Cameron Auto Parts

1607 Words7 Pages
Alex Cameron took over the reins of his family business after his graduation, and when he did, Cameron Auto Parts was immediately faced with a big financial crisis. When he took over the company in 1991, sales in 1990 dropped to $48 million and for the first six months of 1991 to $18 million. Cameron Auto Parts also lost $2.5 million in 1990 and the same amount in the first 6 months of 1991. Market forces, such as the Japanese taking an increasing share of the market, were driving the North American auto producers to try to advance their technology and to lower the prices at the same time. At that time, Alex had to cut the workforce from 720 to 470 people. He was thinking of different steps of how to increase his sales. He wanted to enter…show more content…
Moreover, the company tried to continue having good relationships with key buyers associated with major industries. Design group was an essential role to develop new types of couplings. Cameron was willing to pay attention on solving customer’s problem as well. Licensing Alex wanted to capture foreign markets directly but he didn’t have enough resources on its own to do that. After their promising new product was developed, they had a chance to license it to a Scottish manufacturer, McTaggart. McTaggart couldn’t build the market based on shipments from America because it was too expensive. There was a 5% tariff coming in, freight and insurance was another 10% on top of the price and also there was the matter of currency values. He wanted to enter a licensing agreement. McTaggart already had a demand for the product so getting into a license agreement with him would be in Alex’s advantage. For Alex it was a good way to enter the U.K. market swiftly via McTaggart’s sales force. There was no financial risk involved. If Alex agreed on licensing he would have advantages such as low investment costs, reduced financial risk and quick market entry. He agreed on a deal with McTaggart for the U.K market only so he got his chance to exploit its technology there. The license granted to McTaggart will help bring in the cash flow needed so that they can try to expand. However, the profit of the licensor may not be maximized
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