Driver FX

Babson Professor Stephen Spinelli, Case Director

Bob Dandaraw and Tom Vitella, Case Writers

Arthur M. Blank Center for Entrepreneurship

© Babson College, 2001.

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Abstract

Initially an independent company, Driver FX.com decides to become a subsidiary of their former strategic partner, Keystone Automotive Operations Inc. Continued low sales of their online automotive accessories and an unacceptably high burn rate, forced the company to downsize and create a new business model within the corporate structure of the nation's leader in the marketing and distribution of aftermarket automotive accessories.

The new marketing strategy was designed to help Keystone ward off the threat of competing online and catalog sales companies by providing existing jobbers with new web sites listing Keystone's 250,000 SKU's. The affiliated retailer would have an enhanced and professional web presence while avoiding the costs of back-end and fulfillment operations. However, after a year, the new model is well below estimated revenues, due in part to affiliate resistance to both initial joining costs and the required sharing of marketing costs. The original Driver FX.com entrepreneur in conjunction with Keystone's Board of Directors must make strategic decisions to remedy the situation.

Location of the company: Maynard, Massachusetts and Pennsylvania

Years spanned by the case: 1998 - 2001

Industry segments: Automotive, Internet

Stage of the company: Early growth

Age of the entrepreneur: late 30's

Key Words: Automotive, automotive parts, retail, on-line, entrepreneur, dotcom, marketing, business model, strategy

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Teaching Notes

A three 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.