Eldora_Case_Study

Case Study: The Eldora Company Operations Management DSCI 434-04 Richard Young January 27, 2011 Overview This case study deals with a bicycle manufacturing company named The Eldora Company. Based upon the case, the company appears to have prospered in the local market but is currently concerned with long-term growth potential. The problem is primarily caused by low-cost competition and a saturated marketplace. Management is therefore troubled with the decision to manufacture offshore and penetrate a new target market. The Eldora Company’s success is obtained from flexibility and service. The company had two positive aspects for many years; they have been able to adapt to changing demand and optimize time of product launch, and being located in a high demand market segment. Strategy For years, the company concentrated its efforts on inexpensive bicycles that retailed through mass merchandisers. Eldora’s strengths lay in logistical, production capabilities and second to none customer service. Domestic manufacturing strategy: Keeping the plant on the same campus as its corporate office. This strategy contributed greatly to the cooperation from various departments and resulted to the growth of the company. Core Competencies: The organization competencies require minimum levels of education and infrastructure are prerequisites that contributed to the success in the United States market. Professional design skills and flexibility in manufacturing are requirements. Mission: The case doesn’t specifically define the corporate mission. It is assumed that Eldora’s mission would be to become a global corporation. This assumption can be supported by the company’s joint venture with Rinaldi, an Italian bicycle manufacturer. However, I would also conclude that they want to expand but also keeping the values that made them such a successful operation. Analysis: The old tried and true domestic growth strategy appears to have reached a saturation point in the United States. For this reason, it is important for the management team to develop a new strategy. Eldora must meet the global demands and decide the best alternatives. Globalization has prompted financial integration. Because of decreased cost from competition the need to expand globally is imperative. Other factors include excess capacity for manufacturing, labor costs, and a high demand for bicycle transportation in Asian countries like China. A decentralized manufacturing plant would minimize risks and maximize profits in the global market. However, the cost of transportation, lack of infrastructure and skill are obstacles that should be analyzed further by the company. Recommendations: Based upon analysis, it is my recommendation to pursue a wholly owned subsidiary in Asia. I would specifically recommend the expansion of their domestic strategy by establishing a presence in Asia. With design and manufacturing being Eldora’s strong points, I would suggest that design be kept in the United States; this will ensure advancement in technology. I would also establish a localized manufacturing plant in a location in China. This location must be solely owned by Eldora, so that the company may continue to offer the flexibility and superior quality that they are known for.