Case Study for North Country Auto

font Study for North Country Auto, Inc. North Country Auto, Inc. was a franchised principal sum and factory-authorized service center for Ford, Saab, and Volkswagen. The smart set maintains its competitiveness by providing full function to its customers. For customers looking for a railroad car, the North Country Auto not still provided options for new cars from those three brands, but also provided options to buy used cars from it. In addition, for customers with cars, the company can provide a variety of services to their car, much(prenominal) as service and repair under warranty or at the customers expenses.Example service and repair work are quick crude change, auto repair, the body shop work and auto take leaves supply. Recently, the company adapted a new control system as a strategy to improve its sales and increase its bread. There were five departments at heart North Country Auto the new car department, the used car department, the service department, the parts de partment and the body shop. Origin bothy, these five departments operated as part of angiotensin-converting enzyme business. And the performance of each department was not individually evaluated. under the new control system, all five departments operated as an individual avail center.The owner assumed that, by doing this, all managers of the five departments would be support to increase their departments profit so as to have better military rank and better income. However, under this new control system, there were still problems inevitable to be dealt with, because the business conducted by these departments affected each other(a). In this case, if one department tried to maximise its profit, it may affect the profit of other departments. For example, when the new car department manager tried to sell a new car, he would offer a very steep swop price for the customers used car so as to attract the customer.If this high trade-in greet was allocated to other departments, it would be unavoidable that the cost of those departments would increase and their profit would decrease. Therefore, the questions raised from this case would be should all departments be treated as an individual profit center and how the impart price should be set between the departments as well as how to correctly allocate the cost among different departments. In my opinion, I sound off the parts department and the body shop should not be considered as the profit centers, since most demands for these two departments were from service department.If these two departments tried to maximize their profit, it would be very difficult for the service department to maintain high profit. In my opinion, the parts department and the body shop should be considered as cost centers. In addition, the transfer price among all departments should be the foodstuff price instead of another price determined internally. And any losses on inter-departmental business like trade-ins should be proportio nally allocated to three profit centers the new car department, the used car department and the service department.In addition, under the current control system, the year-end bonus of each department manager was based on his/her departments performance. The profit to be evaluated was the departments gross profit instead of its net profit. This paygrade method may encourage all managers to focus on interchange activities only. They may ignore other important responsibilities such as cost control or reduction, as well as inventory control. Therefore, I think the evaluation for each departments performance should be based on the net profit. This would encourage the managers to be responsible for overall cost control and profit-making.