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CDMA Group Assignment 1 - Group 12 PDF

The relationship between Crown Equipment and Richardson Smith had been successful for decades but has changed recently. Crown should modify the relationship to be less dependent on Richardson Smith and more open to other design partners. For larger projects, Crown could continue working with Richardson Smith but also solicit designs from smaller consultants for quicker, smaller projects. In the long run, Crown could consider an in-house design team to reduce costs, but it may lack outside perspectives and flexibility.

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Akya Bhatnagar
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997 views4 pages

CDMA Group Assignment 1 - Group 12 PDF

The relationship between Crown Equipment and Richardson Smith had been successful for decades but has changed recently. Crown should modify the relationship to be less dependent on Richardson Smith and more open to other design partners. For larger projects, Crown could continue working with Richardson Smith but also solicit designs from smaller consultants for quicker, smaller projects. In the long run, Crown could consider an in-house design team to reduce costs, but it may lack outside perspectives and flexibility.

Uploaded by

Akya Bhatnagar
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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ASSIGNMENT SUBMISSION FORM

This will be the first page of your assignment


Course Name: _Corporate Development: Mergers & Acquisitions_______________

Assignment Title: Group Assignment 1: Crown Equipment Corporation Case


Submitted by: ___Group - 12______________

(Student name or group name)

Student Name PG ID
Akya Bhatnagar 62010339
Soham Roy 62011057
Sidharth Unnikrishnan 62010447
Medha Meenal 61920769

ISB Honour Code

• I will represent myself in a truthful manner.


• I will not fabricate or plagiarise any information with regard to the curriculum.
• I will not seek, receive or obtain an unfair advantage over other students.
• I will not be a party to any violation of the ISB Honour Code.
• I will personally uphold and abide, in theory and practice, the values, purpose and rules of the ISB Honour
Code.
• I will report all violations of the ISB Honour Code by members of the ISB community.
• I will respect the rights and property of all in the ISB community.
• I will abide by all the rules and regulations that are prescribed by ISB.

(Please start writing your assignment below)


Q1) Evaluate the relationship between Crown Equipment and Richardson Smith and how has it
changed over time?

Set up in the post-World War II era, Crown Equipment Corporation was a manufacturer of
temperature controls for coal burning furnaces which later went on to become the market leader
in industrial material handling equipment industry. Crown’s success was attributed to their
products’ superior design in an industry where other players followed a traditional approach to
product design. Crown and Richardson-Smith (RS) had a very long and successful
relationship starting in 1960 with a new forklift design at a fee of $750. The same forklift later
won the design excellence award from the Industrial Designers Institute in 1963. RS became
the exclusive design partner for Crown Equipment and even catered to Crown’s brand
identity needs.

Unlike the traditional client-customer relationship in the industry, Crown and RS shared a very
close and inclusive relationship, to the extent that Richardson Smith’s designers were treated
as Crown’s partners and not outsiders. Dave Smith, RS’ founder, was closely involved in
almost all of Crown’s projects. Breaking away from the industry norm where design
consultants had little say in product design, RS designers were an integral part of the entire
process.

However, as times changed and other players in the market caught up to design innovations and
started giving design paramount importance, Crown had to devise a new strategy to retain its
position in the market. With a focus on introducing new designs at a faster pace, Crown
started evaluating new sources of design innovations, an in-house design team being a plausible
option.

Moreover, the acquisition of RS by Fitch brought forward several challenges to Crown’s strategy
to remain the market leader. Taking up small scale projects for Crown by a company with 500
employees was a big question. Further, the close relationship between the RS designer and
Crown’s team, which was paramount in Crown’s success over the year, was overpowered by the
new organisational structure and communications became more formal. Crown also expected the
project costs to increase in the future. Although, Crown and RS had a prosperous relationship
over the years, but the market conditions and the changes in the organisation have forced
Crown to look for other alternatives for its design needs.
Q2. Based on this evaluation, should this relationship be modified? If yes, how & why? If not,
why not?

The relationship between Crown and RS had been strong for the past decades, but recent
developments indicate that Crown should change their exclusive reliance on RS to a more
open and contractually driven relationship.

After the acquisition by Fitch, RS became FRS, a subsidiary of Fitch. An immediate outcome
was that the relationship between RS and Crown became more formal, and Crown was
concerned that the new entity (FRS) would charge much more than what Crown was used to,
and might not take up the small-scale projects which RS traditionally took up for Crown.

The best decision for Crown would be to limit their dependence also on FRS for their design
requirements and introduce open market negotiations for the enquiries which they floated to
them. This will allow Crown to gain cost benefit and the opportunity to benefit from the
expertise from diverse design providers, via exposure to new viewpoints and ideas.

For larger scale projects, Crown should continue their relationship with FRS, only for
high profile design contracts, because FRS still retains the original design team who were
adept and knowledgeable of Crown’s design philosophy. For smaller scale projects requiring
customization and quick turnaround time, Crown should outsource to smaller design
consultancies which have shown interest in adding Crown as a customer account.

Given Crown’s volume of design requirement, they could also consider developing an in-house
design team. This presents opportunities for long term cost and operational efficiences, but in
the short-medium term the sound decision will be to continue with outsourcing to design
partners. The pros and cons of developing an in-house design team are:

PROS CONS
• Quicker turnaround time as the team will • The in-house team though
now be better integrated. knowledgeable in Crown’s internal
• More economical in long run. The products will have limited exposure to
annual design contracts to other design competing products and might be at risk
consultancies run around $1 million of stagnation.
annually while an in-house team of 8 • Having an in-house design team limits
members in the long run would cost the flexibility for Crown in soliciting
around $800,000 annually. inputs from other consultants which has
traditionally helped Crown maintain an
edge in their machine designs.
• There is a risk of underutilization of in-
house designers which will lead to
redundant fixed costs.

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