Duncan Industries

Executive Summary

Duncan Industries is the manufacturer of a premium hoist, the Duncan Lift, used in the automotive service market. Because of its design, safety features, and warranty, the Duncan Lift is a first-class lift in the scissor lift sector. Duncan has established business in Canada and the United States through various sales channels. The company is now looking to grow and exploring a variety of options. One of those options being to open a sales office in New York to take advantage of the Northeastern U.S. market. Duncan also has an interest in entering the European market and has presented three points of entry, a licensing agreement, joint venture, or direct investment. The joint venture makes the most sense for the direction that Duncan would like to take its business. This will allow the company to be profitable in Europe more quickly and keep the brand reputation they depend on.

Problem Statement

Duncan Industries is seeking to grow into the European market. Its Duncan Lift product has increased in sales year over year in the North American market. However the European market will not be an easy market for Duncan Industries to enter. The company has no experience in Europe, however does have a contact there. Bar Maisse is a European company which sells wheel alignment equipment. Duncan Industries is also interested in expanding their current business in the Eastern United States. The President of Duncan Industries, Mark Duncan, needs additional information to make an informed decision by determining if the European market is worth entering from a financial standpoint. If the market is worth entering recommend that the company use a license agreement, joint venture, or direct investment. Recommend if Duncan should establish a new sales office in New York to handle Eastern United States potential sales growth. The European market potential will be difficult to forecast as limited data is available. Mark Duncan has already conceded that estimating sales for the licensing agreement and joint venture will be very difficult.

Under Duncan Industries’ current capacity it would be difficult to take on both the European market and a new sales office in New York. Pierre Gagnon is the company’s marketing manager and would have to be the point person for either endeavor. Only one venture will be recommended for the coming year with future consideration for the other.

Industry Analysis

Automotive hoists are purchased by garages that are in the business of servicing cars. These garages consist of new car dealers, used car dealers, specialty shops, chains, and independent garages. The Duncan Industries hoist, called the Duncan Lift, is specifically designed to be used for wheel alignment. The Duncan Lift is considered a scissor, surface lift. Of the many competitors in the automotive lift market, Duncan only has two competitors in the North American scissor lift market, AHV Lifts and Mete Lift. AHV is the largest hoist manufacturer by market share. Consequently their scissor lift sells for 20% less than the Duncan Lift. AHV’s lift seems to be considered a middle of the road lift. Mete Lift produces a quality lift for about 5% less than the Duncan Lift. However Mete is a regional firm which concentrates sales to Oregon and California.

Company Analysis

Since its beginning in 1990, Duncan Industries has gained much respect in the North American hoist market. Their flagship product, the Duncan Lift is considered to be a top of the line lift, often called the “Mercedes” of hoists. The lift is a surface lift which allows the lift to be mobile rather than attached to the ground. The Duncan Lift is categorized as a scissor lift due to its scissor like mechanism which raises and lowers the lift. The product is touted for its superior design, safety features, and warranty, all obvious strengths for Duncan. The safety features include a locking mechanism not found in many scissor lifts. The locking mechanism was considered an advancement in lift technology when it was first introduced. Duncan is also so confident in its product that it offers a 5 year warranty. The warranty gives Duncan quite an edge in the marketplace as 5 years is about half the average life of an automotive lift. Mark Duncan is very adamant about the reputation of the company and its product. He does not want to risk the reputation in order to gain market share.

Duncan’s target market is Canada and parts of the United States. Currently 60% of Duncan’s sales are in the U.S. with the remaining 40% coming from Canada. However there are 10 times as many vehicles in the U.S. as there are in Canada. This gives Duncan a glaring opportunity in the U.S. market. Duncan can not easily move