Craig Manufacturing: The Commander Decision
(10 pages of text)
In 2011, the vice-president of Craig Manufacturing (CM)was preparing a presentation for the company’s advisory board and senior management. Craig Manufacturing, based in New Brunswick, Canada, was a privately held, third-generation family business that manufactured attachments for heavy equipment used in large construction projects in Canada and the United States. The company had achieved a strong reputation by pursuing a differentiation strategy based on product quality, leading technology, and exceptional customer service. However, the company needed new revenue streams, as it was experiencing less demand for its customized heavy equipment attachments. The vice-president was about to suggest launching a new product line by producing attachments for mini, or compact, construction equipment and growing the company with a cost leadership strategy. However, entering this market would mean focusing on standardized products, in contrast to the company’s traditional focus on customized attachments. Would the new product line and its cost leadership strategy help propel the company to be the leading manufacturer of industrial attachments in Canada and the United States?
The case is appropriate for senior undergraduate- and graduate-level management programs in strategy courses. After working through the case and assignment questions, students will be able to
- assess CM’s current business model and its strategy to pursue cost leadership in a second product line while maintaining a differentiation strategy in the main product line;
- consider the benefits of different investment decisions and capabilities required for two different strategies;
- explain the impact that the increasing consolidation and price pressures have on the company’s ability to charge or negotiate a high premium when the dealerships are fighting over fewer customers and larger orders, and demanding discounts and longer contracts;
- examine the company’s new challenges, i.e., anticipating bulk orders well in advance of the season; managing the logistics of manufacturing and shipping from China; and implementing new design, sales, and support processes, without eroding CM’s reputation for quality and customer service; and
- consider the pros and cons of other options to grow, such as greater expansion into the United States or pursuing a merger and acquisition strategy.
Canada; United States, Medium, 2011
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