Case Study—Baldwin Bicycles
ACCG330 Case Study—Baldwin Bicycles
Question:
a On the basis of Michael Porter’s(1980) competitive strategies, how does Baldwin currently compete? Justify your answer. (25%)
From the article it seemed that Baldwin Bicycle Company competed somewhere between a cost leader and a differentiator.
Baldwin had been a bicycle manufacturer for almost 40 years. The article illustrated that Baldwin Bicycle had the image of being above average in quality in price, meaning to say that it was not low cost competitor. Besides, Baldwin had never before distributed its products through department store chains of K-Mart, which is well-known for its low price.
However, no obvious evidence showed that Baldwin had targeted a particular market segment as a differentiator. To begin with, the company seemed trying to attract all range of customers—its product line involved 10 models which targeted from small beginners’ model with training wheels to a deluxe 12 speed adult’s model. Moreover, over a long term operation, Baldwin Bicycle seemed not created any superior competitive advantage that could be identified by customers to be apart from its competitors, such as brand loyalty, customer service, product feathers or technology.
Above all, Baldwin Bicycle had not clarified its strategic orientation currently.
b If Baldwin took up Hi-Valu’s offer, how might this change the way Baldwin competes? In particular, think about the effect on Baldwin’s costs and distribution channels(i.e. the retailers).(45%)
If accepting the offer, Baldwin’s strategy may be restructured more like a cost-leader.
Before drawing a draft cost analysis, several assumptions should be considered. a) Selling price should remain consistent. b) Variable and fixed costs should remain constant. Direct material and labor costs remained the same in the current range, and no idle time allowed. c) Estimation of that Hi-Value would purchase 25.000 units and Baldwin would lose 3000 units should be
Question:
a On the basis of Michael Porter’s(1980) competitive strategies, how does Baldwin currently compete? Justify your answer. (25%)
From the article it seemed that Baldwin Bicycle Company competed somewhere between a cost leader and a differentiator.
Baldwin had been a bicycle manufacturer for almost 40 years. The article illustrated that Baldwin Bicycle had the image of being above average in quality in price, meaning to say that it was not low cost competitor. Besides, Baldwin had never before distributed its products through department store chains of K-Mart, which is well-known for its low price.
However, no obvious evidence showed that Baldwin had targeted a particular market segment as a differentiator. To begin with, the company seemed trying to attract all range of customers—its product line involved 10 models which targeted from small beginners’ model with training wheels to a deluxe 12 speed adult’s model. Moreover, over a long term operation, Baldwin Bicycle seemed not created any superior competitive advantage that could be identified by customers to be apart from its competitors, such as brand loyalty, customer service, product feathers or technology.
Above all, Baldwin Bicycle had not clarified its strategic orientation currently.
b If Baldwin took up Hi-Valu’s offer, how might this change the way Baldwin competes? In particular, think about the effect on Baldwin’s costs and distribution channels(i.e. the retailers).(45%)
If accepting the offer, Baldwin’s strategy may be restructured more like a cost-leader.
Before drawing a draft cost analysis, several assumptions should be considered. a) Selling price should remain consistent. b) Variable and fixed costs should remain constant. Direct material and labor costs remained the same in the current range, and no idle time allowed. c) Estimation of that Hi-Value would purchase 25.000 units and Baldwin would lose 3000 units should be