Description

High Performance Tire (HPT) Ltd. is a retail tire chain with a network of company-owned stores in the B.C. Interior. It was formed by Harry and Edna Wallace in 1952 and was passed on to their daughter Jane Wallace in the late 1960s. Jane Wallace maintained control of this family-owned business until 2001, at which time she transferred the responsibility for day-to-day management to her son William. By early 2004, HPT was having difficulties and Jane Wallace decided to become actively involved again in the company to turn things around. Her first action was to hire Jenny Chen, CA, CFA, CMC from the accounting firm of Dexter, Mathews & Jones to review current operations and make recommendations.

WILLIAM’S TENURE 

William Wallace had led a privileged and carefree life, and his mother did not feel that he would be able to operate the business successfully, but she had little choice if she wanted to keep the business under family control. Despite his MBA with double concentrations in marketing and finance from a major university, Jane Wallace did not feel that her son had the patience and general business acumen to operate such a sizeable business at this time. She was also fearful that he would recklessly try to expand the business and lose interest once things did not go exactly as planned. Upon taking over operations in late 2001, William Wallace immediately began to put a major expansion plan into effect that he had worked on as the graduating project in his MBA. This plan had two major focal points. One was to expand the number of retail tire outlets in smaller communities and the other was to diversify the products provided at each of the outlets to include higher margin automotive maintenance services including fluid changes, tune-ups, alignments, batteries and brakes. A number of tire chains in Canada had followed a similar strategy of diversification and were successful. In 2001, all the outlets were expanded to include bays for maintenance work as well as tire installation. Sales of these new services were poor over the next two years. To have their fluids changed, customers had to leave the vehicle and wait for a considerable period of time in the customer reception area. 

Instruction Files