Bendix Corporation: Case Study
Bendix was incorporated in the early 1900’s in South Bend, Indiana, to provide for the expanding automotive manufacturing industry. Products included starter motors, brake linings, air filters, and others for the OEM segment. By the early 1920’s Bendix had relocated to Detroit, Michigan and expanded to manufacture brake system hardware, brake linings, fuel pumps and filters, air filters and related products for use in automobiles, trucks, tractors, and other vehicles.
By 1976, Bendix was serving four basic markets: automotive, aerospace and electronics, shelter and housing, and industrial and energy and had been considered one of the best-managed companies in the United States. Even suffering the recession of 1974 and 1975 Bendix was able to increase sales by a compound annual rate of 10% from 1970 to 1975 while also growing profits at a compound rate of 22% for the same period. In early 1976, Douglas Crane, president of Bendix Corporation’s Automotive Group, was considering whether or not to move forward with plans to build a $10M manufacturing facility for the production of injectors for electronic fuel injection systems.
The automotive market contributed 52% of Bendix sales by 1976 ($700M), with the car segment supplying 75% of those sales. Further, the Automotive Group’s strategy had been to attempt to become a major supplier (typically 25% market share) in each of its product areas, and Bendix was the largest independent parts supplier to the North American market in early 1976. Their reputation as a reliable parts supplier and as being technologically advanced was outstanding. To remain a leader, Bendix desired to stay at the leading edge of automotive technology, and was developing new products, new materials, new engine configurations, and ne personal transportation modes should they appear. The overreaching goal was to increase their reach in both North American and foreign markets to become a world leader in...