Mercedes-Benz New Showroom Development New York University Subject: New Product and Service Development Date: Name: YC

Contents Company Introduction Project Objective New Showroom Development Process

Company Introduction The Class Hyosung is one Subsidiary of Hyosung, which is one of big corporations in Korea. TCH is a distributor (Dealership) of Mercedes-Benz in Korea. Since launching its business in 2004, The Class Hyosung(TCH) has established itself as an essential player in MBK(Mercedes-Benz Korea)s operation Hyosung is a Korean conglomerate with a vast range of business and a particular focus based on the textile and synethetic fiber business The Class Hyosung

Company Overview Jan., 2004 Opening of 1st Workshop May, 2004 Opening of 1st Showroom Dec., 2005 Opening of 2nd Workshop (Main Service center) Brief History 'THE CLASS HYOSUNG' was established to ensure that all customers who purchase premium imported cars, including Mercedes-Benz, and enjoy differentiated services and products with the highest standard and lifestyle filled with the value of life and happiness. Vision & Mission In the long term, our mission is to improve the lifestyle of our customers, enhancing their overall quality of life, while also building the best value and happiness for customers. The first goal of The Class Hyosung is to become No. 1 car dealer of Mercedes-Benz by With Database of Mercedes-Benz Dealership, we expand our business to other areas(other car brands, high-end fashion brands, restaurants, etc) Goal

Contents Company Introduction Project Objective New Showroom Development Process

Project Objective Company Situation TCH sells Mercdes-Benz only in Seoul. TCH market share is about 30% in Mercdes- Benz sales in Seoul TCH has one showroom and two service centers in Seoul. One showroom is the biggest showroom in Asia, and two showrooms are located near the showroom. Issue Current showroom reached the limits of its capacity to take care of customers. So, TCH needs to expand its business scope. TCH are planning to launch new showroom & service center. How we successfully launch new showroom?? Use State-Gate Process when TCH implement to launch new showroom!!

Contents Company Introduction Project Objective New Showroom Development Process

Gate 1. Idea Screen Gate 2. Second Screen Gate 3. Go to Development Gate 4. Go to Testing Post Launch Review Gate 5. Go to Launch DiscoveryScoping Build Business Case Development Launch Test & Validation Stage 1Stage 2Stage 3 Stage 4Stage 5

Discovery Results Generate ideas and figure out potential locations Internal sources Research team/ sales team/ marketing team/ planning team/ service and parts team/ Hyosung corporate strategy team External sources Customers & prospects/ competitors/ Mercedes- Benz Korea/ suppliers/ trade publications/ Car community Activities Several showroom sites (For example, 3~4 sites in Seoul and 3~4 locations outside Seoul) Stage objective: Search New showroom locations

Gate 1. Idea Screen Gate 1. Idea Screen Must-Meet criteria (required criteria) -Does the new showroom project fit the strategic direction of the Business? -Is its development technically feasible? -Do you have the resources required to undertake the venture? -Does actual market needs exist? Should-Meet criteria (desired criteria) -Is market attractive a large and growing one? How attractive? -Is this familiar technology to us? Do we have some of the technology skills in-house? -Can the product utilize existing showroom and service center? How easily? -Will the product have sustainable competitive advantage? How much? -Does current situation of market? Size? Trend? Criteria Activities Pick some effective sites with criteria. Gatekeepers a small group of project team (members from different function areas; planning, marketing, sales) Outputs 3~4 suitable sites (For example, 2 locations in Seoul and 2 locations outside Seoul)

Stage 1. Scoping Scoping Stage objective: Specific Location investigation Outputs 1.Preliminary market assessment Assess market attractiveness and potential Market investigation Collect the market data: Internet search, Key customers, Advertisements, Your own people, Industry experts, Trade associations, Focus group interview contact real estate agency and collect the information Gauge possible new showroom acceptance Sizes up the competitive situation: competitors situation(distribution channel, showroom locations) Check the possibility of local development plan by government and public organizations and prospects of local economy, overall environment, macro market trends Activities Most suitable location candidates and their characteristics Recommendation and plans for stage 2 2.Preliminary technical assessment Showroom establishment requirements Rough check of technical feasibility 3.Preliminary business and financial assessment A sanity check: an extremely rudimentary and quick check of the business rationale and financial prospects 4.Understand MBK dealership standards 5.Consider Synergy with current facilities 6.Understand potential, legal, technical, regulatory variables 7.Start to develop marketing strategy

Gate 2. Second Screen Gate 2. Second Screen Must-Meet criteria (required criteria) -Does the new showroom project fit the strategic direction of the Business? -Is its development technically feasible? -Do you have the resources required to undertake the venture? -Does actual market needs exist? -Is there any Potential, legal, technical regulatory variables? -What are MBK Dealer standards and regulation? Should-Meet criteria (desired criteria) -Is market attractive a large and growing one? How attractive? -Is this familiar technology to us? Do we have some of the technology skills in-house? -Can the product utilize existing showroom and service center? How easily? -Will the product have sustainable competitive advantage? How much? -Does current situation of market? Size? Trend? -Simple financial returns execution -Sales force and customer reaction Criteria Activities Compare site candidates and make a decision to go or not. Select the most suitable location. Gatekeepers a small group of project team (members from different function areas; marketing, planning, sales, finance) Executives of TCH, Hyosung Network Development department in MBK Outputs The most suitable site (For example, 1 location(Bundang) in suburban of Seoul)

Stage 2. Build the Business Case Build Business Case Outputs Activities Business case for the project - New showroom definition: new showroom concept, Showroom features, attributes, performance, requirements, high-level specs - Thorough project justification - Detailed Project Plan: project scope, The plan of action from development to launch, in forms of a time line including required resources, a launch date - Business Plan - Target market definition - Benefits to be delivered including the value proposition - Strategic rationale, competitive advantage, leverage, market attractiveness Review of business, financial, profitability, and risk considerations The plan for the next stage in some detail User needs-and-wants study: Understand Target customer Competitive analysis: competitors locations Market analysis -Market investigation -Related industry(high-end brands, luxury residence, restaurants) situations and prospects/ Boom-up effects of clustering -Customer lifestyle, flow of movement, etc Develop business plan -Positioning determination: Develop specific positioning strategy -new showroom concept development -Target market definition -Construction Plan -Human resource allocation Plan -Operation and Marketing plan -Financial plan -Plans of action Detailed technical assessment: Technical feasibility Financial/ business assessment: detailed business plan and financial analysis Stage objective: Develop effective business plan

Gate 3. Go to development Gate 3. Go to Development Must-Meet criteria (required criteria) -Same as Gate 2. Should-Meet criteria (desired criteria) -Strategic: degree of fitness with business strategy/ strategic importance -New showroom advantage: unique benefit to customers/ meets customer needs -Market attractiveness: market size/ market growth rate/ competitive situation -Synergies: leverages our businesss marketing, distribution, technical know-how, expertise, experience, operations capabilities, facilities -Technical feasibility: complexity of project -Risk versus return: expected returns/ payback period/ certainty of return,profit,sales estimates/ costs -Standards and opinions of MBK Criteria Activities Review the Business plan and revise and confirm the plan. Check the possibility of financial returns! Gatekeepers project team (members from different function areas; planning, marketing, sales, finance, HR) Senior managers from each department in the company Executives in a company, Hyosung, MBK MBK network development manager Outputs Refined and practical business plan

Stage 3. Development Development Outputs Physical development of the showroom Revise and review plans; operation plan,marketing plan, financial plan Seek customer input and feedback: ensure that the new showroom is right and also to speed development toward a correctly defined target/ Seek of continued customer feedback during development Monitor and research the market and the competitive situation. Understand the fluid market change Regulatory issues: Check local law and practical detail Operation process: Organize team to operate new showroom practically/ Allocate R&R to staffs Update your financial analysis. Business case plans are translated into concrete deliverables Develop Action plans Activities Establishment of new showroom Updated business plans (Financial, Marketing and operation plan, etc) Action plans Stage objective: Develop new showroom

Gate 4. Go to Testing Gate 4. Go to Testing Revised Must-Meet criteria: required criteria and Should- Meet criteria: desired criteria Existing gate 3 definition Existing business plan and action plan Market changes and Market growth prospects Criteria Activities Check on the progress and continued attractiveness of showroom and project Review Development work Ensure the work fit to a quality of fashion Check Developed showrooms consistency with the original definition specified at gate 3 Revisit economic questions through a revised financial analysis based on new and more accurate data Approve test, validate plan for immediate implementation Review detailed marketing, operation plan for probable future execution Gatekeepers a small group of project team including project manager. (members are from different function areas; marketing, planning, sales) Senior managers from each department in the company Executives in a company, Hyosung Outputs Development of new showroom Test, validation plan Refined marketing, operation, action plan

Stage 4. Test & Validation/ Gate 5. Go to Launch Test & Validation Outputs Check the schedule Simulate operation of showroom and check it Technically MBK specialists review of the Mercedes-Benz standards and guideline Check on an establishment process Reflect Customer acceptance Revise business financial analysis Activities New Showroom reflected to results of test and validation. Gate 5. Go to Launch Expected financial returns and appropriates of the launch and operations starts-up plans Criteria Activities Make estimates of establishment and marketing costs, sales volumes, final prices, and profit margins with a high degree of confidence Gatekeepers project team including project manager (members from different function areas; marketing, planning, sales) Senior managers from each department in the company Executives in a company, Hyosung Outputs Showroom and refined launch plan Stage objective: revise new showroom project

Stage 5. Launch/ Post Launch Review Launch Results Launch the new showroom and starts its operation Implement both the marketing and operation plan Activities Successful operation of showroom Post Launch Review Criteria Review latest data on revenues, costs, expenditures, profits, timing compared to projection to gauge performance Carry out post audit Activities Marketing objectives/ Project objective Showroom positioning strategy Stage objective: Launch new showroom! Outputs A reform measure to improve the performance

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