Shimano and the High-End Road Bike Industry Harvard Case Solution & Analysis

Professional cycling teams use road bikes consists of several parts or components: frame, fork, wheels and tires, seats, seat posts, handlebars and pedals. Pedal to hold special biker boots on the ground, so they can "clip in" for more power and control, and a few companies make different models of pedals. Lance Armstrong, seven-time Tour de France winner, uses Shimano pedals. Shimano, founded and based in Sakai, Japan, makes many of the key components of the bike. The fact that each of the different components of a high-end road bikes are made by different companies makes for a complex industry supply chain bike. By 2006, Shimano has grown from a family business (founded Shozoburo Shimano in 1920), which focused on the clutch, a $ 1.6 billion global company (with a net income of $ 186 million), which is not only the production of medium and high grade Bicycle components (and low-end components, a), as well as fishing gear. Eighty percent of the sales were of high quality bicycle components and 20% of the average bicycle components. Seventy-five percent of the company's profits can be attributed to the components. Shimano bicycle components industry leader, holding more than 80% of the market with high quality components. But growth does not come overnight. Shimano leaders reflected on the company's growth trajectory. They were particularly proud of the market dominance Shimano, largely due to the company's commitment to research and technology, as well as by the amount of the company managed to leverage from the supply chain in the industry. As new technologies and new companies have come into the market, and the long-term sales trends mature industry bicycle road remained relatively flat - despite the "Armstrong effect" - Shimano leaders and their teams wondering how to continue the growth of the middle and high-end market of components and achieve even greater growth in the global scale. "Hide
by Garth Saloner, Victoria Chang Source: Stanford Graduate School of Business 28 pages. Publication Date: January 27, 2006. Prod. #: SM150-PDF-ENG

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