Case Study: Midas Broadening Horizons

Running head: Broadening Horizons

Midas Broadening Horizons
Kenneth Stotelmyre
BUS644: Operations Management
Michael Snell
9/30/2013

Abstract Midas has always been a simple company that offers simple automotive services. It has been in business for more than 50 years in the United States. It can be invested in as a franchise opportunity. The company is looking into expanding their service beyond their normal range and the new service will include a tune-up. This will include somewhat of an update to their operating system they are now accustomed to. This paper will take a deeper look into the potential expanding market of Midas for a, hopefully, more profitable future.
Midas Broadening Horizons Midas has become what they are today because of a great system of operations. They always have kept it simple and because of that it has saved in operating cost for inventory affecting their bottom line. The strength of a company comes from the name that has a reputation of good prices and quality workmanship. As a franchising opportunity article for Midas indicates the, “Benefit from 97% Consumer Brand Awareness1 Midas is a trusted, globally recognized brand and is one of the world’s largest providers of automotive services. We have franchised, licensed and company-owned Midas shops in 15 countries, offering a wide range of maintenance and repair services, such as brake, exhaust, maintenance, tires, steering and suspension services,” (www.franchiseclique.com). The positive impact can be tremendous because of the name Midas had made for itself. The efficient fast speed of the company, prices and good service is their mission statement in a nut shell. They do not want to jeopardize this by having tune-ups raise questions of mostly efficient speed. They want to stay quick at what they do. They have to make sure that the operating system or procedure of the tune-up is consistent. This is a difficult objective because each and every vehicle is different.
Accommodations
The text book states that, “Operations can become a positive factor contributing to organizational success, rather than a negative or neutral factor,” (Vonderembse, M., & White, G. (2013). If there is a potential to make profits operations will utilize the potential. It is clear that the operating systems will have to change to accommodate this type of change within Midas. They will have to obtain more tools to look into the vehicles electronic control unit to see what may be wrong with particular vehicles. In Optimizing the Location of R&D and Production Activities: Trends in the Automotive Industry states, “It argues that industrial activities tend to agglomerate in certain regions, and it tries to provide an explanation of the fact that some regions seem to attract more economic activity than others. Researchers in this stream suggest that the benefits of agglomeration, such as reduced transport costs, increased product variety and lower unit product prices, encourage firms to concentrate in certain places,” (Colovic, A. & Mayrhofer, U. (2011).
Input Consideration The first thing that we have to consider with Midas is that they are a franchise company making them different than most other automotive shops. This is why the input from each and every store is important. It very well may be a by geographic location only where some Midas locations may include the service of tune-ups where other locations my not. The new equipment that is needed to perform these kinds of services may also deter the owner from wanting to participate. It must be priced right and have a far better revenue potential to entice the owner of the franchise. It is ultimately in the best interest of the company to do what is most cost effective from an operating systems level.
Crucial Input The input of each store is very important pertaining to this objective that Midas has set out to implement. The statistics on how many tune-ups for competitors is also a vital input that needs to be obtained. The article Case-based Reasoning for Automotive Engine Performance Tune-up mentions that, “the relationship between the input and output parameters of a modern car engine is a complex multivariable nonlinear function, which is very difficult to be found. Consequently, engine tune-up is usually done by trial-and-error method. This will spend a large amount of time and money. As discussed, calibrating the ECU of an engine is costly and time-consuming,” (Vong, C. M. Huang, H. & Wong, P. K. (2010). In my opinion this is the single most important thing for Midas to consider because a set time limit of 30 minutes or even an hour in some instances cannot be a realistic guarantee. Also listening to what the franchise investor has to set is important because they are the back bone of Midas. Midas has a great strategic system that has to be implemented to get the best input from every aspect and angle. Implementation The first step would be to create goals and create an action plan for the implementation of tune-ups. In operations management it states that, “An expert system employs human knowledge that has been stored in a computer to solve complex problems. To be considered an expert system, the system must have: (1) a method of acquiring knowledge, (2) a knowledge base (memory), and (3) an inference engine (brain) so it can reason,” (Vonderembse, M., & White, G. (2013). The idea of having a tune-up will need to be guided by an expert system. The concept of having a computer solve complex problem within an engine is nothing new and helps to save time in the servicing process. The action plan that I would create would have the following factors achieved.
The first factor is obtaining the number of tune-ups in all areas where they have a Midas shop. Secondly I would look into the cost of the tools and equipment needed for this specific job. Then I would generate figures of the amount of tune-ups we could do if we could grab just 5% of market share among competitors. Then we would have to implement the tune-up by training employees, letting the public know through advertisements, preparing facilities and setting franchising tune-up standards. This in effect would give Midas a reasonable shot at getting tune-up customers. The idea has to be, perhaps, at first to get the customer interested in a tune-up while they are receiving some other form or service. Then word of mouth will travel when Midas does the quality job that they will do in this service along with all other
services.
Conclusion
In looking at the information and what has made Midas a strong franchise now and for years to come I would urge the company to stay away from tune-ups.
If they want to enter a new market that is much safer to keep customer satisfaction and guarantee high they should service for oil changes. The common oil change is very easy to do in a particular time parameter. I would imagine it all depend the angle that Midas is going for. I do know that they have a great operating system with an easy to understand manual. This makes the business easy to operate from a franchise standpoint. Midas is a good company and if they want to expand profits by offering tune-ups then they will achieve it at an operations level. They have made it this far in the economy for a reason and seem to be seeking broadening their horizons.

References:
Vonderembse, M., & White, G. (2013). Operations Management. San Diego, CA: Bridgepoint Education, Inc.
Colovic, A. & Mayrhofer, U. (2011). Optimizing the Location of R&D and Production Activities: Trends in the Automotive Industry, European Planning Studies. Vol. 19 Issue 8, p1481-1498. 18p. 6 Charts. Retrieved at Business Source Elite.
Website. All Franchises > Automotive Franchises, Midas. Retrieved September 30, 2013 from www.franchiseclique.com.
Vong, C. M. Huang, H. & Wong, P. K. (2010). Case-based Reasoning for Automotive Engine Performance Tune-up, AIP Conference Proceedings. Vol. 1233 Issue 1, p185-190. 6p. 2 Color
Photographs, 1 Diagram, 1 Chart. Retrieved at Academic Search Premier.