Duncan Industries

DUNCAN INDUSTRIES

Corporate Mission

To design and manufacture the Duncan Lift that remains a leader in the automotive (hoists) aftermarket industry in terms of design quality and safety.

Corporate Goals/Objectives

* To continue with product development in manufacturing of the Duncan Lift, by making improvements in design and safety features.

* To increase brand awareness in order to achieve annual increase in market share and sales

Problem Statement

How should Duncan Industries continue its growth as a leader in the design and manufacturing of the Duncan Lift as a relatively small company with limited financial resources and sales force? Is there an opportunity to expand their market share in the US or develop a strategy to break into the European market? If the decision is to develop their market share in the US, is the appropriate approach:

* Continue developing the current North American market with their current sales and distribution in place.

* Focus business opportunities in an untapped US market in the Mid-Eastern, Mid-Atlantic and New England states serviced from Lachine, Quebec.

* Open a New York office to specifically develop business opportunities in the Mid-Eastern, Mid-Atlantic and New England states serviced.

If the decision is to enter the European market, which approach will realize their goal of increasing their market share and sales?

* Enter into a licensing agreement with Bar Maisse.

* Enter into a joint venture agreement with Bar Maisse to manufacture and sell the Duncan lift in Europe.

* Direct investment in establishing a manufacturing facility and distribution network to sell Duncan Lift in Europe.

Situation Analysis

Company

Duncan Industries has been in business for 10 years and in that time has patented a product which has been recognized as a superior automotive hoist. This is an optimal positioning strategy of this product because the two main corporate competitors, AHV Lifts and Mete Lift, have not attained the same standards with their scissor lift sold in the same markets. The company has seen a steady increase in sales, particularly between 1997 and 1999, an average 25.06 percent. However; the Duncan Lift is priced 5percent to 20percent higher than the competitors, which can be seen as one reason growth in units sold and sales volume has not been substantial. Although the US market accounts for 60percent of company sales, the Duncan Lift is a minor product within the wholesaler's total line. The assumption is the Duncan Lift is about 20 percent of the total lift sales of their US wholesaler. It should be noted, the wholesaler brings in 78percent of the unit selling price. The company sales force generates 25 percent of unit sales, bringing in 100percent of the selling price, while Canadian distributors contribute 15percent of the total Canadian market share, bringing in 80percent of the selling price.

Industry

The automotive aftermarket is that part of the automotive industry related to the manufacturing, remanufacturing, distribution, wholesaling, and retailing of vehicle replacement parts, accessories, tools, equipment, and services. In 1999, this industry supplied parts and service for new and used cars at a retail worth of $54 billion in North America. Every year 49,000 hoists are sold within North America and new car dealerships purchase 30percent of all units sold within a year. To further breakdown the market, there are two basic types of lifts; in-ground and surface lifts. Between the two types, in-ground lifts constitute 21percent of total units sold in North America, while surface lifts generate the remaining 79percent of total units sold. The average price range of hoists on the market is between $3,000 and $15,000 as a capital expense. The Duncan Lift average retail price is $10,990, which is higher than other competitors' lifts. Competitor's price range depends upon several factors. A price comparison below of two-post and scissor of products and features available:

Product Duncan Industries Competitors

Two - Post Surface Lift

(maximum lift capacity up to small commercial vehicle) Not available *$3,195.00

**Capacity 12000 lb

Lifting height 72" - 82"

Width Overall 137"

Width between posts 113"

Height overall 111" *$3,195.00

**Capacity 12000 lb

Lifting height 72" - 81"

Width Overall 154"

Width between posts 121"

Height overall 165"

Scissor Lift

(maximum lift capacity up to small commercial vehicle) $10,990

**Lifting Capacity - 12,000lbs.

Lifting Height - 72"

Lowered Height - 12-1/2"

Safety locking mechanism

*$9,895.00

**Lifting Capacity - 12,000lbs.

Lifting Height - 72"

Lowered Height - 12-1/2"

*http://www.americanautomotiveequipment.com/

**http://www.gmc.com

Canadian market

A majority of aftermarket businesses are small to medium in size. According to Automotive Industry Association of Canada (AIAC) an estimated 60percent of companies they surveyed in the 1999 reported a work force of less than 50 employees, and the other 40percent having less than 25 employees. An estimated 10percent of businesses employ more than 250 employees with less than 6percent employing over 500 employees. Canada has