Fundamentals of Management, 8th ed


Chapter 3: Planning and Strategic Management 9 3



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Chapter 3: Planning and Strategic Management

9 3

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technologies, futuristic materials, and e-commerce are

becoming more prevalent and affordable. The political–

legal climate is favorable to business in the United

States and most developing nations, whereas regulation

is higher in the European Union. The standard of living

is stable, the population is aging, and ethnic diversity is

increasing.

Today in the bicycle-manufacturing industry, manu-

facturers must invest very heavily in research and devel-

opment (R&D) to compete effectively on a global scale.

Domestically, the bicycle-manufacturing industry is

fragmented, with the largest firm, Trek, controlling just

24 percent of sales. The industry’s customers are primar-

ily local, independent bike retailers, a very fragmented

group. The Internet, and eBay in particular, provides

alternate channels for new and used bike sales. Bike

riders, the ultimate purchasers, are interested in style,

comfort, and high-tech features, as well as environmen-

tal and health issues. Suppliers of many bike compo-

nents are small, local manufacturers located in

developing countries. However, a few suppliers are

more powerful, such as Shimano, an internationally

known maker of bicycle components and cycling gear.

Regulators are not a significant force for bicycle manu-

facturers, but Trek and others have numerous joint ven-

tures. In one example, Trek teamed with AMD, Nike,

and other companies to produce the high-performance

cycle used by Lance Armstrong and other leading

cyclists in the Tour de France and other races.

Trek has excellent R&D capability and effectively

utilizes low-cost manufacturers in producing the more

affordable products in its broad line of bikes. However,

its Wisconsin factory produces its high-end lines and

can customize a bike to a customer’s exact specifica-

tions. Trek is beginning to push to improve the cus-

tomer bike-buying experience. The company will limit

the number of retailers it uses and require retailers to

stock a higher percentage of Trek products. In return, it

will provide training and funds to improve in-store

marketing and increase customer loyalty.

MANAGEMENT AT WORK


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