1. Using the information provided, prepare the report that David Bennet requested, assuming that the project will begin immediately. Assume 45days are available to complete the project, including transporting the car to Detroit before the auto show begins. Your report should briefly discuss the aspects of the proposed new business, such as the competitive priorities that Bennett asked about.

a. Assessment of new business i. Attract new customers
BASS’s current business consist of three car dealership that sell and service several makes od American and Japanese cars, two autopart stores, one large body shop and car painting business and one auto salvage yard. The decision to expand into vintage car restoration business, a new market segmentation will attract new groups of customers and will strengthen BASS’s car empire.

ii. Demand
As we noted about the public’s going interest in restoration of vintage automobiles, it’s an opportunity for us to expand into this market which has a future potential. Among the people who own vintage car or planning on purchasing a vintage car, many of them want to restore their cars but don’t have time to do so, some want to own a vintage car, and many of them have money to pay to restore car. Usually vintage car collectors are rich people who are willing to spend a lot of money to purchase a vintage car or restore their car.

iii. Promotion strategy
Using the first Mustang restored by BASS as an exhibit in sales and advertising and take it to auto shows to attract business for the new shop is a great promotion strategy. Our very first product show potential customers quality of our service and what we are capable to do.

iv. Types of services provided
Our new business is going to provide three types of restoration service, the first one is the basic restoration, making car looks good and running, the second type is restoring the car to mint condition, and the third type is customizing the car following customer’s preferences. By providing different kind of service, we give customer several options to choose from, which is an attractive service since customer would want their car to be unique.

b. Competitive priorities of new business i. Cost
The cost of restoring vintage car is quite high especially in cost of auto parts. There are two ways to get auto parts for car restoration. The first type is New Old Stock, which is new parts manufactured years ago that is still packaged in its’ original carton. This kind of parts is not easy to obtain as New Old Stock is not produced in large quantities and parts of certain vintage car are no longer exist.

The second type is machine new parts to replicate those that are hard to find or no longer exist. This option is rather costly because BASS has to purchase a new machine to make those parts. BASS would need to produce customized parts in small quantity as different brand of car need different types of parts. So, producing standardized products in large quantity to lower cost structure is not an option for BASS. But, if BASS could increase sales by providing quality products and satisfying customer needs, we could still lower the cost structure and increase our profit margin because we achieved economies of scale by spreading fixed cost over large amount of output.

Another way to get auto parts is to purchase second hand auto parts. Second hand auto parts are cheaper compared to machining new parts but the quality could be compromised. Some customers might not want their vintage car turning into “used car”.

We could also choose to outsource manufacturing of auto parts to outside supplier. Outsourcing could lower the cost for auto parts but it is recommended that we do break-even analysis before making any decision.

Besides cost of raw materials, labor cost will be increased as we need to hire skilled labor who knows a lot about vintage car to do the restoration, especially if we want to restore it to mint condition. This is a niche market so it will be costly to hire the expertise in vintage car.

The process of vintage car restoration is job shop because we need to produce customized product at low quantity. This will increase labor cost as restoration process has to be done by hand. We can’t use machine because machines found on the market are only designed to assemble modern cars, there’s no machine to assemble vintage car.

So, it is not recommended to choose cost as competitive priorities as vintage cars are expensive to restore.

ii. Quality
Vintage car is a sophisticated item. Owner or collector of vintage car are usually very rich and are willing to spend a large sum of money to purchase or restore their cars.

Thus, quality is a competitive priority we could focus on. Raw materials used should be of certain quality, so, if we want to use quality materials, we have to sacrifice cost. High quality auto parts are high in cost than used or second hand parts.

We provide service to restore vintage car to mint condition. To make this possible, apart from high quality parts, we should also employ highly-skilled workers to do the car restoration to ensure that the car wouldn’t be damaged during the restoration process. If anything happens to the car during restoration process, any amount of money we compensate our clients wouldn’t be enough. So, skilled workers should be able to carry their jobs carefully. Creative workers are also important to provide customers with different types of customization ideas they can do to their cars.

By providing a high quality vintage car restoration service, the car we restored won’t break down frequently and will have a longer life. This is more valuable to our customers than just restoring the exterior of the car.

Thus, I recommend that we focus on quality as one of our competitive priorities.

iii. Customer service
Providing good customer service is a great way to retain customers. Our vintage car restoration business is a service business that requires high contact with customers. So, we should train our employees to treat customers well and provide them with professional advice regarding their car restoration and customization.

Providing after-sale service such as giving warranty for restored cars, free car servicing within a few months after car restoration, giving discount for restoration of second car or giving voucher for car wash is also an option. It shows customers that we do care about their needs, not only their money.

iv. Flexibility
We let our customer choose the degree to which restoration is done. They could choose to do basic restoration or restore the car to mint condition or customize the car following their preferences.

We could also provide more options in customization of car. For example, adding new components such as stereo in modern car into vintage car. The combination of classic and modern might be a hit. We could also get the parts from different countries if the customer wants the best components for his/her car.

Speed is also a choice of flexibility. There are few ways to increase the speed. We could try to cut down the time of delivery from suppliers to end customers. We could negotiate with suppliers to cut down the time of delivery. We could also purchase more machines to manufacture auto parts or hire more skilled workers to increase efficiency.

By choosing flexibility as one of the competitive priorities, we are also sacrificing cost as competitive priorities. As a conclusion, we should focus and quality and flexibility as competitive priorities. If we are capable, we could also focus on customer service.

c. How this business fit with other business?
BASS current business consist of three car dealership that sell and service several makes of American and Japanese cars, two auto part stores, one large body shop and car painting business and one auto salvage yard.
We could promote our new business to our current customers we’ve known from car dealership. Some of our old customers might be interested in vintage car restoration. We could use the reputation of our current business to attract customers.
Instead of buying new machines or outsourcing to outside suppliers, we could use machines in our auto part stores to manufacture parts. By doing internal outsourcing, high fixed cost of purchasing new machines could be reduced. We could also reduce cost structure by using our own body shop and car painting to restore vintage car. If second hand part is required, we could try to find it from our salvage yard.
As BASS owns a car empire, we own plenty of resources we could use in new business.