Cameron Auto Parts

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 foreign markets but didn’t have enough resources to do so on its own. He had different options on his mind such as licensing and joint venture. He had a big ambition for diversification, but he never had to design and develop its own products and had never hired any design engineers. By mid-1993, Alex had hired a key-engineer from a Canadian firm and the company developed its own line of flexible couplings with an advanced design and efficient production process using the latest in production equipment. They developed a good marketing plan and made a successful new product. Cameron was then faced with how to market and sell the product. He needed to decide whether it was better to expand current facilities, or license to outside companies. He was considering licensing since there was an opportunity for it and it would be a good way for quick entry to foreign markets.
Developing new product
Being a competitive company Alex should address the importance of the product enhancement by technology change and advanced design. Additional returns will be gained with the introduction of new products. Due to Cameron depending on Big Three and neglected to foster the innovation potential of the firm, sales dropped dramatically with the