Baldwin Bicyle Case
a. How Baldwin currently compete on the basis of Michael Porter’s (1980) competitive strategies:
Customers:
Major customers of Baldwin are those who had passion in riding bicycles, Baldwin offered wide range of product with 10 models for kids to adults. Hi-Valu was a potential buyer for bikes wanted to purchases bikes from Baldwin at lower prices than wholesale prices under a brand name called “Challenger”. Secondly, Hi-Valu wanted the Challenger bike to be somewhat different in appearance from Baldwin’s other bikes while the frame could be the same. Hi-Valu also wanted bikes to be packed and printed with the Hi-Valu and Chanllenger names. Those requirements would increase the production costs and packaging costs. Hi-Valu expected to purchase 25000 bikes, incremental profit of 26.7% would occur if the order was accepted because Baldwin still had more than 30000 spare capacity.
Suppliers:
There were different suppliers for different components of a bike, there were also suppliers for packaging materials, paint for painting, printing. As the requirements of Hi-Valu, that would occur some extra costs and Baldwin would consider estimating some new suppliers. However, there was not much information given about suppliers in the case.
Subtitute products:
There were various competitors on the markets and there were substitute products
New Entrants:
Barriers to entry such as the regulation of governments, price competition, firms need to be in big scale in order to lower costs, highly competitive.
Competitors:
Hi-Valu was a potential customer of Baldwin but Hi-Valu was also a potential competitor as well because Hi-Valu was selling bicycles within the same market. If consumers went for Hi-Valu, sale of Baldwin would be affected, they might lose about 3000 units of sales.
b. If Baldwin took up Hi-Valu’s offer, Baldwin would have the competitive advantage over others competitors because Baldwin would have a big customer who offer high volume of sales.
Customers:
Major customers of Baldwin are those who had passion in riding bicycles, Baldwin offered wide range of product with 10 models for kids to adults. Hi-Valu was a potential buyer for bikes wanted to purchases bikes from Baldwin at lower prices than wholesale prices under a brand name called “Challenger”. Secondly, Hi-Valu wanted the Challenger bike to be somewhat different in appearance from Baldwin’s other bikes while the frame could be the same. Hi-Valu also wanted bikes to be packed and printed with the Hi-Valu and Chanllenger names. Those requirements would increase the production costs and packaging costs. Hi-Valu expected to purchase 25000 bikes, incremental profit of 26.7% would occur if the order was accepted because Baldwin still had more than 30000 spare capacity.
Suppliers:
There were different suppliers for different components of a bike, there were also suppliers for packaging materials, paint for painting, printing. As the requirements of Hi-Valu, that would occur some extra costs and Baldwin would consider estimating some new suppliers. However, there was not much information given about suppliers in the case.
Subtitute products:
There were various competitors on the markets and there were substitute products
New Entrants:
Barriers to entry such as the regulation of governments, price competition, firms need to be in big scale in order to lower costs, highly competitive.
Competitors:
Hi-Valu was a potential customer of Baldwin but Hi-Valu was also a potential competitor as well because Hi-Valu was selling bicycles within the same market. If consumers went for Hi-Valu, sale of Baldwin would be affected, they might lose about 3000 units of sales.
b. If Baldwin took up Hi-Valu’s offer, Baldwin would have the competitive advantage over others competitors because Baldwin would have a big customer who offer high volume of sales.