CASE 24-2: Changing a Business Image This Carâ€™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 dishonest and will do anything to make a sale. The view of many is that used cars are a risk because the customer doesnâ€™t know the vehicleâ€™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 welllighted 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 technicians 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 customer 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 partnersâ€™ 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 companyâ€™s salespeople? 4. Which compensation plan would you recommend the partners adopt? Why?