Everyone wants to become the best dealership in terms of retail numbers; while the dealership business serves a bigger gamut of operations.
Let us see how to become a great dealership in all parameters - How a Good dealership can become Great dealership for customers, employees & the transition is highlighted in the following article.
Let us understand with illustration for the better understanding
BAML – Best Auto Motors Limited – OEM Passenger Car
Excel Auto Dealer Pvt Ltd (EAD) – Top performing Dealership
Mr.Prasad – Owner & CEO of EAD
Excel Auto Dealer Pvt Ltd (EAD) is one of the top five dealerships of BAML in the passenger vehicle business. It has been performing very well in all three segments of the Passenger Vehicle Business of BAML. it grew at an impressive rate during the last 6 years by exploring and executing all the avenues of revenues. Simultaneously it kept on investing profits in its expansion. Today it operates five districts through 19 branches. Six of these are 3S facilities.
EAD enjoys the highest employee productivity in terms of “revenue per employee”. Its workshop productivity (i.e. services done per bay per day) is also the best in its region. The workforce is a balanced mix of experienced senior executives and talented young executives. The overall organizational culture is very good as it has been built up around the traditional concept of “Family bondage”. Its employees have been working on “stretched targets” for the last 4 years. They are also paid at the best rate in the industry and the region.
Mr.Prasad the Owner / CEO is a visionary leader who brought up EAD to today’s size and glory. The top management of BAML takes pride in calling him the most professional and progressive leader. Mr.Prasad believes in operational and financial transparency. His dealership is one of the best illustrations of corporate governance. He is a fast learner, picked up the growth strategies of his rivals in the industry, and established higher benchmarks of both operational and financial performance.
In a recent “in-house rating exercise”, EAD was rated by BAML (on the scale of “0 to 5”) as follows -
The overall score of 21 out of 25 (i.e. 84%) is quite impressive compared to other dealers of BAML & competition. Especially, the parameters, business growth, and strength of the balance sheet put EAD in a very formidable position. In other words, EAD is excellently poised to excel further on both the prime business performance parameters – operational and financial.
With the competition heating up, in PV sector, recently BAML’s market share reduced. Although it has been regularly introducing new variants of its vehicles, BAML is facing the problem of a “stagnated rate of growth” on account of overall economic depression in the country. Some of the operational issues faced by BAML have also been impacting the performance of its dealers. These operational issues are to be viewed and resolved strategically. Product quality, delivery, and variety are the factors to be addressed on a priority basis. Inventory and retention of margin are also very important issues the dealers are facing. EAD knows very well that it has to sustain its growth rate and also looks forward to BAML to resolve the problems impacting the very sustainability.
EAD, despite its impressive performance, is not very satisfied with the excellence it attained, it views some of its organizational and strategic competencies to be inadequate. These may be narrated as follows –
Mr.Prasad holds the opinion that most of the entrepreneurial vision is concentrated in him. This vision should be institutionalized. Growth during the coming decade would be possible if his colleagues demonstrate “strategic leadership”. This requires an overall change in the present mindset of his top executives who are very loyal and hardworking but not so strategic in their business approach. EAD’s present “Performance Management System (PMS) will have to be geared up to create a scope for entrepreneurial performance at all the levels of the organization.
BAML is a big brand and EAD too is a much-respected brand in its region. But Mr.Prasad thinks that the EAD brand is now poised for a global performance on the greater benchmark. With the entry of many global players in the passenger vehicle segment, BAML & EAD shall be exposed to the global benchmark. EAD’s present greatness will be tested against these bigger benchmarks. Mr.Prasad is now in a hurry to get ready to work on newer challenges. A further “leap” will depend on how fast Mr.Prasad & his colleagues attain new competencies, change organizational gear, and a built-up a new system of entrepreneurial adventurism.
Great leadership is always assessed on the three categories of parameters viz. strategic, operational, and financial. Sustainability is assured if a leadership develops a strategic plan based on long-term objectives. It also depends on a dynamic business model and flexible organic structure. It requires constant efforts of innovation to improve present competitive advantage. The “EAD” brand will have to be strengthened further for the strategic advantage of cost of fund, better and wider customer loyalty, talent recognition, and satisfaction for all the stakeholders.
Mr. Prasad will have to also define and establish a robust PMS based on versatile entrepreneurial parameters. The segmental performance will have to be viewed with a “Profit Centre Approach” and ultimately to be assessed with an “Investment Centre Approach” Strategic leadership will have to be built up with a higher degree of empowerment. In other words, the “employee competence” will have to move upward as follows –
BAML presently uses the mechanism of the “Balance Score Card”. EAD may have to move a step further and use the “Entrepreneurial Score Card”. EAD can implement the business initiative proposed by its principal. But it can be more ambitious and use an innovatively carved out path to reach the status of a great dealership. Obviously, Mr.Prasad and his colleagues will have to first define a “Great Dealership”!
(The article is written by Mr. A Rahman. He is an Analyst, Researcher & Consultant in the Automobile Industry. He is a Multi phased professional living, studying & working in the auto environment for 20 Yrs & Co-Founder of Satiate Consulting Pvt Ltd.)