Author: Arend Pryor | Created: 10/03/2021
Details: Sharing content created as part of pursuing my MBA degree
Assignment Details: Evaluate competitive advantages and value-creating opportunities for organizations.
Imagine yourself as the CEO of a company in an industry that interests you. Identify the major global trends that affect the company, analyze the impact of those trends on the company, and identify sources you, as the CEO, could use to monitor those trends. How can you use those trends to create value for the company?
It was Albert Einstein that once said, “Life is like riding a bicycle. To keep your balance you must keep moving” (Antonova, 2021). This is great advice for new riders, but also a good analogy for guiding and managing a company. As an example, we have our fictitious company Vivace Inc., a bike manufacturer that specializes in road bikes for a variety of riders. The company offers three distinct models of road bike including one that caters to casual riders, an upgraded model for commuters, and our high-end model that’s geared towards those who like to break a sweat. In the sections that follow, we play the role of the Chief Executive Officer (CEO) of this company and examine global trends in the bicycle industry and discuss what impacts they might have on our company. Next, we identify potential sources for monitoring these trends and lastly, talk about how we can create value for the organization based on these same trends.
There are no shortage of global trends that can potentially impact companies within the bicycle industry. A shortage of a particular part or change to the materials used to manufacture them can cause repercussions for many within the industry. For example, one such trend shows the expected growth of the bicycle industry over the next seven years, which is projected to increase at a compound rate of 7 percent annually. This is also illustrated in the chart below (Grand View Research, 2020). Yet another trend points to an increase in bike purchases as a result of those looking to improve their health in the wake of the recent pandemic. Lastly, and one of the most interesting of the the trends identified, had to do with the increased popularity of two specific style of bikes. Gravel bikes, which are made for off-road riding and e-bikes. which allow the rider to flip a switch and make the bike go with the help of a tiny motor (Vögele, 2021).
Figure 1: Bar Chart – North American Bicycle Market
As part of analyzing the trends mentioned above, we must identify their potential impact on the company. Starting with the projected growth rate of the industry overall, one of the potential impacts to our company is an increase in our road bike sales. As a side note, while road bikes are projected to increase, so are sales for other types of bikes. With our company offering only road bikes, this could be seen as a threat if our customers switch to a different style of bike. The gravel and e-bike trends previously mentioned could also have a negative impact on the company for the same reason just mentioned. However, this trend can also be viewed as an opportunity to develop a new product. One that we know has the potential for growth.
As the CEO of the company, the amount of time available to monitor trends would be limited, so the focus would be on reviewing high-level industry reports that summarize data in various slices. Additionally, the frequency in which this information is reviewed would need to be on a monthly or quarterly basis. Examples of the types of data to monitor and review include industry sales by country, company, and bike type, as well as data on consumer demographics. This information could potentially help with forecasting future demand for parts, planned manufacturing runs, and as a method of keeping an eye on opportunistic products like e-bikes.
Sources for viewing this information include websites for the National Bicycle Dealers Association (National Bicycle Dealers Association, 2021) and Bicycle Retailer and Industry News (Studies/Reports, 2021). There would also be interest in viewing historical supply chain data such as lead times, production times, and inventory turns in order to identify trends, manage inventory, and look for opportunities for improvement (Chang, 2021). Managing and optimizing our supply chain from an internal and external perspective could add value to the organization, our customers, and offer a competitive advantage (Dess et al., 2018). The main source for this information would be the supply chain manager and/or any software used to manage the supply chain.
Based on the trends we reviewed above, how can we take this information and use it to create value for our company?
This is a great question and one that CEO’s must answer on a continuous basis to help guide their company. With regard to the expected growth of the bicycle market, my thought is that this information could be used to justify hiring extra resources, establishing additional manufacturing locations, and introducing a new model of road bike. Along these same lines, the gravel and e-bike trends offer a special opportunity to create a new product that differs significantly from the road bikes our company currently offers and would allow us to diversify our product line. With the expected growth of the industry, we know that these products are expected to experience increases in sales as well.
Albert Einstein may not have invented the bicycle, but he was quite fond of riding one, much like the growing number of riders across the world. As discussed above, the bicycle industry is projected to grow at a steady pace over the coming years. This is an example of a global trend that has the potential to aid in making strategic decisions for an organization such as forecasting resources and inventory. We talked about this and other trends in the industry and the types of impacts they might have. This also included a look at the opportunities they could present for the company. As the CEO, it would be important to monitor such trends and to be familiar with the sources required to do so, as we discussed. Last but not least, we uncovered details on how these trends could be used to create value for the company, which is one of the most valuable skills a CEO and their management team can utilize in order to keep things moving.
References
Antonova, T. (2021, April 14). 10 great cycling quotes to inspire you [UPDATED in
2021]. We Love Cycling Magazine.
Chang, J. (2021, April 1). Supply chain management has surely evolved throughout the
years. For instance, the role of supply chains in pr. Financesonline.Com.
Dess, G., McNamara, G., Eisner, A., & Lee, S. (2018). Strategic management: Creating
competitive advantages (9th ed.) [E-book]. McGraw-Hill Education.
Grand View Research. (2020). Bicycle market size, growth & trends report, 2021–2028.
National Bicycle Dealers Association. (2021, August 20). US bicycle market report 2020.
Studies/Reports. (2021). Bicycle Retailer and Industry News.
Vögele, J. (2021, August 20). Unchecked bicycle boom: These are the trends. Ispo.Com.
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