Please read the case and answer the following questions.How strong does the resistance to the new business model at Destination appear to be?What advice can you offer Doreen for overcoming the resistance to change?What is your opinion of the potential effectiveness of The no-hassle Destination business model? Explain your reasoning
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Doreen is the CEO of Car Destination Inc., a sllperdealership that sells ltev cars. SUVs. and pickup trucks
from five different tnatrttfactttrers. and also lras a large
used-car lot. Car Destination has been profitable over
the years. even eking out a profit dr-rring trvo different
business recessions. Yet Doreen has the nagging thought
that Destination is slippin-q a little behind the times.
In talking r’vith an oLrtside advisor, Doreen said, “The
vehicle-sales busiuess is changing rnore rapidly than u’e
are cltanging. Fer,ver coltslllrers are ittfluenced as nlttch
as they rvere it.t the past by the sales representative. hrstead. they ferret out ittfonlatiotl on the lnternet otr rvhat
they think the price of a vehicle shoLrld be. Also, they
shop online to find the lor’vest possible price for rvhat
thel’ rvant. When they arrive at tlie dealership, they even
knor.v rvhat accessories and features they rvant, so they
are less iufluenced by rvhat ollr reps have to sa1′. Atrother’
problern is that a greater ttlttrrber of cttstotnet’s r.vho do
corne to the dealership to purchase a car or trucli don’t
rvant to haggle r’vith the rep.”
Based on these concents, pltts some discussious rvith
Melody, the rtsed-cat’ sales tnanager, offered her opirriou: “Doreen. u’ith dtte respect to the rvisdonl of our
CEO, ‘The tto-hassle Destiuation’ nlay not rvork here.
Maybe rve could act like CarMax sales associates-we
hire a bunch of good-looking sales reps. dress thetn irr
khakis and polo shirls. and teach thetn to keep a smile
on theil faces all the time. But rvhett our clieutele comes
to Destination to purcltase a used car, they like to negotiate. I love tlte look ott the face of a customer rvho has
just beert girren a discount. Buying a used car or truck is
a sporl. It’s not like purchasirtg a six-pack of beer.” (The
group laughs loLrdly at the beer analogy.)
Sarn, the ner.v-velticle sales tratrager, said r’vitlt a concerned erpressiot.t, “Doreett, I think tlte busittess model
vou propose probably u,orks rvell in some situations’
think this through quite carefully. Our
best reps are tnaking a ton of molley. If yoLr put them on
a fixed and modest salary, ottr stars uould leal’e for the
courpetition. A fixed salarl is probabll’ okay for the CarMax associate, but I think experienced pros tnuclt prefer
Kaleb, the director of finattce. offered a suggestion:
a ferv autotlobile execLrtives, Doreen decides
I say let us r’vait a bit before introdLrcing this
the business trodel at Destination. The uerv bttsitless
need to stLrdy the potential impact of the neu’
model she rvants to introduce to her managelrlellt staff model.
and to sales represetttatives requires that sales represell- business rlodel on ollr profitability. We are a consistatives no longer rvork otr commissiort. They rvill norv tentll, profitable sLrper-dealership. A key factor is that
the salaries \’e pay sales reps are quite lor’v because thel’
be salaried associates r.r,ho try to satisfy the needs of custorners. Furthennore. Destirtation ri’i1l norv offer fixed eam so n.tuch on commissiou. This helps lorver our fixed
sticker prices on all treu, and used vehicles. No rtlore costs. We coLrld wind up rvitli a handful of sales associnegotiating u,ith cltstotners about pl’ice. Dol’een calls a ates rvho produce very little in relation to their salan’
meeting for the fbllorving Monday’ mornittg lvith all of and benefits.”
Feeling frr-rstrated. Doreetr said, “Let’s breali for nou’
her rnanagers and trvo of tlte senior sales represelttatives
to discuss tlte neu, bttsiness model. She labels the trer’r’ and return to this discltssiott totnorrorv mortting. You
fblks don’t seeur readl’ quite y’et to shift to ‘The tromoclel “The no-hassle Destittatiotl.”
Doreen describes the new business model. ltsin-e a hassle Destination.”‘As she gathered her trotes. Doreetr
PorverPoint presentation to sllppoft her talk. She speaks thought. “For the nerv ntodel to rvork rvell, I r’vill have to
for I 5 rninutes lvithout accepting conlmellts ol qtLestiotts. change sorne of these negative attitudes.”
but she does notice a ferv grimaces and atxiotls expl’es- Case
sions or.r the faces of the Destinatiou staff. Doreetr finally
strong does the resistatlce to the tterv busiuess
says, “Okay gang, l’ve talked enouglt for tlou,’. Let me
model at Destination aPpear to be?
knor,v rvltat you think of our ner’v bttsiuess model'”
2. What ac[r,ice calt yotl offer Doreen for overcoming
Torty’. a veteran sales representative, speaks first:
the resistance to chatrge?
“Dol’eell, it’s good to knorv that our CEO is Lrp-to-date
What is your opinion of the poterttial effectiveness
ou tlte automotive sales business. But Satttrtl tried rvhat
“The no-hassle Destinatiott” bttsiness model’l
you are talking abottt. The comparly lost tons of lnolley,
and finally was eliminated by GM. The sales reps did
everythirrg but hug and kiss the cttstomers rvho drove
offthe lot r.vith a new Satttrn.” (The people present laLrgh
Part 4 The Organizational System and the Global Environment
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