Cameron Auto Parts Case Study
Cameron Auto Parts was founded in 1965 after the signing of the U.S. and Canada
Auto Pact. The main consumers were the Big Three automotive manufacturers and the company prospered in this new business environment. In 2000, problems started to occur in the company. First, a consequent drop of the sales of more than 50% happened. Second, the Japanese were great competitors and took advantage of the market opportunities in Canada. Alex took the control in 2001 in order to implement a process of modernization of the company. His “operation survival” consists of cutting the production costs by being more focused on the workforce (mainly lay-offs). Although is it difficult to manage a financial problem, Cameron faced serious “gaps” in this function.
In 2003, the situation of Alex familial company is stabilized, even if there is a need to invest in another plant. As Cameron was not financially ready to make such a progress, the first option was, on one end, to wait and generate more profits leading to more financial stability through exports. On the other end, the company can choose to license the production of the flexible coupling with McTaggart. In this case, Cameron is the licensor and McTaggart, the licensee. The licensor shares patents, copyrights or trademarks and gets royalty fees in return.
In 2004, Alex signed a five years licensing agreement with McTaggart. Following this agreement, McTaggart had to pay $100,000 fee in advance in order to help Cameron to recover and a royalty of 3% on the first $1 million of sales and 2% on the second. In case McTaggart reached a higher level of technology, it would also have the obligation to share at least one of them with Cameron. Alex realized that the plant cannot afford both systems because the costs of expanding the activity were too high and required too many of the company's resources. Moreover, the company's financial situation could not permit Cameron to implement a plant expansion.
The potential in
Auto Pact. The main consumers were the Big Three automotive manufacturers and the company prospered in this new business environment. In 2000, problems started to occur in the company. First, a consequent drop of the sales of more than 50% happened. Second, the Japanese were great competitors and took advantage of the market opportunities in Canada. Alex took the control in 2001 in order to implement a process of modernization of the company. His “operation survival” consists of cutting the production costs by being more focused on the workforce (mainly lay-offs). Although is it difficult to manage a financial problem, Cameron faced serious “gaps” in this function.
In 2003, the situation of Alex familial company is stabilized, even if there is a need to invest in another plant. As Cameron was not financially ready to make such a progress, the first option was, on one end, to wait and generate more profits leading to more financial stability through exports. On the other end, the company can choose to license the production of the flexible coupling with McTaggart. In this case, Cameron is the licensor and McTaggart, the licensee. The licensor shares patents, copyrights or trademarks and gets royalty fees in return.
In 2004, Alex signed a five years licensing agreement with McTaggart. Following this agreement, McTaggart had to pay $100,000 fee in advance in order to help Cameron to recover and a royalty of 3% on the first $1 million of sales and 2% on the second. In case McTaggart reached a higher level of technology, it would also have the obligation to share at least one of them with Cameron. Alex realized that the plant cannot afford both systems because the costs of expanding the activity were too high and required too many of the company's resources. Moreover, the company's financial situation could not permit Cameron to implement a plant expansion.
The potential in