Cameron Auto Case Study

Topics: Automotive industry, Decision making, Royalties Pages: 3 (898 words) Published: December 24, 2013
Cameron Auto Parts was founded in 1965 to take advantage of opportunities created by the Auto Pact (APTA) of 1965 between the United States and Canada. The APTA allowed for tariff-free trade between the Big Three American automakers and parts suppliers and factories in both countries provided that the companies maintained assembly facilities on both sides of the border. Cameron Auto Parts focus was primarily on small engine parts and auto accessories such as oil and air filters, fan belts and wiper blades manufactured as original equipment parts (OEM) based upon design specs created by the Auto manufacturers and then sold these parts to the auto makers. Alex Cameron took over the business in 2001 and was immediately met with a financial crisis. Sales in 2000 had dropped to $48M from $60M in 1999 and were only $18 million for the first six months of 2001. Losses were recorded in 2000 and 2001. This profit loss was primarily due to declining auto sales of American cars and trucks and the increased presence of Japanese automakers. Cameron’s only defined “strategy” before Alex was just making whatever parts the Big Three told them to make. This is not a strategy, this is just following orders. There were no processes in place for new product diversification and Alex decided that the company needed to change the company strategy to include product diversification if they were to regain the success they once had. Alex Cameron felt that expansion into product design was essential for the long-term survival of the firm. In mid-2001, Cameron took the steps necessary to design and develop its own parts line. Alex then hired four design engineers (on his own) and, even though his management team considered them unsuccessful, he then hired a way a key engineer from a Canadian firm to head up the design team. By 2003 the team came up with a flexible coupling idea that would entice international buyers and not just the Big Three automakers. The couplings seemed like a...
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