential risk to the confidentiality of such a library of spare parts, which is essentially intellectual property or may be registered software. Work with this service should be carried out either with the participation of company consultants or on its territory, which complicates access and increases labor costs while protecting against copying. Alternatively, clients can access it remotely, which increases the initial cost of creating this database on the Internet, but there is a threat of hacking at this level (Gupta et al., 2019). Since the restoration service is not an instant step, the first option becomes preferable.
Using a restored Mustang as an asset for resale could be relevant, especially given Roberts’ decision to refurbish it to mint condition instead of the conventional approach. At the same time, the marketing of the new company must demonstrate the best quality that the masters in the organization are capable of; therefore, the choice is justified.
Potential competition can be defeated due to extensive experience in all related automotive areas, high quality of work, and the ability to find retro parts in our supply chains for interested customers. Thus, the retail line and coverage of market segments are increasing, which will naturally lead to sales growth without external influence (Sarin et al., 2022).
Financial Considerations and Budget Constraints
As a result, if Roberts’s market research does reflect evidence of interest in this area, then from a profitability and liquidity point of view, this diversification is fully justified and should lead to company growth. However, the financial side remains an important issue, which, in turn, must comply with the current requirements and capabilities of RASAS. At the same time, the restoration of the Mustang must be completed by the start of the Detroit Auto Show.
The budget cannot exceed $70,000, considering $50,000 for the purchase of the Mustang; respectively, $20,000 should be spent on restoration, even though Roberts can spend only $3,600 per week. The cost of all listed services in the report is limited to $18,100, making it possible to consider the time aspect and expenses per week. The figure below shows the network diagram of all cases, indicating the duration and cost.
Restoration Timeline and Work Plan
From the plan, the approximate work plan can be seen; while the ordered parts are being delivered, it is possible to deal with the machine’s insides up to painting. The order of parts will take two days, and in parallel with it, it is possible to remove chrome from the car body. It is impossible to pay for all the parts in the first week, so the parts with the longest delivery time will be ordered first: upholstery material for seat covers and windshield. $3,500 will be spent for the first week.
On the first day of the second week, it is possible to start chrome-plating the removed parts in parallel with the carburetor and oil pump order, adding $1,960 to the week’s budget. After removing the body, artisans can start two things at once, increasing the weekly budget to $3450: repair doors, trunk, and hood, and pull the engine from the chassis. By the end of the second week, the windshield will already be delivered, and for the rest of the budget, it can be changed in just one day, in parallel with repairing doors and other things. The budget for the second week will be $3,550.
The third week starts with three parallel cases: regrinding engine valves, removing rust from the frame, and replacing the carburetor and oil pump, as the latter will already be delivered. These events will cost $2,100, which leaves the opportunity to start fixing fenders for a thousand dollars. Then, with the rest of that week’s money, Roberts can pay for installing the engine, doors, and so on, setting the third week’s budget at $3,540.
Starting Week 4 with a budget update makes it possible to rebuild the transmission and replace the brakes for $2,000. Accordingly, other large and expensive events remain unavailable this week, so it is possible to chrome parts and put fenders back on to avoid wasting time. The budget for the fourth week will be $2,310. In the fifth week, it is possible to paint the car and install chrome parts for $1,800.
The sixth week can be dedicated entirely to the reupholstered interior of the car for $2,400, after which, in 43 and 44 days, the car will be delivered to its destination. Accordingly, with the gradual reduction of the weekly budget, the Mustang can be fully prepared for the show, and therefore, diversification of the car restoration business can be undertaken immediately.
References
Gupta, S., Poonia, R. C., Singh, V., & Raja, L. (2019). Tier application in multi-cloud databases to improve security and service availability. In Handbook of research on cloud computing and Big Data applications in IoT (pp. 82-93). IGI Global. Web.
Sarin, V., Mahapatra, S. K., & Sood, N. (2022). Export diversification and economic growth: A review and future research agenda. Journal of Public Affairs, 22(3), e2524. Web.