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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.
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