CASE 5 —Reagan Technologies
Mike Reagan and his brother, Marc, were justifiably proud of their company. What they began
as a paint distributor some forty years ago, fresh out of college, had grown into one of the
largest specialty painting contractors in the U.S., and likely the world. What their company does
is paint ships, which may not sound difficult, but when one considers that every surface on a
ship, including some in some very tight places, has to be painted and repainted over time, it
becomes easy to see that your average painter wouldn’t be able to do the job. In fact, the
company has the best safety record and is known for developing new, safer methods for ship
painting. As a result, the company employed 1,200 people, 1,100 of whom were highly trained
specialists in marine painting. Now, as Mike just turned seventy and Marc wasn’t far behind,
they were discussing the company’s future.
“We need to find another business,” Mike was telling Marc over coffee one morning.
“Something that will flourish when times are not so good for shipbuilding. And we need to find
it quickly so we can help get it going before we turn this company over to Mike Junior and
Addie.” Addie is Marc’s daughter, and the only one of his children who had shown an interest in
the family business. She worked with her dad in taking care of the back office functions
(accounting, finance, IT, etc.) while Mike Junior worked with his dad to oversee the painting
operations.
One truth about shipbuilding is that the industry is highly cyclical—governments don’t build
navies during peace, for example. Another truth about shipbuilding is that there is no sales
force, because all jobs are put out for bid. Government jobs don’t require a salesperson, just a
good proposal, and Reagan Technologies had a solid proposal-writing team. But even with that
strong team, the company’s revenue would plummet when the U.S. Navy wasn’t building new
ships.
Marc replied, “I think I have an idea. I got a call last week from Shore Insulation and
Fireproofing. They want to rent our scaffolds from us on the U.S.S. Bankston job when they do
the insulation. And they’re not the only ones. I’ve had several calls from companies in the area
asking if we rent scaffolding. There’s a lot of companies in construction, maintenance, and
building repair that rent scaffolding.”
Mike had a quizzical look on his face as he said, “But we don’t know anything about that
business.”
“We know how to put up and take down scaffolding safely, and safety is a big issue. With our
safety record, we should be able to win a lot of business,” Marc responded. “Plus, this should
be relatively steady income, in addition to the painting business. With our locations in the
shipyards all across the Gulf and up and down the east coast, we should be able to serve just
about anything east of the Mississippi River.”
“Yeah, but how do we get the business? We’ll need salespeople because right now, you and I
are the only ones in this company with sales experience, and I don’t have time for that!”
QUESTIONS:
1. So far, Reagan Technologies has had neither a marketing department nor a sales force.
Which should come first and why?
2. What would marketing do for the new division? What would its role be, and what
would you consider success for marketing?
3. What type of sales position would they need? Justify your choice.
4. If they were short on capital and wanted to outsource sales, could they? What would
stop a scaffolding manufacturer from outsourcing in a similar fashion and then beat
them on price?
——
CASE 5: REAGAN TECHNOLOGIES
Mike Reagan and his brother, Marc Reagan, were justifiably proud of their company. What they began
Fresh out of college, he started as a paint distributor and grew into one of the largest paint distributors in the country.
The largest specialist painting contractors in the United States, if not the entire world. What their firm does
is to paint ships, which may not appear difficult at first, but when one realizes that every surface on a ship must be painted, it becomes challenging.
Over time, the ship must be painted and repainted, including some in very tight spaces.
It’s clear that the average painter wouldn’t be able to complete the task. The truth is that the
The company has the best safety
