Business Analysis of De Havilland Vehicles Plc - Essay Example

Business report for De Havilland Vehicles plc Hatfield, Herts England Case Study Overview De Havilland Vehicles plc (DHV plc) based in Hatfield, Hertfordshire (UK) is a distributor of motor cars. To respond to the pressures of increasing competition in the automotive sales industry their directors have developed a new business strategy which is: To improve efficiency To reduce overheads To become more responsive to market demands They wish to explore how the introduction of a more coherent and integrated information system and e-Business can help them achieve these new goals. This case study will explore their current circumstances; suggest ideas for e-Business applications and where new information systems can make improvements. It will draw conclusions and make recommendations for implementation. Contents 1. Overview 2. Background 2.1 Company Information 2.2 Market Information 3. E-Business Problem Definition and Objectives 3.1 E-Business Ideas for DHV plc 3.2 Private New Car sales 3.3 Fleet Car Sales 3.4 Second Hand Cars 3.5 Virtual Community for Car Lovers 3.6 Warranties, servicing and repairs 3.7 What other distribution Companies are doing 3.8 E-Business Conclusions 4. Information Systems Problem Definition and Objectives 4.1 Information Systems Analysis 4.2 Information Systems Ideas 4.3 Information Systems Conclusions 4.4 Alternative Solutions 5. Implementation 5.1 Third Party Selection 5.2 Budget 5.3 The Project Team 6. References 2. Background 2.1 Company Information DHV plc is located on the outskirts of Hatfield in Hertfordshire. Their facilities include a car sales showroom and repair and maintenance workshop. The company operates a computerised financial accounting system for producing invoices to customers, payroll and financial reports. (This operates in isolation to the company's other systems.) The company also uses a basic computer system (developed by the car manufacturer) to maintain inventories and costs of spare parts. It also includes the manufacturer's current price list for new vehicles and spares and the manufacturer's spare part catalogue. The sales office has on-line access to the manufacturer's vehicle tracking system to establish the availability of cars by model, colour and extras. Cars can be ordered directly, but there is no internal system to store data on products or customers, only a card index system. DHV plc also uses paper-based systems to administrate its service and repair booking system, job cards, supplier data, orders, personnel and training. 2.2 Market Information DHV plc has three distinct parts to its business. They act as a middleman for a car manufacturer selling their new vehicles. Last year (2004) 50% of their car sales were new split 40% to business and 10% to private users. The other 50% of their car sales were used vehicles and they include guarantees with all second-hand cars sold. The new car warranties and used vehicle guarantees tie customers in for subsequent servicing which builds long term relationships. The company seeks to retain these customers when the warranty or guarantee expires. The company also has a buoyant local repair trade. 3. e-Business Problem Definition and Objectives Whilst the directors of DHV plc have determined that e-Business and more integrated Information Systems is the appropriate way forward to achieve their new objectives it might help define the detail of the problem more accurately by researching not only what the competition are doing but also what e-Business innovations other distribution companies of high value items are using. It might help reinforce the soundness of their strategy and point them in the right direction. 3.1 E-Business ideas for DHV plc According to Lou Gerstner, (CEO IBM 1993-2002): The internet is increasingly playing a more strategic role in business processes and failure to recognise this and take advantage of its potential could result in an organisation being left behind in todays over competitive environment.(Source, Internet & Business, Page 4) Bill Gates writes in his e-book Business@the Speed of Thought: (www.microsoft.com/billgates/speedofthought/default.asp I have a simple and strong belief, how you gather, manage and use information will determine whether you win or lose. Most transactions between business and consumers will become self service digital transactions. Intermediaries (such as DHV plc) will evolve to add value or perish. Customer service will become the primary value added function in every business. Human involvement in service will shift from routine, low value tasks to a high value, personal consultancy on important issues - problems or desires- for the customer. Clearly recognized business leaders understand the importance of using the internet in Business. However the problem for DHV plc is that there are many different e-Business ideas available. Which of them will help achieve their new objectives 3.2 Private New Car sales The web sites of major Auto manufacturers BMW (www.bmw.com) and Ford (www.ford.com) and car distributors Stratstone Landrover (www.stratstonelandrover.com) and Dagenham Motors (www.dagenhammotors.co.uk) in London include some interesting features that DHV plc could consider for their transition to e-Business. By building an innovative, informative and easily found web site, showing a wide variety of images, or movies, of cars for sale will better inform the private buyer before visiting the DHV plc showroom as to the features and benefits of each model. Customers can book test drives and calculate the purchase, leasing or hire purchase costs with an online finance calculator such as seen on the Get a Free Car Quote (www.automotive.com) and quickly arrive at what could be affordable without involving any salesman. If the customer can see the models in their different colours, as they do on the BMW Model selector (www.bmw.co.uk/bmwuk/modelselector_flash/0,5449,1156_1484__,00.html) and with each variation of accessories the customer will know exactly what they want when arriving at the showroom to buy. DHV plc would also increase their accessibility as customers can shop virtually for their car 24/7 meaning that the sales persons spend less time with each customer and become more productive. Orders can be finalized more quickly with less risk of disappointment as the customer has seen virtually what has been ordered. Additional questions could be answered expertly by e-mail, live chat or by a section on frequently asked questions. 3.3 Fleet Car Sales For the fleet buyers representing some 40% of DHV plc's new car customers the traditional approach of sustaining business relationships should be initially continued. Often these customers are personal friends of the senior management and it would be prudent not to rock the boat by insisting on replacing personal contact with virtual without the consensus of the customer. The website of Automotive Fleet Management (www.collectivedata.com) teaches us that the traditional way of managing a fleet of cars is that the users do it themselves with a dedicated staff, now it can now be done differently. If DHV plc provides Fleet Management and Administration services in addition to selling the new cars, it will add value to the DHV plc's traditional middleman status. Building strong relationships with fleet customers may result in incremental sales when a second car is needed for a customer's partner at home. 3.4 Second Hand Cars The Kelkoo second hand cars website (http://cars.kelkoo.co.uk) shows how DHV plc could use the internet to sell used vehicles more effectively. Digital images of newly purchased second hand cars can be uploaded immediately when they are ready for sale along with its service record. It can link to independent used car history checks or used car scam sites such as, "Is it a Lemon" (www.is-it-a-lemon.com) Finance quotes also help better inform the customer about the affordability of each model before any visit to the garage. Second hand car buyers could also register their model preference and when one becomes available the garage can inform the customer. It will reduce the telephone demand in both directions. Second hand car owners looking to sell to DHV plc can quickly establish online whether DHV plc might be interested in buying it prior to a visit to the garage for inspection and pricing, some models may not be of interest. Owners could e-mail a photo of it from their latest mobile device using similar software as provided by Tecnomessage (www.tecnomen.com). 3.5 Virtual Community for Car Lovers and Old and New Customers DHV plc can also set up an online car lover's community for their customers and potential customers; it could include details of all their older models. DHV plc could sponsor car rallies of their older models and post the details of the occasion on the web site as do the DSNG Vintage Car Rally website (www.dsng.net/2004/05/vintage-car-rally.html). It could demonstrate longevity and durability of their cars. Customers and potential or lapsed customers could access the site by email address registration thereby building a database of interested parties. As new models or special deals arise they can be posted on the community and e-mailed to all members. A regular newsletter or sending an e-card at Christmas builds amazing rapport. According to the website Car Home Page for Car Lovers (www.carhomepage.com) they only buy a new car every three or fours years and it is important to sustain brand loyalty if they are kept warm for the forthcoming event. 3.6 Warranties, servicing and repairs Modern cars are technological masterpieces that need sensitive servicing by experts not something to be undertaken at home. Most drivers have no idea how they function and prefer to have their car serviced by the dealer who sold it to them because the element of trust is much stronger. Customers can make enquiries about servicing and book online. To better inform their captive warranty and guarantee customers DHV plc can add to their web site histories of satisfied service and repair customers, explaining problem and solution and showing photos of before and after. Images of body repairs and rough guides to cost will encourage new customers to ask for estimates. Photos of smiling and friendly mechanics and the workshop fully fitted with all the latest technology will underpin the value of professional workmanship. Special deals on tyres, batteries and exhausts as can be posted along with seasonal tips about winter coolants and tyre pressure recommendations for a driving holiday in the Spanish heat. 3.7 What other distribution Companies are doing Boatcan (www.boatcan.com) sellers of boats provide a page of links to related services such as Marine Insurance and the Coastguard. DHV plc could link to insurance, roadside recovery services, specialist accessories and downloadable maps. Extreme Custom Bikes (www.extremecustomcycles.com) link to specialist bike events, bike museums and exhibition calendar. DHV plc could do the same for cars. 3.8 e-Business Conclusions Cars are expensive to own and maintain. Buying one is not a simple decision meaning that buyers prefer a more personal contact before agreeing to such a major financial commitment. Therefore it is unlikely that customers will purchase them over the internet with a credit card. Although it will be interesting to watch how e-Bay auctions (www.motors.ebay.com) may impact this in the future. DHV plc need not therefore attempt to actually sell cars over the web but should concentrate on using it to better inform local customers about their cars and personal services and to provide online enquiries and service bookings. By incorporating these ideas into an easily found and well designed web site DHV plc can add the value needed to provide an improved, innovative and informative customer service 24/7. It will protect and enhance their position as a middleman. Providing that they use an adaptable and flexible approach, they will be able to communicate new ideas, services and deals to customers much faster than competitors. 4. Information Systems Problem Definition and Objectives Whilst the new web site will improve the provision and collection of information to and from the customer the internal systems should address how to improve the speed and quality of information that flows between the sales office, workshop and their suppliers. 4.1 Information Systems Analysis The existing information systems at DHV plc may be adequate in their current form to support the existing business but are not likely to cope with the demands of the new e-Business strategy so may in part become redundant. To begin DHV plc need a Feasibility Study by a competent team to research the practical details of how DHV plc can use e-Business to achieve their objectives. With a detailed brief of functions and procedures the team should study what available technology might be available in order to establish a realistic and achievable system design. The basic principles of collecting data should start with who, how, where and what as they gather the necessary information. What new day to day things will staff be doing differently How will e-Business influence the relationships and communication flows between front and back office, customer and workshop How can customer data be collected from the web site and accessed by systems. Should the new information system interact with any of the existing technologies The study should embrace managerial issues such as the provision of accurate data to measure the performance of e-Business. As the team build the system design it needs to be set against the environment in which it will operate. Different needs might arise in a quiet showroom or a noisy workshop. How can the existing work environment cope with more terminals everywhere, and will existing health and safety policies be adequate Does the existing Company structure and decision making procedure sit comfortably in an e-Business environment Will changes be need to Company culture and politics Will the existing staff be able to cope or will they need extra training, will they willingly participate and be happy to make the necessary adjustments The team should consult with potential suppliers of services and systems to establish a number of alternative strategies and their cost implications. To establish if the new system is affordable the team should analyze the level of and return on investment. Also by using Porters Value Chain Analysis, (defined in appendices) of their primary activities and linkages can determine areas where new information systems can provide scope for strategic advantage. 4.2 Information Systems conclusions It is assumed that their basic manufacturer's parts, pricing and online new car model search engine system probably still works very well. The manufacturer might eventually develop a fancier system. However DHV plc would have to wait for the manufacturer to further develop their own software as it is peculiar to them. The manufacturer's new system development timescales may not be harmonious with DHV plc who should not have to wait to control their own destiny. Furthermore DHV plc couldn't rely on the manufacturer to add in on their behalf an appropriate e-Business, accounts, customer service, human resources and purchasing information systems. That is not their business and because DHV plc also sells other second hand car brands and parts. Installing integrated accounts, customer service, human resources and purchasing information system will speed up communications between front and back office and suppliers. It will facilitate existing staff to do more in the same time. It will also allow DHV plc to build a database of information about customers that can be used by the e-Business team to build better customer relationships and provide a wider ranging service. A detailed brief and scope of requirements will enable DHV plc management to determine what new systems are needed from external sources and what knowledge is lacking internally and the short and long term costs and benefits to the Company. Should they wish to proceed with the project appropriate service and product suppliers consulted in the data collection can then be called in to evaluate their requirements and formulate proposals. When analysing these supplier presentations, they ought to, according to the website at Stick to the Knitting (www.washingtontechnology.com) remember their primary function which is to sell, buy, service and repair cars and communicate efficiently with customers and that this new Information Technology is just a tool to do that better. They will do well to follow the principles promulgated by well known business guru F. Reichheld in his book Loyalty Rules "Keep it simple" (www.loyaltyrules.com) 4.3 Alternative Solutions One solution worthy of implementation is for DHV plc to adapt all their information systems to one used successfully by other dealerships contracted to the same manufacturer such as the system by Dealer Management Services.(www.agenterprisesinc.com) Alternatively they could develop a new system from scratch precisely tailored to their needs but this would be time consuming and extremely expensive and leave them responsible for the staff, accommodation, hardware and maintenance costs. Alternatively they could outsource the complete package to experts such as Brick Red (www.brickred.com) who is a service provider to a large number of car dealerships. The outsourcers would provide a project manager to liaise closely with DHV plc departments who would collect data for e-Business, information systems and define staff training needs. Use of e-Business in daily operations does need a specialist legal knowledge for protecting customer rights; the outsourcers would know the required and ever changing legislation. DHV plc has a new business strategy; to deliver it involves substantial time and investment learning new methods with which they are unfamiliar. Having experienced outsourcers holding their hands will help introduce the new and necessary changes more effectively without the burden of extra and expensive resources and will enable the DHV plc team to focus on what they are best at, selling cars. 5. Implementation Whatever solution DHV plc finally choose for their e-Business and Information systems solution will only be as effective as the quality of advice and information gathering, the skills of the team and the appropriateness of the solution. As it is unlikely that DHV plc currently employ such expertise they will need to find it externally. 5.1 Third Party Selection One of the sad realities of business today is that potential suppliers often exaggerate the performance of their product or service. To rely on product suppliers alone for accurate advice could therefore be foolhardy. To ensure that the best independent advice is available DHV plc should appoint an external consultant with proven experience of e-Business and information systems for car dealerships and knowledge of third party suppliers with demonstrable working systems. 5.2 Budget One of the roles of the consultant will be to develop an accurate budget based on previous installations for projects of this nature which have a tendency to overrun on timescales and costs. Even so contingencies should be allowed for unforeseen circumstances and potential variations in currency exchange. 5.3 The Project Team DHV plc should appoint a senior director to be responsible for the project and report progress to the board. The role would be to seek out the consultant and then work in collaboration to build a team of skilled staff to develop and implement all aspects of the project. Further external expertise may be needed to assist with certain facets such as health and safety, insurance, technical constraints, and planning permissions. The key element of success or failure for this project will be the quality of this team. 6. References AUTOMOTIVE FLEET MANAGEMENT Fleet Management Software Available at http://www.collectivedata.com/ Accessed 3 August 2005 BOATCAN Computer Boat Sales Available at http://www.boatcan.com/index.php Accessed 3 August 2005 BRICK RED Outsourcing for Car Dealers Available at http://www.brickred.com/resources.html Accessed 3 August 2005 BMW Car Manufacturer web site Available at http://www.bmw.com/ Accesssed 5 August 2005 BMW, Model Selector Available at http://www.bmw.co.uk/bmwuk/modelselector_flash/0,5449,1156_1484__,00.html Accessed 3 August 2005 CAR DEALERSHIP CONSULTANTS "Dealer Impact" http://www.dealerimpact.com/ Accessed 3 August 2005 CAR DEALERS DIRECTORY, Second Hand Cars website Available at http://www.matren.co.uk/car-dealers.htm Accessed 3 August 2005 CAR HOME PAGE, Finance for car purchase web site available at http://www.carhomepage.com/ Accessed 3 August 2005 CASE of De HAVILLAND VEHICLES Plc. Information management DAGENHAM MOTORS Car Dealers Available at http://www.dagenhammotors.co.uk/ Accessed 7 August 2005 DEALER MANAGEMENT SERVICES Car Dealer Management Software Available at http://www.agenterprisesinc.com/ Accessed 3 August 2005 DSNG, Vintage Car Rally Web site Available at http://www.dsng.net/2004/05/vintage-car-rally.html Accessed 3 August 2005 e-BAY MOTORS Online vehicle auctions Available at http://www.motors.ebay.com/ Accessed 7 August 2005 ENTERPRISE FLEET SERVICES Car Dealer Management Software Availabke at http://www.enterprise.com/fleets/home.do Accessed 3 August 2005 ETHICAL-LEGAL ISSUES (Powerpoint presentation) EXTREME CUSTOM BIKES Specialist Motorcycle Distributors Available at http://www.extremecustomcycles.com/Links.html Accessed 4 August 2005 FORD MOTOR COMPANY Car Manufacturer Web site Available at http://www.ford.com/en/default.htm Accessed 4 August 2005 GATES, B Business @ the Speed of Thought. E-Book available at http://www.microsoft.com/billgates/speedofthought/default.asp Accessed 4 August 2005 GET A FREE CAR QUOTE, Car Finance available at http://www.automotive.com Accessed 3 August 2005 INTERNET and BUSINESS - Powerpoint presentation INTRO to E-COMMERCE 221104 - Powerpoint presentation IS IT A LEMON Used Car History Check and Car Scams Available at www.is-it-a-lemon.com/carfax/dealer-scam.htm Accessed 3 August 2005 KELKOO CARS Second Hand Car Sales Web site http://cars.kelkoo.co.uk/b/a/c_172601_cars_accessories.html Accessed 3 August 2005 LECTURE 1 - Introduction to Information Systems LECTURE 2 - strategic Information Systems LECTURE 3 - initiation and development LECTURE 4 - Value-Source Information Systems PORTERS VALUE CHAIN ANALYSIS (1985) Competitive Advantage: Creating and Sustaining Superior Performance. Free Press New York REICHHELD F. 2005 E-Book Loyalty Rules Keep it Simple Front Page Available from http://www.loyaltyrules.com/loyaltyrules/apply_simple.html Bain & Co. Inc. Accessed 3 August 2005 STICK TO THE KNITTING, Business Consultancy Available from http://www.washingtontechnology.com/news/12_5/news/10471-1.html Accessed 3 August 2005 STRATSTONE LANDROVER, Landrover Dealer Available from http://www.stratstonelandrover.com/ Accessed 7 August 2005 TECNOMESSAGE Mobile phone technology Available from http://www.tecnomen.com (Accessed 3 August 2005) Porters Value Chain Analysis (Source, Lecture 2, Strategic Information Systems) Is an analytical framework for considering key activities within an organisation and how they add value at each stage of activity. It evaluates each aspect of primary and support activities in the supply chain. Primary activities contribute to delivering goods/services directly to the customer such as Inbound and Outbound logistics, Operations, Sales and Marketing and Service. Support activities provide the infrastructure that facilitates the execution of the primary activities. They include Corporate Infrastructure, Human Resource Management, Technological Development and Procurement. Read More

 

Read More