Analyzing Detroit Bikes: Industry Attractiveness and Growth Strategies

This case study analyzes Detroit Bikes, a bicycle manufacturer, using PEST and Porter's Five Forces models to assess industry attractiveness. The analysis examines the company's competitive advantages, including innovation and diversification, and characterizes its target market. The study then explores potential growth strategies, such as market and product expansion, and diversification, evaluating their associated risks and opportunities. The analysis suggests market expansion as an efficient growth means through product differentiation to attract a global clientele. The study also highlights the importance of research, ethical practices, and the role of social media in the company's success. The student concludes with a personal investment decision based on the company's innovative approach and insurance offerings.

NAME: ______________________________
Detroit Bikes
1. Apply the PEST and PORTER e-scan model to the Detroit Bikes business model. Based on this, what is
your take on the attractiveness of their industry? Please double check to make sure your name is on your
case summary.

PEST analysis of Detroit Bikes
Political  Political instabilities
 Tax tariffs
Economic  Low production cost
 High exchange rates
Social  Ethical code of conduct
 Employee Insurance and Health
insurances
Technological  Eco-friendly bikes and bicycles
 High mileage vehicles
Political instabilities adversely affect the business operations of Detroit Bikes. Within this, mention can be
made of the murder rates, which adds an interrogative parameter to the security of the employees. Along with
this, tax tariffs act as obstacle in the importing and exporting the services to the foreign markets. High pension
costs, lack of appropriate funds, quicken loans were introduced for improvising on the situation ( Becherer &
Helms, 2016). Offshore management enhanced the awareness about the prospective clients, who contributes in
the productivity through the foreign investments. Selecting the ethically minded customers proves effective for the
Detroit Bikes in terms of enhancing the brand image. Within this, mention can be made of the ethical code of
conduct, which helps in averting the risks of conflicts, discrimination and harassments. Technology upgrades the
standards and quality of the performance. Valos et al. (2017) argues that stable contacts with the research and
development team is assistance towards acquiring infrastructural development through the means of latest and
modern technologies. Typical evidence of this lies in the production of eco-friendly bikes and bikes, which gives

more mileage. Initiatives like insurances reflect the conscious approach towards the wellbeing of the clients and
customers.
PORTER’s e-scan model
Competitor rivalry
Detroit Bikes face tough competition from Detroit Bicycle Company and Shinola. Major drive behind this is
the spare parts of the bikes are imported. The prices of importing the parts is difficult for the clients to avail. Along
with this, operational cost also differs. In case of Detroit Bicycle, the cost is approximately, $3200 and in case of
Shinola, the price of the bikes ranges from $1000-$2950.
Buying power of the suppliers
Most of the suppliers do not belong to the standards required by Detroit Bikes. This is in terms of the
incapability towards coping up with the large volume of production. Detroit Bicycle and Shinola targets markets
with high end for increasing the profit margin (Rothwell et al. 2017).
Threat of substitutes

Producing bikes according to the need and convenience of the customers acted as a threat of substitutes
for Detroit Bikes. Typical evidence of this lies in Bike Friday, Masi Bikes, trek bicycle and workman cycles.
However, the factors of appearance and functions assists Detroit Bikes to lure the attention of the clients and
customers. Manufacture of eco-friendly bikes, giving more mileage acted assistance towards enjoying competitive
advantage over the contemporary brands.
Bargaining power of the buyers
Trek cycles was a new attraction among the buyers. Overseas manufacturing process upgraded the
standards and quality of design within the cycles and the bikes. Along with this, the buyers were provided with the
options within selecting the color. According to the arguments of Arslanagic-Kalajdzic and Zabkar, (2015),
adopting social media marketing proved beneficial in terms of reaching to large number of audience.
Threat of new entrants
Trek cycles acquired largest market share in United States. Variations in the design of the cycles acts as
a threat of substitute for Detroit Bikes in terms of retaining the prospective clients and the customers. Tuition,
reimbursement plans, pension plans and promotion of a healthy culture results in upgradation for the standards
and quality of the cycles. In such a scenario, social media marketing reduces the intensity of the threats of
substitutes largely (Piehler, Hanisch & Burmann, 2015). Typical evidence of this lies in the 13668 followers on
Facebook.
2. What is the competitive advantage of Detroit Bikes? Brand? Low-cost? Innovation? Niche?
Diversification? Please explain. How would you characterize their target market? Also, how would you
characterize the Detroit Bikes brand?
Competitive advantage of Detroit Bikes can be considered as innovative with diversification in the bikes
and bicycles. The target market are the customers, who are passionate towards possessing branded vehicles.
Joint ventures with the members of the research and development team helps the personal in adding innovative
touch to the design of the bikes and bicycles. Uploading the newly launched vehicles on the social networking
sites is a means for reaching to large number of audience in a single time. Along with this, distributing pamphlets
along with the newspapers is an indirect means of reaching to the clients and the customers. Survey and
feedbacks are assistance in terms of gaining an insight into the approach of the customers towards the launched

products (Eisend, 2015). Pay per click advertising technique is beneficial in terms of tracking the number of
visitors for the brand, indicating enhancement for the brand image.
Including the provision of congenial working atmosphere within the marketing strategy, is assistance
towards acquiring productive labour from the employees. Focusing on the exporting the spare parts of the bikes
and cycles is effective means for altering the standards and quality of the vehicles. Apart from this, insurances are
developed for the clients and the customers. These insurances support in averting the accidents while the
vehicles are plying in the roads (Gomes, Carneiro & Dib, 2018). Typical evidence of this lies in the lab tests for the
produced vehicles by hiring foreign experts.
3. What would you suggest is the best strategy to grow the business? Market expansion? Product
expansion? Diversification? Please explain. What are the opportunities and risks with this growth
strategy?
If you had money to invest, would you invest in their business? Why or why not?
Market expansion would be an efficient means for expanding the business. For this, product
differentiation is needed, as it would lure the clients and customers across the world. Inadequate stock of
resources would lead to delays in the making the supplies at the right time. On the contrary, contracts with the
suppliers would be beneficial for enhancing the scope and arena of the marketing outreach. Along with this,
conducting offshore management would be crucial for seeking the prospective clients, who would contribute in
increasing the sales revenue and profit margin. Not using security cookies can result in leakage of the confidential
organizational data to the third parties. However, market research is needed at the initial stage for enriching the
knowledge about the foreign market scenario. This research would also be effective for Detroit Bikes in terms of
upgrading the knowledge regarding the strategies of the contemporaries towards achieving growth and
expansion.
I would invest in the business of Detroit Bikes. This is because, they provide variety in the bikes and
bicycles, from which I can choose according to my affordability and convenience. I especially like the innovative,
sporty and classic look of the bikes, which I think would enhance my personality. I would also invest in their
services for availing the health insurances. This insurance would ensure my safety in the roads.

References
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Detroitbikes.com (2019). About us. Retrieved 22nd February 2019 from https://detroitbikes.com/
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Piehler, R., Hanisch, S., & Burmann, C. (2015). Internal branding—Relevance, management and
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Valos, M. J., Maplestone, V. L., Polonsky, M. J., & Ewing, M. (2017). Integrating social media within an integrated
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