To: Mark Baxton
Subject: Baxton Technology Expansion
Baxton Technology Company manufactures surface automotive hoists, which are used by garages, service stations and other repair shops to lift cars for servicing. Because of its design, quality of workmanship, safety features, ease of installation and five-year warranty, Baxton Lifts achieved a reputation as the “Mercedes” of the hoist industry and is considered a leader in automotive lift safety in Canada and United States.
If Baxton Technology decided to enter the European Market, they would have three options.
2. Joint venture
3. Direct investment
We recommend going with option number two, a joint venture.
A French firm has already expressed interest in licensing and manufacturing the lift, so this is certainly an option to be considered. Half of those who Pierre had questioned about Bar Maisse had not heard of the company. However the other half who have heard of them had spoken in terms of them being of utmost high quality. Also it was mentioned that the management team heading up Bar Maisse had integrity, which means that hopefully they would manage the manufacturing of the Baxton lift in a clever way, which is what the Baxton Company would hope for. Baxton Technology have such success in North America that they should also be successful in Europe, especially in the Big 4 countries with high vehicle levels. This is especially so when they have a product of such high quality in a market where this factor is so important.
However we believe that if Baxton were to pursue this agreement of licensing out their lift, they should seek a higher royalty rate, and not simply accept the offered 5%. They should do this because they will be lending total control of the manufacturing and distribution of their signature product to another company in another continent, so they are really giving a lot away. It is always a danger...