Evaluating Legal and Regulatory Issues

Running head: AUTOZONE1
AutoZone: Situation Analysis
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AutoZone: Situation Analysis
1. Introduction
AutoZone is a US, Tennessee-based automotive aftermarket retailer. Founded July 4, 1979 as Auto Shack by J.R. “Pitt” Hyde III in Forrest City, Arkansas, AutoZone/Auto Shack expanded into eight stores in Arkansas and Tennessee (“About AutoZone,” n.d.). Initially conceived by J.R. “Pitt” Hyde III as a specialty store and as part of family’s wholesale food business, AutoZone has expanded into an international company offering mutiple aftermarket services by expanding in size, operations and competitive advantage and staff. In 1987, Auto Shack became independent AutoZone lead by J.R. “Pitt” Hyde III. This step marked an important milestone in company’s history. By operating independently from Pitt’s family business, AutoZone assumed an independent corporate identity and, as such, continue to grow and develop a brand unique to AutoZone. In 1991, AutoZone was listed on New York Stock Exchange. Changing status from private to public company is second important milestone in company’s history. Turning public means, if anything, AutoZone, just as all publicly traded companies are, is accountable to stockholders and stakeholders as opposed to company’s founders and owners only. The change in status is, moreover, a strong indication of company’s solid financial and non-financial position. During, 1990s, AutoZone made more calculated and extremely successful moves only to cement company’s competitive edge in aftermarket industry. In 1996, AutoZone rolled out a commercial program providing credit and delivery to auto part professionals. Shortly after, Auto Zone acquired ALLDATA, country’s leading provider of electronic automotive diagnostic and repair software – a vertical expansion which has enabled AutoZone to diversify and further specialize in aftermarket offerings. In 1998, AutoZone was ready to expand
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internationally in Mexico and, years on in 2012, in Brazil. Today, AutoZone employs over 85,000 staff, or AutoZoners, in four continents supporting company’s growing operations (“About AutoZone”).
2. SWOT Analysis
The automotive aftermarket industry is extremely competitive. Susceptible to changes in upstream market, aftermarket industry is caught between sweeping changes occurring in vehicle manufacturing end and equally rapid changes in mobility market at end customer’s end. Technological innovations, coupled by rapidly changing customer preferences, are redefining automotive aftermarket industry in key significant ways. To put matters into more perspective, a closer examination is required of AutoZone’s operating environment. To do so, a SWOT analysis is presented as follows:
Strengths
* Brand Equity. AutoZone has, clearly, developed a reputation of service excellence over decades. Starting at early information and service economy period, i.e. 1970s, AutoZone has managed to eke out a niche market in aftermarket industry. Leading aftermarket by enhancing internal capabilities and expanding vertically and horizontally, AutoZone has established a brand name a few similar aftermarket companies could match. This is a high value asset AutoZone could always rely on for any future expansions and/or investment diversification.
* Strong National Presence. The US is AutoZone’s home market. Having strong US market presence, AutoZone is in strong shape to enhance market positioning. Moreover, company’s long market presence has strengthened AutoZone’s supply chain network and, as such, has leveraged company’s bargaining power to negotiate price quotes, purchases and contracting conditions.
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This is, definitely, a strong asset which does not only add yet also create value across company’s value chain.
Weaknesses
* Outdated Business Model. Despite company’s steady growth and solid financial performance, AutoZone has a major liability: company’s business model. As matters stand, AutoZone still operates according to a largely outdated business model whereby customers, commercial and private, still need to stop by to pick up an order and/or perform a service. True, AutoZone has introduced a number of apps for customer’s convenience. These apps are, however, a sort of catch-up many lagging companies play in an attempt to stay abreast of more advanced customer-oriented services and offerings. The AutoZone Pro affiliate service (“AutoZone Pro,” n.d.), for instance, is designed to cater to needs of auto professionals in a way reminiscent of 1990s online services. Instead of, say, a data-driven app or platform, commercial customers are asked to fill in an online form to gain access to customer’s AutoZone Pro authorized account. This is, of course, one example of many indicating ways AutoZone is lagging behind in servicing customers.
* Supply Management Practices. AutoZone has been in business for decades. This has expanded company’s network of partners, suppliers and loyal customers. In so far as information about suppliers is available, AutoZone does not offer any particular information about company’s suppliers except for Vendor Information (“Vendor Information,” n.d.) and Affiliate Program (“Affiliate Program,” n.d.) sections, each including request for information, not providing any. Transparency is, accordingly, missing in AutoZone’s supply chain management practices, a
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major liability given growing pressure by customers and regulatory bodies on companies to open up and report non-sensitive business information more openly.
Opportunities
* Strong Global Market Demand. The auto industry is susceptible to a diversity of domestic and global market risks. This impacts on all affiliate industries and services including aftermarket. Still, auto industry is one of a few rebounding fast after crises. The auto industry – and, by extension, aftermarket – has usually fared extremely well after a “lull” ensuing, say, a recall crisis. In short, auto industry usually experiences strong demand. This is more so given growing economic status (and hence spending power) of emerging markets particularly in China, India, Russia, and Brazil. The strong global demand on vehicles, coupled by solid US service excellence reputation, is a major opportunity AutoZone for growth, expansion (vertical and horizontal) and partnerships.
Threats
* Emerging Technologies. Technology is, by definition, disruptive. This is particularly applicable to auto industry in general and aftermarket in particular. Namely, electric cars represent one major challenge to auto industry. For long decades, auto companies have established and maintained a vehicle production and consumption model centered around fossil fuels. This is now changing fast, in part, under growing pressures of calls to phase out fossil-based vehicles for environmental reasons; in part, due to changes in customer preferences; and, in part, due to changes in regulations. The current aftermarket is still defined by auto maker manufacturing practices now going out of fashion, if not business soon. The auto aftermarket
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should, accordingly, introduce innovative solutions quickly in order to meet demands for a changing auto market and industry.
* Data-Driven Service. The current service offerings by AutoZone are, as noted, lag much behind. Today, more and more companies in and beyond auto industry are investing in data-driven innovations not only to service customers more promptly yet also to slash out costs and, more importantly, anticipate customer needs in order to introduce new services and achieve market leadership. Therefore, AutoZone is on an uphill path should no immediate intervention is performed to optimize customer service using more soph...