Alco Equipment

Babson Professor Stephen Spinelli, Case Director

Dan D'Heilly, Case Writer

Arthur M. Blank Center for Entrepreneurship

© Babson College, 1995.

Abstract

This case focuses on the relationship between two manufacturers and a common distributor in a consolidating industry. Alco Equipment had three product/service offerings: new and used trailers, tractor and trailer parts, and trailer service. A critical decision arose when both trailer manufacturers attempted to force Alco into an exclusive relationship. Despite long-term customer relationships, the entrepreneur had to consider who owns the brand equity: the dealer or the manufacturer? The company had grown to be one of the largest dealerships in New England through an innovative product/service-extension strategy. Attention is focused on the strategic nature of distribution relationships and on some of the difficulties involved in sustaining rapid growth in a maturing market.

The case contains a great deal of information about the entrepreneur and his company, so that classes can evaluate their strengths and weaknesses. Also included is sufficient data to perform financial ratio analysis for the company as a whole, and separately for the product offerings. In past teachings, seldom has a class been unanimous in its appraisal of the entrepreneur or in recommendations for resolving this conflict.

This case is best used in courses involving distributors, dealerships, opportunity assessment, rapid growth, ethics, family business, consolidating industry, crisis management, and financing issues.

Location of the company: Chickopee, Massachusetts

Year(s) spanned by the case: 1984 through 1995

Industry segment(s): Freight tractor/trailer sales and repair

Stage of the company: Growth

Age of the entrepreneur(s): 40s

DVD

There is no DVD available for this case.

Teaching Notes

A ten page case teaching package, written by Stephen Spinelli, is available for this case. The teaching package includes strategies for case presentation, key concepts, solutions to the assignment questions in the case, and suggestions for the most effective ways to work this case into a course.