Camar Automotive Hoist

Camar Automotive Hoist

Executive Summary

Introduction:

With the advent of the Free Trade Agreement in 1989, the duties on hoists between the two countries were phased out over a 10-year period; by 1999 exports and imports of hoists were duty-free. Camar Automotive Hoist (CAH) manufactured surface automotive hoists, a product used by garages, service stations, and other repair shops to lift cars for servicing. In 1999, CAH had sold 1,054 hoists and had sales of $9,708,000 about 60 percent of sale were to the U.S and 40 percent remained to Canada

Recently the major project and problem is that Mark Cammar, President of CAH, determine what marketing strategies should be implemented for this move to the European market in 2001 from these options such as, licensing, joint venture and direct investment, in order to succeed in this business in the future.

Recommendations & Implementation:

To enter the European market, the manager has to look at all aspects of CAH and pin pointing what strategies to be implemented upon, there are already some alternatives in the companyЎЇs list that the manager can adopt, and alternative evaluation should be considered (Exhibit 1).

In the short term, if CAH decides to enter European, the manager will be the obvious choice to head up the ÐŽodirect investmentÐŽ± option or the ÐŽojoint ventureÐŽ± option. There is a chart for marketing profit potential (Exhibit 2) that the company can see how much profit potential each option has, and how much risk the company has to face. In terms of direct investment to the European market, the company needs to consider high risks such as, high cost at least $ 1,450,000, better understanding of local market conditions, and fewer local restrictions. Therefore, the optimal option in the short-term is that CAH should offer joint venture to associate with the local firm, Bar Maisse. This will allow them to invest together to create a local business in the European market. These two companies share ownership, control, and profits of the new company. Investment may be made by having either of the companies buy shares in the other or by creating a third and separate entity. The advantages of this marketing option are twofold. First, CAH may not have the necessary financial, physical, or managerial resources to enter European alone. Second, the European government may require or strongly encourage a joint venture before it allows the foreign company to enter its market. To do this, Bar Maisse had knowledge of the market, and CAH had the product. The joint venture will allow the two companies to spread the risk (and the returns) in the foreign market. However, There are some serious drawback to this mode of entry for CAH. When the company troubled whether this apparent synergy would work or whether Bar Maisse would seek to control the operation. For instance, the company forgoes control of its product and reduces the potential profits gained from it. In addition, while the relationship lasts, CAH may be creating its own competition if Bar Maisse is able to modify the product somehow an enter the market with product and marketing knowledge gained at the expense of the company that got them started. To offset this disadvantage of joint venture, set up meeting between CAH and Bar Maisse, a contract should be made stating that before any business decision is to be made there shall be a meeting