DUNCAN INDUSTRIES

Lauren Knott, Brian Taylor, Kelsey Baker

Mark Duncan established Duncan Industries in 1990 in Lachine, QuebecDuncan Industries sell surface automotive hoistHoist lift cars from the ground so that auto mechanics can work on the underside or tires on the carHoists range from $3,000-$15,000 so it is a serious investment for a business; approximately 49,000 hoists are sold each year in North America aloneDuncan is the safest and highest quality automotive hoist on the market; but also one of the most expensiveDuncan hoists mostly sold to automotive outlets that service cars, car dealers (new and used), specialty shops, and chain stores Expanded to the United States in 1996; since then sales grew by $3,490,000

Case Summary

Sixteen competing companies; four Canadian and twelve United States Firms

There are different types of hoists In-ground (only 21% of hoists sold)

single-post, multiple post Surface ( 79% of hoists sold)

Two-post, Four-post, ScissorOnly two competitors produced scissor lifts (pictured in first slide); AHV Lifts sold for 20% less than Duncan but did not provide the extra safety features; the second was a small restricted company, Mete Lifts, who only sold to California and Oregon which sold for 5% less than DuncanSafety is an important feature to businesses purchasing the hoists because when they do malfunction they frequently have serious injuries as an outcomeDuncan Industries had developed a good name for themselves by early 2000; they had a strong reputation for good quality and customer service

Case Summary Continued

The company saved money by having three types of distributors (a company sales force, Canadian distributors, and a U.S. automotive wholesaler) and only four salespeople plus Pierre (who handles the marketing) Duncan Industries succeeded in the United States and so they started to consider expanding to Europe as wellThe market for the Duncan Lift hoist depended on the number of vehicles in the country

Four countries in Europe consisted of more than 20 million active vehicles

There were three options for expanding the company into Europe Licensing- giving Bar Maisse (European company) permission to produce and sell

Duncan Hoists for a profit to Duncan Industries Joint Venture- a 50/50 proposal where two companies shared the investments and

the profits Direct Investment-Duncan Industries would establish a manufacturing facility alone

The decision was left up to Mark Duncan with the advice and help of Pierre and his research

Case Summary Continued(2)

Problem Definition

Should Duncan Industries expand the company to Europe?

If so what part of Europe should Duncan Industries expand to?

Which investment option should Duncan Industries use?

SWOT

Hoists are fully hydraulic

Alignment turn plates

A leader in automotive lift safety

Four patents on the machinery

Exchange rate

Hoists are a capital expense for most automotive businesses

Exchange rate Majority of buyers

are not well informed

Strengths Weaknesses

SWOT

Penetrate the European market

Expand the North American market (Cater to New England and the

Mid-Atlantic States)

Europeans keep cars longer (More maintenance needed)

Majority of hoists sold are surface lifts

Competitors sold 60% of all hoists sold last year

Opportunities Threats

Market Information: Consumers

Financial Statistics 1997-1999

1997 1998 1999

Sales $6,218,000 $7,454,000 $9,708,000

Cost of Sales 4,540,000 5,541,000 6,990,000

Contribution 1,678,000 1,913,000 2,718,000

Marketing Expenses

507,000 510,000 530,000

Administrative Expenses

810,000 820,000 840,000

Earnings Before Tax

361,000 583,000 1,348,000

Units Sold 723 847 1,054

North American Competitors AHV Lifts

Is the largest U.S. firms Annual sales of $60,000,000 Focus mainly on the In-Ground and Surface hoists 20% less cost than the Duncan Lifts Not as many safety features as the Duncan Lifts

Mete Lifts Small regional company; sales only in California and

Oregon 5% less cost than the Duncan Lifts Not as many safety features as the Duncan Lifts

Market Information: Competitors

Courses of Action

We feel it’s a good idea to do a

licensing agreement with Bar Maisse

With the licensing agreement we would receive 5% sales and the contract is only for 3 years

This would give Duncan Industries a chance to get our feet wet in the European market without a long-term contract

So why not direct-investment or joint-venture?

Mark Duncan needs to research what Bar Maisse has accomplished in the past and meet with them face to face to discuss the deal in more detailMark and Pierre should go to a trade show in Europe to research and get more in-depth information about the market for hoists in EuropeGo to Europe open-minded, in hopes for other business opportunities

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