Baxton Technology

Baxton Technology: A Case in Global Marketing Strategy

Background Statement

Baxton Technology is a relatively small Canadian firm selling a high quality, safe, automotive hoist to the North American automobile aftermarket industry. Since it’s founding in 1990, the company has continuously grown and now constitutes ~2% of all automotive hoists sold in North America. While the company has shown steady growth, Mark Baxton, the founder of Baxton Technology, is looking at ways to increase sales, and is open to a number of alternatives proposed by his marketing manager, Pierre Gagnon.

Problem Statement

How can we maintain our fast-paced growth and continue to increase our market share given the feasible alternatives at hand? Particularly, Should we adopt a European Penetration Strategy, or focus our efforts in the high untapped potential in the US market?

Option 1

Accept the proposal of Bar Maisse to enter into a licensing agreement in which the French firm Bar Maisse would obtain a 3 year manufacturing licensing right for the Baxton Lift in Europe. In exchange Bar Maisse would pay Baxton a 5% royalty fee off of gross sales of the lift.

Advantages:

* This plan is a very risk-averse way of getting penetration into the European market. Bar Maisse would take on all of the risk associated with production and marketing of the product in Europe, and Baxton would receive 5% royalty fees.

* Any revenue generated would be purely incremental, as there would be no operational costs to Baxton Technology.

* Assuming Baxton Lift could generate a similar market share as they have in the US, annual incremental EBIT would be $574,105

* While Bar Maisse is a relatively small firm, it has a very good reputation for quality products, and is a good compliment to Baxton’s developed brand image in North America.

Disadvantages:

* Baxton would have little control over their product, and would have to rely on Bar Maisse to keep standards high in order to...