Marketing Case Analysis: Curtis Automotive Hoist
Basic Problem: CAH's basic problem lies in determining whether the company shoud expand or increase its growth prospects, and CAH must decide on whether it should do so in the United States by expanding its existing operations and sites, or whether CAH should explore opportunities in Europe and entry options available to the firm in Europe.
Basic Decision Alternatives:
*CAH had the option altogether of forfeiting expansion projects abroad in Europe and increasing their existing sales in the United States. Both Mr. Curtis and Mr. Gagnon felt that the U.S. market had unrealized potential with a population of 248 million people and over 140 million registered vehicles.
* Entering European markets using the following entry options:
- Licensing the lift for sales with other automobile part's manufacturers that would allow CAH's products to complement other manufacturer's existing product sales.
- Joint Venture that would give Mr. Gagnon and Mr. Curtis a 50-50 equal stakeholder position in Europe and an equal share in the company's investment and profits.
- Direct investment where CAH would establish a manufacturing facility and set up a management group to market the lift.
Analysis of each of the alternatives:
*Within in the United States competition was intense with a total of sixteen companies competing in the automotive lift market in North America. The industry was dominated by two large U.S. firms, AHV Lifts and Berne Manufacturing who together held approximately 60% of the market.
* Licensing option: While the licensing option would allow CAH to sell its existing products in Europe through an established and renowned dealer: Bar Maisse, CAH's reputation and brand image would be at stake, since Bar Maisse's was not well known across the transatlantic in the U.S. Furthermore, Bar Maisse was prepared to pay a royalty rate of only 5% of gross sales, which in my opinion is a nominal portion that would not equate to high profits.
*A joint venture had many
Basic Decision Alternatives:
*CAH had the option altogether of forfeiting expansion projects abroad in Europe and increasing their existing sales in the United States. Both Mr. Curtis and Mr. Gagnon felt that the U.S. market had unrealized potential with a population of 248 million people and over 140 million registered vehicles.
* Entering European markets using the following entry options:
- Licensing the lift for sales with other automobile part's manufacturers that would allow CAH's products to complement other manufacturer's existing product sales.
- Joint Venture that would give Mr. Gagnon and Mr. Curtis a 50-50 equal stakeholder position in Europe and an equal share in the company's investment and profits.
- Direct investment where CAH would establish a manufacturing facility and set up a management group to market the lift.
Analysis of each of the alternatives:
*Within in the United States competition was intense with a total of sixteen companies competing in the automotive lift market in North America. The industry was dominated by two large U.S. firms, AHV Lifts and Berne Manufacturing who together held approximately 60% of the market.
* Licensing option: While the licensing option would allow CAH to sell its existing products in Europe through an established and renowned dealer: Bar Maisse, CAH's reputation and brand image would be at stake, since Bar Maisse's was not well known across the transatlantic in the U.S. Furthermore, Bar Maisse was prepared to pay a royalty rate of only 5% of gross sales, which in my opinion is a nominal portion that would not equate to high profits.
*A joint venture had many