Big Drive Auto Scenario

Big Drive Auto Scenario

 

Big Drive Auto is a multistate dealer of several manufacturers’ cars and trucks. The dealer sells the vehicles, services the vehicles, sells parts for repair, and conducts a significant business in motor oil, coolant, and replacement tires. Management is always scanning the macroeconomic environment for signals that may help Big Drive Auto better plan their business. Big Drive has been keeping data on the volume of sales in its various lines of business over the last 10 years. In some cases, such as auto and truck sales, Big Drive tracks the number of units sold. In other cases, Big Drive tracks constant dollar sales. The following tables report Big Drive’s sales in all of its multistate locations since 1998.

Table 1

Vehicle Unit Sales (Thousands)
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
139 160 145 133 154 167 165 161 160 163

Table 2

Motor Oil, Coolant, and Tires (Thousands of Constant Dollars)
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
2,096 2,064 2,150 1,978 1,935 1,980 1,956 2,000 2,020 2,050

Table 3

Service Revenue (Thousands of Constant Dollars)
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
5,915 6,111 6,300 6,490 6,716 6,897 7,118 7,317 7,500 7,650

In addition to sales data, Big Drive Auto collects data on the prices the company charges customers. Following are the data since 1998:

Table 4

Index of Sales Prices for Vehicles: Year 2000=100
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
98.0 99.2 100 99.0 97.0 96.8 98.0 97.2 98.5 99.0

Table 5

Index of Sales Prices for Motor Oil, Coolant, and Tires: Year 2000=100
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
100.5 100 100.1 102.0 102.9 106.0 111.2 116.9 118.5 119.0

Table 6

Index of Sales Prices for Auto and Truck Services: Year 2000=100
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
97.5 98.8 100 100.4 102.0 104.1 105.8 107.7 109.2 110.4

The source for the U.S. government macroeconomic data that correspond to company data can be found in the industry detail of the GDP accounts as reported by the Bureau of Economic Analysis. The bureau provides data for GDP quantity indices by industry and the price indices by industry used to convert the nominal data into the quantity data.

Industry detail tables with data going back to 1998 may be found at http://www.bea.gov/Industry/Index.htm. Click on the link for Interactive Tables: GDP by Industry. The tables may be found in the Gross Output by Industry section. The Bureau of Economic Analysis website may change locations periodically. If this is the case, you may locate the information using a search engine and typing the phrase GDP by Industry.
1. Assume you have an option to start a business say in San Francisco, Ca or Memphis, Tennessee. What macroeconomic factors will you consider in making your decision? For instance how critical are the following local factors – please address as many of these factors as possible:

Labor productivity
Labor cost
Consumer Confidence
Foreign exchange rate
Global economic conditions
Stage of the local economy – unemployment rate, GDP growth etc.
Cost of credit

How critical are these factors in affecting not only your location by also on your pricing, non-pricing and production strategy?

2. This activity helps you apply course concepts using a real-world scenario. Read the Big Drive Auto Scenario and identify 3 to 5 key business management decisions that can improve the revenue of Big Drive Auto. Include key topics from the course that support these decisions. Use common business terms or language when describing your decisions, and put the business decisions in a real-world context. If you had to provide a recommendation for implementing these business decisions, what would it be? See attachment

3. Many business decisions are not easily determined. As a manager, you might have to investigate and sort through numerous pieces of information before making an educated decision. For example, as a consultant, you might be pulled into a project and given access to a great deal of information about a company. It is the consultant’s responsibility to sort through the information and find the most relevant facts to make recommendations. This activity is an opportunity to practice this real-world management skill. Visit the Kudler Fine Foods Virtual Organization. Identify 3 to 5 key business management decisions that can improve the revenue of Kudler Fine Foods. Create a list of key topics from the course that support these decisions and describe how you would implement these business decisions. Share your ideas. You might want to consider the anticipated outcome if Kudler Fine Foods implements the recommendations. Resources: Kudler Fine Foods Virtual Organization

https://ecampus.phoenix.edu/secure/aapd/cist/vop/index.html

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