Case 20 Schwinn Bicycles J. Paul Peter University of Wisconsin-Madison Inside a

Question

Case 20 Schwinn Bicycles J. Paul Peter University of Wisconsin-Madison Inside a plain, brown building in Boulder, Colorado, is a shrine to an American ico th Schwinn bicycle. Some mud-caked from daily use, some shiny museum piecesdoe of bikes stand atop file cabinets and lean against cubicles. Amid the spokes and handle. bars, a group of zealots is working to pull off the turnaround of the century in the be business. Brimming with energy, they're determined to resurrect the best known brand on two wheels. But as Schwinn celebrates its 100th anniversary, its management tea faces a long uphill climb. Just two years ago, once-mighty Schwinn had a near-death e perience in bankruptcy court. Now it's trying to rise to the top of the crowded mountain bike market. For years, Schwinn was the top U.S. brand with as much as 25 percent of the market Now, it has less than 5 percent of the $2.5 billion annual retail bike market. The ne Schwinn will sell about 400,000 redesigned bikes-many of them Asian-made models- that sell for S200 to S400 retail, the lower end of the adult bike market. Those models are catching on. But the turnaround won't be a success unless Schwinn persuades cyclists to fork over $700 or more for its newer bikes. Below are market shares of manufacturers for bikes retail-priced $400 and up: Trek Cannondale Specialized Schwinn Giant Diamondback GT Scott Mongoose Pro Flex 24% 12% 12% 796 6% 690 6% 4% 3% 3%

Explanation / Answer

1.

Strengths

Weaknesses

2.

Opportunities

Threat

3.

How important is it for mountain bikes to be made in America?

Mountain riding is considered an American sport. So having,’made in America’, tag will add a lot of value to the brand and bikes. This will also to help in differentiating from competitors to some extent and charge higher prices

4. Evaluate Schwinn’s strategy of selling bikes for prices from $100 to $2,500.

To capture market share, Schwinn has to cater to wide variety of segments and hence a wide price range is a mandate. Customers are still trusted Schwinn in the low-cost category for durability. Schwinn’s cruiser model has shown good sales ($250). But Schwinn has to sell bikes above $700 to make a good turn around. Hence it needs to innovate and produce different categories for the high priced segment too.

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