Background & Problem Definitions: Jolson Automotive Hoist is a company produces and manufactures premium, high quality automotive hoists, then sells them to car repair shops and garages. The company is doing well and has an opportunity to grow in the industry, specifically by the possibility of expanding into Europe. Jolson needs to make a decision on which method of expansion would best suit their company.
Market & Industry Analysis: There is a level of maturity and competition within this Hoist industry, as it is primarily dominated by the two large US companies, Berne Manufacturing and AHV Lifts. These two companies alone take up 60% of the whole market. The types of lifts made also differed in that of maturity and growth potential, whereby the in-ground lifts and the four-posts were at mature/declining stage, and the scissor lifts were up and coming in terms of growth. Jolson’s direct competitors in this growing market segment of scissor lifts were AHV Lifts and Mete Lift, a small regional company. Customers in this market were specialty shops, new/used car dealers, independent garages, and chains. Jolson mainly targeted those in the specialty shop segment, who dealt with wheel alignment. Extensive personal selling, product features, and brand of hoist all play key role in the purchase of a hoist.
Evaluation of Alternatives: These are the alternatives Jolson must decide between. The following alternatives, along with their pros and cons, are as follows:
Alternative 1: Enter European Market by Direct Investment. * PROS: Jolson has 100% control over operations, product vision, and brand reputation. * No royalties to paid to anyone; Jolson collects 100% of all profits earned * CONS: Negatives that come with being in a foreign environment (economically, politically, etc.) * High initial investment costs of up to $1,530,00 (See Exhibit 1)