Monday, October 22, 2012


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Saturn A Different Kind of Car Company

1. Small cars buyers are primarily looking for an affordable source of transportation. Car’s price, fuel economy, warranty coverage and expected maintenance expense are considered the main priorities in making a purchase decision. Most of the small car buyers are unable to upgrade their cars to a more expensive model because they have a limited budget. Small cars tried to offer the features that are usually found in more expensive models, like anti-lock brakes, airbags, deluxe interiors and sports options. The sales process also plays an important role in the purchase decision. Many shoppers dislike bargaining over features and price. That is why some dealers used a tactic called the “ no-haggle “ pricing to lower customer complaints. Leasing is also encouraged by dealers to lower monthly payment to as much as 0 %. In that way, customers are less likely bother to ask questions about pricing. Moreover, dealers and build relationship during service calls throughout the lease period.

. Saturn divided U.S. into a fixed number of sales territories. Saturn would grant franchises to potential dealers who showed a strong record of customer satisfaction in other dealership. Saturn required its franchises to build showrooms dedicated solely to Saturn. Retailers often purchased blueprints from Saturn to meet specifications for the retail site. Saturn justified a higher initial investment by offering higher gross margins on the sale of each car. Saturn dealers also sold a higher volume of cars compared to its competitors. Franchise rights were given through agreements without expiration dates. Saturn established a Franchise Operations Team composed of 8 dealer representatives and 8 members of the management. They discuss major issues including customer service and other management issues. Decisions were based on 70 % consensus. Binding arbitration and mediation were also provided to dispute settlements. Retailers sacrificed short-term profits to help the company to meet Saturn’s philosophy. Saturn stressed a team-oriented approach. As for customer service, hotel was the model for Saturn. During Saturn Launch all consultants congratulated a new car owner with a special cheer and applause. NADA showed that dealers gave Saturn higher marks than other makers for service, sales support and product quality even though competitors were gaining in some areas.


Firm Infrastructure Teamwork to improve quality, minimize bureaucracy and enhance worker involvement by placing decision-making authority on the factory floor, employee empowerment, team oriented culture

Human Resource Management Skills training and team building exercises, charter team member, decision circles

Technology Development online cost accounting system, systems to scan nationwide inventory base, reliable MIS

Procurement Continuous improvement in design

Set up branch operations for sole source contractsInbound Logistics Clean sheet approach, vertically integrated complexOperations Highway access to the production site and laid out an internal road system to accomodate just-in-time deliveriesOutboundLogistics Well-trained sales consultant, company’s goodwillMarketing and Sales Excellent service, survey of buyers’ service historyService

Saturn pretty much excelled its competitors in all aspects in the value chain . The only aspect that Saturn is lacking compared to its competitors is the operations in labor hours per car. Saturn was ranked 1st among the U.S plants. Saturn needs to make significant changes to become a top tier factory.

4. Saturn definitely has a competitive advantage in the industry. By looking at the value chain, Saturn pretty much has a value in every aspect of the value chain. All it needs is to improve its operations in the factory � to decrease labor hours per car. Saturn’s sales were high compared to its competitors according to 1’s statistic. Also, Saturn scored the highest marks in all areas of the NADA dealer survey results. The satisfaction rate with the selling process is increasing. The defects per 100 cars in 1st 0 days in decreasing. Unit sales is increasing rapidly.

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