Baxton Technologies: Background
Baxton Technology, referred as BT hereafter, is a Quebec based company which manufactures hoists (scissors type surface) with its operations in Canada and US. It competes in the speciality shop segment particularly with shops that deals with wheel alignment. It had already developed a reputation and was known as the Mercedes of Hoists and had sold 1,054 hoists, with 60% sold in US and rest in Canadian Market.
Total hoists sold annually in North American hoists market was around 49,000, typically purchased by new car dealers, used car dealers, speciality shops, and automotive outlets for serviced or repaired cars. The Canadian hoists market more ...view middle of the document...
Investing in the New York Office: This option has its own pros and cons.
Pros: The target market has untapped potential and it alone can increase the sale substantially.It has lower risks as compared to other options and as its known the operations will be little easier.
Sales from North America Wholesaler: 492 Units, If we start the office we will forego the revenues from the wholesaler, i.e., 492*8572 = $4,220,094 or contribution of $1,514,906. So as to achieve the BEP we need to sell 384 units at $10990 and 72 units to recover the annual cost of 3 employees (Margin = $220,000). So we need to achieve 150% of the current sales in order to reach BEP. This sounds risky and the competition is already intense. Exhibit 2
2. Licensing Agreement: This option sounds lucrative as they will earn 5% royalty and there would be no operating costs for BT but only the 5% revenue, however, this might not be as fruitful as it sounds as the Bar Maisse might not keep the stringent quality standards and it will ruin the band image of the...