Introduction
Royal Automotive (RA) deals in new and used cars. The company management strives to make buying a used car a simple process. RA has been in business since the year 2006. During this period, the company management has created a reputation of perfection and quality in its operations.
One of the key areas the company focuses on is the customer’s satisfaction and experience. RA has repeat businesses and referrals of up to 40 per cent. The company is running a lean operation with no large, fancy showroom for its exhibitions. This approach enables RA to cut down on costs and maximize on returns.
The focus on customers enables the company to turn its strategy into a partnership with financial institutions. RA has specialized in finding credit opportunities with financial institutions such as Bank of Denver and Chase. The company claims to get customers’ loan requests approved in writing within 5 minutes.
Further, the company is a Credit Union member, which makes its credit requests easily approved. RA gives customers the comfort of handling their credit needs with or without references to their credit history.
The key for success of RA is its ability to learn and change continuously in its environment of operations. We can assert that the RA management team has been able to adopt approaches of a learning organization that is capable of continuously transforming itself in order to meet the challenges of change, and customers’ requirements.
Supply chain and inventory management
The emergence of mass production of cars led to the rise of used car dealers. RA has various ranges of models from different car dealers. Therefore, the management of supply chain and inventory occupies a significant part of the company’s operations.
These can only work through a complementary management approach whereby the company implements changes involving systematizing and stabilizing practices of management, and focus on employment relationships.
The theories and ideas of hierarchies, new work patterns and division of labor particular with emphasis on measurements of outputs, supervision and rewards have been part of the classical approach in an organizational design and management.
These ideas emanated from scholars like Fredrick Taylor, Henri Fayol and Max Weber. American automotive industry quickly incorporated these ideas and theories, particularly Ford Motors into its management practices.
Management of supply chain grants some elements of security to RA suppliers and customers. The company meets the buyer’s specifications levels of quality and performance. These factors have created confidence in customers about AR’s commitment to improve in managing the supply of used cars.
From the point of view of customers’ management practices in RA, it seems that the customer assumes a dominant role in the relationship and can influence the supply with regard to performance, quality, monitoring, delivering and pricing of used cars in RA.
In this way, RA becomes an open-learning organization in terms of managing its stocks and supplies. This emerges from the way the company gets, interprets and acts on information from its customers.
Therefore, RA cannot assume that the future supply management will rely on past experiences and consumer behavior. The ability to identify the market and financial changes among consumers and act on the opportunity is the key to supply and stock management in RA.
RA must demonstrate to its staff why adapting to changes every day is necessary as the management faces different customers with divergence needs. The company supplies of best selections of used cars must be guided by the clients’ specifications and financials positions.
RA has no choice but to fit its supplies to meet the needs of its clients. RA must be ready to adapt to evolution and revolution at every stage of its operations in order to survive.
Customer management
We can attribute the success of RA to its two distinct core values. The RA customer service and handling financial needs of its customers has created repeat and referral businesses for the company of up to 40 per cent.
This has created a culture of exception customer service and experience management, promoting innovation and fostering cooperation. The company has a commitment to make an effort and resolve all customers’ complaints.
Royal Automotive has the management practice of lean operation. It has no large showroom rather it focuses on customers’ satisfaction. This has enabled it to practice continuous improvement in its core operations. This has been the pillar of operation and foundation which RA has become successful.
In understanding change in an outside environment and customers’ requirements, the senior management has been able to communicate this to the organization. These strategies emerge from customers’ feedbacks, individual contributions and team efforts.
The company seems to have adopted a dominant management strategy that encourages individuals and team to challenge established norm through customers’ feedbacks. In this regard, RA seems to promote individual learning and involvement in the organization so that its representatives are ready to meet new challenges (Nieuwenhuis and Wells 55).
Royal Automotive seems to command the retail market for used cars in Denver. It is from retail segment that the company makes most of its sales and profits. The company knows that not all retailer customers are the same. Therefore, it has stocked various ranges of used cars from various manufacturers. The company has both serious buyers and serious shoppers.
The serious buyer is a customer who needs a car within a short time frame. This customer looks for value and price. More often, the customer will compromise on vehicles specification. RA claims that for such customers, buying a used car does not have to take them a whole day.
This is a customer who wants to walk in the showroom and drive out with a car. RA gives them that assurance through their large inventories of assorted used cars and credit arrangements processes (West 5).
RA has serious shoppers who have carried out their home work and know what they need to buy. The customer has researched various ranges of vehicle models and options before visiting RA and then goes on to give his or her specification of a desired pre-owned car. The company manages such customers by ordering new selections of used cars. Most these customers are car young, car enthusiasts and first time buyers.
The fact that RA gets most of its sales from serious buyers and shoppers shows that the company knows how to handle its customers in order to maximize sales. At the same time, those customers who have not decided on what car to buy get both advices on credit and car types.
The idea of lean operation and approach to the car dealership probably comes from Japanese approach to car sales. Examination of the company’s management practices would appear relevant to a lean operation model of Japanese car dealers. It involves how RA has learnt and changed due to ever increasing competition following Japan’s over production in the automobile industry which led to sales of used cars, particularly in Africa.
Lean production approach focuses on production organization, superior quality and productivity of used cars with customers’ needs guiding the selection of used cars in RA. Lean production has been a dominant form of operation management in Japan car industry.
Other dealers realized that the method was transferable outside Japan and adopted it. This approach to management could have influenced the operation of RA in its approach to sales of used cars.
Financial management
Royal Automotive has credit specialists who are ready to handle any customers’ financial needs. The company claims that every credit application for the purchase of its cars gets approved within 5 minutes.
The world automobile industry has experienced rapid and deep changes over the past few decades forcing several market leaders to re-invent their managements and operations practices. Re-inventions methods included mergers, globalization strategies, changes in consumer needs and the rapid entry of Asian countries in the automotive field.
These companies come with their own organizational and management cultures into established markets. Asian players have now become the largest producers of cars in the world. Subsequently, they have created successful markets for quality used cars in other continents, which have led to significant changes in the automobile industry.
RA has studied the contemporary financial situation in the United States, which has created less optimism in contemporary customers and incorporated it into its management practices. The company is able to provide best selections of quality used cars affordably and on credit.
This is due to reduced customers demand for new cars and high vehicle prices. They solve these problems by providing reliable quality used cars to customers and arrange for funding alternatives through their affiliate financial institutions.
Works Cited
Nieuwenhuis, Paul and Peter Wells. The automotive industry and the environment: A technical, business and social future. New York: CRC Press, 2003. Print.
West, Penny. Organisational Learning in the Automotive Sector: Routledge Advances in Management and Business Studies. New York: Routledge, 2001. Print.