Cameron Auto Parts Case Study

Cameron car move was founded in 1965 aft(prenominal) the signing of the U. S. and Canada Auto Pact. The main consumers were the jumbo Three self-propelling manufacturers and the union prospered in this naked as a jaybird byplay environment. In 2000, problems started to conk in the guild. First, a consequent spend of the sales of more(prenominal) than than 50% happened. Second, the Nipp wizse were huge competitors and withalk prefer of the securities industry opportunities in Canada. Alex took the run into in 2001 in launch to implement a process of modernization of the lodge.His operation pick consists of cutting the occupation cost by being more focused on the workforce (mainly lay-offs). Although is it operose to manage a fiscal problem, Cameron face up serious gaps in this function. In 2003, the mooring of Alex familial company is stabilized, even if at that place is a hold to couch in another plant. As Cameron was not financially ready to submit much(prenominal) a progress, the commencement pickaxe was, on one end, to wait and stupefy more mesh leading to more financial st adequate to(p)ness through and through exports.On the other end, the company evict make do on to permit the drudgery of the conciliatory jointure with McTaggart.In this case, Cameron is the licensor and McTaggart, the licensee. The licensor servings patents, copyrights or trademarks and gets royalty fees in return. In 2004, Alex write a quintet years licensing correspondence with McTaggart. Following this agreement, McTaggart had to redeem $100,000 fee in advance in order to athletic supporter Cameron to recover and a royalty of 3% on the first $1 one thousand million of sales and 2% on the second. In case McTaggart reached a high take aim of technology, it would similarly bind the obligation to shargon at to the lowest degree one of them with Cameron.Alex recognise that the plant cannot hold both(prenominal) systems because the c osts of stretch forthing the activity were too high and unavoidable too many of the companys resources. Moreover, the companys financial role could not put up Cameron to implement a plant expansion. The authorisation in the European market is a great elan to expand a line of work although the nicety is different. It is difficult to conform a sum American melodic phrase system to a European system. export to the European market means that the fairish European node will check to pay the global fees ( approximately 20 per cent more than northwest Americans because of taxes).By granting McTaggart a license, Alex ensures a readily and minimize the put on the lines art object peachy the U. K and European markets. Although thither atomic number 18 many advantages when licensing, there argon other consequences such as sh atomic number 18-out not only if profits, but excessively knowledge, and so Camerons intellectual property. The advantages of licensing McTaggart ar numerous. The low investing costs, reduced financial attempts, and economies of scope argon real fire when implementing an activitys expansion. Cameron is concerned about its financial positioning and licensing provides them a higher security.It is a lovesome market launch with a minify risk of poor people performance from the licensee, McTaggart, which is already and directly running game operations in the U. K. On the contrary, the risk of image loss, the length between both countries leading to dialogue losses, the lack of revenue, and the divided profits are some disadvantages to take into account when implementing a license strategy. exportation also has its advantages and disadvantages. First, it provides independence, a higher control over the lineament of final results, economies of scale, and a higher, non-shared profit. In this case, disadvantages are numerous.The lack of efficiency of Cameron limits its ability to expand its business through exports. Plus , the different capital represents a risk as currencies nourish varies greatly on the short term. there are also high enthronization costs, a express knowledge of the U. K. and European market, the costs of merchant marine and the trade barriers. Considering the companys financial situation, the costs and risks of penetrating a new market, we think that Alex should license McTaggart. It is clear that McTaggart is the better business partner. This company owns all the tools infallible to concretely maturate and sell the flexible couplings.They are able to sell the product very prompt and build a strong and sustainable relationship with Cameron. McTaggart is experience in this business and Cameron can emolument from it to increase output signal capacities. They mystify a solid written report and a great financial situation. The sales persons are very involved concerning the merchandising and selling of the products. They have high manufacturing capacities and are willin g to invest and develop the manufacturing ability to efficiently larn the flexible couplings. Additionally, their client base is essential. Licensing McTaggart is the best(p) choice Cameron can do to improve its situation.