Knowledge Management Strategy for Car Mart

Knowledge Management Strategy for Car Mart

Introduction and Background

There are several car dealers in the United States. However, Car Mart Inc., located in Bentonville, was founded by Freeman Bill back in 1981. The company started its day to day operations by 20 vehicles from which it has grown at high speed. Recently, it has been listed the fourth among the present 500 companies in the US. The company has been using various strategies to ensure its growth; one is expanding its premises to three other form different locations to maximize its sales. In late 2011, this company had beyond 100 business premises in 8 different states (Brown and Duguid 2001). The company has been aided by its compelling mission statement which has assisted its operation to conquer its products’ market. The mission states “striving to earn the repeat business of the customers by providing them with quality vehicles at affordable payment terms and also excellent services.” This paper seeks to expose the required knowledge management strategy that could catapult the company from its current state to its desired state.

Overview of Approach and Methods used in Development the KM Strategy

Conceptual Framework for KM approach

The KM strategy chose to adopt a quantitative methodology and a positivist approach since analysis of the company’s operations needs to be based on factual information. Positivism relies on the qualitative methodology since it is more trustworthy and has a structure (Zack et al.2009). Primary sources will be the main information providers to the KM analysis. A closed questionnaire designed as a table will be employed in questioning branch managers on several KM factors to establish the knowledge needs of the entire company. Analysis of the strategic gap and knowledge gap will be performed by scaling the table below with responses from Car Mart’s 100 branch managers.

Figure 1: Questionnaire table to be filled out by Car Mart’s branch managers

KM performance area KM indicator Rating
    1 2 3 Remark
Problem solving The processes outlined in response to the event of a problem Car-Mart are clear. 10 80 10  
  I encourage my staff to resolve problems in Cart Mart creatively, and they have the necessary skills to do so. 30 60 10  
  Resources needed to solve problems are always available in Car-Mart. 30 60 10  
Personal Learning Experiences Car-Mart staff members are assigned task based on experiences. 20 30 50  
  I encourage the Car-Mart member to share with colleagues the past experiences freely. 45 45 10  
  Car-Mart staffs are free to make mistakes to learn from them. 45 45 10  
Learning experiences form others Documentation of the past projects is stored where can be easily retrieved by Car-Mart staff. 70 10 20  
  The documented of the past projects possess pieces of reliable information for the Car-Mart staff 60 30 10  
  Novice member are encouraged to associate with the experienced members to get equipped with skills 30 60 10  
Trial of new processes The staff of the Car-Mart is expected to regularly change processes for future job security due to emerging issues. 40 30 30  
  New processes experimentation lead to innovations in the Car-Mart departments. 10 70 20  
  Divergent ways of doing things help in portray notable improvements in the whole of Car-Mart. 60 30 10  
Fast and efficient transfer of knowledge Exit interview in Car-Mart is regularly conducted which is open for any staff. 80 20 0  
  Information and knowledge are fed to a pool by the staff of the Car-Mart company. 90 10 0  
  Staff members know where to retrieve relevant information regarding Car-Mart. 40 30 30  
Conducive learning environment Car-Mart employees can access an efficient IT system that transmits knowledge around their branches 10 40 50  
  Car-Mart has a program understood by all employees that recognize their information and knowledge contribution. 0 80 20  
  KM measures are always considered while creating car Mart’s organizational plans 50 30 20  

When the feedback from the above survey was interpreted, it was found that Car-Mart as an organization was knowledge awareness but knowledge blocked at the same time. While information about knowledge management was at their disposal, they did not utilize the tools to manage their knowledge (Davenport and Prusak 1998). However, the Car Mart’s branches were not empowered enough to mold the environment to manage knowledge effectively. For knowledge acquisition, several actions are recommended to fill the knowledge gap. They include:

  • The creation of a centralized system for storage and retrieval of stakeholder emails and attachments.
  • Using standardized software on all Car-Mart employees’ workstations for guaranteed database access.
  • Creation of an IT interface that will effectively meet the needs of Car-Mart customers through interactive feedback loops.
  • In areas of the company where departments interact with suppliers or subcontractors, the information channels should be revamped.
  • In areas where departments interact among each other and where branches communicate with each other, a centralized system should be created to enhance such information

Analysis: Strategic Gap Analysis/ Knowledge Gap Analysis

  • Desired state
  • Operational Infrastructure

According to their 2017 annual report, Car-Mart has in their Form 10-K provided future objectives that can be analyzed to project their desired state. Several operations can be isolated through their forward-looking statement. An example of such a statement is the expectation of new car dealership opening. Concerning this operation, Car-Mart senior management will decide where to locate new car dealerships and in what particular site within their choice communities(America’s CAR-MART 2017). The company hopes to add on their 140 dealerships on an annual basis to achieve their organic growth strategy. Car-Mart’s desired state regarding operational infrastructure depends on the availability of suitable sites to pitch their new dealership, ability to pull and retain effective management for this leadership, cost, and availability of vehicles and favorable overall operating performance. Ideally, the company hopes to lease 95% of its overall facilities including corporate offices and dealerships by 2018(America’s CAR-MART 2017).

  • Technological Infrastructure

Ideally,Car-Mart desires to achieve the implementation of the dealership support guidelines as put forth by Standards for Technology in Automotive Retail (STAR). It looks up to the STAR guidelines to find the support that will enhance interoperability between the company’s dealerships and other businesses’ dealerships regarding IT infrastructure(STAR 2016). Increased security measures in the digital age, is one desired projection that Car-Mart hopes to achieve. It thereby hopes to improve on its information systems’ control, email security, network security, disaster recovery, unified threat management, intrusion detection system and security information event management(America’s CAR-MART 2017). The insistence on cybersecurity lies in the fact that Car-Mart customers present the company with personal information that is not limited to a bank account and other financial bio-data.

  • Cultural Infrastructure

Car-Mart culture can be summarized as conservative. Car-Mart relies on a large number of people in the lower economic tiers.  While it firmly believes in its approach regarding their customers, it desires to revamp its entire employee structure to improve employee competence and consequently service delivery. Car-Mart hopes in the future to change its recruitment policy in such a way that it will hire seasoned talent from without its organization and indoctrinate them into its operation culture(America’s CAR-MART 2017). This talent ranges from human resource personnel, purchasing, legal, IT, collections and compliance.

  • Current state
  • Operational Infrastructure

In its present status Car-Mart mainly operates in the United States. Car-Mart headquarters are in Rodgers, Arkansas. It has 140 car dealerships spanning 11 states across the country. These states are Alabama, Arkansas, Georgia, Indiana, Mississippi, Missouri, Oklahoma, and Texas among others. As a retail outfit, Car-Mart is popular in the US used cars’ market. Car-Mart has specifically concentrated its business interest in the ‘integrated auto sales and finance’ segment(America’s CAR-MART 2017). More than 64000 customers rely on Car Mart’s vehicles owing to their inability to achieve conventional financing due to problems with credit due to the same reason Car-Mart primarily opens car dealership only in small towns across the south-central region of United States(America’s CAR-MART 2017).

Several operations are determined by Car Marts unique business strategy. The most basic of the operations is the collection of customers’ accounts. It is moreover the primary focus in which corporate office and car dealership personnel operate daily. The dealerships are overseen by a corporate management which also controls a centralized financial base monitors the score of the proprietary credit and drafts up contracts terms and down payments standards.        

  • Technological Infrastructure

Technologically,Car-Mart has employed information communication technology in its operation to increase their efficiency for example in a bid to reduce credit losses; the company invested in a proprietary system for credit scoring. Through this system, the company monitors contracts’ qualify (Alavi 2001). The system is also capable of credit reporting even when customers are not currently buying or selling vehicles. Car-Mart has also invested in Global Positioning Systems (GPS) for all their vehicles. Car-Mart moreover has implemented information systems to automate most company operations. For example, the management of sales, consumer financing, inventory and customer information is all done on dealership level and the corporate level using this system (Choi and Lee 2008). The company therefore has hired tech personnel to continually protect these systems’ integrity (America’s CAR-MART 2017). The company moreover has expanded its technological infrastructure to include a call center that notes every customer’s contact and maintain a record of conversation at the dealership servers. Moreover, in May this year, the company commenced the use of text messaging to notify customers on where to receive their payment reminders or late notices.

  • Cultural Infrastructure

Culturally, the currentoperation of Car-Mart is based in areas with low populations of about 50000 or less. Car-Mart believes that services in small communities offer it better-consolidated results than it would get in the larger community. Moreover, the financial objective of cost saving is realized in such community since the operating expenses like rent salaries and advertising are low in these areas. In the 2017 annual report, Car-Mart stated that its most precious investment was people. Thereby, the company invests in hardworking and honest individuals in this every position and develops and nurtures the people to fill its vast managerial capacity (Lehaney 2004). Car-Mart believes that promoting people from within the company enables it to continue in its long-standing unique culture as well as maintaining associates loyalty through the provision of advancement opportunity. Another facet of Car Marts cultural infrastructure is its diverse community of customers. The company has a reputation for successful customer relations. These relationships have brought financial payoffs to Car-Mart since the greatest portion of sales as established dealerships are attributable to repeat customers while 15% of total sales come from customer referrals (Chen and Huang 2009). This can be perhaps attributed to the fact that their choice customers originate from the close-knit community (Stany et al., 2007). Notably, culture has a significant impact to the performance of business. Identification of market niche is an important step to be taken for any business to grow (Alavi, 2001).

Summary

Car-Mart has established strategies which would enable its growth in the ever changing market structure. With the market knowledge, the management has competitively tried to establish the market niche to remain ahead of others (Davenport and Prusak 1998). Through opening new dealership, they anticipate to make more profits and expand their coverage. Moreover, with the evolvement of technology, the company aims to improve its system controls which would foster proper management of activities within the organization. It is important to note that the culture of a business determines its growth path.Continued reliance on less qualified staff impedes innovation and creativity within the organization. The technical feat and challenges experienced while training new entrants can be mitigated by recruiting well trained workers. Current state of Car-Mart has improved in various areas(Alavi 2001). Notably, the company has employed modern technology to increase efficiency and reduce the cost. Further, they have resorted to serving low populated areas in order to maintain their quality services. Withal, their operational infrastructure has been concentrated on auto sale and finance. Certainly, major improvements have been witnessed within Car-Mart.

KM Recommendations

  • Operational Infrastructure

      When coming up withrecommendations for operational support, one has to first consider the knowledge management indicator scores for each performance area. When contrasting the current state of the company to its desired one, staffing is a major issue. Car-Mart should therefore not advance all of their entry-level employees but seek to retain those employees that have shown a steady learning curve. Another operation that could be helpful in shifting their current state to the desired one is experimentation. Thereby, the Car-Mart staff is expected to change their processes with emerging management practices to ensure relevance of the firm in the future (Chen and Huang 2009). Experimentation could also lead to innovation in Car-Mart department which could ultimately result in a potential for new financial income generators. Training should also be considered an operation infrastructure since the hired talent needs to be indoctrinated into the operational strategy that has made Car-Mart successful for almost 40 years (Yew Wong 2005). In conclusion, Car-Mart should revisit its policy of decentralized management and adopt a centralized one in which collected knowledge can be pulled into a repository why all car dealerships could access it.

  • Technological infrastructure

      This is of utmost importance since technology is a great enabler of knowledge and information systems. Car-Mart has based its technical prowess in the installation of GPS systems in their vehicle. This kind of thinking, while not in itself incorrect should be replaced with an approach based on management information systems (MIS) (Alavi and Leidner 2001). Centralizing of the Car-Mart information system could also be useful in helping the company to manage its knowledge. To achieve this, the company should create an efficient IT system that transmits knowledge equally around their branches. The disparities between their current technological security and safety in their desired state also bring about a knowledge gap that should be bridged by the adoption of STAR guidelines to automotive technologies (STAR 2016). Lastly, training should be administered to employees to familiarize them with the proposed system to make them capable of collecting, recording, retrieving and using knowledge relevant to Car-Mart (Choi et al., 2002).

  • Cultural Infrastructure

             While Car-Mart insists that its organizational culture has been its defining feature, there is still much that can be done to help them improve their knowledge management about human interaction (Zack et al., 2009). For example, a problem-solving culture could be adopted as per the knowledge management indicators formerly discussed through encouraging staff members to resolve problems creatively on their own. Employee’s errors in judgment should be tolerated if not invited to build up an innovative culture. Novice members of the employee community should be encouraged to associate with more experienced members(Zhu 2004). Moreover, Car-Mart should hire into a pool of culturally different staff to bring about fresh ways of thinking that could result in improvement in the entire knowledge management system of Car-Mart.

Closing Statement

America’s Car-Mart is mainly efficient in the management of its business activities. While this could be naturally attributed to proper management of business knowledge in well-known companies, it is not the case with Car-Mart. This is since the company is painstakingly conservative in their business strategy (Holsapple 2004). Their approach is primarily based on a decentralized system where car dealerships are spread across small cities in the South Western United States with minimal interaction among them. This is counter-intuitive to the basic tenets of knowledge management which is the sharing of information and business intelligence. Car-Mart has projected their desired state in their 2017 annual report. Car-Mart needs not only to focus on vehicle management and corporate management technology but also on information management systems(Davies and Sure 2006). Thereby, to implement such a system, their entire operation structure should shift from decentralized to enable a centralized pool of information where all dealerships could mine the information for patterns that could further its corporate agenda. In conclusion, Car-Mart should change its cultural approach to recruitment to hire talent that will guarantee the continued relevance of the adopted knowledge management framework.

Share this Post