Case Study Making Business In Asia

6 Pages 1451 Words

Intercultural Management

CASE STUDY

· Eldora Company (EDC) a leading U.S. bicycle maker.
· Domestic manufacturing strategy: keeping its plant on the same campus as its corporate offices in Boulder, Colorado. It had contributed greatly to cooperating among various departments and ultimately to the company’s growth.
· In 1992 EDC’s sales and earnings had hit record levels.
· Now the Company produced almost 30% of the bicycles sold in the United States.
· U.S. mass-market bicycle sales were growing by only 2% per year.
· For years, the Company had concentrated its efforts on inexpensive bicycles.
· Boulder Colorado, was a bicyclists Mecca. Eldora employees at all levels shared a genuine love of bicycling and eagerly pursued knowledge of the industry’s latest trends and styles.
· All marketing staff, engineers, designers and manufacturing personnel worked on one campus, within a 10-minute walk of one another.
· A Joint venture with Rinaldi, a high-end Italian bicycle manufacturer. EDC had begun importing Rinaldi bikes and Rinaldi had begun marketing EDC bikes in Europe.

MOVING TO CHINA

Reasons for do it.

· The industry is reaching the saturation point in United States.
· Two of the largest bike manufacturers in the world, located in rapidly growing Asian markets, enjoyed a significant labor and distribution cost advantage.
· Of the 200 million bicycles made in the world last year, 40 million were sold in China, 30 million in India and 9 million in Japan.
· There’s a growing middle class. The demand in Asia has been doubling annually.
· EDC can’t compete from U.S, about 20% of it product cost is labor, and the hourly wages of the manufacturing workforce in those countries are between 5% and 15% of EDC.
· EDC has also a 20% cost in transportation and duties for get its bicycles to those markets.
· There are a lot of companies in Asia that could provide EDC with a product very quickl...