Eldora Case Study free essay sample

With the high growth of Asian markets other larger competitor companies have moved manufacturing to Asia to take advantages of lower labor costs and the distribution costs. Eldora’s Strategic Objectives: Eldora’s strategic objective is to gain entry into the emerging bike market in Asia where the growth is doubling every year. The company wants to lower its costs, while it maintains its core competencies that lay on its reverse engineering abilities as well as its logistical and production capabilities. Core competencies are what a company does best, giving them a competitive advantage over their competition. Eldora’s core competencies are their fabrication of lightweight and rigid frames and their good customer service. Over time they have made a lot of efforts to develop a system of production and logistics, which results in lightweight frames and fast and reliable delivery times. In order to keep these core competencies they have to make some strategic decisions, and decide what functions within the company would benefit from moving to Asia. We will write a custom essay sample on Eldora Case Study or any similar topic specifically for you Do Not WasteYour Time HIRE WRITER Only 13.90 / page They have all their manufacturing, marketing, and product development in one site, Boulder Colorado. The closeness of all these major functions of the company has provided them with quick feedback in any of the design changes, and also the flexible manufacturing system, and quick distribution has given them advantages over the other competitors. Now they must decide which one of this functions they perform domestically they should outsource to China to give them the opportunity to capture the growth potential of Asian markets. They must decide what functions of the company might be relocated to expand their present in the Asian markets. They are facing a few alternatives on how they should accomplish their objective in capturing high demand for bikes in Asian markets. 1) The first alternative is outsourcing their assembly in Mexico that will provide them with lower labor costs, but also with proximity to their main location in Boulder Colorado. This Alternative is relevant to lowering the cost of production by using lower labor wages in Mexico but the distribution cost and finding the channels to the Asian markets will still be difficult and time consuming causing them to lose time in delivery and reliability which is one of their biggest strengths in the domestic markets. Also marketing the new products would still be difficult to manage from their campus in Boulder because Asian markets are growing so fast and are very dynamic and need close monitoring and it will be difficult to develop a marketing strategy. Also with the culture and social differences of the population it will be difficult to have a good marketing strategy to reach their potential target market in Asian countries. 2) The second alternative is to open a small office in China staffed with some of their people and collect information about the Chinese market, distribution channels, local conditions and laws, also identify some of the prospective joint venture partners. This alternative will help them gather more information about the dynamics and opportunities the Asian market is offering and help them built their strategies for their future. But the manufacturing and assembly will still be done on their campus site which does not lower their costs of production and the cost of shipping everything into Asian countries. This alternative will help them give a little more insight and better idea what the demand on the market is and how to find the distribution channels to make their product easily transported and flexibility to reach new potential areas and regions in different Asian countries. ) Establishing a joint venture in which Eldora would provide the product and the process knowledge and the joint venture would manage the manufacturing and distribution. This alternative will be very efficient in bringing their product to the market place very easy and fast because the venture has already good establishment of the distribution and logistics in the market. Also on the other hand it will make the company to still stay focused in producing very high quality product on their primary location and using their process to mak e reliable product using their reverse engineering. This would help them to stay the best at what they do well, but they still will have high production costs. But being on a joint venture will not give them the opportunity to exclusively have full access to the market. They have to rely on the partner’s ability to distribute their product at the right time right place and right quantity. 4) Forging an alliance with an Asian company and establish a final assembly plant. Keep frame production of high tech ends home and locate the assembly plant near the strongest competition, and count on the joint venture partners for the distribution network. This is a good alternative, because they will outsource the assembly part of their production process which will lower their costs but in the same time they still can produce their high quality frames and other bike parts home where they have the technology and the resources to keep doing best what they always have. Outsourcing the assembly line will lower their production and shipping costs of their product. On the other hand their joint venture partners with their expertise in the Asian markets can provide them the best distribution channels to reach their new customers and fulfill their demands. But they will still not be able to exclusively thrive in the Asian market because they need to rely on their partner logistics ability. 5) Create a new campus in Asia where they can do everything from the high tech design and engineering to manufacturing parts to creating new distribution channels. This could be a big project and its going to have very high costs in building it and maintaining all the departments of their production and distribution channels. I will also require a lot of time to transfer all the technology equipment and expertise staff in Asia with very high costs. Recommendation: It will be very beneficial for Eldora to have to marketing divisions one in Asia and one in America. This is because marketing strategies they have for the American market will not work in Asia because of the cultural differences. This required them to have a local team that will be dedicated in developing marketing strategies for the Asian market by closely living and monitoring the customer behavior and demand for their product also keeping a close eye on their direct competitors. This team of experts in Asia will also provide them with insight regarding the Asian market for the other functions of the company. They should keep their product development function in US to maintain the high quality of lightweight frames they are famous for. This will make sure that those people who have the skills and technology to design and built these frames will continue. They should also seem for potential joint venture that has big distribution channels in Asian markets so their product will deliver fast and in time. Also they can built a site in Asia to have their assembly parts coming from US to be put together with a low cost using lower labor wages. This combination will give Eldora a strong presence in the Asian markets and provide them with more opportunities to expand their presence in the future.