Crummer Graduate School of Business
MGT 615 Business Policy
Dr. Theodore T. Herbert
Size-Up of the Situation
Cannondale Corporation is the leading manufacturer and marketer of high-performance aluminum bicycles and bicycle components in the world. The company vision is to be the world’s best bicycling company and focuses on close relationships with their customers, employees and vendors in order to reach this goal. Over the past ten years Cannondale has experienced tremendous ...view middle of the document...
Staggering slow numbers have forced companies to target future growth through new product introductions and technological innovation. The Competition is mainly based on brand image, performance features, technological innovation, price and perceived value.
There exist over 1 billion bicycles in the world and 70% are used as means of transportation and 29% for recreational purposes. The demand for recreational bicycles in the West, has been highly dependant on health trends and interest in outdoor activities, and even governmental agencies has made “attempts” to increase the usage of bicycling though federal legislation and environmental regulation. Distribution is mainly handled through large discount stores or in specialty bicycle shops, differentiating mainly on price and quality. It is imperative within the industry to have a distribution strategy that balances the use of channel, not destroying brand equity through wrong placement (i.e. Mongoose)
Cannondale can attribute their successes in creating strong market share to its competitive advantages in their product innovation, product offering and brand equity, through effective targeting middle-income families in North America and Europe. In order for Cannondale to gain sustainable competitive advantage, the company has to address five major Key Success Factors within the industry:
• Product innovation and design expertise – Companies with advanced technological
know-how and an ability to invest in R&D will benefit from a first-mover advantage - thus increasing
market share developing lighter, faster and more comfortable bikes. (Cannondale is currently the
• Brand equity and image – Companies that have established an image as innovative and carries high
quality products will have an edge at decision-making time. Sponsoring and promotions is important
in achieving brand equity . (Cannondale has won several high quality and best products awards that
are highly regarded within the industry, also the company is sponsoring the Volvo/Cannondale racing
team which is both a reputable testing team (R&D) and as a marketing asset)
• Low cost manufacturing – Companies that have the ability to achieve scale of economies and capture experience curve effects will enjoy higher profit margins. (Cannondale’s flexible manufacturing strategy targets low cost and ability to produce a range of models and sizes).
• Strong distribution network – Sales through the specialty bicycle stores is vital in influencing the
customers purchase decision, due to high pricing and complexity of the product features and service
commitment.(Currently Cannondale is selling through ca 1200 stores.)
• Patent protection - Companies who are able to patent their R&D will be able to enjoy improvements