SCENARIO 1 - YATES MOTORS

Yates Motors is a family owned and operated car dealership, which means the Yates' are directly involved in day-to-day operations and know many of their customers on a first-name basis. They are committed to the promise of something better and that's exactly why they've been satisfying customers for over 50 years. Yates Motors is about more than selling cars. Management and staff are committed to offering a total customer care experience, from purchase to ongoing maintenance of the customer's vehicle. In addition to the GMC showrooms, the dealership includes an extensive Parts and Service Department, a state-of-the-art Body Shop, and a full-service Auto Cleaning and Detailing Centre. As well, financing can be handled on the premises.

MISSION STATEMENT

The Yates Promise:

1. To be the leading provider of automotive sales and service in Central Ontario
2. To provide superior customer care through honesty, integrity and respect.
3. To provide our employees with a safe and positive workplace
4. To be a responsible business member of our community.

History The Yates automotive story began in 1958, when Mr. George Yates opened his first Auto Repair facility in Barrie. George Yates Jr. and Peter Yates began working with their father while still quite young, and became involved on a full-time basis after graduating from university. In 1974, George Yates Sr. and his sons began selling GM automobiles. In 1988, after their father's retirement, the Yates brothers opened up their cleaning and detailing centre. Since that time, several of George Yates' grandchildren have also joined the company.

When you come to the dealership you will find a 71,000 sq ft GMC dealership and service department. The building features spacious showrooms, large, comfortable waiting areas, and customer work centers with internet access. The Yates Motors team is committed to giving back to the community that has supported them for over 50 years. Long-time supporters of countless local charities and community events, the family's efforts have assisted close to 200 charitable groups in recent years.

• Part 1 - Internal Sources of Funding
• Part 2 - Budget
• Part 3 - The Expansion

PART 3 - THE EXPANSION

As was mentioned previously, an opportunity has arisen for the family to purchase a Hyundai dealership. The available business has a very good reputation and high levels of customer satisfaction. One of the characteristics of customers in the automobile market is a lack of the loyalty to brands and models that is often seen in other consumer good markets, for example soda or beer. In other words, the Yates family has noticed that customers don't tend to buy the same type of car again when making a new purchase. Customers will seek to upgrade or try something different even though they have been fully satisfied with their last vehicle purchase. Yates Motors believes the second dealership provides them with an opportunity to satisfy that customer need more fully by having more cars to offer the customer. This will enable them to increase sales and profits by increasing their local market share. The following is a list of the assets and costs of the second dealership:

Financial Investment Analysis

Working Capital
A/R	90,000
Inventory	175,000
Capital Assets
Building	472,000
Furniture & Fittings	98,000
Equipment	75,000
Marketing Costs	40,000
Total Financial Investment Needed	950,000

Assignment:

The Yates have been pre-approved for $350,000 mortgage. Your task is to develop a financial requirement plan that can provide guidance on how to raise funds to meet this need. (Note: There are many potential solutions) Please do not include Internal Financing or Mortgages in your answers to a or b

a. Your financial requirement plan must include a minimum of 5 difference sources / forms of financing and meet the financial needs of the business (2 marks)

b. Each source form that you choose to use must be evaluated with a written discussion of the advantages and disadvantages of each set (Source -form). (Minimum one paragraph per source) (20 marks)

c. For the conclusion, outline why your plan is the most suitable set of sources / forms of finance for the company to achieve its goals, using 3 of the 5 choices you made above. Also , explain how these 3 choices will work with the Internal financing and mortgage already arranged. ( 3 marks)

The total financial plan should be 600 words