ENVY RIDES CASE

ENVY RIDES CASE

Project description
it should be written by accounting style
ENVY RIDES INCORPORATED
Greg J.R. Smith wrote this case under the supervision of Elizabeth
M. A. Grasby solely to provi
de material for class discussion
. The
authors do not intend to illustrate either effective or ineffect
ive handling of a managerial situation. The authors may have d
isguised
certain names and other identifying information to protect confidentiality.
Richard Ivey School of Business Foundation
prohibits any form of reproduction, stor
age or transmission without its written
permission. Reproduction of this material is not covered under
authorization by any reproduction rights organization. To order
copies
or request permission to reproduce material
s, contact Ivey Publishing,
Richard Ivey School of Bu
siness Foundation, The Universi
ty
of Western Ontario, London, Ontario, Canada, N6A 3K7; phone (519) 661-3208; fax (519) 661-3882; e-mail [email protected]
Copyright © 2010, Richard Ivey
School of Business Foundation
Version: (A) 2010-10-27
In early January 2010, Scott Miller, newly appoint
ed manager of commercial accounts at the Genesis
Bank of Canada (GBC), was considering the latest
loan request that was sitting on his desk. Jacob
Hessels, dealer principal of Envy
Rides Incorporated (Envy), was requesting a $60,000 long-term loan for
a partial renovation to his dealership. Hessels had
also requested an additional $450,000 working capital
loan for the day-to-day operations of his motorspor
t recreational dealership. Because of the current
unstable economy, Hessels was becoming increasingly anxi
ous about his loan request, and he needed an
answer now so that he could approach other banks,
if necessary. Without the requested loans, Hessels
was uncertain whether he could continue operating Envy
Rides. With the recent increase in loan requests
from new and existing customers, Miller had four hours in which to make a decision before he was
scheduled to meet with Hessels.
JACOB HESSELS
Jacob Hessels was a talented businessman, specializing
in business start-ups. He prided himself on
developing successful marketing campaigns and, at the
age of 38, he was well known in many different
industries. Hessels’ career had started in the car
retail sales industry, where he had worked as a car
salesman. As an amiable and charismatic person, he
was noticed in every role he filled. After excelling
in car sales for over a decade, Hessels became the vice-president and director of marketing for Wegz
Stadium Bar.
1
He stayed in this role for five years,
and then moved on to accept the role of general
manager for the start-up of a Hyundai dealer
ship in a small Southwestern Ontario town.
When the opportunity arose to purchase an existing moto
rsport dealership that sold recreational vehicles,
Hessels could not pass it up. As a motorcycle enthus
iast himself, Hessel felt this chance was a dream
come true.
1
Wegz Stadium Bar was a Sports Restaurant
located in Toronto, Ontario, Canada.
Page 2
9B10N033
ENVY RIDES INCORPORATED
Hessels had always dreamed of owning and operating
his own dealership. He enjoyed the freedom of
being his own boss and setting his own working hour
s. The banks were not willing to loan Hessels
money because he could provide only minimal start-up capital for his business venture, so instead,
Hessels personally borrowed funds to purchase the deal
ership from his network of private investors, who
believed in his talent for this
new business venture. In August 2007,
2
Hessels bought Milton Motor
Sports, an existing recreational motorsport dealership
in the Milton area just outside Toronto, Ontario.
Hessels immediately changed the business name to
Envy Rides Incorporated, converting the business’s
identity and the building to
the Envy Rides brand.
Hessels’ business grew exponentially in its early
months. Sales were increasing, and the staff
complement had grown from six to more than 20 em
ployees in less than a year. In February 2008,
Envy’s growth supported a move, and the business relo
cated to its current store in Mississauga, Ontario.
The 14,000-square-foot leased facility focused on selling
recreational vehicles, mainly in the motorsport
category. Although vehicles within the motorsport divi
sion consisted of a variety of vehicles, including
ATVs, snowmobiles and mopeds, Envy primarily focused
on motorcycles. The dealership carried many
different brand names, with a large focus on Aprilia
, Moto Guzzi, Suzuki and Yamaha, thereby increasing
Envy’s overall recreational market share by offering bra
nds that interested most consumers. Additionally,
the dealership offered accessories and apparel (hel
mets, jackets, boots, etc.) that supplemented the
recreational vehicle purchase. Envy provided recr
eational vehicle servicing by a knowledgeable and
friendly parts-and-service team within the dealer
ship (much like an automo
tive dealership). The
dealership serviced all types of motorsport vehi
cles, with the exception of marine vehicles. To
accommodate riders during the winter months, Envy
offered storage for motorcycles and other motor
sport vehicles. Envy also had a strong website presence on the Internet with plenty of information
ranging from events, to the most recent news, to invent
ory and dealer information; the site even allowed
consumers to post testimonials about their buying experience.
With Hessels and his marketing expertise at the helm
of the company, Envy was the subject of brilliant
marketing campaigns and initiatives. Hessels had bi
g dreams and, with the 2008 expansion, he took
advantage of the grand opening with the hope of further increasing sales. The grand opening featured
activities and events including a bike wash, races,
prizes a barbecue and massive inflatable ATVs
covering the new facility’s lot. Envy also had a
large presence on a hit radio station, z103.5, which
catered to Envy’s prime demographic
?
consumers between 18 and 35 years of age.
New to the market, Envy matched any other competito
r’s price (if quoted in writing), and the business
strongly relied on word-of-mouth advertising. As a
motorcycle rider himself,
Hessels’ knowledge and
expertise played a key role in the buyer’s purchasi
ng experience. Envy strove to ensure customer
satisfaction at the highest level and to represent its
brands professionally at all times. Envy’s mission
statement sought to provide a new type of buying
experience for consumers, wherein the dealership
would also provide outstanding service after the sale was completed. Hessels believed Envy was the
dealer that would be able to provide this kind of service.
Hessels looked back on the expansion as necessary; ho
wever, with the current economy and the everyday
woes of the recreational motor sport industry, he knew it was time to do more to improve his cash
position and to improve Envy’s profit margin.
2

Envy’s first complete fiscal year end was 2008.


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