In 1971 Joseph Montgomery set out to build a company that would be a leader in the cycling community. Not only did the Cannondale Corporation become a leader, but the dominating manufacturer of performance mountain bikes. As any business student graduating from Cal State Hayward would know, the following questions must be raised; How did Cannondale reach the top? Can they sustain their position? What are the key strategic issues, both the internal and the external factors, that the company must bear in mind to achieve a sustainable competitive advantage which will lead to above-average returns and therefore produce greater shareholder wealth?
Strengths: Cannondale Corporation needed more than luck, bumping into walls, and other less-effective forms of management to achieve its position in the market. Cannondale’s primary core competency & strength is stated in the company’s principle philosophy as follows, “We produce a stream of innovative, quality products.” It is this striving for innovation and quality that has propelled the company to the head of the pack. The primary example of this strength can be shown in the company’s core product, performance mountain bikes. As shown in Exhibit 1, the number of mountain bikers in the U.S. rose from 200,000 in 1982 to about 8.5 million by 1997… a staggering 425% increase! Cannondale used its commitment to innovation to develop “the world’s first affordable aluminum bike,” giving Cannondale a first mover advantage the enabled the company to ride the wave of growth which was the developing mountain bike industry. Through continued R&D and innovation Cannondale was able to create very strong brand recognition for their high end performance bicycles. This strong branding will prove to be one of the company’s greatest assets.