Jolson Automotive Hoist Case Summary

Background:

Jolson Automotive Hoist, Inc. sells surface scissor hoists to specialty shops that perform wheel alignments in the North American automotive market. Successfully expanding in the U.S. Jolson is evaluating the potential of global expansion into the EU. Multiple modes of entry have been presented to Jolson in which they need to decide whether to expand into the EU or continue expansion in the U.S.

Market Analysis:

The hoist industry sells 49,000 hoists a year and Jolson holds a 2.1% market share based on units. The entire market is made up of two categories of hoists, in-ground and surface. The in-ground market is declining while surface hoists are increasing in sales. Jolson’s scissor lift competes with AHV Lifts who is the

Canada accounts for 40% of sales. Distribution within the market is assisted by a Canadian wholesaler who took 20% of the selling price. The U.S. market accounts for 60% of sales and large accounts were processed through a U.S. wholesaler who took 22% of each sale. The difference in the U.S.’s and Canada’s percentage of sales can be credited to the fact that the U.S. car market is about 10 times bigger than Canada’s. However, the U.S. market seems to have more potential as the U.S. wholesaler’s lift sales are made up of about 20% Jolson lifts. This shows the wholesaler’s lack of incentive to push Jolson lifts. To incentivize the U.S. wholesaler to push more Jolson lifts, Jolson could increase the percentage of the selling price given to the wholesaler. This would decrease Jolson’s contribution margin for U.S. sales. On the other hand, Jolson could build a sales office, which would retain 100% of sales, in New York to reach the North Eastern, Mid Atlantic, and Mid-Eastern states. The cost of the office with four more salespeople, a marketing manager, and sales support is estimated to be $460,000. The breakeven sales volume of this move would be $1,643,002 [Exhibit 2]. This strategy is attainable as Jolson’s current four salespeople have accounted for 25% of unit sales or $2,895,865. The sales office would give Jolson access to the region’s estimated 46 million car