Page 675 - Business Principles and Management

C HAPTER 24 A SSESSMENT

CASE 24-2: Changing a Business Image
This Car’s-4-U is a used-auto dealership owned by Fred Anderson and
Julia Parente as a partnership. They recognize that many people are wary
of used-car dealers, believing the dealership and salespeople are dishon-
est and will do anything to make a sale. The view of many is that used
cars are a risk because the customer doesn’t know the vehicle’s history
and the dealership will not disclose any known defects or problems.
Then the customer may end up stuck with a vehicle that brings nothing
but headaches and repair expenses.
Fred and Julia are determined to change the image of their dealership.
They want customers to feel good about the purchases they make and return
to the dealership for service and future purchases. They have developed a
used-car business that is more like the new-car dealerships customers are
used to. They have a modern facility with a large showroom and a well-
lighted lot to display their used cars. They have established an up-to-date
service center to take care of the cars they sell, with highly qualified techni-
cians using the latest technology.
The final area of concern is the sales process. They are aware that
most auto dealerships pay salespeople commissions on sales volume.
They know that many customers view salespeople negatively, expecting
them to use high-pressure tactics to make a sale. Fred and Julia do not
want customers dissatisfied because of the actions of their salespeople.
However, they also know that they need sales to make a profit, so the
salespeople must be able to convince prospective customers to buy the
used cars. They are willing to hire the best people and offer them the
necessary training. But they also believe the compensation system may
be part of the solution.
The partners are considering several compensation options: (a) an
attractive hourly wage, with hours assigned to each salesperson based
on his or her sales history; (b) a small weekly salary and a reasonable
commission based on the number of cars sold; (c) an attractive salary
that is not tied to sales but a careful, regular performance review by
the sales manager to determine the effectiveness of the sales and cus-
tomer service skills of the salesperson; or (d) a combination plan of a
reasonable monthly salary, a small commission on each car sold, and
a bonus based on the satisfaction level of customers after they have
purchased a car.

THINK CRITICALLY
1. Do you believe the changes the partners have already implemented
for their dealership will result in a different image for their business?
Why or why not?
2. What are the advantages and disadvantages of each compensation
option in meeting the partners’ goals for a different image for the
business and for a profitable business?
3. How do you believe each option will be viewed by the company’s
salespeople?
4. Which compensation plan would you recommend the partners
adopt? Why?

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