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 cases@ivey.uwo.ca. 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. PLACE THIS ORDER OR A SIMILAR ORDER WITH US TODAY AND GET AN AMAZING DISCOUNT :)