IB Higher Level Business Management Research Project

"Is after COVID-19 the right time for Global Autoimpex & Industries to start their own automotive workshop?"

Research Proposal

To the owner of Global Autoimpex & Industries Mr. Kulmeet Anand

Session: May

Word Count: 473

Research Question:

"Is after COVID-19 the right time for Global Autoimpex & Industries to start their own automotive workshop?" Rationale

Global AutoImpex & Industries Pvt. Ltd. is a company that deals with vehicle parts and is located in New Delhi, India. They are looking forward to adding an extra source of revenue by starting their own automotive workshop. They believe along with attracting new customers, their existing customers might also be interested in getting their vehicles fixed from Global Autoimpex's workshop, increasing their monthly income. However, the outbreak of COVID-19 was a major set back for all the businesses. Hence, the research question "Is it the right time for Global Autoimpex & industries to start their own automotive workshop" arises.

Theoretical Framework

1.3 Organisation Objectives - SWOT analysis - Identifies the potential pros and cons for the business along with evaluating the overall benefits.

1.7 Organisational Planning Tools - Lewin's Force-Field Analysis- Assists with exploring the restraining and driving forces for the project along with helping to land on a decision.

3.8 Investment Appraisal- Payback Period - Aids in the prediction time for the company's recovery of the investment costs of this project.

Methodology

Data Collection	Rationale Link
Primary Data
- Interview: Director of Global Autoimpex - Questionnaire: Customers of Global Autoimpex - Observation: Location of existing workshops and the location chosen by the company for the workshop	- Interview: The Director's views on the project - Questionnaire: Customers and public views on the conduction of such a project. - Observation: Population with cars around different workshops and the cars around the location chosen by Global Autoimpex for the workshop.
Secondary Data
- IB Business management Textbook. - Profit loss account from the company. - Total investment account. - Profit loss account with forecasted result.	- Gain an insight. - Define terms. - Use decision making tools.

Planning

Anticipated Difficulties	Possible solutions
Inaccurate or obsolete financial documents	The most recent produced documents can be used, provided by the firm
Director reluctant to give out certain information through documents or an interview	Provide a letter of confidentiality which would help the director with a sense of security
Limited respondents to questionnaire	Post the questionnaire on the company's different marketing sites or social media pages
Difficulty in determining the cost of new projects	Prediction of costs using previous data
Lack of information by respondents or director	Decrease the amount of questions and make them more open for more information.

Action Plan

Date	Action	Source	Anticipated Difficulties	Modifications
28th October	A. Interview Director and draft the questionnaire	Director	Cancellation of interview if anyone falls sick due to Corona or any other reason.	Rescheduled date with director and extend other dates
31st October	B. Questionnaire sent out and observations concurred	Director and customers	Less people responding to the questionnaire	Questionnaire uploaded to different social media links of the company
2nd November	C. Beginning of write up	-	-	-
5th November	D. I.A draft due date	-	-	-
7th November	E. Edits made based on the feedback	-	May need to change research based on the feedback	-
10th November	F. Discussion of results with the company	Director	Director unable to have a face to face meeting due to corona	Online meeting
13th November	G. I.A due date	-	-	-

Gantt chart of investigation

International Baccalaureate Higher Level Business Management Internal Assessment

"Is after COVID-19 the right time for Global Autoimpex & Industries to start their own automotive workshop?"

Research Proposal

To the owner of Global Autoimpex & Industries Mr. Kulmeet Anand

Session: May

Word Count:

Executive summary: 200

Main report: 2000


Acknowledgements:

I would like to thank the entire team and the director of Global Autoimpex & Industries with full gratitude for helping me out with the information required to complete the research. I would also like to thank Global Autoimpex's customers and those people who took out time to fill in the answers in the questionnaire. I would like to show gratitude to my Business teacher as well who took out his valuable time in providing me the correct guidance.


Table of Contents

Executive summary 8

Introduction 9

Methodology 9

Main result and findings 10

Analysis and Discussion 11

Conclusion 14

Recommendations 14

Limitations 14

Bibliography 15

Appendix 16


 

Executive Summary

 

The director of Global Autoimpex has been considering to start an automotive workshop since 2019. He believes, he can get vehicles repaired for lower prices as they already manufacture automotive parts. This means, less expensive automotive parts, attracting more customers. Furthermore, they almost launched in March 2020. Unfortunately, due to outbreak of COVID-19 the country locked down. After 6 months with the re-opening of economy, they began to consider making the investment again. Hence, the question arose "Is after COVID-19 the right time for Global Autoimpex & Industries to start their own automotive workshop?"

To find the answer for the question a primary research was conducted which included a questionnaire for firm's customers, observation of existing workshop locations and the location Global Autoimpex chose and an interview with the director of the firm. Furthermore, this information was implemented in SWOT analysis and capitals analysis to check if they should invest or not. Along side this, with the help of firm's financial accounts, payback period was calculated for the investment.

The conclusion suggests that most of the analysis are in their favour to invest in the project but they need to find solutions to defuse threats and maximise profits.

Introduction

Global Autoimpex & Industries is a private limited company, found by Mr. Harminder Singh in 1972, specialising in manufacturing, exporting and wholesaling all automotive parts. The company deals with car parts of the most well known automotive part companies.

The firm currently owns two shops in Karol Bagh and a factory in Okhla region of New Delhi. It has 6 of its own vehicle part brands which are GAP, Seco Global, Mando, Male, Moto jet, PHC Valeo. These brands are held in high regard in the industry. Before the outbreak of COVID-19, they decided to open an automotive workshop as this would aid them with extra income. A major advantage for them is that they produce their own automotive parts which allows them to offer repair services at a lower cost than their competitors. This would be a significant attraction for potential customers. Unfortunately, due to the lockdown all business shutdown so they had to halt for a bit (4).Now, that the businesses are re-opening, Global Autoimpex is again bringing the project to life, though the peoples incomes have decreased, this is major factor in asking the question "Is after COVID-19 the right time for Global Autoimpex & Industries to start their own automotive workshop?".

Methodology

Three primary and four secondary sources of data were used for generating a prudent conclusion. An interview with the director Mr. Kulmeet Anand was conducted, providing a detailed outline of his current performance and his views on the project (Appendix 2). A questionnaire was conducted (Appendix 1), consisting of 10 questions. It was uploaded on all the social media links of the company as due to COVID-19 there were fewer customers in their shop. The answers were vague, but helped in receiving data (Appendix 3) but helped the company determine how to meet customers needs and maximise income. Payback period was calculated by using secondary data. Additionally, for observations there was comparison done between location of existing repair workshops and the location Global Autoimpex chose.

The IB Business management textbook by Paul Hoang was used as a secondary resource to help mention concepts and detailed definitions along with the company's financial accounts.

The gathered information with other business tools will be used in decision making. SWOT analysis determines external threats and opportunities along with internal strength and weaknesses affecting decision making. The Lewin's force field structure analyses the weight of driving forces to compare it with restraining forces, aiding the company with making decision of investing or not. The payback period determines the amount of time required to recover investments.

Main results and findings

The responses from the questionnaire are in favour of Global Autoimpex's decision. Firstly, more than 60% of the respondents have been in business with them for more than 3 months (Appendix 3), depicting a large amount of satisfied customers who would be of a great help in promoting their workshop. Being existing customers they might also consider sending their vehicles to their workshop. Around 30% of the respondents were interested, new people, who could become their potential workshop customers (Appendix 3). Hence, increasing revenue. Around 50% of the existing customer don't have a fixed workshop for their car, so they can start sending their cars to Global Autoimpex (Appendix 3). Over 70% of the respondents pay Rs30,000 for servicing (Appendix 3), at other workshops. Now, knowing the market price, Global Autoimpex can keep lower servicing prices as they themselves manufacture vehicle parts which reduces costs for them (Appendix 2). This allows them to keep prices the same or low as competitors and raise them when they become reputable. Around 50% of the respondents were ready to spend on their car repair even after low salary due to COVID-19 (Appendix 3) which means there are still people who would get their vehicle fixed, leading to potential customers for Global Autoimpex. Lastly 100% of the respondents believe in hygiene concerns after COVID-19 (Appendix 3), so their workshop would need to spend on hygiene products for customer's health and safety.

The observations carried out showed that most of the workshops are located in areas near main roads for example areas like Okhla where there is greater amount of traffic. The location chosen by Global Autoimpex is a bit secluded. It is not near the main road or where people have a lot of cars. This might make attracting new customers difficult.

Analysis and Discussion

SWOT Analysis

Answers from Questionnaire were used to determine internal strengths and weaknesses and the external threats and opportunities to decide if it is the right time for Mr. Kulmeet Anand to invest in the new project.

(2 from bibliography)

Research revealed that the strengths of the project are easy promotion as over 60% of existing customers are very satisfied (Appendix 3) at their already existing business who can help promote their workshop. Furthermore, they have enough finance to invest in the workshop (Appendix 4) . Lastly, they can keep competitive prices as they already manufacture the necessary automotive parts. This allows them to supply parts to their own repair workshop at lower prices (Appendix 2). These factors allow them to be significantly more competitive.

Alongside this there are a couple of weaknesses like limited HR, as most people have been more cautious now and prefer staying home (Appendix 3). The director said they have no experience in repairing cars which can pose a problem when allotting workers their work (Appendix 2). Their automotive part supply is low due to less sales after COVID-19 (Appendix 2) so this means that at times if their workshop is full they would have to rely on other suppliers and their prices would not be competitive enough. Due to COVID-19, land prices have increased drastically as people want to cover up for what they lost during COVID-19 lockdown (Appendix 2). Observations showed that the director was not able to find the best location. Their budget does not allow for a workshop on the main road, which means comparatively fewer customers would find them simply by driving by.

Weakness often are beginning of opportunity. 55% of the Global Autoimpex's customers have stopped purchasing auto parts from them (Appendix 3) in the same amount they used to so workshop can act as a source of extra income when people come to get their vehicles serviced. Additionally, 50% of the people from the research agreed on spending the same amount of money they used to spend on their vehicles (Appendix 3) which is an opportunity as workshop is still a basic need for some people who own cars which means fair amount of profit. As 100% customers care about their hygiene after COVID-19 crisis (Appendix 3) which means this can be a plus point for the workshop in attracting customers and creating brand loyalty by promising repairs with full sanitisation. India, a developing country. Everyday the citizens are purchasing cars for commuting, there are about "11.2 million" (Asher) cars in Delhi and a very few workshops which means that more workshops are required. This is an opportunity for Global Autoimpex as Delhi needs more of such repair workshops.

Some external threats are like less customers due to COVID-19, 36% of the people would not be trusting workshops with health concerns (Appendix 3) and 48% of them would not be spending on their cars (Appendix 3) which means Global Autoimpex can have comparatively less customers than before lockdown. There can also be lack of customers because 49% of them show brand loyalty towards a workshop (Appendix 3) which presents a threat from competitors as well.

THE FORCE FIELD ANALYSIS

Force field analysis determines the driving and restraining forces which help a company in decision making. It was with the help of the interview and questionnaire that these restraining and driving forces were ranked out of 5, helping in deciding if Global Autoimpex should open a workshop or not.

The director decided to start the workshop in order to increase revenue (appendix 2). As workshops are important in a developing country (India) so it would surely help with increasing revenue. This is why "increase in revenue" has 5/5. The restraining force "Not the fist priority" means there are already workshops with which people have created brand loyalty. As 50% of the respondents are loyal to other brands (Appendix 3). If Global Autoimpex uses competitive pricing the customers would prefer to create brand loyalty with Global Autoimpex that is why the restraining force have been given 3/5.

Customer satisfaction, the first priority, is how they will create brand loyalty. This is why 5/5 is given to "customer satisfaction". The restraining force to this is "additional cost". In today's time due to COVID-19, 100% of the people require health safety (Appendix 3). This can only be done by proving to the customers, they care about their customer's safety by performing sanitising activities. This is why investing is given 4/5 due to its priority.

They want more customers at the repair workshop. The problem here is that if they promote their workshop at their spare part shop this will lead to decrease in customers at their parts shop.

Instead of purchasing spare parts and then giving it to a mechanic, customers would instead get their car fixed from Global Autoimpex's workshop. Furthermore, this will lead to decline in the amount of customers at the spare part shop. This is why the restraining force (4/5) is given more score than the driving force (3/5)

Overall, the driving forces scored 2 points higher than the qualitative and quantitative restraining which means the decision to begin the workshop can still be considered.

Payback Period

Lastly, the calculation for repayment of the investment was done. So investment costs for the new workshop were calculated (Appendix 5) along with a forecasted profit loss account for values for calculation (Appendix 6).

Payback period = initial investment cost/ contribution per month

Payback period = Rs14108000 (Appendix 5)/Rs1357942.6 (Appendix 6) = 10.38 months

The payback period for investments is 10.38 months which is relatively a short period. Furthermore, the amount of potential customers that was determined from the answers in the questionnaire (Appendix 1 and 3) can help achieve this short payback period. This means, Global Autoimpex can go ahead with making the investment.

Conclusion

The three tools used, suggest that Global Autoimpex should invest in the new project. The SWOT analysis makes it clear that Global Autoimpex has more positive factors. Additionally, in the force field analysis the total of driving forces was more than retraining which indicates that they are good to invest in the new project. The payback period of their investment is a realatively short time which means that there is a limited concern over finances and a realistic opportunity to overcome short-term financial stress. The observation portrayed a comparatively poor location which is a worry.

Recommendations

1. The SWOT analysis portrayed that the company has more positive factors but it also has some negative ones which the company needs to take into consideration and act accordingly to maximise profits.

2. The company has enough finances to invest (Appendix 4) but it needs to take into consideration the financial risk of a worst-case scenario, such as another world-wide pandemic like COVID-19.

3. Location is another factor. According to observations the company has a location in a secluded area, the company should do more research for locations to find the best location to maximise profits.

Limitations

Global Autoimpex's accounting information may not be accurate, the company might be reluctant to share their actual financial records. The force field analysis was based on interpretations, previous data and data from the questionnaire so the company cannot rely on it blindly. In the interview, the director might have given some answers that were biased to his side, just to show that his company has made the right decision. Furthermore, the questionnaire might be a bit unreliable as high-quality answers were not possible.


Bibliography

1. Asher, P., & 16, O. (2020, October 16). India - total number of registered vehicles in delhi 2016. Retrieved February 03, 2021, from https://www.statista.com/statistics/665712/total-numberof-vehicles-registered-in-delhi-india/

2. James, A., Kumar, G., Bhalla, M., Amar, M., & Jain, P. (2020, October 09). Analysis of challenges for automobile service garages in India: A structural modeling approach. Retrieved February 03, 2021, from https://www.emerald.com/insight/content/doi/10.1108/ JAMR-04-2020-0059/full/html

3. Global autoimpex & Industries Pvt. Ltd. (n.d.). Retrieved February 03, 2021, from www.globalautoimpex.com/

4. Hoang, P. (2014). Business management. Victoria, Australia: IBID Press

Appendix 1

Questionnaire

Q) Do you have a fixed workshop for your car?

A) Yes or no

Q) How much do you usually spend at workshops on your car?

A) Between 1000-10000, 20000, 30000 or higher

Q) Do you think after covid you would be trusting workshops for health concerns?

A) Yes or no

Q) Would you still want to spend on your Car service after Covid played a role in decreasing your income?

A) Yes or no

Q) Do you have a luxury brand car?

A) Yes or no

Q) Would you buy parts in same amounts after the reopening of business due to pandemic?

A) Yes or no

Q) Does location infrastructure matter for a workshop or it is fine if the workshop does excellent work?

A) Location matters or work excellence matters

Q) What type of customer are you?

A) existing customer Or new customer

Q) Since how long are you a customer of Global Autoimpex?

A) Less that a month, 1 month, 2 months, 3 months or more than 3 months

Q) Are you concerned about your health safety in repair workshops?

A) Yes or no

Appendix 2

Interview

Q) Since how long have you been planning on this new project?

A) This idea has been revolving around in our mind since the last 1 year. We had been delaying it and were waiting for our profit margins to increase more so that while making an investment we are not short of money and we can add anything that can make the customers happy and satisfied. We had to begin with the project in March but unfortunately covid19 came out and we had to shutdown for six months.

Q) What do you aim for? What do you exactly want to achieve?

A) I am aiming for making our workshop the best car repair workshop in New Delhi. Along with achieving satisfaction from our customers we also look forward to gain more income. The workshop can also act as a side business for extra promotion of our auto parts shop.

Q) Do you feel this project can bring home any threats to your auto parts shop?

A) I would not say that there is any threat as such to our auto parts shop but we might lose some customers and profit at our autoparts shop, who would instead of buying from our shop would get their car fixed at our workshop which would not affect our business as indirectly we our getting more money but from workshop.

Q) Would the funding of the project still be easy even after covid and your business being closed for a while?

A) I believe the investment part would not be that easy but we can manage as before our business closed we had more than the amount we needed to invest but now according to our accountant we have the exact amount needed for investment if we look at the extra investments we need to do such as purchases for the safety of our staff and customers from Covid. A plus point we have is due to covid the prices for properties in New Delhi have also reduced which will deduct some amount from our investment cost and we can use it in buying safety and health products.

Q) Why do you feel this project would be successful?

A) India is a developing country and New Delhi is a part of this developing country. Most of the people in India have cars and as I said cars need servicing and repairing every once in a while so our workshop on the busiest street that is Okhla can attract customers. We manufacture auto parts so it is very easy for us to get the parts for cheaper and put different repairs and services for cheaper prices than customers. Hence, attracting more customers. Even out auto part shop exisiting customers can get interested. Lastly, we already have a well established brand for auto parts which can help us promote our workshop on a large extent without spending a lot of cash on billboards etc. Though covid would affect the business to some extent but the business will still be beneficial due to our competitive pricing.

Q) Do you feel this project will help you get profit now that is after the lockdown opened?

A) Of course it would help us get profit but no as much. All the businesses are running slow as many people who lost their jobs or businesses are focusing on saving money rather than spending it as they don't have enough cash. Even for us we did not earn any profit for 4 months as our business was closed but we believe that we can still afford investing in this project as I said in the previous answer. As many businesses have closed like such workshops. Our this move of stepping in this market can help us earn more. Of course our profit at autoparts shop would also be less due to less orders by our customers so the workshop could help increase it as so many people have cars which need repairing or servicing once in a while. Most of the workshops might be full as lockdown just opened and cars might need servicing and this could be an opportunity for us to make permanent customers through our best experience. In fact I believe covid will help us in making customers by word of mouth as well if we give them satisfactory services with full health safety garuntee

Q) What all car brands would you work on and what services would be there in the car workshop?

A) We are planning to look at all the brands from non luxury to luxury to sports as Okhla is an area where there is mixed community some people own a Honda, some own a BMW and some own a Ferrari. Hence, attracting more customers. Furthermore, we would offer a wide range of services from changing even a screw in the car to reworking the engine along with doing monthly car service. We are aiming to become one of the best workshops and with the proper amount of investment and efforts, I believe we would be able to achieve the goal.

Q) Have you guys forecasted any sales that you are going to make which would help in calculating payback period?

A) Yes, we calculated the total monthly sales twice once before lockdown and once after lockdown. The before Covid-19 lockdown sales were much higher than. The one's we calculated a month ago. Right now the relevance is of the most recent forecasting sales so, after considering all factors that is the people who are going to buy from us and get their cars fixed, we reached on one number that is exactly 52,00,000 rupees per month (5.2 million INR). You can use this number to calculate the payback period as it is the exact value that we calculated.

Appendix 3

Questionnaire results

1. Do you have a fixed workshop for your car

2. How much do you usually spend at workshops on your car.

3. Do you think after covid you would be trusting repair workshops for health concerns

4. Would you still want to spend on your Car service after Covid played a role in decreasing your income


5. Do you have a luxury brand car

6. Would you buy parts in same amounts after the reopening of business due to pandemic?

7. Does location infrastructure matter for a workshop or it is fine if the workshop does excellent work

8. What type of customer are you?

9. Since how long are you a customer of Global Autoimpex

10. Are you concerned about your health safety in repair workshops


Appendix 4

Global Autoimpex and Industries pvt. Ltd.

Monthly profit and loss account for August 2020

*Provided by the director of Global Autoimpex and industries

Appendix 5

Investment cost account for automotive workshop

*Investment account provided by the company's director

Appendix 6

Forecasted monthly profit and loss account from the new automotive workshop.

This prediction was made after discussion with the Director, Mr. Kulmeet Anand, of Global Autoimpex and industries. The value for the sales revenue was told by the director during the interview (Appendix 2)