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MGT 498 Week 3 Individual Assignment Environmental Scan Paper

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MGT 498 Week 3 Individual Assignment
Environmental Scan Paper
Environmental Scan: AAMCO Transmissions, Inc.
MGT 498 Week 3 Individual Assignment Environmental Scan Paper
Write a 1,050- to 1,400-word paper in which you complete the following:
Research and describe the internal and external environments of 2 to 3 real-world companies using
an environmental scan. Fill out the SWOT Analysis form provided by the instructor and attach it to
your paper.
Determine what competitive advantages each company has and what strategies each company is
using.
How does each company create value
MGT / 498
Environmental Scan: AAMCO Transmissions, Inc.
Aamco Transmissions, Inc. (ATI) is a national company that has a
majority of its store open and operating through a franchise network
of individual owners and operators. Currently the franchise chain has
approximately 750 open and operating stores, with about 5% (37) of
those being company run stores. Aamco Transmissions, Inc. offers a
wide variety of automotive services for retail sale, as well as a robust
National Fleet program for fleet management companies as well as
extended warranty organizations.
While ATI does offer a wide variety of automotive services, they are
better known for their expertise in the automatic transmission repair

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segment. Over the course of 50+ years of operating in the United
States and Canada, ATI has established themselves as the largest
transmission repair chain as well as an innovator with both
advertising and manner in which customers are handled.
Over the past 10 years, ATI has experienced a decline in transmission
repair services performed in their centers, nationwide. On average, the
average repair order size (dollar amount) has increase by 3% year
over year during that time, but the volume of transmission services
performed has continued to decline at a rate of 2% per year, on
average. The challenge for the franchise is to maintain the core
business model that has sustained the chain for over five decades
while continuing to provide the same type of profit margins that the
franchisee network has come to expect.
The current model that ATI has is to employ, in each center, a
transmission rebuilder who is capable of diagnosing and rebuilding
transmissions. However, with the continuing decline in transmission
revenue, year over year, the cost of employing such a specialized
technician has, or is, become too costly and is having a detrimental
effect on the bottom line for the lower volume centers. The reasonable
solution is to remove the high priced technician that is capable of only
a limited set of skills and replace it with a “universal” type of
technician. The problem then lies in the fact the centers would then be
unable to accommodate the transmission business and be forced to
abandon that high margin work.

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Senior management has considered offering, to the franchisees, a
remanufactured transmission to help offset the cost and liability of
having an in house rebuilder. These transmissions would be produced
in a rebuilding facility that ATI would purchase and ship the units
directly to the franchisees on an as needed basis. These units would be
sold at cost to the franchisees (plus a small amount to cover cost of
possible warranty issues). While the overall cost of unit (including the
parts and labor) would be similar to the current process, it removes
the variable expense of the rebuilders salary and allows the cost of
unit to become a fixed cost.
What has to be considered is what competition exists in the wholesale
market that the franchisees may consider as an alternative. Currently,
there are several players in the national market that could and do
compete in that field. The first competitor is Jasper Engines and
Transmissions (Jasper) based out of Indiana. Jasper has been in
business for several decades and is renowned for their quality and
warranty offerings. A second company is Engine and Transmission
Exchange (ETE) based out of Wisconsin. ETE is a family owned
business who is relatively new to the industry and is known for lower
that Jasper prices with similar warranty, but slightly lesser quality.
Both organizations utilize similar strategies to market their products.
With the type of products that are offered from these companies, there
is a limited retail market for them to compete in and neither has any
retail locations that deal directly with the public. The public is capable

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