Business
Assignment 1. The Market Assessment.
Introduction
The subject of the current research is the company Express Oil Change & Tire Engineers and its office in Cookeville, TN. This company provides a wide range of the services for the car owners. The most popular service is a 10-minute oil change that also includes some examination of the safety and mechanical conditions of the vehicle (Range of Auto Services Offered).
The company has been established in 1979 and throughout 37-years, it has grown into one of the leading automotive service providers. Nowadays, there are more than two thousand of the company’s offices in the US (List of Store Locations). Each office offers clients twenty point safety travel check.
Let’s analyze which factors of the external environment can impact on the company and its further development.
Environmental Analysis
The broad environmental forces that may impact on the company Express Oil & Tire Engineers in the near future can be divided into six groups: demographic, economic, natural, technological, political-legal and social-cultural factors. For example, the US is characterized by the active aging process. In this case, the number of people over 40 years constantly grows. They more actively and longer uses automobiles. Thus, the number of clients grows for the automotive service centers.
Economic factors are related to the current stagnation process. In other words, the price increases and the household incomes remain almost the same. The main technological factor is that the majority of automobiles uses the petrol. The quantity of electro cars is minimal. In this case, the service system aims to maintain, primarily petrol cars. They need regular technical revision and maintenance.
Driving Forces
It should be noted that the market, on which the company Express Oil Change & Tire Engineers operates, is under the influence of several major factors (or forces). They are: fuel prices, customers demand and their income level, the overall level of the automobile industry in the US, some regulation policies (Express Oil Change & Tire Engineers).
Key Success Factors
Nowadays, the company Express Oil Change & Tire Engineers is quite successful. It is characterized by stable annual growth and high popularity among customers due to its wide network of offices on all territory of the US. At the same time, there is a system of particular factors, which the company uses in its activity in order to develop effective. In general, key success factors of the company can be considered as the ability to generate motivation to attract customers and increase sales.
The following factors determine the success of the company analyzed:
popularity and reputation among customers;
network business: offices of the company are located in different states and are available for loyal customers with permanent discounts;
high quality service in all offices;
competitive pricing system;
effective relationships with suppliers;
wide use of marketing tools in order to attract new customers.
Porter’s Five Forces Model
The theory of Michael Porter identifies that there are five driving forces that determine the possible level of profit in the market. The macro environment consists of the forces that affect the company’s ability to service its own customers and make a profit. A change in any of the forces usually requires the company to reconsider its position in the industry and the market. Sufficient industry attractiveness does not meanі that every company will get the same profit in it. Each force in Michael Porter’s model represents a different level of competitiveness of the goods:
market power of buyers;
market power of suppliers;
threat of invasion of the new companies;
the risk of new goods – substitutes (or services – substitutes);
the level of competition or intra-industry competition.
Let’s analyze each of the above mentioned factors in more detail. Competition in the chosen industry is quite high as it is characterized by the homogeneity of services and a large number of the companies-competitors. It uses the tools of competition (lower prices, a high level of customer service and others). The seriousness of the threat of new competitors depends on two factors:
barriers to entry into the industry;
expected the company’s response that operates in the market to the emergence of a new competitor.
One can say that barriers to entry into the industry are not high. The new automotive service can develop quite effectively in the local market. At the same time, it will be quite difficult to achieve the level of the company Express Oil Change & Tire Engineers and to build networks of offices across the country.
The threat of the existence of new services-substitutes is low. The market of the chosen industry has already formed. All major competitors have their clients and focus on the satisfying their needs. It can suppose that era of electro cars will change the industry of the automotive services. But, nowadays, the share of electro cars is quite low in the market and remains the same for the next ten-twenty years.
The market power of the customers is important for the company Express Oil Change & Tire Engineers. As a rule, each client chooses the particular automotive service center for a long period of time. The car owners usually choose one automotive center and service all family cars there. It is conveniently and profitably for customers. Thus, the loss of one customer means his leaving for another company-competitor.
On the one hand the clients have an insignificant impact on the company, as they are not large consumers. They are the individuals, who do not have the ability to interact with each other and coordinate the influence of the price, quality and other conditions of sales. But, on the other hand, even a single user may have a competitive pressure on the automotive service center in certain circumstances: If the company’s services are quite similar to competitors’ ones, the user can switch from one center to another without too much cost and service providers. In this case, the automotive service center is forced to go for additional concessions, wanting to keep customers.
Great influence has the awareness of the customers about the company and its competitors. The better informed consumers are, the better their position in relation to the particular company. Nowadays, the Internet opens up new possibilities for consumers to search necessary information.
The market power of the suppliers can be considered as more important in comparison with the market power of the customers. The competitive pressure from suppliers depends on two factors:
The ability of suppliers to exert pressure on consumers, changing the terms and conditions of supply to the desired side for themselves;
levels of interaction between suppliers and buyers in the industry.
The company Express Oil Change & Tire Engineers depends on the prices of the motor oil, car accessories and other components, because all of them are fixed costs of the company and if they increase, the company should reduce changeable costs (employees’ wages, marketing activity and others).
Competitive Analysis
Competitive analysis needs to use such tools as WCA or SGM. The first tool, weighted competitive analysis allows determining the place of the company Express Oil Change & Tire Engineers in comparison with its main competitors: Pep Boys, Mr. Transmission, Maaco. Let’s analyze the main characteristics as quantity of years in the market, the number of locations across the country and customers popularity. The results are presented in the table 1.
As we can see, the company Express Oil Change & Tire Engineers scored 6 points and took the third place in the ranking. Despite the fact that the company has been established not so long ago, it has gained good reputation and popularity among customers. At the same time, the company focuses on the eastern and southern states, while other companies have their offices in more quantity of states.
It should be noted that all companies offer similar services. For example, Pep Boys offers customers quick oil change service as a company Express Oil Change & Tire Engineers, but the duration of the procedure takes 30 minutes at Pep Boys center versus 10 minutes at Express Oil Change (Pep Boys. Official Site.).
Another useful tool for competitive analysis is building the strategic group map. Such factors as quality of services and pricing system are the most important factors for analysis. They are presented as the Y and X variables. The scale (1-10 points) is used to estimate the position of the company, where 1 is the lowest value of the indicator and 10 is the highest one. The map is presented in the figure 1.
The strategic group map shows that chosen variables are important for the company on the way to achieve success in the industry. As we can see, such companies as Express Oil Change & Tire Engineers, Maaco and Mr. Transmission are close competitors in the market.
Assignment 2
The Internal Analysis, Data Collection and Data Analysis
Value chain of the company Express Oil Change & Tire Engineers is formed by the primary activities and related support activities. There are several primary activities of the company:
oil change service;
complex diagnostic of car;
tire service;
additional services, which aim to check safety system, air-conditioning and other equipment in the car.
Supported activities of the company are the following:
product research and development (including marketing campaigns, website and other online tools to support good relationships with the customers and partners);
human resource management that aims to hire active and highly-professional staff, to motivate it through the benefits, corporate events;
a quality management system that aims to control the same high quality of services offered at all locations of the company.
Factors that impact on the company and its value can be analyzed using SWOT-analysis. The main strengths of the company are the following: good awareness of the customers about the company and the services offered, wide range of services, flexible prices for loyal clients, the network of offices in fifteen states.
The main weaknesses are related to the limited market of the company’s locations, which are concentrated in southern and eastern states. There are no offices of the company of West of the country. Such states as California, Nevada, Arizona, Utah have a great potential for the company’s further development. One more opportunity is related to the starting to work with the corporate clients. The majority of big companies provides their employees working cars or amortization payment if the employee uses his own car. In this case, the companies spend large sums on the regular automotive services and repairing. The partnership with the corporate clients opens before Express Oil Change & Tire Engineers a great opportunity to receive regular orders and maintenance more cars. However, Express Oil Change & Tire Engineers should develop attractive pricing program for corporate clients, which would be more beneficial in comparison with the main competitors.
The main threats are linked to the loss of clients, falling incomes of the customers, economic crises in the country, the increase in supplier prices.
Strategic Implications
One can say that current strengths of the company form its competitive advantages and allow working quite effectively. At the same time, there are many opportunities, which the company can implement in its further activity and, as a result, increase its market share.
Assignment 3
Recommendations Section
After analyzing the external and internal environment, one can present the recommendations, which will be useful for the company in its further activity and development. Firstly, it needs to implement the stabilization strategy. It aims to achieve an early alignment of sales volume and profits and their subsequent increase. It also assumes the transition of the company to the next stage of growth. The aim of the company at this stage is to increase competitiveness and maintain its position in the market. The enterprise should involve both real and potential consumers by providing the widest range of services and flexible pricing policy in order to achieve the intended purpose. In this case, the development of strategic service groups is the most preferred.
The implementation of the strategy is conducted in all major subsystems of the company: marketing subsystem, personnel, supply and sales. The first step in the marketing subsystem is an appropriate research that can reduce uncertainty, when making marketing decisions, analyze the market, in which the company operates and to assess and its market opportunities. The second step is the development of the advertising campaign. It is also very important to pay attention to supporting good company’s image.
Human resource subsystem is necessary to provide and organize training courses for sales managers to improve their level and culture of service. Sales subsystem should perform the following tasks:
Subsystem “supply” should direct its efforts to conclude agreements with more favorable suppliers identified through the market research. In summary one can say that all above mentioned recommendations can improve the current market position of the company and help it to attract new customers.
Works Cited
Express Oil Change & Tire Engineers,. "About Us". Expressoil.com. N.p., 2016. Web. 4 Aug. 2016.
List of Store Locations,. "Express Oil Change & Tire Engineers Store Locations". Expressoil.com. N.p., 2016. Web. 4 Aug. 2016.
Pep Boys. Official Site.,. "Manny, Moe & Jack- The Pep Boys Story. About Us. Pep Boys". Pepboys.com. N.p., 2016. Web. 5 Aug. 2016.
Range of Auto Services Offered,. "Auto Services". Expressoil.com. N.p., 2016. Web. 4 Aug. 2016.
