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Form: SSC-115-07-06
UNIT
CODE:
NAME OF STUDENT (PRINT CLEARLY)
BES11200
BUSINESS KNOWLEDGE
DEVELOPMENT
TITLE:
STUDENT ID. NO.
STRAWBRIDGE
AMBER
1032 7335
THOMPSON
MONIQUE
1033 2717
ROBERTS
NICHOLAS
1032 7865
CAO
RUI
1029 3068
FAMILY NAME
FIRST NAME
NAME OF LECTURER (PRINT CLEARLY)
DUE DATE
ANGELA BEVILACQUA
23/10/2013
Topic of assignment
SEAVIEW NISSAN
Group or tutorial (if applicable)
THURSDAY 8:30AM
Course
Campus
G95
JO
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Date
23/10/2013
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Name: Amber Strawbridge
Monique Thompson
Nicholas Roberts
Rui Cao
Date: 23/10/2013
Signature: X
Seaview Nissan Report
Task 1: Brain-storm, mind-map and give an overview of new business
1. The team’s prospective new business
What is the Business?
The business is an expansion from Nissan in Wangara to the Clarkson area. It will be called Seaview
Nissan. This will be a smaller car yard that will be located within the Clarkson area. The business will
be aimed at small to medium sized business, offering a relatively low finance rate on vehicles for
business that are looking to purchase new or used vehicles. The business is also aimed at customer
within and close to the Clarkson area, who want to get a good deal on finance for a new or used car,
but do not want to travel all the way to Wangara to see a Nissan dealer close to their area.
With our primary target market being small to medium business owners, we seek to open our office
from 09:00 to 17:00, Monday to Friday and will be remaining closed public holidays. Any enquiries
outside these hours will be diverted to our head office in the Wanneroo Area, which will be handled
directly by the Wanneroo service managers and handed over to us in due course for follow up.
Staffing
In terms of staffing, our full time, regular employees will consist of a finance manager, a human
resource manager and an advisor. Our part time employees will consist of a default manager. In
order to cope with busy periods of the business financial year we plan to employ trainees. Not only
will this benefit our company with cost reductions but it will also provide our trainees with a unique
business experience where they are free to work and grow in an environment which will give them
key employability skills within the workforce.
2. The business’ target market
Who is the Target Market?
The target market consists of small to medium sized business in and around the Clarkson area.
Customers within and around the Clarkson area who are looking for a Nissan dealership but don’t
want to travel as far Wangara or North or South of the River are also included in this target market.
The aim of this target market is to enhance the client base for this small Dealership as well as for the
larger partner dealership in Wangara. The economic status of these customers will be of medium to
high economic status as we are looking mostly at businesses purchasing vehicles. Looking at the
Clarkson area it is quite an expensive housing area so we would expect the economic status to be of
medium to high level. The target market includes customers looking at new and used vehicles.
3. Mind map of the business
4. Potential competition for your business
Potential Competition



Commercial car yards
With over 60 automotive brands in the Australian market we realise the need to beat/match
our competitors. In doing so, we have identified our top 5 competitors to be Toyota, Holden,
Mazda, Hyundai and Ford. From the following graphs we can see that our two strongest
competitors (Toyota and Holden) appear to be getting stronger every year through the
increase of new car sales. However, Mazda, Ford and Hyundai seem to have irregular
increases and decreases in their sales throughout the year which can be due to a number of
environmental factors.
We have learnt that it hasn’t always been an easy road for our competitors and that it takes
a rather long period of time to build credibility within the market place, especially within the
global market. In order to gain sales and compete with our competitors we must appeal to
what the customers want and so with our innovative customer service focus we will be able
to listen to what our customer’s desire. Whilst many of our competitors offer similar services
we aim to differentiate ourselves through our customer service and flexible financing
opportunities as mentioned earlier.
Task 2: Undertake a SWOT analysis of your new business
A SWOT analysis of the business idea has been undertaken and the results are listed below under
each of the SWOT headings.
Strengths:
The strengths of this business are that we have the Nissan name, which is a well recognised name
and we are backed by AHG. We are customer focused and our business is aimed at small to medium
businesses as well as any customers within the Clarkson area. We have full cover of warranties on
cars purchased to cover any repairs as well as having a service and parts department.
Weaknesses:
The weaknesses of this business are that we will be without a building until AHG locate one in
Clarkson. This business can be considered high risk as there are other car dealerships within the
Clarkson area, however in saying that in the area of Clarkson that we will be based there are only 4
dealerships to worry about. Our marketing costs will be quite high within the first year as we are
trying to get our name out that we are in the Clarkson area, however there are strategies we have
come up with that will be mentioned later on in this section of the SWOT analysis.
Opportunity:
This business has many opportunities, one is that it is an expansion in which case we will have an
existing customer base for customers that live in Clarkson but have come to Wangara and we
already have the financing opportunities to operate and sell cars. We have the opportunity to
expand to interstate branches and companies, as well as a large product category of Nissans.
Threats:
Opening up any business has its threats, to a car dealership one of the biggest threats aside from
competitors is people with unstable credit ratings. Unstable credit ratings mean that we may not be
able to sell cars to customers if there is the risk that they cannot repay the money; however this is
where contracts come in to play. Competitors will be a threat especially if they have been
established in Clarkson for a long period of time, however we have strategies to overcome this
threat, particularly with the Nissan name behind us and having an existing customer base of
customers that have previously come to Wangara but they live in Clarkson.
Overcoming these weaknesses and threats:
Competitors
As previously mentioned one of our threats would be our competitors. To overcome this we will
have to establish our name. We do have an existing customer base of customers that live in Clarkson
that have come to Wangara. This will be more convenient for Clarkson customers having a Nissan
dealership in their area.
Building front
Covering the weakness of the building, AHG are the ones who will locate the building for lease or
purchase and we will have their backing for the credit rating and lease.
Customers
Being an expansion we will have some customers from Wangara that live in the Clarkson area that
will come to the Clarkson dealership as it is closer to where they live. From here our existing
customers will spread word of mouth to other people in the Clarkson area, these being businesses
and other customers. Along with advertising, this is how we will gain customers and bring more
customers into our business rather than other dealerships.
How to decrease our marketing costs?
In terms of marketing costs it will be hard to decrease these costs as advertising the business is vital.
When first opening the advertising costs will be quite high due to the number of advertisements that
will be used to promote the grand opening. For every year after the marketing costs could decrease
slightly due to only running specific sales during specific times of the year, such as end of financial
year and birthdays. To try and decrease costs we could prepay the advertisements for so many
months or even years in advance. Of course we would pay more in the year that we decide to prepay
the advertising but over the years where the advertising has been prepaid we have cut that cost
from the budget.
People with unstable credit ratings
In terms of dealing with this issue, this one is quite simple to solve. The finance manager will get in
touch with the bank and obtain a record of the customer’s credit history. If the customer has bad
debts or unstable credit ratings, the manager will from there send an application to the finance
company. If the finance application is rejected the customer will not be able to obtain a car through
finance.
Task 3: Summary of revenue and costs items for your new business
Investors
Seaview Nissan is a well-structured company that is self-funded from a small group of investors. The
management team is working at the store to reduce agency costs in the short term eventually
stepping back into part time roles where needed to save unnecessary staffing costs. Trainees will be
employed on a permanent-part time basis and possibly a casual to ensure smooth running of
business.
The staff that will be employed will be full time, part time and some casual. The listing of full time
staff will be;
-
Dealer principle
Financial controller
Finance department manager
Human resource manager
The part time employees will include;
-
Default agent
Casual staff will include trainees that will be hired to cover for the busy seasons.
We have begun with a substantial injection of private capital from our team. As we have no cost of
loans and can use the capital already contributed to keep business running correctly.
We are looking for potential partners in the long term to possibly replace the need for part-time
staff further reducing agency costs.
Initial Outlay
After capital introduction our team conducted a net present value analysis into the viability of
buying verses leasing for our dealership venue. Due to the available capital a buy decision was made,
this allows us to have more control over fixed costs in the long run.
Once this decision was made tangible purchases were made; this includes:
-
Our first cars from Nissan
-
Our dealership furnishings for customer comfort
Office fittings such as computers, telephones, printers and general office supplies needed to
do business.
Furthermore continual purchasing of equipment will be organised on a fixed cost basis while
unexpected damages or faults will be accounted for in variable costs.
The next phase of setup included our intangibles. These include our:
-
Business licenses
-
Dealership license
-
Utility set up costs as a business
Insurance costs for our business to limit risk of investment and to protect from unseen
circumstances
Once this is completed we will seek professional assistance from a law professional to draft our
business’ sales and lease agreements along with potential contracts and future business solution
options to show clients before a customized option is created for them.
Costs
Fixed
All businesses incur fixed costs, fortunately fixed costs for our business can be easily organised and
minimized through contracts for yearly terms.
Insurance will be the first cost paid at a fixed rate monthly rate. As previously mentioned this serves
to minimize risk and is an important and necessary cost for business in Australia.
As business is able to come by fixed contracts easier than consumers we have structured our utilities
(water, phone line and electricity) to be paid at a fixed rate also. Further costs will be accounted for
by us in variable costs.
Seaview Nissan operates in a business environment so we must abide by the corporate tax rate. This
is set at 30% as of time of writing and may change given the government change but should not
affect our viability in the long run.
Staff wages will be a large expense. We plan to pay our staff on a salary/ commission base, therefor
our wages cost is a fixed cost. Commissions are a variable cost shown later.
As a franchise company Seaview Nissan must pay royalties to our parent company (AHG) this may
vary between 2-10%. This will be offset given our differentiation by providing small- medium
business solutions, a service which is not as prevalent as consumer car dealerships.
Magazine and newspapers shall be made available to our customers as small touches can make all
the difference and built rapport showing our potential clients way pay attention to business. A fixed
yearly subscription cost is set aside for this as well as a water cooler will be provided as to avoid an
un pleasant experience for our (potential) clients.
Variable
Commissions paid out to staff are a built into our cost of business as to not affect profitability.
In the event of very good business outcomes we will have to pay additional tax on our income, this is
a variable cost in the sense that we are unable to foresee this beyond budget measures.
Additional cars to sell and additional office supplies fall into the variable cost section. Given that a
need for extra inventory shows heightened success this will not be a draw back for us and given we
operate within budget these costs will not be raised in the short run.
As we must lease cars we show in our show room we need to account for this cost, this cost will be
mainly paid from using start-up capital and will be paid on a fixed/variable basis so is shown in the
section.
Any business that that offers guarantees must honour them so a cost of our business will be to cover
our warranties and service agreements. This will be a substantial cost for us if we do not manage our
product correctly, best care is always taken and insurances and major faults will be forwarded to our
supplier as we lease the product up until time of purchase.
Lastly AHG well send us promotional packs and cover 50% of our advertising costs. This cost aside as
we cannot structure our own promotions with freedom the cost of discounts and other negative (for
our bottom line) outcomes will be accounted for as cost of advertising outcome. This is majorly a
variable cost as this cost will vary from dealership to dealership.
Revenue
Nissan (AHG) our parent company will offer cars to us at varying prices. We will have a substantial
basic selection of the most sought after cars on the market as well as some cars that we are able to
sell to increase revenue. As a business we shall serve as a non-Nissan brand car brokerage buying
cars from cheap auctions and on selling them on the request of a customer. This allows us to have a
customer centric approach with this process being completed once the customer shows
commitment in writing forming a contract to avoid unnecessary purchases.
A small part of our incoming cash flows will be from optional extras and the mark-ups we will charge.
We will also offer quotes for repairs at a low price for our customers as a potential product if we hire
a part time mechanic in the future.
Our primary revenue will stem from the solutions we provide to small and medium business. On
being approached by a potential client we can provide some example of past solutions and ideas
with the client to help them with our process. Our revenue will come from mark-ups in the interest
rate charged as well as premium services and our time given to the client based on their needs.
A general mark-up on our financing will apply to compensate us for our business as well as general
sales made to all customers.
Extended warranties are offered as they make money for us with premiums usually outweighing
potential costs for fixing cars etc.
Insurance products are offered and will briefly be discussed.
Credit insurance can be issued to protect the customer from not being able to make
payments
-
Disability insurance is offered to customers in the event of medium- long term disability
GAP insurance is offered to customers to cover the large lump cost outstanding against the
car in the event of extreme damage or total destruction of the car
All of our insurance products will be factored out to our parent company to free our capital reserves
and avoid lack of liquidity.
Task 4: Design a promotional campaign to attract prospective customers
To promote the business we have come up with a promotional campaign. This campaign includes
the materials and mediums used, what the costs will be and the timing of the campaign. We are also
going to include a basic marketing strategy for the business.
Materials
The materials chosen to promote the business are sales such as a grand opening sale to begin with
to attract customers to the business. This sale will entail a low finance rate on vehicles. Other sales
will include end of financial year sales, birthday sales and sales with low finance rates on certain
vehicles. The mediums that we will use will be television, radio, a website, newspaper
advertisements and a promotional package.
Within the promotional package we will include brochures on certain new vehicles that have just
been released on the Nissan market, sale promotions, fact sheets/ spec sheets, business cards, some
price listings as we want people to come in and enquire about pricing on vehicles. It will also include
information on finance, warranty and insurance.
Costs
The costs that will be involved in this campaign will be the costs of the advertising such as the
promotional package, the mediums used to promote the business and what the sale promotions will
cost the business, such as the grand opening sale and discounting cars or having a low finance rate.
Timing
The timing of this promotional campaign will be around the end of financial year time, when
businesses and customers have done their tax returns and have money to invest on a new vehicle
whilst we advertise vehicles for purchase at a low finance rate. For businesses this is time for them
to update one or more vehicles if they wish to, to enhance their business. For example a tradesmen
needing a new utility vehicle would invest in a new Navara for the room for all of his tools which
would enhance his business by making it easier for him to take his tools to jobs and drive an
attractive new car to catch customers eyes if they see him out on the street.
Task 5: Re-assess the viability of your business and make any necessary
adjustments
Comment
SWOT
Give greater evidence
of viability.
Lack of experienced
trainees.
Train them during off
peak seasons.
Incorporate the use of
charities (cancer
council) into our
Promotional
campaigns.
Mechanical expansion.
AHG
Mitigation
Opportunity.
Weakness.
Action Taken
Sales research of
Nissan.
Commence earlier
training
Rationale for Chosen
Action
To further prove
financial viability.
Will increase and
effectiveness of staff
efficiency
Opportunity.
No action
Franchise legalities.
Opportunity.
Threat.
Opportunity
NPV
Brain storm ideas to
minimise weaknesses
& threats
Finance 6-12months
Strengthen viability of
business
Task 6: Undertake a quantitative analysis to support the viability of your new
business
1. A clear outline of who the target market is
The business’ target market is initially small to medium sized business in and around the
Clarkson area. We have expanded this to include any customers within and around the
Clarkson area who are looking for a Nissan dealership but don’t want to travel as far
Wangara or North or South of the River. The aim of this target market is to enhance the
client base for this small Dealership as well as for the larger partner dealership in
Wangara. The economic status of these customers will be of medium to high economic
status as we are looking mostly at businesses purchasing vehicles. Looking at the
Clarkson area it is quite an expensive housing area so we would expect the economic
status to be of medium to high level. The target market includes customers looking at
new and used vehicles.
2. Retrieve data from at least 2 secondary data sources
i.
Presence of your target market
A census conducted in 2006 and recorded by the Australian Bureau of Statistics on small business
operations, showed that 87% of business operators were in a family run business, and just over half
(54%) had dependants. In addition to this, 39% of business operators indicated they had spent time
caring for a child/children without being paid. These statistics highlight the need for a flexible-low
cost financing option for the working class citizens of Australia.
Through our research we were able to identify nine industries that residents in Clarkson operated
within that would be most likely to require the use of company and private vehicles, they are as
follows:
- Manufacturing (7.4%)
- Electricity, gas, water and waste services (1.2%)
- Construction (13.6%)
- Wholesale trade (3.4%)
- Transport, postal and warehousing (3.5%)
-Financial and insurance services (3.4%)
- Rental, hiring and real estate (1.5%)
- Administration and Support services (4.4%)
- Public and administration safety (6.1%)
In addition, the findings from the 2006 census have shown that business operators are likely to:
- Run a small business (96%)
- Employ between 1-19 staff (55%)
- Be educated to year 12 or the equivalent (49%)
- Have training in engineering (24%)
- Have training in management and commerce (17%)
- Have training in architecture and building (17%)
- Earn $799 per week or less (52%)
- Born in Australia (73%)
ii.
Adequate demand for your proposed product/ service
In a national regional profile the following statistics concerning the Clarkson Area were retrieved
from the Australian Bureau of Statistics website:
Registered Motor Vehicles (March 31, 2011):
Rate per 1000 population
- Passenger vehicles (501)
- Campervans (2)
- Light commercial vehicles (86)
- Light rigid trucks (2)
- Heavy rigid trucks (5)
- Articulated trucks (1)
- Non-freight carrying trucks (0)
- Buses (2)
- Motorcycles (36)
Occupation of Employed Persons (2011):
- Managers (8.6%)
- Professionals (14.3%)
- Technicians and Trade Workers (20.2%)
- Community and Personal Service Workers (11.3%)
- Clerical and Administrative Workers (14.3%)
- Sales Workers (10.5%)
- Machinery Operators and Drivers (7.2%)
- Labourers (12.1%)
Method of Travel to Work:
- Train/Tram (473)
- Bus (82)
- Car (3566)
- Motorbike/Scooter (29)
- Bicycle (15)
- Other (101)
- Walked (174)
3. Add visual displays using XL
Australian Business Operators,
2006-2007
Operated with the
family
Have dependants
Caring for a
child/children with no
pay
Figure 1
Employed by Industry (Clarkson),
March 2011
Public Administration and Safety
Rental, Hiring and Real Estate
Transport, Postal and Warehousing
Construction
Manufacturing
0
Figure 2
2
4
6
8
10 12 14 16
Figure 3
Registered Motor Vehicles
(Clarkson), March 2011
Motorcycles
Non-freight Carrying Trucks
Heavy Rigid Trucks
Light Commercial Vehicles
Passenger Vehicles
0
Figure 4
Figure 5
100
200
300
400
500
600
Method of Travel to Work
(Clarkson), March 2011
Walked
Other
Bicylce
Motorbike/Scooter
Car
Bus
Train/Tram
0
500 1000 1500 2000 2500 3000 3500 4000
Figure 6
4. Analyse data using Quantitative techniques used in class
Minimum
Mean
Median
Mode
Range
Maximum
Figure 1
39
60
54
48
87
Figure 2
1.2
2.73
3.5
12.4
13.6
Figure 3
17
51.29
52
17
79
96
Figure 4
0
70.56
2
501
501
Figure 5
7.2
12.31
11.7
14.3
13
20.2
Figure 6
15
634.29
101
3551
3566
5. Interpret and explain your findings
Data from Figure 1 shows that a high percentage of Australia’s population, run or work
within a business in which they heavily rely upon to support their families. This aspect, along
with many others, highlights the need and want of providing flexible-low cost financing
options to our customers. We believe our flexibility will attract a high degree of customers
which will help counteract for any initial loss in lowering our prices against our competitors.
From the recorded data shown in Figure 2, we selected industries in which we believed
would have a higher need of transportation within their industry. From our results we
concluded that the highest demand was situated within the construction and manufacturing
industries followed closely by public administration and support with the highest percentage
of 13.6% and 7.4% respectively. This highlighted the need to target our marketing strategy
to these industries.
Figures 4 and 6 demonstrate the demand for passenger and light commercial vehicles within
the Clarkson area. With a total of 587 passenger and light commercial vehicles registered
within the Clarkson area and a total of 3566 persons travelling to work via car, the demand
for a commercial dealership within Clarkson is sufficient enough for us to open a Nissan
expansion dealership.
Team Meeting Log
Date
In Attendance
29/08/2013
All
05/09/2013
Amber, Nic and
Rui
12/09/2013
19/09/2013
All
All
26/09/2013
Monique,
Amber and Rui
03/10/2013
All
What (needs
doing)
Brainstorm and
mind map.
SWOT
Who (will do
it)
Everyone
When (will it
be done)
05/09/2013
Comments
Everyone
26/09/2013
Group to think
about SWOT
idea further
and give
thought to
revenue
summary and
promotional
campaign.
Task 3 & 4
Preparation,
reinforcement
and fine tuning
of progress.
Presentation.
Everyone
Everyone
26/09/2013
Prior to
presentation
on the 26/09
Everyone
On the day.
Nic’s
Presentation.
Everyone
On the day.
Everyone
10/10/2013
1 – Amber
2 – Monique
3 – Rui
4 – Amber/Nic
5 – Rui/Nic
Monique
17/10/2013
General work
on Task 1-4.
04/10/2013
Rui, Nic and
Monique
Discuss where
we are at.
Task
delegations of
Task 6 and
Final.
Presentation of
the project.
Research/Plan
website
layouts.
10/10/2013
All
17/10/2013
All
Critical
evaluation of
viability.
Task 6
delegation
Website, finish
task 6.
Due Date
References
8175.0 – Counts of Australian Business Operators, 2006 to 2007. [2008]. Retrieved from the
Australian Bureau of Statistics website:
http://www.abs.gov.au/ausstats/abs@.nsf/Latestproducts/8175.0Media%20Release12006%20to%2
02007?opendocument&tabname=Summary&prodno=8175.0&issue=2006%20to%202007&num=&vi
ew=
National Regional Profile: Clarkson (Statistical Area Level 2). [2013]. Retrieved from the Australian
Bureau of Statistics website:
http://www.abs.gov.au/AUSSTATS/abs@nrp.nsf/Latestproducts/505031101Industry120072011?opendocument&tabname=Summary&prodno=505031101&issue=2007-2011