BJs Wholesale Club - Case Study Example

Number BJ’s Wholesale Club History BJ’s Wholesale Club has its headquarters in Westborough, MAand is a leading company operating membership warehouse clubs in Eastern United States. Currently, the organization runs over 200 Clubs in various states and employs over 25,000 Team Members (Bjs Wholesale Club). The states of operations include Connecticut, Delaware, Florida, Maine, Massachusetts, Virginia, among others. The company allows all consumers who are 18 years and above and all businesses to join and become members of BJ’s. BJ’s wholesale club offers a narrow assortment of general merchandise items and food under broad product categories. The company limits the general merchandise selections to items that present the particular brands under each product category to ensure rapid inventory turnover and high sales volume. BJ’s sells a variety of products and, therefore, they attract many customers from a broad range of other retail and wholesale distribution channels. Such distribution channels include consumer automotive and electronic stores, office supply stores, supermarkets, department stores, supercenters, drug stores, among others. BJ’s operates warehouse clubs which enable them to sell their products and services at a relatively low cost compared to the higher cost channels above. Such warehouse clubs eliminate the high costs involved in handling the merchandise, for instance, the traditional multi-step distribution channel, by directly purchasing the full truckloads of merchandise from the manufacturers. Also, BJ’s uses the sales floor to store the merchandise rather than the central warehouses. Since 2004, BJ’s has grown to over 205 clubs from 150 clubs (Bjs Wholesale Club). Site development and construction costs for a full-sized BJ’s club range from 6 million US Dollars to 1o million US Dollars. The organization spends around 5 to 10 million US Dollars in acquiring the land for a single club. On the other side, BJ’s company invests 3.5 to 4 million US Dollars for equipment and fixtures, approximately 2 million US Dollars for inventory. According to Bjs Wholesale Club, the firm also incurs an estimated 1 million US Dollars to 1.5 million US Dollars in preopening costs of new full-sized clubs. The large urban clubs require high preopening costs. Abstract BJ’s Wholesale Club is committed to quality services and high profitability. The primary source of capital and liquidity resources is cash flows which are generated from the club operations. For instance, BJ’s cash as well as cash equivalents amounted to $58.8 million in January 2010 (Bjs Wholesale Club). The company’s decision makers strive to retain the firm’s management team through lucrative incentives. This is one of the measures developed towards achieving the company’s set objectives as well as addressing some of the challenges facing the organization. One of the problems is the seasonality of BJ’s business due to its retail nature. Also, the services are below the customers’ demands, particularly in the tire center. Customers expect BJ’s to provide more services by upgrading and expanding on the current services. The company should, therefore, focus on upgrading and expanding the services to meet the customers’ demands. For instance, BJ’s should offer oil changes, state inspections and installation of batteries. The project proposal targets the expansion of the tire bay services which requires a keen and more detailed study. The project looks into the impacts of the current situation in the organization and the clients. Effective research methods such as qualitative and quantitative methods will be used during the study to formulate appropriate solutions and recommendations to BJ’s stakeholders and management. The two research methods are preferred because it ensures efficiency in data collection and analysis (Katsirikou et al. 9). Introduction The project will aim at broadening the tire bay services as demanded by the customers. BJ’s Wholesale Club is a profit oriented organization and, therefore, the intended project must promote the primary objective of the company. Apart from the service expansion at the tire bay, the organization will ensure they continue to offer quality products and services in the various departments. The company’s loyal clients face inadequacies in the services provided in the tire bay. The services are limited to installing and selling tires, flat repairs, rotations, and balancing. The deficiency in service provision is a major challenge at BJ’s and needs to be addressed as soon as possible. Therefore, the project intends to analyze the prevailing high customer demand for services at the tire bay and respond by providing the necessary services required by the customers. The company should expand their operations and offer other services such as installing batteries, state inspections and giving oil changes. Such measures will seek the attention and support of the company’s management and stakeholders who are in a position to influence the decisions made at BJ’s wholesale club. The upgrade and extension of services will lead to customer satisfaction in the firm through the provision of adequate and quality products and services. Technical Section The constant customers’ requests to upgrade and expand the services of the tire bay put the company at a risk of losing some of their loyal customers to other businesses. If the problem persists without quick measures taken to address the issue, the company is likely to experience many problems. For instance, the productivity of the firm will go down. If the customers’ requests are not addressed appropriately, the company will lose many clients to the competitors offering similar products and services within the region. This implies the demand for the goods and services will go down. On the other hand, demand has a significant impact on the production scale (Gandolfo 168). The low the demand, the low the productivity as surplus production will end up into wastage. The efficiency of the organization’s operations and activities will also decrease. Since the company is not in a position to offer the supplementary services to the current services provided in the tire bay, efficiency is likely to go down. For instance, giving oil changes and state inspections will add on to the flat repairs and installations to improve the effectiveness in the automobiles. Without all the required services, efficiency in the company’s will go down since most of their work and services will seem incomplete. The company’s profit is highly dependent on the level of productivity, customer satisfaction as well as efficiency in the firm’s operations. Therefore, the low productivity and inefficiency is likely to cause huge losses in the company profits. Therefore, the management and the stakeholders of BJ’s Wholesale Club have to upgrade and expand their services to maintain and increase the company profits. Additionally, such measures will ensure continuous delivery of quality services and goods. The unsatisfied customers will result in adverse impacts both on the revenue and the company profits. First is the obvious loss of revenue from lost customers. Also, there is the secondary effect. It costs most businesses around 500 to 1,000 US Dollars to get or attract a new client (Oliver 3). BJ’s Wholesale Club is likely to lose some of the clients, and the organization will have to spend a large proportion of their profits in marketing to maintain the previous revenue stream. If BJ’s company can delight their customers and have them coming back, the marketing money will go directly into savings or used to grow the business. BJ’s can use customer retention programs, support, and stellar services to satisfy the customers. This is why large organizations focus on customer satisfaction, quality services, and customer retention. Apart from the organizational impacts, the existing problem affects the consumers negatively. The clients’ choice is somehow limited. Whereas they require the additional services at the tire center, BJ’s has failed to provide the variety of services, according to the desires of the customers. Therefore, the loyal customers have no alternatives but rather put up with the situation at the firm. According to Oliver, customer satisfaction is a core indicator of performance especially as a strategic differentiator in competitive markets. Additionally, organizations refer to the client satisfaction in getting the customers’ perceptions regarding the performance. However, BJ’s Wholesale Club does not meet customer satisfaction due to the limited services. The customers’ expectations are the benchmarks which customers use in gauging their satisfaction. The existing problem of service inadequacy is also likely to affect the company’s competitive level in the market. BJ’s company has several competitors including Sam’s Clubs, Costco Wholesale Corporation, among others (BJ’s Wholesale Club). Most of these competitors are large organizations which have more resources than BJ’s company. Therefore, the competitors are in a position to offer some of the services which BJ’s cannot provide to their customers. Customers always seek satisfaction thus the company may face stiff competition which will result in loss of customers to the competitors. Loss of customers will lead to reduced demand which will affect the business’s profitability adversely. Management Requirements Changes in personnel It is necessary to address the changes in personnel whenever there is an upgrade or expansion of services in an organization. The stakeholders and management team of BJ’s Wholesale Club will have to take into consideration such changes and act appropriately to implement the project. According to Hbrs 10 Must Reads, the company will have to employ a systematic approach as required by organizational change management (OCM) to manage and control the changes in personnel. OCM is important since the upgrade and expansion require the employees to learn new skills and behaviors. At first the decision makers will have to set expectations, proactively seek ways to handle cases of misinformation and employ tools which will improve communication. By doing all these, the management and stakeholders will initially buy into the change and remain focused and committed to the change despite any discomfort and challenge that will come on the way. The stakeholders and management will have to employ the various successful OCM strategies to implement the project. For instance, the management should establish a strong executive leadership which will communicate the project’s vision and sell the company’s business case for change (Hbrs 10 Must Reads). The personnel will be required to adapt to the new services and thus need to be directed and controlled by the management to ensure that they do the right thing. Importantly, the management of the company will have to strategize on educating the employees in their new areas of work. The upgrade and expansion of services will require new knowledge and skills. Therefore, the personnel should be offered with appropriate education through training and seminars. Changes in physical facilities Apart from the changes in personnel, the stakeholders and management need to take into consideration the changes in physical facilities. They should have extensive plant management plans, according to the demands and needs of the project (Varley). The good service management will be concerned with addressing the needs and demands in the most cost-effective and best ways possible. The facility management will encompass various responsibilities. For example, the management will be required to ensure high and adequate purchases of the essential products through standardization. Also, it will be necessary to provide the divergent procedures, standards and processes present in the company complement rather than interfering with one another. Moreover, the decision makers will ensure the new facilities comply with the relevant regulations and codes, and that they do not violate environmental rules. Changes in the management structure Due to the new products and services that will be introduced in the tire bay, it is necessary to adjust the existing management structure of the company. Deciding on the right management structure will ensure the project grows, employees are contented and that the project becomes profitable (Varley 19). On the other hand, the wrong management structure will result in tensions between managers and workers. Also, inappropriate management structure will reduce the profitability of the company and result in much inefficiency at the workplace. In worst cases, the wrong management structure will lead to the closure of the project. In regards to the above considerations, the management and stakeholders will have to change some of the critical components in the management structure. Among the key elements include task definition, communication style, formalization and the type of influence. Such changes will have to be coherent with the BJ’s Wholesale Club requirements as well as the demands and needs of the new project. Under task definition, the decision makers will have to redefine the allocation of tasks and outline clearly the delegation of tasks. Also, the formal interaction patterns and coordination mechanisms between the managers and the employees will have to be adjusted accordingly. Importantly, the communication style will be redefined to suit the new personnel at the tire bay and the whole company. It is necessary to change how the messages and information travel throughout the company inclusive of the newly formed departments. Appropriate communication channels will be established to ensure smooth flow of information. Depending on the needs of the new physical facilities and the personnel, BJ’s will have to decide on whether to adopt vertical or horizontal communication. For instance, in vertical communication, information will be passed from the top management down to the juniors and vice versa. In horizontal communication, information will travel amongst the junior employees or managers. In formalization, the decision makers will define rules and regulations regarding decision making and management control. Also, the degree of standardization of new procedures and tasks will be set by the new services. The rules and regulations may be through written descriptions which are objective or subjective informal controls. Finally, the types of influence BJ’s employs to motivate and direct the staff will be redefined. For example, the decision makers may choose expertise-based influence or authority-based influence to attain the set goals and objectives. In the authority-based technique, the top managers will issue direction and orders depending on their position (Gandolfo). On the other hand, in expertise-based technique, the managers will use their knowledge to influence and direct the subordinates. New products and service manager The new products and services will be managed by the company’s product manager who is likely not to end up with unilateral decisions. More preferably, the product manager will have to possess experience and skills in sales and marketing, as well as engineering world. The dedicated product manager will permit the BJ’s senior management to pay close attention to the significant aspects of the project. Again it will be the role of the company’s decision makers to select the best candidate for the position of the product manager. Despite the key role played by the product manager, the company’s senior management will remain ultimately responsible for managing the new goods and services, and they will be engaged on a daily basis. This is a requirement for new product development which is aimed at bringing success to the organization. Cost Section The whole project requires many resources to implement. For instance, in the state inspections, the firm will need extensive inspection approval sticker systems. Such systems will help evaluate the condition of cars and determine whether the vehicles are roadworthy or un-roadworthy. Giving oil changes will require different brands of oil both for brakes and engines, among other accessories. On the other hand, installation of batteries will require a variety of tools and accessories from connectors to starter cables. Notably, the introduction of new facilities will require proper education of the personnel. This will be done through training and other methods. The educators and trainers will have to be motivated through wages to carry out their duties appropriately. The estimated budget for the project requires a total of $ 6,541 and is shown on the next page. Item Price/Cost ($) Quantity Totals ($) Educating new personnel _ _ 1,000 Approval sticker 2 200 400 Computer and printer 200 5 1’000 Plastic scraper 10 50 500 Oil filter 2 100 200 Oil 8 100 litres 800 Vacuum oil remover pump 100 10 1,000 Floor jack 20 10 200 Jack stand 15 10 150 Muffler repair 8 8 16 Battery washer 5 15 75 Starter cable 8 _ 320 Connector 8 50 400 Battery adapter 12 40 480 TOTALS 6,541 Conclusion The problem of inadequate services at the tire center affects BJ’s Wholesale Club in various ways. The impact is felt by the organization, customers as well as the competitors either negatively or positively. The direct effects are considered in productivity, efficiency, profits and customer satisfaction. On the other hand, the broadening of the services of the tire bay requires various adjustments in management. The change in personnel and physical facilities need to be addressed. The company has to strategize on different ways to ensure that the changes do not interfere with the daily operations in and out the organization. The management and stakeholders will have to employ appropriate education and motivation to promote adaptability of both personnel and physical facilities to the prevailing conditions. Additionally, the company will have to budget adequately for the project. The project entails many expenses which are costly. Therefore, the company has to provide enough resources so that the project continues once it is started. Furthermore, the existing management structure should be adjusted to the demands and needs of the project. Recommendations The upgrade and expansion of services at the tire bay to include giving oil changes, installation of batteries and state inspections are necessary for achieving customer satisfaction at BJ’s company. More still, BJ’s Wholesale Club should ensure adequate and quality services which retain and attract more customers into the organization. Works Cited Katsirikou, Anthi, and Christos H. Skiadas. Qualitative and Quantitative Method in Library: Theory and Applications: Proceedings of the International Conference on Qqml2009, Chania, Crete, Greece, 26-29 May 2009. Singapore: World Scientific, 2010. Internet Resource Bjs Wholesale Club, Inc. Swot Analysis. Marketline, 2007. Print. Gandolfo, Giancarlo. International Economics: Vol 1: The Pure Theories of International Trade. Springer Science & Business Media, 2013. Print Varley, Rosemary. Retail Product Management: Buying and Merchandising. London: Routledge, 2014. Print Oliver, Richard. Satisfaction: A Behavioral Perspective on the Consumer. London: Routledge, 2014. Print Hbrs 10 Must Reads: On Change Management. Boston, Mass: Harvard Business Review Press, 2011. Internet resource Read More