Transcript PowerPoint-Präsentation

CASE STUDY PRESENTATION of GROUP 1
CAMERON AUTO PARTS (PART B)
Presentation done by:
Navid Nazemian
AIM 6th term
Navid Nazemian Prof. Dr. Rainer Schnauffer
© all copyrights: waterproof concepts 2001
A presentation from:
© waterproof concepts
Navid Nazemian Prof. Dr. Rainer Schnauffer
© all copyrights: waterproof concepts 2001
Table of contents:
Introduction
of the team
Working
Procedure
Answering
Question 1
Navid Nazemian Prof. Dr. Rainer Schnauffer
Answering
Question 2
Answering
Question 3
Answering
Question 4
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Our working procedure:
Minutes
Discussions
Teamwork
Calculations
Brainstorming
Regular Meetings
Comparison of different scenarios
Navid Nazemian Prof. Dr. Rainer Schnauffer
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Cameron‘s point of view – Opinion about McT‘s behaviour
Our opinion about McTaggart‘s previous behaviour
The proposal of the Australian Joint Venture
The alternative of investing in Michelard
Our strategy towards the European Market
Navid Nazemian Prof. Dr. Rainer Schnauffer
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Cameron‘s point of view – Opinion about McT‘s behaviour
Our opinion about McTaggart‘s previous behaviour
The proposal of the Australian Joint Venture
The alternative of investing in Michelard
Our strategy towards the European Market
Scenario 1: Cameron‘s point of view
Navid Nazemian Prof. Dr. Rainer Schnauffer
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Cameron‘s point of view – Opinion about McT‘s behaviour
Theoretical Background
Types of Licensing
Production
Sales
Usage
1)
Brands
Technical
Equipment
Handout International Marketing, Prof. J. Höppner, p. 98
OUR OPINION ABOUT MCTAGGART‘S PREVIOUS BEHAVIOUR
Navid Nazemian Prof. Dr. Rainer Schnauffer
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Cameron‘s point of view – Opinion about McT‘s behaviour
McTaggart‘s Internationalisation
MCTAGGART‘S INTERPRETATION OF LICENSE CONTRACT
Navid Nazemian Prof. Dr. Rainer Schnauffer
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Cameron‘s point of view – Opinion about McT‘s behaviour
Constant increase of royalties by 500%
ROYALTIES RECEIVED 1994-1996
$ Royalties
750,000
800000
700000
600000
500000
400000
300000
150,000
200000
100000
30,000
0
94
95
96 *
year
* Estimated by McTaggart
Source: [Page 1,2 case study part B]
Navid Nazemian Prof. Dr. Rainer Schnauffer
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Cameron‘s point of view – Opinion about McT‘s behaviour
Performance of McTaggart
McTaggart 1995
Royalties $ 150,000
Revenues:
1,500,000 x 3 = $ 45,000
100
$ 150,000 - $ 45,000 = $ 105,000
105,000 x 100 = $ 5,250,000
2
$ 5,250,000 + $ 1,500,000 = $ 6,750,000
Navid Nazemian Prof. Dr. Rainer Schnauffer
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Cameron‘s point of view – Opinion about McT‘s behaviour
Revenues are growing remarkably
MCTAGGART‘S AND CEMRON‘S TURNOVER (flexible couplings) 1994-1996
mio $ revenues
140,00
128
120,00
100,00
80,00
65
McTaggart
Cameron
60,00
20,00
36,75
33
40,00
1
6,75
0,00
94
95
96 *
year
* Estimated
Navid Nazemian Prof. Dr. Rainer Schnauffer
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Cameron‘s point of view – Opinion about McT‘s behaviour
Increase of revenues in 1995
EXTENSION OF CAPACITY LIMIT
$ revenues
8,00
7,00
6,00
$ 750,000
Additional
capacity
Capacity Limit
5,00
4,00
3,00
2,00
1,00
0,00
Capacity of
McTaggart
Source: [Part A, page 8; Part B, page 2]
Navid Nazemian Prof. Dr. Rainer Schnauffer
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Cameron‘s point of view – Opinion about McT‘s behaviour
Conclusion
flexible response to market situation
+
honest reports & payments Orientation
more royalties
to foreign
markets
Navid Nazemian Prof. Dr. Rainer Schnauffer
negotiation power
Blackmailing
price reduction
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-
Cameron‘s point of view – Proposal of Joint Venture
Our opinion about McTaggart‘s previous behaviour
The proposal of the Australian Joint Venture
The alternative of investing in Michelard
Our strategy towards the European Market
Scenario 1: Cameron‘s point of view
Navid Nazemian Prof. Dr. Rainer Schnauffer
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Theoretical Background
Determinants:2)
1. Company oriented
- strategy
- cost situation
2. Product oriented
3. Market oriented
- legal situation
- economic situation
- competitive situation
- trade situation
- consumer situation
Exporting
Objectives:3)
1. Market Position
Licensing
Contract Manufacturing
Mgt. Contract
-
share
sales volume
new markets
2. Cost objectives
-
scale of economy
productivity gains
3. Profitability
Joint Venture
Own Subsidiaries
Acquisition
Navid Nazemian Prof. Dr. Rainer Schnauffer
-
profits
return on sales
return on capital
4. Financial objectives
-
credit
liquidity
self financing
capital lay-out
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Handout International Marketing, Prof. J. Höppner, p. 91
OVERVIEW OF POSSIBLE ENTRY STRATEGIES1):
1)
Sources: 2) Kutschker 1992, 3) Meffert, Bolz, Internationales Marketing Management
Cameron‘s point of view – Proposal of Joint Venture
Cameron‘s point of view – Proposal of Joint Venture
Theoretical Background
Domestic company
capital
management
shares
profits
Foreign company
Host country
Navid Nazemian Prof. Dr. Rainer Schnauffer
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1)
Home country
Handout International Marketing, Prof. J. Höppner, p. 101
JOINT VENTURE1):
Cameron‘s point of view – Proposal of Joint Venture
Theoretical Background
ADVANTAGES OF JOINT VENTURE
more profit
more control
more influence
motivation of
partner
secure step to an
infamiliar market
dependence on
Joint Venture partner
losses possible
shared
responsibility
investment
necessary
financial risk
DISADVANTAGES OF JOINT VENTURE
Navid Nazemian Prof. Dr. Rainer Schnauffer
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Cameron‘s point of view – Proposal of Joint Venture
Conditions of Australian Joint Venture Contract
§ Conditions §
Assembling in Australia (tariffs)
No management responsibilities
60:40 share
Investment $ 1.2 Mio
40% of remaining profits
Royalties 2.5 %
Navid Nazemian Prof. Dr. Rainer Schnauffer
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Cameron‘s point of view – Proposal of Joint Venture
Cameron‘s total profit from Australian Joint Venture
Profits JV 1997
Profit after tax 1997
$
40%
300000
300,000
250000
McTaggart
$ 360,000
187,000
200000
Cameron
$ 240,000
150000
100000
60%
50000
0
McTaggart
Cameron
Management
fees
Royalties
Source: [Part B, page 3]
Navid Nazemian Prof. Dr. Rainer Schnauffer
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Cameron‘s point of view – Proposal of Joint Venture
Assumed sales in 1997
Estimated sales: $ 7.5 Mio
Royalties/year: $ 7.5 Mio x 2.5% = $ 187,500
Estimated net profit after tax: $ 600,000 x 40% = $ 240,000
Total Profit: $ 187,500 + $ 240,000 = $ 427,500
Source: [Part B, page 2]
Navid Nazemian Prof. Dr. Rainer Schnauffer
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Cameron‘s point of view – Alternative of investing in Michelard
Joint Venture profit higher than UK-profit
COMPARISON BETWEEN UK LICENSE BUSINESS & AUSTRALIAN JOINT VENTURE
$
600000
400000
200000
0
-200000
-400000
-600000
-800000
-1000000
-1200000
-1400000
427,500
165,000 *
0
-1,200,000
UK
Profit
UK
Australia Ausralia
Investment
Profit
Investment
* UK license conditions referring to estimated sales in Australia
Navid Nazemian Prof. Dr. Rainer Schnauffer
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Cameron‘s point of view – Proposal of Joint Venture
Cameron‘s final statement to Joint Venture with McT:
Quick market
entry
Tariff reduction by
local assembly
Reliable partner
-> Let‘s do it!
Good market knowledge
Good prospects
(New Zealand)
Known cost structure on
Australian market
More profitable
than a pure
license business
Navid Nazemian Prof. Dr. Rainer Schnauffer
© all copyrights: waterproof concepts 2001
Cameron‘s point of view – Alternative of investing in Michelard
Our opinion about McTaggart‘s previous behaviour
The proposal of the Australian Joint Venture
The alternative of investing in Michelard
Our strategy towards the European Market
Scenario 1: Cameron‘s point of view
Navid Nazemian Prof. Dr. Rainer Schnauffer
© all copyrights: waterproof concepts 2001
Cameron‘s point of view – Alternative of investing in Michelard
Theoretical background
COMPARISON BETWEEN GREENFIELD AND BROWNFIELD INVESTMENT
Strategy
Criteria
Access to market
Investment
Site
Greenfield
Investment
Brownfield
Investement
delayed
split
selectable
quick
high entry costs
given
Source: [Welge/Holtbrügge, 1998, page 122
Navid Nazemian Prof. Dr. Rainer Schnauffer
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Cameron‘s point of view – Alternative of investing in Michelard
Michelard & Cie
Family-owned
business
No experience in
manufacturing
(pure distributor)
High
administrative
costs
Important
customer
European
Union
Cash-shortage
Good knowledge of
French, Belgian, Italian &
Swiss market
Navid Nazemian Prof. Dr. Rainer Schnauffer
Sales problems in
the Netherlands
& Germany
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Cameron‘s point of view – Alternative of investing in Michelard
Immense increase in sales figures
CAMERON‘S SALES TO MICHELARD 1994-1996
$
300000
240,000
250000
200000
150000
Sales
100000
50000
85,000
30,000
0
94
95
96*
years
* Estimated
Source: [Part B, page 5]
Navid Nazemian Prof. Dr. Rainer Schnauffer
© all copyrights: waterproof concepts 2001
Cameron‘s point of view – Alternative of investing in Michelard
Domestic market is the strongest
MICHELARD‘S TOTAL SALES SPECIFIED TO COUNTRIES
France
Belgium
Switzerland
Italy
Germany
Holland
Holland 2.3%
Germany 2.62%
Italy 4.59%
Switzerland 18.85%
53.77% France
Belgium 17.87%
Total sales: $ 12.2 Mio
Source: [Part B, page 11]
Navid Nazemian Prof. Dr. Rainer Schnauffer
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Cameron‘s point of view – Alternative of investing in Michelard
Conditions of Joint Venture with Michelard
§ Conditions §
$ 4 Mio investment
40:60 share based on profit with couplings
Royalties 4% on sales
10% profit on component shipment (until 1998)
Management competence with Michelard
Source: [Part B, page 11]
Navid Nazemian Prof. Dr. Rainer Schnauffer
© all copyrights: waterproof concepts 2001
Cameron‘s point of view – Alternative of investing in Michelard
Immense increase of sales of flexible couplings
PROSPECTED SALES OF FLEXIBLE COUPLINGS 1997-1999
Mio $
25
20
20
15
Sales
12
10
5
5
0
97 *
98 *
99 *
years
* all figures prospected
Source: [Part B, page 5]
Navid Nazemian Prof. Dr. Rainer Schnauffer
© all copyrights: waterproof concepts 2001
Cameron‘s point of view – Alternative of investing in Michelard
Biggest profit share made by component shipment
COMPOSITION OF PROFIT FROM MICHELARD‘S BUSINESS IN 1998
Total = $ 2.08 Mio
19,2%
Component
shipment
Royalties
23,1%
57,7%
Share of
incremental
profit
Source: [Part B, page 11]
Navid Nazemian Prof. Dr. Rainer Schnauffer
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Cameron‘s point of view – Alternative of investing in Michelard
Amortisation within a short period possible
CAMERON‘S INVESTMENT & PROFITS FROM MICHELARD BUSINESS 1996-1999
Mio $
4
4
3
investment
profit
2,08
2
1
0,7
0
0
0
0
0
-1
-2
-3
-4
-4
96
96
97
97
98
98
99
99
years
Premise: still dependent oncomponent shipments
Source: [Part B, page 11]
Navid Nazemian Prof. Dr. Rainer Schnauffer
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Cameron‘s point of view – Alternative of investing in Michelard
Final statement
MORE PROFITABLE THAN ANY OTHER FOREIGN BUSINESS AT THE MOMENT
BUT
-> Risk of getting in trouble with McTaggart
Navid Nazemian Prof. Dr. Rainer Schnauffer
© all copyrights: waterproof concepts 2001
Cameron‘s point of view – Strategy towards the European Market
Our opinion about McTaggart‘s previous behaviour
The proposal of the Australian JointVenture
The alternative of investing in Michelard
Our strategy towards the European market
Scenario 1: Cameron‘s point of view
Navid Nazemian Prof. Dr. Rainer Schnauffer
© all copyrights: waterproof concepts 2001
Cameron‘s point of view – Strategy towards the European Market
Subdivision of European Market between McT & Michelard
McTaggart
Michelard
Navid Nazemian Prof. Dr. Rainer Schnauffer
© all copyrights: waterproof concepts 2001
What is our strategy all about?
Enter a Joint Venture with Michelard
More control over European Market
Competition between Michelard & McT shall be avoided
Find a compromise with McTaggart
Optimum marketing
End of 98: new negotiations with McTaggart:
to avoid unnecessary competition
higher royalties
-> Overall aim: profit maximisation
Navid Nazemian Prof. Dr. Rainer Schnauffer
© all copyrights: waterproof concepts 2001
Thanks for your attention!
Sources:
1)
Handout International Marketing, Prof. J. Höppner, p. 91
2)
Welge / Holtbrügge 1998, p. 122
3)
Kutschker 1992
4)
Meffert, Bolz, Internationales Marketing Management
5)
Microsoft Encarta 1999
Questions?
Navid Nazemian Prof. Dr. Rainer Schnauffer
© all copyrights: waterproof concepts 2001