What Is the Competitive Environment Facing Edc?

1. What is the competitive environment facing EDC?

In terms of the competitive environment facing EDC, Ann realizes that not only is the

number of competitors increasing, but the nature of the demand for bicycles is changing as

well. The U.S. mass market bicycle sales is expected to grow by only 2% a year, while the

Asian market for those same bikes is nearly doubling on a yearly basis. This growth scenario

is likely to lead to thinner margins and a lower ROI in the U.S. for bicycle sales. Additionally,

EDC's foreign sales performance has been flat the last two years, likely the result of not

being able to compete on price given their current U.S. distribution channels in place. EDC

has higher wage rates, material costs, and distribution costs than their competitors in Asia

and other foreign markets. Both of Ann's vice-presidents agree that EDC must move quickly

to capitalize on the growing Asian market before other competitors change the market

landscape.

2. What are EDC’s strengths in manufacturing?

EDC has a number of strengths in their manufacturing division. Their flexible manufacturing

operation seems quite adept at meeting the changes in trends and fads of their market. This

operation is cited as a key factor in EDC's ability to meet rapid change in the local market.

Having their plant in Boulder, a bicycling Mecca, has helped to keep EDC on top of trends

and demand changes in the U.S. market. Their engineers seem to be ahead of the curve in

designing new products and features that consumer's desire. This design knowledge is also

the result of the cross-functional cooperation, and geographical proximity of the entire staff,

including engineers, marketers, manufacturing, etc. EDC also has a strong quality and state-

of-the-art design orientations, and these strengths have helped give them a competitive

advantage in the market in that they can charge a higher price premium for their products

than their foreign competitors.

3. Should EDC establish a manufacturing division in Asia?

I think that EDC should establish a manufacturing division in Asia. The long-term horizon in

the U.S. is one of slower demand and more mass and niche competition, while the Asian

markets are growing in the double digits and may react quite favorably to a high quality

bicycle as compared to the current offerings. I do think that more research is needed in

terms of facility location (e.g., China, Taiwan, etc), but that EDC should ramp-up an operation

as soon as possible. EDC should look to where other U.S. companies are located abroad, and

discuss with those companies