Furthermore, labor is a supplier in this industry as well, and salaries for such individuals are well known and not very flexible. Therefore, these companies can set whatever price they wish to. These companies are more consolidated that the repair industry, have deeper pockets, an almost limitless number of substitute customers, and finally they are the single most important supplier to F & R’s industry. This is due to the fact that the suppliers who absorb the greatest amounts of cash from repair shops are large auto part companies. Suppliers have a great deal of power in setting and negotiating the prices of their products and services to repair shops. The auto repair industry is highly competitive. Each company within this field has high capital costs, low margins, and a high intensity of competition. These include:Įach job or project will be on a reservation basis, although we will accept a small percentage of drive in repair work. 3.1 Service Descriptionį & R Auto provides a wide range of auto repair services. The largest part of the company’s expenses will be in labor costs. It is the company’s professional people who will fulfill the firm’s contracts and goals. The only way to have an advantage in this industry is a low cost leadership principal applied aggressively or to create higher switching costs through the building of strong business to customer ties.į & R Auto will hire trained and certified mechanics who are able to prove they have superior customer awareness and interaction. Finally, the barriers to entry are moderately low, and the large number of competitors in this field, including substitutes (such as do-it-yourself work) mean that the pricing for such services are very competitive. In addition, because the customers see the service as undifferentiated and a “commodity” with little value separation between competitors, buyer power is also very high. ![]() The industry is highly competitive with suppliers having a great deal of power in setting and negotiating the prices of their products and services to repair shops. In this way the company can offer greater perceived value for the customer than many other shops which specialize in certain areas. It is ultimately the goal of the company to offer a one-stop facility for all auto servicing needs, including brakes, transmission, wheel alignment, etc. ![]() F & R Auto offers a wide range of services as outlined in the detailed sections below.
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