Posted: March 12th, 2023

Case Analysis #4 (MGT5430 Organizational Behavior)

Read the CarMax case found in the Module Learning Resources  and address all 5 questions at end of the case. Use the references in  the case to gain more knowledge of the case. Some of the URLs in the  references are outdated, therefore, you need to research for updated  information from original sources. 

You are required to apply in-depth knowledge of Organizational  Behavior Management acquired from the textbook, research, and instructor  feedback to analyze the case. The Case Analysis must follow the  following guidelines:

1. You must give quality answers that show mastery of the case, using  clear logic, and supporting facts. Also, the answers must directly  address the case using chapter readings and research.
2. Case Analyses test the understanding of key elements of  Organizational Behavior Management and the industry, therefore, they  must be thoroughly addressed.
3. You must use citations with references to document information  obtained from sources. The key elements of Organizational Behavior  Management are found in the sources listed in the syllabus (it is your  duty to search for them, read, analyze, evaluate, summarize, paraphrase  in your answers, and cite the authors who wrote the articles, books,  term papers, memoirs, studies, etc. What it means is that you will have not less than 5 references from the listed sources.
4. Grammatically correct paper, no typos, and must have obviously been proofread for logic.
5. Questions must be typed out as headings, with follow up answers in  paragraph format, and a summary or conclusion at the end of the paper.

The Case Analysis must be in APA format and it is due no later than the specified time

CarMax, the Used Car Superstore: Learning for Performance Improvement
CarMax, the nation’s largest retailer of used cars, is headquartered in Richmond, Virginia,
where its first store was opened. CarMax has “grown from that one store in Richmond to more
than 100 stores across the country.”i CarMax promotes itself with the following verbiage on its
corporate website: “We’ve sold more than 2 million cars. We’ve appraised more than 5 million.
And the news is buzzing with stories about CarMax, the experience we offer our customers, and
the work environment we provide for our Associates.”ii

The operations of CarMax are guided by its five-point business concept. The five points of the
business concept are as follows:

1. “We offer tens of thousands of used cars across the country”[;]
2. “Every car we sell has a low, no-haggle price”[;]
3. “Our vehicles are superior in quality. Only the best cars meet our high standards”[;]
4. “We’ll buy your car whether you buy from us or not”[; and]
5. “You’ll get friendly customer service.”iii

Writing in The RMA Journal, Casey Thormahlen and George Van Horn, suggest that new car
dealers that also sell used cars can learn a great deal from CarMax. They say that “[n]ew-car
dealers looking to expand their used-car operations should take a page out of CarMax’s
playbook. CarMax . . . has consistently outpaced its more traditional rivals by offering a more
pleasant buying experience. Sales commissions are set on a per-vehicle basis (rather than by
percent of sale), prices are fixed, and buyers are given a transparent, itemized price breakdown.
A robust parts and services department creates further economies of scale for dealers choosing
this path, allowing for modest repairs that enhance the resale value of incoming trade-ins.”iv

CarMax asserts that its operations are firmly based on a foundation of ten values that seek to
treat customers, CarMax associates, and investors with trustworthiness and ethical practices
while merging the best retail practices with the needs and demands of the automotive industry.v
One of the ten values guiding CarMax is continuous improvement. With regard to continuous
improvement, the CarMax website states, “We will never stop improving our systems, our
processes, and our policies.”vi In short, CarMax is committed to organizational change that
continually improves how the company operates.

CarMax’s commitment to continuous improvement relies heavily upon learning. The talent
management process is one major way by which CarMax capitalizes on continuous learning.
The use of learning loops is a second major way by which CarMax fosters continuous
improvement.

Talent Management for Continuous Learning

CarMax has strategic goals for talent management to ensure that its workforce has the
necessary skills to support company performance. According to Sean Ramage, CarMax’s
Director of Talent Management, “Our company has put a strong emphasis on the importance of
core competencies that drive behavior, which, in turn, drives performance. Based on our short-
and long-term goals, we partner with company leadership to put together programs that support
the competency needs/gaps that drives the desired performance goals.”vii

Ramage also points out that CarMax regularly surveys its associates and managers to ascertain
what is needed to achieve their individual work objectives and to improve performance. CarMax

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combines this survey data with assessment data from other sources, including but not limited to
performance reviews and management assessment programs. Ramage indicates that this
comprehensive assessment approach links employee competencies with business objectives
and promotes a genuine continuous learning process.viii

As part of the continuous learning process, CarMax closely monitors trends in talent
management and human resources, as well as overall societal trends. And CarMax also closely
monitors emerging technologies to provide the right tools help associates develop the
competencies they need to have in order to excel at their roles.ix

Learning Loops
Another way in which CarMax incorporates learning into its continuous improvement
commitment is through learning loops. Successful learning loops incorporate five basic features.
First, the company develops effective performance measures and targets that are linked to the
firm’s values, vision, and goals. Second, performance information is communicated quickly,
clearly, and usefully. Third, performance information is shared with the right people, and they
are empowered to act on the information. Fourth, people are encouraged to suggest changes to
improve performance, and the company works to overcome barriers to implementing
performance improvements. Fifth, the company monitors the process to ensure that its learning
loops are, in fact, fostering increased learning and increased performance.x

These features can be seen in CarMax’s use of learning loops, which “can be implemented
anywhere in the organization to accelerate the pace of change” xi At CarMax, CEO Austin Ligon
holds regular sessions with employees to share the latest performance information. During a
collaborative analysis of the shared information, Ligon asks questions such as, “What is it that
we may be doing that could be considered unnecessary, or stupid?”xii Ligon actively participates
in these brainstorming sessions, making sure that “every idea is recorded and receives a
response.”xiii

Learning for Performance Improvement

In considering the question What is the key to improving performance? learning seems to be the
unequivocal answer for CarMax. Is this also a viable answer for other businesses?

Discussion Questions
1. How is continuous improvement linked to organizational change?
2. What external forces for change are likely to influence CarMax’s commitment to continuous

improvement?
3. What internal forces for change are likely to influence CarMax’s commitment to continuous

improvement?
4. Explain CarMax’s use of (a) talent management for continuous learning and (b) learning

loops from the perspectives of incremental change, strategic change, and transformational
change.

5. What are the primary organizational development interventions that are embedded in
CarMax’s fostering of learning for continuous improvement?

SOURCE: This case was written by Michael K. McCuddy, The Louis S. and Mary L. Morgal
Chair of Christian Business Ethics and Professor of Management, College of Business
Administration, Valparaiso University.

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i Anonymous, “About CarMax,” CarMax website, http://www.carmax.com/enus/company-info/about-us.html
(accessed February 7, 2014).
ii Ibid.
iii Ibid.
iv C. Thormahlen and G. Van Horn, “Moving Metal: Managing Risks in the New Automotive Marketplace,” The
RMA Journal 193 (3) (November 2010): 13–20 (8 pages).
v Anonymous, “Our Culture and Values,” CarMax website, http://www.carmax.com/enus/company-
info/culture.html (accessed February 21, 2014).
vi Ibid.
vii M. Weinstein, “Look Ahead: Long-Range Learning Plans,” Training (November/December 2010): 38–41.
viii Ibid.
ix Ibid.
x E. Douglas, “Five Factors of Successful Learning Loops,” Idea Marketers website,
http://www.ideamarketers.com/?Five_Factors_of_Successful_Learning&articleid=1535019 (accessed February 21,
2014).
xi Anonymous, “Examples of Learning Loops,” Secrets to Business website,
http://www.secrets2business.com/examples-of-learning-loops/ (accessed February 21, 2014); Douglas, “Five Factors
of Successful Learning Loops.”
xii Ibid.
xiii Ibid.

CarMax
• SOURCE: This case was written by Michael K. McCuddy, The Louis S. and Mary L. Morgal Chair of Christian Business Ethics and Professor of Management, College of Business Administration, Valparaiso University.