1. Case analysis- What are the problems that the business needs to solve? 1a. What are...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
1. Case analysis- What are the problems that the business needs to solve? 1a. What are the compensation issues? CASE STUDY - A NEW INCENTIVE SYSTEM AT THE AUTO DEALER? You have been hired by a relatively large local automobile dealer to design a new compensation and incentive system for several positions that make up the bulk of the firm's workforce. These positions are: • 10 administrative positions These positions involve the day-to-day operational facets of running the dealership answering phones, working at the customer service desk, filing paperwork, pulling records on cars, and so forth. These employees are currently paid on an hourly basis. The tumover rate is about 30% for these positions. There have been several complaints about the courtesy and helpfulness of employees occupying these positions. . 40 sales positions The employees occupying these positions are primarily focused on selling cars and are paid entirely on commission. The turnover among these employees is fairly high (about 80% leave each year), although a few of the sales staff have been with the dealership for a number of years. • 15 service positions (mechanics and detailing personnel)-The employees occupying these positions are paid on a standard hour plan (that is, their pay is based on how much time it should take to perform each repair). The turnover among these employees is very low. As in any other dealership, there have been some complaints about the quality of the service the firm's mechanics deliver. A number of customers have had to bring their vehicles in several times before their auto problems were properly repaired. The detailing personnel generally are also tipped by customers. The goals of the dealership are primarily to make money on the sale of new and used cars, although increasingly the service department is generating more income. There are several challenges you must consider before you make your recommendations: 1. The dealership's profitability is fundamentally influenced by the number of cars sold and the prices of those cars. In addition, the dealership's profitability is enhanced by (a) repeat business (b) the company's reputation (c) customer retention and repeat business by way of servicing. Historically, repeat customers represent a sizable amount of business; the dealership gets to sell their used cars they traded in and also sells them new cars. Moreover, customer loyalty matters a lot because word-of-mouth advertising generates business. 2. Service quality in terms of the sales process as well as the service department (mechanics) is a critical component of customer satisfaction and affects the amount of repeat business dealerships get. 3. The income salespeople eam is directly related to the profitability of each car they sell. The prices on the cars are somewhat negotiable. Under the current system, the sales staff and the dealership split the profits 50-50 from every transaction. QUESTION: Formulate and discuss TWO different incentive mixes that you would suggest to the auto dealerships to cover all three sets of employees. 1. Case analysis- What are the problems that the business needs to solve? 1a. What are the compensation issues? CASE STUDY - A NEW INCENTIVE SYSTEM AT THE AUTO DEALER? You have been hired by a relatively large local automobile dealer to design a new compensation and incentive system for several positions that make up the bulk of the firm's workforce. These positions are: • 10 administrative positions These positions involve the day-to-day operational facets of running the dealership answering phones, working at the customer service desk, filing paperwork, pulling records on cars, and so forth. These employees are currently paid on an hourly basis. The tumover rate is about 30% for these positions. There have been several complaints about the courtesy and helpfulness of employees occupying these positions. . 40 sales positions The employees occupying these positions are primarily focused on selling cars and are paid entirely on commission. The turnover among these employees is fairly high (about 80% leave each year), although a few of the sales staff have been with the dealership for a number of years. • 15 service positions (mechanics and detailing personnel)-The employees occupying these positions are paid on a standard hour plan (that is, their pay is based on how much time it should take to perform each repair). The turnover among these employees is very low. As in any other dealership, there have been some complaints about the quality of the service the firm's mechanics deliver. A number of customers have had to bring their vehicles in several times before their auto problems were properly repaired. The detailing personnel generally are also tipped by customers. The goals of the dealership are primarily to make money on the sale of new and used cars, although increasingly the service department is generating more income. There are several challenges you must consider before you make your recommendations: 1. The dealership's profitability is fundamentally influenced by the number of cars sold and the prices of those cars. In addition, the dealership's profitability is enhanced by (a) repeat business (b) the company's reputation (c) customer retention and repeat business by way of servicing. Historically, repeat customers represent a sizable amount of business; the dealership gets to sell their used cars they traded in and also sells them new cars. Moreover, customer loyalty matters a lot because word-of-mouth advertising generates business. 2. Service quality in terms of the sales process as well as the service department (mechanics) is a critical component of customer satisfaction and affects the amount of repeat business dealerships get. 3. The income salespeople eam is directly related to the profitability of each car they sell. The prices on the cars are somewhat negotiable. Under the current system, the sales staff and the dealership split the profits 50-50 from every transaction. QUESTION: Formulate and discuss TWO different incentive mixes that you would suggest to the auto dealerships to cover all three sets of employees.
Expert Answer:
Answer rating: 100% (QA)
Compensation Issues Administrative Positions Problem The turnover rate for administrative positions is high and there are complaints about courtesy an... View the full answer
Related Book For
Business Ethics Ethical Decision Making & Cases
ISBN: 978-1439042236
8th Edition
Authors: O. C. Ferrell, John Fraedrich, Linda Ferrell
Posted Date:
Students also viewed these general management questions
-
Read the case study "Southwest Airlines," found in Part 2 of your textbook. Review the "Guide to Case Analysis" found on pp. CA1 - CA11 of your textbook. (This guide follows the last case in the...
-
What are the problems that Wal-Mart has faced, and what has the company done to address them? Wal-Mart Stores, Inc., is an icon of American business. From small-town business to multinational, from...
-
To ensure the process's performance, a sample took in week 21, and it was below the lower control limit. So what does Murarka need to do? please do fast and correct **** i need correct answer if...
-
I recently heard my neighbor discussing how one of our other neighbors lost his job. My neighbor assumed that the person who lost his job was probably lazy or not smart enough for the job, without...
-
Compute the historical daily 90% VaR of a portfolio whose daily losses in the last 10 days were, in millions of dollars (minus sign indicates a profit). 1,0.5,0.1, 0.7, 0.2, 0.1,0.2,0.8,0.3, 0.5 .
-
Because of increased consumer demand for fuel-efficient, alternative energy automobiles, Global Auto Company is considering investing in a new hybrid crossover vehicle. Development costs each year...
-
Yeast and Company has 5,000 shares of stock outstanding. The market value of Yeasts assets is \($800,000.\) The market value of its outstanding debt is \($200,000.\) The company issued 100 warrants...
-
Cepeda Corporation has the following cost records for June 2012 Instructions (a) Prepare a cost of goods manufactured schedule for June 2012. (b) Prepare an income statement through gross profit for...
-
Gumbo Company had the following transactions during the month of December. What was the December 1 cash balance? dividends paid $221 credit sales 149 payments for equipment 1496 taxes paid 2032...
-
A store maintains data on customers, products and purchase records in three tables: CUSTOMER, PRODUCT, PURCHASE. The store manager wants to know which product is on its maximum discount for each...
-
4. A computer network runs at 1 gigabit per second. Data is sent in packets on the network; each packet contains 1500 bytes (a byte is 8 bits). Each packet is transmitted at line speed (1 gigabit per...
-
\(k_{1}, k_{2}, k_{3}\), and \(k_{4}\) are in series a. \(16,007.75 \mathrm{~N} / \mathrm{m}\) b. \(52,500 \mathrm{~N} / \mathrm{m}\) c. \(64,500 \mathrm{~N} / \mathrm{m}\) d. \(3310.078 \mathrm{~N}...
-
Does the VIX seem to exhibit a mean reversion? When the VIX is 12 or less, does it appear to be more likely that it will be larger (than 12) within the next 6 months than when it is 25 or greater to...
-
What is the relative exposure to interest rate risk of a floater versus an inverse floater?
-
The pricing expression for a risky floater can be thought of as possessing two components. Explain.
-
You took a personality test and did not receive a job offer. The feedback was because your personality does not suit the role. This is incorrect because: a. Your previous personality tests show you...
-
topic chosen - drug abuse and social media in ques 1 - need to provide arguments that a British politician would make in support of the trade, but this didn't really happen. in ques 2 - need to...
-
Consider the combustion of methanol below. If 64 grams of methanol reacts with 160 grams of oxygen, what is the CHANGE in volume at STP. 2CH3OH(g) + 3O2(g) 2CO2(g) + 4H2O(1) The volume decreases by...
-
Should pet supply companies like PETCO be held responsible for the conditions at pet breeders and suppliers? How do you think exposs on poor breeder conditions have affected PETCOs reputation? PETCO...
-
1. Evaluate Nikes response to societal and consumer concerns about its contract manufacturing. 2. What are the challenges facing Nike in the future? Phil Knight and his University of Oregon track...
-
1. What evidence is there that Andersens corporate culture contributed to its downfall? 2. Describe the legal and ethical issues surrounding Andersens auditing of companies accused of accounting...
-
1.3 Isaac Dez of Brazil. Isaac Dez Peris lives in Rio de Janeiro, Brazil. While attending school in Spain, he meets Juan Carlos Cordero from Guatemala. Over the summer holiday, Isaac decides to visit...
-
1.4 Munich to Moscow. For your post-graduation cel- ebratory trip, you decide to travel from Munich, Germany, to Moscow, Russia. You leave Munich with 15,000 euros (EUR) in your wallet. Wanting to...
-
1.5 Moscow to Tokyo. After spending a week in Moscow, you get an email from your friend in Japan. He can get you a very good deal on a plane ticket and wants you to meet him in Tokyo next week to...
Study smarter with the SolutionInn App