Manafgement

Economic Plan for Big Drive Auto

Learning Team A

ECO/561

November 8th, 2010

Michael Hebert

Economic Plan for Big Drive Auto

Big Drive Auto is a multistate dealer of cars and trucks located in Denver, Colorado. Big Drive Auto (BDA) sells various manufacturers’ vehicles as well as services the vehicles, sells parts for repair, and conducts a significant business in motor oil, coolant, and replacement tires. Big Drive prides itself on being the premiere dealer in the Denver Metro Area and is committed to being the most user friendly, customer service driven, and environmentally conscious dealer in the west.

The economic future of the auto industry is contingent on various economic conditions. Big Drive Auto management constantly scans the macroeconomic environment for signals to better improve their business. Items that Big Drive Management monitors are pricing strategy recommendations, recommendations for non-price barriers to entry, and ideas for product differentiation for the organization.

Big Drive Auto considers the indices for sales prices when creating a pricing strategy recommendation. From this, Big Drive Auto is able to determine how to proceed with pricing in the upcoming year/s. The years covered in these indices are 1998-2007 with the base year being 2000.

Index of Sales Prices for Vehicles: Year 2000=100 | | | | | | | | | |

1998 | 1999 | 2000 | 2001 | 2002 | 2003 | 2004 | 2005 | 2006 | 2007 |

98 | 99.2 | 100 | 99 | 97 | 96.8 | 98 | 97.2 | 98.5 | 99 |

Index of Sales Prices for Motor Oil, Coolant, and Tires: Year 2000=100 | | | | | | | | | |

1998 | 1999 | 2000 | 2001 | 2002 | 2003 | 2004 | 2005 | 2006 | 2007 |

100.5 | 100 | 100.1 | 102 | 102.9 | 106 | 111.2 | 116.9 | 118.5 | 119 |

Index of Sales Prices for Auto and Truck Services: Year 2000=100 | | | | | | | | | |

1998 | 1999 | 2000 | 2001 | 2002 | 2003 | 2004 | 2005 | 2006 | 2007 |

97.5 | 98.8 | 100 | 100.4 | 102 | 104.1 | 105.8 | 107.7 | 109.2 |...