Bling Max Car Wash Harvard Case Solution & Analysis

Introduction

Bling Max Car wash was an old business which changed owners recently; the new owner being Bernard West. The business was taken over by Bernie 6 months ago utilizing all his financial resources including home and drawings.

The business stood at 8 years old, though in perfect condition and standing in one of the prestigious and desirable places in the city with a heavy customer base.

After 6 months of operating the business, Bernie has assessed the need for appraisal for the business, and has some ideas which he needs to implement into the business to achieve more profits. There are options to be considered but some of them use Capital investments which needs to be analyzed on the cost benefit analysis.

The main options to be considered her are using the same business and future forecasts, Increasing the number of types of washes available to the client, investing in new blow off material for faster operating process of car wash, and changing the amount of prices available to the clients of the business.

Bling Max Car Wash Harvard Case Solution & Analysis

Overview of the Current Business:

The current position of the business relates to the Overall Position of the organization which Bernie has managed to assemble after 6 months operating for the organization.

The current business simulation suggests on an average 83 vehicles being entertained by the business on an average day; leading to an average risk adjusted revenue of 260.7 Thousand dollars and generating risk adjusted annual profits at 169.4 Thousand Dollars.

There is here a major drawback for the organization in the wait times, as average wait time deduced by the data in the case relates to an average of 103 Minutes to get a car wash of 6-8 Minutes in total, this is a problem for the organization in the retention of the client base.

Option-1: New Exit Blow off Machinery

The new machinery for the business has to be brought in through a capital investment of 11,500 Dollars being financed by bank at 6.5% APR.

Assumptions:

The calculations of the figure below are ensured at a simulated model, with random equal probabilities assigned. The Rainy Day risk adjustment is taken at 6% which is assumed to be loss on problems due to rain or any other inefficiency which can be fixed in the required time.

Evaluations:

Implementing of this option would require the investment in the machinery which will decrease the timing of all 3 wash cycles available by the organization:

Current
WASHMINUTESPRICE
economy6$8.00
custom7$9.00
deluxe8$10.00
Option
WASHMINUTESPRICE
Economy5$8.00
Custom6$9.00
Deluxe7$10.00

The above category will not change the options for the organization, or will implement a change in price. When compared to the data in the current position of the organization; it will reduce the average number of cars being washed daily from 83 cars to 98 cars per day. The profit for that option is approximately 200 Thousand Dollars annually which is Risk adjusted.

WASHMINUTESPRICE
economy6$8.00
custom7$9.00
deluxe8$10.00
Option
WASHMINUTESPRICE
Economy5$8.00
Custom6$9.00
Deluxe7$10.00

The above category will not change the options for the organization, or will implement a change in price. When compared to the data in the current position of the organization; it will reduce the average number of cars being washed daily from 83 cars to 98 cars per day. The profit for that option is approximately 200 Thousand Dollars annually which is Risk adjusted.................

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