MAN120 New Enterprise: Auckland Used Car Company Case Study Analysis

This case study analyzes the Auckland Used Car Company, a small business in Auckland, New Zealand, focusing on its innovative approach to the used car market. The report explores various aspects of the company, including its creative business model of renovating and modifying used cars to me...Read More

Running Head: NEW ENTERPRISE & SMALL BUSINESS DEVELOPMENT 1
New Enterprise & Small Business Development
Student Details
4/30/2019

New Enterprise & Small Business Development 2
Contents
Introduction......................................................................................................................................3
Auckland Used Car Company Profile..........................................................................................3
Creativity, Innovation & Entrepreneurship.....................................................................................3
External Analysis, Vision & Mission and Strategy.........................................................................7
Business Model................................................................................................................................8
Design of the business model.......................................................................................................9
Legal Issues.....................................................................................................................................9
Marketing:......................................................................................................................................11
Strategic Growth:...........................................................................................................................11
Conclusion:....................................................................................................................................13
References......................................................................................................................................14

New Enterprise & Small Business Development 3
Introduction
Auckland Used Car Company Profile
Auckland used car company is a small business established in Auckland, New Zealand and
consists of maximum of 20 employees. It employs five people in Auckland. Last year turnover of
the company was around $2 million. Due to small turnover and very few number of employees
in the company makes it fall into the category of small businesses in Auckland, New Zealand.
This report discusses about the role of innovation in establishment and development of the
company. This report includes various aspects of Auckland Used Car Company which include
creativity, innovation and entrepreneurship, vision, mission, external analysis, strategy, legal
issues, business model, marketing, finances, HRM and operational issues, and strategic growth.
Creativity, Innovation & Entrepreneurship
Auckland Used Car Company introduced a new and creative idea behind its establishment. This
company uses old cars and renovate those cars and change the outer parts of the cars and upgrade
and modify engines of these cars according to the customers’ needs and requirements. This idea
of the company seems very attractive to the customers as they found it helpful in finding solution
of various problems of their cars under one roof and do not have to go different places for
different issues of the cars. Along with this company provides special and attractive discounts to
the people who buy cars from them, creating customer value with their services.

New Enterprise & Small Business Development 4
Idea Generation: Auckland Used Car Company started this business because of two reasons or
one can say that there are two things which motivated the organization’s owner to choose this
concept for starting their venture. These two ideas include: first is because there are almost no
competitor of the company as no other dealer is working on this concept, and the second thing
which motivated this concept is love of youngsters for speedy and sports cars. Youngsters in
Auckland are crazy for sports cars but it is not possible for most of them to buy such expensive
car. Hence, Auckland Used Car Company utilized these two opportunities and decided to convert
normal cars into to look like sports cars. It attracted huge customers as they start getting what
they want and that is also at reasonable price. Auckland Used Car Company is also using social
media effectively to market its products among customers or to reach out to customers.

New Enterprise & Small Business Development 5
Turning the Idea to an Opportunity to an Entrepreneurial Venture: The idea of converting
the normal and damaged cars into refurbished sports cars was attractive as founders of the
company completed research of the market regarding this and found that, people have passion
for sports cars but due to financial problems they are not able to afford a one. Company found
opportunity in this idea. Secondly, starting a new business based on this concept did not require a
large investment and work force and thus created opportunity for the company to turn its idea
into an entrepreneurial venture (Hohenthal, Johanson&Johanson, 2015)..
Applying Blue Ocean Strategy with Four Actions: Blue Ocean Strategy is a structure which
motivates to advance and grow new interest and create new markets for the products of new
venture which are battling with rivalry over a similar piece of the overall industry and fulfilling a
similar interest which is ordinarily done in a red sea system. (W. & Renée, 2005)
Idea of Auckland Used Car Company was totally new in the market and despite of having
competition, it was not direct. There are some key points which are described below were
followed by the company for its project using Blue ocean strategy.
• All competitors in the market are depending on fixed price or special price offers and that
makes the competition irrelevant with the company.
• They are innovating and developing new demand for the products such as customers can pre-
orders a product which is not there in the market (like new 3 color changing headlights coming
soon from japan) as well as they are providing these features on affordable price.
• Also they reduce the product’s cost compared to the market which will break the value cost.

New Enterprise & Small Business Development 6
They use four actions framework tool which will help them to apply this strategy and reconstruct
customer value (W. & Renée, 2005).
REDUCE
:PRICE
ELLIMINATE
:FIXEDPRICE
NEW
VALUE
CURVE
CREAT
:BARGAIN
RAISE
: CUSTOMER SUPPORT
:WEBSITE VISITOR

New Enterprise & Small Business Development 7
External Analysis, Vision & Mission and Strategy
The external analysis was done by the market research team from the marketing department of
Auckland Used Car Company by using secondary and primary research methods (Jackson,
2015). The major model used for the analysis purpose is PESTEL analysis with major focus on
the political, sociological and technological factors. Apart from this, the opportunity and threat
analysis were also performed for better accumulation of the external data for further strategy
making and implementation by using SWOT analysis method.
Market Research Prior to set up: Before set a new venture, it is important to conduct primary
and secondary researches to know about all internal and factors which has direct or indirect
impact on the business. To conduct the primary and secondary researches, Auckland Used Cars
Company appointed both in-house team and external consultant agency who can provide proper
guidance in business setup. PESTLE analysis determines the six important factors in business
such as political, economic, sociological, technological, environmental, and legal. There are two
major political parties in New Zealand: National Party and Labour Party. The Labour party
implemented various economic and social legislation related to existing and new venture since it
has come into power. He National Party also adopted welfare measures of Labour government.
Political environment of New Zealand supports innovation and entrepreneurship. Economy of
New Zealand is very good and data of various factors such as GDP growth rate, GNP, inflation
rate, interest rate, unemployment rate, consumer spending, government spending, industrial
production, exports, and imports shows that despite of having many ups and downs previously,
now all these factors are favorable for starting a new business. Social and cultural environment
of Auckland is very supportive and people here are hard working and easy going and not create
barriers for innovation. New Zealand supports advancement in technology and welcome

New Enterprise & Small Business Development 8
technology which are valuable, innovative and eco friendly. Size and population mix in
Auckland supports establishment of technology infrastructure. New Zealand has simple tax laws
with minimum loopholes and legal conditions of Auckland have fairness and simplicity. SWOT
analysis provides details of internal factors such as strengths and weaknesses of the business.
Strengths of this business include that it has no competitors, consumers’ requirement are in favor
of this business, and innovative and feasibility. Auckland has huge opportunity for this business
as sports are being loved by youngsters very much and they want to get these cars and services at
reasonable prices and under one roof. Weakness associated with the business is that it is a new
business and lacks in financial strength. Threats to the business may include downturn in
economy in future, consumer spending, and emergence of new competitors.
Formulation of the Strategy: After analyzing the internal and external factors for the business,
strategies were developed for the business set up. These strategies include marketing and sales
strategy, pricing strategy, budget financing and many more. Marketing strategy of Auckland
Used Cars Company is driven by unique and excellent customer service, unique finishing, and
quality service delivery. Company focused on developing loyal customer base. Company
targeted on creating its customer through referrals from its satisfied customer. Company’s
strategies are mapped with the customer requirements (HewaWellalage& Locke, 2015).
Business Model
The business model of the organization is very similar to the new car dealer model. In this case,
the cars in the inventory are gone through various quality checking processes for the final
approval from the operations management team. In many cases, the final quality may not live up
to the inventory standards and the cars would be discharged from the same. Auckland Used Car

New Enterprise & Small Business Development 9
Company believes in absolute quality and therefore, it also employs special quality check team
in association to the operations department. In case of the marketing management, the company
uses print and non-print media advertisement strategy for the mass attraction with special focus
on 100% quality purchase offer. The major focus of the business model is retail operation with
no special inclination to one brand. Due to variability of brand in cars, the customers can choose
their options easily (Whittaker, Fath& Fiedler, 2016).
Design of the business model
The design of the retail business model was benchmarked from the competitive organizations
including the new car dealership business. However, the utilization of the social media platforms
for the advertisement was used for the first time by Auckland Used Cars Company in New
Zealand. Apart from this, the local government, finance management; business partners and
operations team supported the business model design process from the scrap as it is known from
the analysis that these factors play crucial role in success of each business as businesses are
dependent on all these factors too. Support of these factors is thus important.
Legal Issues
Dealing with the legal issues in the set up phase: According to (Schaper, 2016), the decision
for the choice of business structure of limited liability, partnership, limited partnership,
corporation or sole proprietorship has been dealt carefully by the advocacy of the founding
members. Auckland Used Cars Company registered itself as an independent and private business
identity. The distributing liabilities and responsibilities in the set up phase have been distributed
by the same founding members through the counsel of the advocates in reporting referendum that
also supported the shareholders’ agreements. The next legal issues regards to the business license

New Enterprise & Small Business Development 10
and tax registration which are accelerated by the support from the local government in Auckland.
Starting a new business requires approval from the government and this approval is provided by
the government by issuing a business license. The next legal issue is the incorporation procedure
which is dealt in the early phase of the setting up process with proper administration
(Hohenthal,Johanson&Johanson, 2015).
Dealing with the legal issues in the maintenance phase: The first maintenance legal issue is
the late payment that is resolved with the Small Claims Court system in Auckland. The tax issues
in Auckland Used Car Company are resolved through registration with tax authorities, whereas
the employment issues are resolved through the outsourcing strategy in New Zealand. In case of
the contractual issues, the company employs a solicitor for the checking of legal agreements. The
last legal issue refers to the intellectual property which includes taking patents for the business to
protect new inventions of the company, rights of design, copyright, and trade marks in order to
protect the business from unfair way of copying their strategy and this can be met by the
employment of the IP lawyer (Nel, 2015).
Finance: The Company is targeted to generate its revenue through car modification,
customization, finishing, and restoration. Company has successfully derived capital to start its
business from personal savings, partnerships, and governmental finance for starting a new
business. Company derived its fund from getting a bank loan, company adopted the method of
crowd-funding through websites by sharing its creative idea and product at lower prices, and
their business idea also attracted investors to invest in their business.

New Enterprise & Small Business Development 11
Marketing:
Business marketing in the past: In the past, Auckland Used Car Company used to follow the
conventional marketing technique that includes only advertisement through the print and non-
print media. This also employs lots of sales people for the mixed customer queries. The former
counseling or the information process of the customers used to happen manually that are taken
care by the former senior marketing employees. In the past, the marketing and finance teams
used to work separately that used to make some problems both for the customers and the
management as some of the customers also opted for the loans (Kelsey, 2015).
Current business marketing strategy: Currently, the marketing of Auckland Used Car
Company business is more streamlined due to the administration and inclusion of the social
media content. The social media advertisement happens to attract more customers than the
conventional media channels. This has made the work of the marketing people easier as the
customers are pre-informed of the cars they are interested to purchase. In this case, the
employment of the sales people for the clustered customers is important. Currently, the physical
positioning of the finance team is also adjusted as they support the marketing activities with the
proper information related to loans and others (Hohenthal, Johanson&Johanson, 2015). Apart
from this, company is mainly focused on creating its marketing through loyal customers by
providing them satisfactory services and attractive offers and discounts.
Strategic Growth:
Product based growth plans: Auckland Used Car Company is intended to increase the product
portfolio by entertaining more and more brands like D.C (very famous customization brand)
Holden, Ford, Nissan, Toyota etcso that it can attract more customers in the specified region.

New Enterprise & Small Business Development 12
Apart from this, the company is also considering different loan options for the customers like
they have some good relations with couple of loan companies and sometimes customer loan
would pass in 20 minutes with quit low rate of interest for example they told me if you buy car
from them of $15000 value and you are depositing $2000 as a down payment they charge you
only 5.5% and first three months free
Promotion based growth plans: Apart from the existing print and non-print media
advertisement and social media promotion, Auckland Used Car Company is intended to employ
discount basis promotion model for the seasons like Christmas, New Year. This would provide
better deals to the customers such as 5% discount on car price, first service at free of cost, gift
hampers, and many others during the special occasions and better maintenance packages for the
customers. They also use to post some discount coupon codes on Facebook with these customers
get special discount on accessories and some other stuff.
Placement based growth plans: Auckland Used Car Company is planning to place the brand in
different regions or locations like Hamilton, Tauranga in New Zealand apart from only Auckland
to expand its business. This would be very contemporary policy that increases customer base of
Auckland Used Car Company in New Zealand (Nel, 2015).
Positioning based growth plans: Auckland Used Car Company is also intended to expand the
positioning of the company by increasing its portfolio into the luxury and premium vehicle
segments. There are some companies like autoupgrades.co.nz ,D.C , Ultrawheels.co.nz which do
customization as per customer instructions. New Zealand used car company is doing same like
they do modification in the vehicles by changing their seats , lights, entertainment system couple
of changes with the body of the vehicle. This would fetch different source of revenue from the

New Enterprise & Small Business Development 13
extended customer base in New Zealand. This would also provide better profitability and
competitive advantage for the company over costly car dealers who charge more to the
customers for these kind of modification (Hohenthal,Johanson&Johanson, 2015).
Conclusion:
Auckland Used Car Company has started as a small business in Auckland, New Zealand.
Through the course of time, the company has risen to pinnacle of business operations due to its
new and revised strategy. The utilization of the technological platform for the attraction of the
customers has brought the business-to-business and business-to-customer activities closer to the
business. Apart from this, the social media interaction and advertisement would be appropriate
for better improvement of the customer acquisition and retention focus in Auckland Used Car
Company.

New Enterprise & Small Business Development 14
References
HewaWellalage, N., & Locke, S. (2015). Impact of ownership structure on capital structure of
New Zealand unlisted firms. Journal of Small Business and Enterprise Development,
22(1), 127-142.
Hohenthal, J., Johanson, J., &Johanson, M. (2015). Network knowledge and business-
relationship value in the foreign market. In Knowledge, Networks and Power (pp. 187-
224). Palgrave Macmillan, London.
Jackson, D. (2015). Employability skill development in work-integrated learning: Barriers and
best practice. Studies in Higher Education, 40(2), 350-367.
Kelsey, J. (2015). The New Zealand experiment: A world model for structural adjustment?.
Bridget Williams Books.
Nel, E. (2015). Evolving regional and local economic development in New Zealand. Local
Economy, 30(1), 67-77.
Schaper, M. (Ed.). (2016). Making ecopreneurs: Developing sustainable entrepreneurship. CRC
Press.
Whittaker, D. H., Fath, B. P., & Fiedler, A. (2016). Assembling capabilities for innovation:
evidence from New Zealand SMEs. International small business journal, 34(1), 123-143.