Crown Equipment

Looking forward, should Crown change its integration strategy? If so, why? If not, why not?

Background:

In 1957, Crown ventured into the forklift industry filling the need within the industry for small, high-quality lift trucks for intermediate-duty use in material handing. In choosing to join the already mature market of forklift makers, Crown realized that in order to be successful, it needed to have some form of competitive advantage over the companies that already existed within the market.

For over two decades, Crown with the help of RichardsonSmith (RS) dominated the market by concentrating on an aspect which her competitors paid little or no attention to; Design.

A number of changes have since occurred and in looking forward, we make the following recommendations.

We believe in order for Crown to remain competitive within the market, Crown will need to alter its integration strategy by establishing its own in-house design group. The issue Crown faces is a human capital issue, which does not deal directly with physical assets. The crux of which comes down to weak but balanced incentives (integration) vs. Strong but unbalanced incentives (independence). The reasons below lend credence to why we believe there is a need for Crown to establish her own in-house design group.

• Purchase of RichardsonSmith - Through the years, one could tie the strengths of Crowns superior designs with the special relationship it enjoyed with RS. Clearly the understanding and the environment led to great accomplishments but also left certain areas of concern which worried Tom Bidwell. While the relationship with RS worked out well for years, there was no guarantee that Crown will enjoy the same relationship with the new firm Fitch RichardsonSmith (FRS).

• Product Development- The current market environment demanded faster new product development and continuing refinement of existing products. By establishing their own in-house design group, they will have more direct control over how their forklifts are designed, the time line within which changes and updates are implemented. By establishing