Make Bikes in the U.S., or Go Abroad to Cut Costs?

Super Sized Cycles bicycle manufacturing company is based in Vermont, New England, in the United States. The following mission statement is suitable for the company:

Mission Statement

To create value through the provision of quality personalized bicycles to our customers using the right combination of knowledge, skills, and technology and deliver them at affordable prices.

The target market of Super Sized Cycles is the overweight bicycle riders who are too heavy to ride on the normal sized bicycles. The customer need identified is that, as a good way to exercise, obese people consider biking. However, the bicycle manufacturers do not manufacture bicycles that accommodate this customer segment. The generic business level strategy used in this case is the differentiation focus strategy, where the company differentiates itself from other bicycle manufacturers by focusing only on the obese customers.

The two options available to Denizot were either to manufacture the bicycles in the USA or to import them from Asia at lower costs. Manufacturing in the USA benefits the target customers in that they get individualized services according to their specifications. Furthermore, it would benefit the society by providing them with opportunities for apprenticeships and skilled manufacturing jobs. However, it is expensive to produce in the USA as the costs of production are as high as $1250.

Manufacturing the bicycles in Asia had the advantages of reducing the production costs, which would in turn lower the prices charged to the customers. The move to Asia would still lead to the expansion of the business. However, production in overseas locations has the disadvantage of making it hard to match the products to the needs of the customers.

The situation at hand at Super Sized Cycles posed an ethical dilemma to its owner, Ms. Denizot. She had to choose between the following:

  1. Manufacturing her bicycles in the USA and provide manufacturing skills, employment, and apprenticeship to Americans
  2. Shifting the manufacturing operations to Taiwan, where the costs of production are lower

Ethics is important in the formulation of strategies for the following reasons:

  • It boosts the morale of workers as they gain trust and confidence about the business’ going concern status
  • It breeds customer loyalty that emanates from the best and consistent services from satisfied workers
  • It results in profitability as satisfied customers maintain business with the organization
  • It leads to steady growth and sustainability as a profitable company is in no threat of liquidation

The products of Super Sized Cycles should be introduced to Taiwan for production because it shall reduce the costs of production. The reduced costs of production shall then translate into reduced prices of bicycles to the customers. The affordability of the bicycles shall then increase the level of sales, hence increasing profitability. Furthermore, the increased chain of distribution shall create more jobs, both in the USA and Taiwan.

The critical functions that I recommend to Ms. Denizot to keep domestic include the assembly, accounting, selling, and distribution functions. The accounting department is critical to the company because it involves keeping of accounting records and all the financial information, which should be out of reach of competitor companies. The assembly of the bicycle parts should be done in the USA in order to help in the customization of the bicycles according to the needs of the customers. It shall also help to avoid corrupt deals outside the country. The selling and distribution functions should also be done in the USA in order to harmonize the selling prices.