Introduction of Firm

Founded in 1972, Giant Bicycles of Taiwan is today, alongside Hero Cycles of India, officially recognized as the largest manufacturer of bicycles in the world (Koufopoulos& Pitt, 2012). According to Koufopoulos and Pitt (2012), the company’s manufacturing output of 5 million bikes per year revolves around three countries China, Taiwan, and the Netherlands. In 1977, Giant started making bicycles as an original equipment manufacturer (OEM), whereby it produced bicycles for Schwinn that were retailed under different brands. During this time, it operated as a private label (Walker, 2017). A major leap forward came in 1980, when workers at Schwinn’s Chicago plant downed their tools and Giant was asked to expand its operations to bridge the shortfall. According to Walker (2017), Giant currently has several brands and sub-brands; it classifies its bicycles in four broad user groups: on-road, e-bikes, x-road, youth, and off-road. It is also highly innovative and employs sophisticated technologies to manufacture performance-oriented, durable, and efficient bicycles.

Overview of Firm Competitive Advantage

Walker (2017) states that Giant’s e-bike portfolio is one of its most significant sources of competitive advantage. Unlike electric cars, the global e-bike segment is not only well-established but also highly lucrative, with countries such as the Netherlands providing a ready, large, and stable market that can be supplied with e-bikes. Incidentally, Giant has a production facility at the core of the global e-bike market in the Netherlands, allowing it to move its products quickly from the plant to end consumers directly and to provide competitive after-sales services (Walker, 2017). Also, its e-bikes are innovative, technologically advanced, and value-driven, making it the premier supplier of the product in North America, Asia – Japan, China, Taiwan, and various other countries – and Europe.

In summary, Giant is strategically positioned to dominate the international e-bike market for the next few years and is increasing supply to other overseas markets(Koufopoulos& Pitt, 2012). Secondly, the Giant brand is reliable and visible internationally; this gives it an edge over rivals when it comes to competing for new customers and retaining clientele, whether they are looking for value or quality. Third, Giant has struck an excellent and useful balance between cost-efficiency and innovativeness across its entire supply chain, something that its competitors are still struggling to achieve (Walker, 2017). Lastly, in addition to being a renowned global brand with plants in the cycling capital of the world (the Netherlands), Giant’s local footprint is also huge; this way, it can implement global standardization while retaining a local presence.

Problem(s) Statement

Presently, Giant’s profitability and market share are threatened by the emergence and growing popularity of protectionism. As is seen in the U.S., protectionist leaders are enacting a variety of changes to favor domestic producers, including tariffs on imports from foreign manufacturers like Giant (Walker, 2017). As such, this has created global economic uncertainties and adversely affected the company’s overseas operations and export volumes.

Alternative Solutions – Solutions/Opportunities

The first option for Giant is to strengthen its key markets of Asia and Europe to offset difficulties experienced in markets such as North America. The second option is to augment its global positioning by cultivating greater brand loyalty and differentiating itself regarding innovation, quality, and value.

Option 1 Analysis

Pros

• Allows the company to focus on its key markets.
• It reduces unnecessary investments in less rewarding markets.

Cons

• Denies the company an opportunity to establish itself in North America and other promising foreign markets.
• Concentrating on a few markets increases exposure to risk.

Option2 Analysis

Pros

• The firm would retain its rank as the premier bicycle manufacturer worldwide.
• The company will be able to invest in newtechnologies, strategic partnerships, and campaigns that give it greater access to the global market.

Cons

• At a time when the global economy is wrought with uncertainties, the company will be incurring greater risk by investing valuable resources in ventures that might not pay off.
• Global expansion is a lesser priority compared to solidification and exploitation of regional markets in Asia, as it is less lucrative.

Decision and Support

Giant should pursue option 1 as it offers the best platform for cushioning itself from the volatility that has typified the global market. While North America and Africa are significant and essential markets, they are not the company’s primary markets. Asia, led by China, Japan, and Taiwan, and Europe, especially the Netherlands, account for the largest percentage of Giant’s annual revenues. Consequently, it would be wise to continue expanding into and solidifying the Asian and European markets and invest prudently in its North American operations.

Action Plan

Giant should implement a multipronged strategy composed of innovation, stronger customer relationships, better hiring techniques, and acquisitions. If taken together, these practices will significantly improve the company’s competitiveness, brand loyalty, reduce employee turnover while increasing employee productivity, and grow its market share by minimizing the number of competitors.

References

Koufopoulos, D., & Pitt, M.R. (2012). Essentials of strategic management. Upper Saddle River:SAGE.

Walker, P. (2017). Bike nation: How cycling can save the world. New York, NY: VintagePublishing.

 
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