Auto Zone Microenvironment

The purpose of this report is to become familiar with research tools, to introduce a framework for secondary industry research and gain to practical experience in creating an executive summary. This research paper looks at a broad set of indicators on the Canadian new vehicle industries. The Canadian automotive industry produces light duty vehicles — cars, vans, pickup trucks; heavy duty vehicles—trucks, transit buses, school buses, military vehicles; and a wide range of parts, components, and systems used in vehicles of this nature. To complement its manufacturing activities, the industry boasts a well-developed vehicle dealer network, plus an aftermarket organization which has grown into a world-class distribution system and service provider (Canadian automotive industry, 2014). Canada accounts for a small amount of 4.6% of the Americas new cars market value (New Cars in Canada, 2016). Throughout the project I became more aware of how much the industry is worth. The worlds automotive industry accounts for around $1 trillion in annual sales. (Canada’s Auto and Auto Parts Industry Industrial Outlook, 2006). However, in 2015 the Canadian new cars market had total revenues of $15.0 billion. The market is expected to grow substantially by 18% in 2020 (New Cars in Canada, 2016).

This is where the money is and the growth is. Their consolidation will in essence allow us to lessen the breadth of our dealer coverage and allow us to focus our sales effort in this high growth area.

Expanding operations into another country is not a decision any company should take lightly. Comprehensive investigation and market research should determine if the decision to penetrate a foreign market is a viable one. Research indicates that South Korea is a top contender of manufacturing and exporting automobiles and currently ranks 5th in the world. According to figures from Korea’s Polyurethane World magazine, “between 1985 and 2010 automotive production rose from 265,000 cars/year to 2.9m cars/year with a compound annual growth rate of 11% during the same period the amount of flexible foam consumed in the sector rose from 6kT/year to 81.2kT/year

AutoZone employed a growth strategy that grew the company to 200 stores in 5 years. When the firm went public in 1991, AutoZone had grown to nearly 600 stores. The company began to acquire other businesses in 1998, including Chief Auto Parts and Adap’s Auto Palace Stores. At the turn of the century, AutoZone attempted a change in strategy from acquisition to internal growth averaging an additional 150 to 200 stores per year. AutoZone targets the do-it-yourself market and professional repair shops. Advance Auto Parts is AutoZone’s greatest competition holding at number two in the industry. Other competitors include Pep Boys and O’Reilly,

I would define Autozone in the automotive industry based off the primary products they retail. I would include the dealership and the fellow discount automotive stores in this industry as well. Industry is defined as a group of competitors that produce similar products or service ( Parnell, 2008 pg 38). By this definition dealerships and aftermarket automotive discount stores would fall under this category. When a consumer thinks of a dealership they immediately think of purchasing a new or used vehicles, this assumption is a valid thought. The dealership offers so much more than new or used vehicles, in fact dealerships offers car washing (detailed), collision repairs, and parts and services on vehicles.

Autozone started as a small retail auto part store in the late 1970’s. Auto Shack was founded by J.R. “Pitt” Hyde III. Auto Shack was the first name that was given to the company. AutoZone official name was given in the 1980’s. Autozone made their first impression in New York stock exchange in 1991 (Autozone, 2014-15). Autozone become one of the first auto part store that was able to put in customer warranties in a computer database. By allowing the company to increase in technology devices that allows the company to help each autozone communicate between stores. By using this business structure helped Autozone increase their sales significantly, banking up to 1.5 billions dollars in sales. In 1995 Autozone created their own Duralast and

AutoZone is an aftermarket auto parts retailer headquartered in Memphis, Tennessee. AutoZone focused on the do-it-yourself weekend mechanic and small professional mechanic shops. It specializes in delivering low-cost replacement auto parts. AutoZone has many competitors, auto dealership parts counter, Advanced Auto Parts, O’Riley’s Auto Parts, Napa, and other discount auto parts stores, including online stores and junk yards. AutoZone strategy is delivering low-cost quality auto parts. As a weekend warrior, I have price compared between several auto parts stores when working on my dad’s old Ford. While price comparing, AutoZone was the cheapest of all the other auto parts stores. With the rising costs of automobiles and skyrocketing car loan

AutoZone has responded to the changes in its macroenviornment through the PEST (political-legal, economic, social, and technological analysis (Parnell, 2008). AutoZone had to face political-legal issues. One issue occurred in 2014 at a meeting when one of the members of its board of directors wanted to convince them to provide further details regarding their political spending. AutoZone’s board of directors responded by wanting its shareholders to vote against it (Meek 2014). AutoZone is actually in a good position due to the economy by to AutoZone being in auto parts industry. In a bad economy, people will most likely not purchase new vehicles. People will more likely keep the car that they already have which will eventually need repairs.

According to the World Bank (2016), “Mexico is the second largest economy in Latin America” (Iliff, 2016). Mexico is one of the largest auto producers and exporters. “Mexico, produced 3.4 million vehicles in 2015, raking seventh largest vehicle producer in the world and first in Latin America” (Administration, I. T. (2016). Automotive manufacturing is growing, and large automotive companies such as Nissan, Mazda, Volkswagen, and GM, who have plants already established in Mexico, are now planning to expand their facilities. Half of the cars sold in Mexico are made there, and the other half is imported (Iliff, 2016).

An important foundation in hiring the right employees for frontline roles (person behind the counter) is in place at the Advanced Auto Zone. Recently, I had a problem with my car starting so, I headed to Advanced Auto. John, a frontline employee greeted me as I entered the store and seemed to have a natural drive to satisfy a customer’s needs. He made me feel confident that he would find the right employee to assist me with my needs. I was then introduced to Jeff. Also a very well-informed employee, who went above and beyond my expectations in giving me direction in determining what, may be the problem with my car.

Industry is defined as “a group of competitors that produce similar products or services” (Parnell, 2008). AutoZone’s industry could be considered automotive as they provide parts and services for vehicles. Whereas services such as actual mechanic work are not performed on the premises, certain services that are offered at dealerships are performed at AutoZone stores.

The organization have followed the Wal-Mart strategy which is to offer the lowest prices. Auto-Zone also have other services such as assistance with minor car repair and they offer thousands of parts in store daily. If it is not in the store they will try to order the parts so that they keep the consumer satisfied. The plan have been to buy as many part stores to keep growing the franchise.

The Global Purchasing and Supply Chain division was responsible for streamlining the supply chain and the year 2013 was a good one for the U.S. automotive market as sales rose 7.6 percent to 15.6 million vehicles. This is a substantial comeback from the levels of 2009-2010 when severe recession forced the bankruptcy of General Motors and other automobile companies and caused many other automakers to lose revenue and profits hence reducing labor and operation costs by massive worker layoffs and downsizing by closing manufacturing plants.

The financial crisis starting in 2008 and the following recession hit hard the US auto sector. Traditional car makers had to realise that substantial changes were needed in order to maintain their strong position in the

The company understands the risks for working with U.S. auto industry especially during the recession in 2008, so they venture out to produce four new business units to minimize it by looking into investing on early-stage opportunities.