Cameron Auto Parts Case Study

Cameron Auto Parts was founded in 1965 after the signing of the U. S. and Canada Auto Pact. The main consumers were the Big Three automotive manufacturers and the company prospered in this new business environment. In 2000, problems started to occur in the company. First, a consequent drop of the sales of more than 50% happened. Second, the Japanese were great competitors and took advantage of the market opportunities in Canada. Alex took the control in 2001 in order to implement a process of modernization of the company. His â€Å"operation survival† consists of cutting the production costs by being more focused on the workforce (mainly lay-offs). Although is it difficult to manage a financial problem, Cameron faced serious â€Å"gaps† in this function. In 2003, the situation of Alex familial company is stabilized, even if there is a need to invest in another plant. As Cameron was not financially ready to make such a progress, the first option was, on one end, to wait and generate more profits leading to more financial stability through exports. On the other end, the company can choose to license the production of the flexible coupling with McTaggart. In this case, Cameron is the licensor and McTaggart, the licensee. The licensor shares patents, copyrights or trademarks and gets royalty fees in return. In 2004, Alex signed a five years licensing agreement with McTaggart. Following this agreement, McTaggart had to pay $100,000 fee in advance in order to help Cameron to recover and a royalty of 3% on the first $1 million of sales and 2% on the second. In case McTaggart reached a higher level of technology, it would also have the obligation to share at least one of them with Cameron. Alex realized that the plant cannot afford both systems because the costs of expanding the activity were too high and required too many of the companys resources. Moreover, the companys financial situation could not permit Cameron to implement a plant expansion. The potential in the European market is a great way to expand a business although the culture is different. It is difficult to adapt a North American business system to a European system. Exporting to the European market means that the average European customer will have to pay the international fees (about 20 per cent more than North Americans because of taxes). By granting McTaggart a license, Alex ensures a quick and minimize the risks while penetrating the U. K and European markets. Although there are many advantages when licensing, there are other consequences such as sharing not only profits, but also knowledge, and so Cameron’s intellectual property. The advantages of licensing McTaggart are numerous. The low investment costs, reduced financial risks, and economies of scope are very interesting when implementing an activity’s expansion. Cameron is concerned about its financial situation and licensing provides them a higher security. It is a quick market entry with a minimized risk of poor performance from the licensee, McTaggart, which is already and directly running operations in the U. K. On the contrary, the risk of image loss, the distance between both countries leading to communication losses, the lack of revenue, and the shared profits are some disadvantages to take into account when implementing a license strategy. Exporting also has its advantages and disadvantages. First, it provides independence, a higher control over the quality of final products, economies of scale, and a higher, non-shared profit. In this case, disadvantages are numerous. The lack of capacity of Cameron limits its ability to expand its business through exports. Plus, the different currency represents a risk as currencies’ value varies greatly on the short term. There are also high investment costs, a limited knowledge of the U. K. and European market, the costs of transportation and the trade barriers. Considering the companys financial situation, the costs and risks of penetrating a new market, we think that Alex should license McTaggart. It is clear that McTaggart is the perfect business partner. This company owns all the tools necessary to concretely produce and sell the flexible couplings. They are able to sell the product very fast and build a strong and sustainable relationship with Cameron. McTaggart is experienced in this business and Cameron can benefit from it to increase production capacities. They have a solid reputation and a great financial situation. The sales persons are very involved concerning the marketing and selling of the products. They have high manufacturing capacities and are willing to invest and develop the manufacturing capability to efficiently produce the flexible couplings. Additionally, their client base is essential. Licensing McTaggart is the best choice Cameron can do to improve its situation.

Locate articles on the Internet about how population demographics are Assignment

Locate articles on the Internet about how population demographics are changing in the U.S., and other developed countries - Assignment Example On the other hand, the population demographics of developing countries such as Nigeria, Indonesia, India and Pakistan are characterized by high birth rates. The population in Africa and Asia is estimated to triple by 2030 due to the high fertility rates and unexploited resources in those countries (Shapner, 2007). The changes in U.S population demographics will affect the work, healthcare, private wealth and income security of the citizens. The business firms will be required to increase their social security contributions due to the increase in the number of post-retirement years for their workers (Kachru, 2009). The business firms will have to align their employment practices with the changes in population demographics in order to remain competitive. The firms will have to incorporate diversity in their talent development and implement human talent development programs that aim at attracting next generation of young and skilled workforce (Little and Triest, para 3). The business firms will have to shift more of their employees from full-time positions to part-time positions in order to address the life-balance requirements of the aged workforce and the need for luxury (Kurtzleben, para 4). The aging population in the US will increase the demand for health-care services. This requires innovative health technologies that will address the high increase in acute and terminal diseases such as Alzheimer and cancer. The business firms will have to offer additional medical benefits in order to ensure the aged workforce remain productive (Shapner, 2007). In 2008, the birth rate was 14 live births per 1,000 representing a 2 percent decline from 2007 statistics and general fertility rate was 68.6 live births per 1,000 women aged 15-44 years. The high fertility rate was attributable to increased access to child care services and other societal adaptations such as male involvement in household labor. The mortality rate was 9.7 deaths per

Critically appraise the application of traditional capital budgeting Assignment

Critically appraise the application of traditional capital budgeting techniques - Assignment Example At the same time, many business organizations failed to survive stiff market competition and subsequently went out of the market. The last decade witnessed a series of corporate scandals and bank failures due to poor managerial accountability and ineffective corporate governance practices. Hence, today’s managements give particular focus to corporate governance principles and long term business decisions. In this context, the concept of capital budgeting is of considerable significance because it evaluates future cash inflows and outflows on a prospective business project and thereby determines it potentiality. After the global financial crisis 2008-09, capital budgeting is specifically considered to be an integral part of the financial management. This paper clearly describes how the capital budgeting technique can contribute to the long term sustainability of business organizations. In addition, the influence of capital budgeting on managerial efficiency and organizational p erformance is also explained in this paper. Some recent developments in the application of capital budgeting have increased this method’s relevance in the modern business context. ... back period, net present value, accounting rate of return, internal rate of return, equivalent annuity, profitability index, real options valuation, and modified internal rate of return (Drury & Tayles 1997). The method used for capital budgeting may vary with regard to the change in size of the business. Simply, capital budgeting is a tool used for long term decision making. Although capital budgeting is traditionally used for making sound long term investment decisions, many other real-life applications of this technique have been developed recently. Capital budgeting is a complex process and therefore careful management of this process is vital to achieve the desired outcomes. A post project audit is conducted to evaluate the completed project. More precisely, under a capital investment project, actual cash inflows and other benefits are compared with figures forecasted at the time of project appraisal. This paper will analyze the objectives of capital budgeting, recent developmen ts in its applications, and the role of post-completion auditing. 2. Capital Budgeting and Post Completion Auditing Capital budgeting can be simply referred to the planning process deployed to evaluate whether or not a firm’s long term investments including new plants, new machinery and products, and research and development project are worth pursuing. In a broader sense, â€Å"capital budgeting can be defined as the analysis of a proposed investment that is a long-term asset used by the business to yield a return over a period of time that is greater than one year† (Williamson et al 2008, n.a). Management experts argue that capital budgeting can also enhance the growth of non-profit organizations because potential long term investment decision would assist those institutions to expand