Case: the Plant Allocation Puzzle

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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...
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