Why Weststar Maxus Operation Must Consolidate and Reorganise

Consolidating makes sense

Weststar LDV Distributors had recorded a strong year-to-date profit as at end December 2010 mainly due to strong support from the government. Going forward, the situation is expected to slow down because new stock of Maxus will only be available in the last quarter of 2011 or early 2012.

Weststar is going big and strong in next 5 year and business is going to be seriously competitive in terms of price and market share. Weststar has big volume to handle and customer service will be a top priority. Consolidating the operations of Weststar LDV and LDV Distributors is the new agenda that will be implemented to sustain growth and systematic future development. New strategies must be drawn and adopted to make it a lean enterprise. Areas such as sales and marketing, production, After Sales including parts and service, training, IT, dealership and human resources need a new reorganization. The organization which is now top-heavy with duplication of job functions is unhealthy unless something is done to cut some of the liabilities. This may involve removing, reorganising or scaling down of unnecessary posts. Weststar practices heavyweight and heavy top lateral management system. While there is nothing wrong with it during good times, it would be real taxing when the economy is non favourable.

With Shanghai Automotive Industrial Corporation coming in as major principal, and as main provider of parts and warranty, the game is changing its landscape. Everyone has to be aggressive and proactive. New IT infrastructure and software are required to be on top of thing. Online connectivity with various bases, with principal and between departments and subsidiary companies on aspects like material orders, production, finance, spare parts, services, warranty, claims, invoice and payment will be very critical for efficient and effective state of the art online transactions.

A serious study on human capital must not be forgotten. The entire operation must have just enough staff, not less and not over-staffing. Special emphasis will be on the After Sales. Current situation would require Weststar to consolidate its Maxus operations to enable it to become more profitable. An aggressive and immediate consolidation exercise is inevitable at this juncture. I will agree if Weststar adopts a new business model whereby it will move away from the branch set-ups and replace them by dealership structures. Dealership structure will enable it to maintain its presence in certain markets at minimum costs. While there may be associated difficulties in the beginning stage, the long term effect is expected to be positive overall.

Having enough capital outlay, branch set up is preferred where Weststar may maintain its own spare parts and service facility. With the setting up of new branch, excess key personnel can be transferred to the new location to take up new roles and responsibilities or they could be absorbed into new job functions associated with their knowledge and talent.

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