Shimano is a manufacturer of mechanical bike components for mid- to high-end road bikes. They do not make frames and they do not sell directly to customers via retail stores, but rather to bike manufacturers that want to use Shimano’s components. They have been, by far, the leader in their industry for years. They netted around a 14 percent profit margin, dwarfing that of almost all bike manufacturers, and did so using their many competitive advantages over rivaling brands.
Shimano’s Core Competencies
Provide access into wide variety of markets
One of Shimano’s key strengths was their ability to tap into a wide variety of markets, and they showed this in a number of ways. Shimano’s components could be used with virtually any road bike made by nearly all of the major manufacturers; Trek, Giant, and Bridgestone Cycle were all manufacturers that had long-standing relationships with Shimano. As other forms of biking became more popular around the world, Shimano’s attention broadened to new product innovations.
The rise in popularity of mountain biking in the United States provided Shimano with a gateway to tap into a market, one that they had not previously been a factor in. The product line-up that Shimano offered more than doubled that of even their closest competitors. They offered a broad array of products in all 3 major markets (mountain, road, and comfort bikes), giving them a distinct competitive advantage over other manufacturers.
Provide perceived customer benefits
Shimano separated itself early when it came up with the idea of selling their components in bundles, referred to as “System Components”. This offered a certain degree of convenience for retailers and customer alike. The components were designed to specifically work better with corresponding components from the same manufacturer. Mixing and matching caused deficiencies with the operation of the bike. This convenience factor left Shimano as the highest value.
Shimano focused its...
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