Case Study Cameron Auto Parts (a)
1. Cameron was right to have licensed to McTaggart. Expansion strategies, as discussed in class, have different barriers and costs. For example, for Cameron to have entered a joint venture with the company would have cost both sides a lot of money and time. For Cameron to have expanded into the UK - what Andy had argued - would have been the most expensive and time consuming of the four options. The company definitely has money, however the extra cash needed to finance such large operations isn’t available.
Finally, for Cameron to have simply exported into the UK economy could have been easy however, it is exactly what they are doing now. This leaves them limited to the amount that the importers are able to pay in terms of duty and freight, currency exchange, as Sandy explains, as well as the issue of never knowing “how long the goods will take”(International Management, pg 254) to arrive. Also, with the developing need, having more orders would force Cameron to build a new manufacturing facility to accommodate for the higher production. This would exuberate their need for that second plant.
All of this leaves licensing to be the most viable option as it requires the least amount of capital, both financial and human. Cameron Auto Parts are paid royalty fees as well as the costs of setting up the manufacturing and training without having to spend much money to get the UK plant running.
2. I would say that McTaggart is a good choice for the company to become the licensee of the UK for Cameron. According to Exhibit 3, even though they had sales of - £9 million from 1991, it states that this is because their sales took a plummet against “a U.S product of superior quality” (International Management, pg 255) It also states that they have the capacity to increase production substantially. This means that given the right product, they are already capable of producing according to demand. Further, because Sandy himself knows there is a huge (and growing)
Finally, for Cameron to have simply exported into the UK economy could have been easy however, it is exactly what they are doing now. This leaves them limited to the amount that the importers are able to pay in terms of duty and freight, currency exchange, as Sandy explains, as well as the issue of never knowing “how long the goods will take”(International Management, pg 254) to arrive. Also, with the developing need, having more orders would force Cameron to build a new manufacturing facility to accommodate for the higher production. This would exuberate their need for that second plant.
All of this leaves licensing to be the most viable option as it requires the least amount of capital, both financial and human. Cameron Auto Parts are paid royalty fees as well as the costs of setting up the manufacturing and training without having to spend much money to get the UK plant running.
2. I would say that McTaggart is a good choice for the company to become the licensee of the UK for Cameron. According to Exhibit 3, even though they had sales of - £9 million from 1991, it states that this is because their sales took a plummet against “a U.S product of superior quality” (International Management, pg 255) It also states that they have the capacity to increase production substantially. This means that given the right product, they are already capable of producing according to demand. Further, because Sandy himself knows there is a huge (and growing)