Eldora Case Study

Eldora's strategic objective is to gain entry into the emerging bike market in Asia where growth is doubling annually. The company wants to lower costs while maintaining their core competencies. There are many options available to them but they need to choose one that will deliver the best possible outcome. Eldora would like to do this by moving some of its operations over to Asia and keeping the more crucial ones in America. Moving certain operations to Asia will allow Eldora to take advantage of lower labor costs while interacting in this emerging market.

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 outstanding customer service. It took several years and a lot of effort for Eldora to perfect these core competencies. Over that time they developed a lean system of production and logistics, which resulted in the lightweight frames and reliable delivery times. In order to keep these core competencies Eldora must decide what functions within the company would benefit from moving over to Asia. It would be highly beneficial for Eldora to have two separate marketing divisions; one is Asia and one in America. American marketing strategies will not necessarily work in Asia. The cultural differences between these regions require local teams concentrating and interfacing with customers and competitions. The marketing team in Asia will also be able to offer insight regarding the Asian markets to other functions of the company. Eldora should keep the product development function in America to maintain the high quality of lightweight frames they are known for. This will ensure those who are most skilled to design and build these frames will continue to do so. By keeping this function in America, Eldora can also continue perfecting their skills in reverse engineering. As bike technology continues to improve Eldora will need to continue finding ways to implement these new technologies for less. After the frames are designed and built in Boulder they will be shipped over to Asia for final assembly. The final assembly of the bikes should be moved over to Asia to allow the company to take advantage of the lower labor costs in Asia. It will also result in time and money saved in regards to the shipping of hardware, such as derailleurs and freewheels since Eldora already purchases the hardware for their bikes from Taiwan. The moving of the final assembly to Asia will result in higher shipping costs when transferring the finished bikes to Boulder. The higher costs will be offset by the tremendous amount of money Eldora will be saving by paying lower labor costs and having the finished bikes logistically closer to the larger Asia markets.

To best achieve these objectives Eldora should follow alternative four with the addition of maintaining their