Cameron Auto Parts was founded in 1965, as consumer’s they haver three biggest car manufacturers. Cameron Auto Parts began having crisis in 2000 due twomajor problems: the first is about the drop in sales that were stopped at $ 48 million and in 2001 dropped to $ 18 million, and the second one is because the entry of Japanese competition to the market.Because of these losses Alex was in need for modernization, for this I borrowed $ 10 million.
In 2001 Alex began the "Operation Survival", taking the decision of reducing costs, mainly in laborforce. Alex cut its workforce from 720 to 470. At the beginning of 2002 the revenue would raise to $ 45 million and there were small gains. In the midst of "Operation Survival" Alex decides to dosomething about diversification, bringing to four engineers, designers and instructors. In 2003 Cameron Auto Parts spends $ 2.5 million in equipment for quality products, faster service delivery, but notPrice.
In late 2003, the Cameron situation returned to normal, although there was a need to invest in a new plant to separate the line of production of flexible couplings. As Cameron was notfinancially prepared to make that commitment, the options were either to wait a year to generate more profits and financial stability, or license production of the flexible coupling.
In the spring of2004, Alex signed a five-year agreement with licensing Supplies Ltd. McTaggart. McTaggart had to pay $ 100,000 in fees in advance for the help of Cameron to make things right and a royalty of 3% on thefirst £ 1 million sales and 2% in the second million. McTaggert was forced to give a feedback of technology back to Cameron should get an improvement.
In this case we can identifyseveral problems, like in the beginning, that there was no diversification of the product or there was no major sales contracts that with the "Big Three". Due to the crisis experienced at the...