993 words 4 pages
Eldora Case Study 1) Q: What strategic objectives should this venture serve?
A: Eldora Company’s main strategic objective should be to gain access into the Asian market, due to the market for the same kind of bikes over there is doubling annually, while the market in the United States has remained stagnant. Eldora should also attempt to maintain their strength that they have locally, due to them being the top mountain bike manufacturer in the United States. They should also take advantage of the lower labor and distribution costs in Asia by setting up facilities in that part of the world as well. 2) Q: Given the strategic objectives, what functions of the company might be relocated in this effort as well?
A: The Eldora Company
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Establishing assembly in the Asian market would take advantage of their lower labor costs.
Would be lower cost to Eldora than expanding operations to Asia without a joint venture.
Cons: The Company that they are forming the joint venture with may not make the best marketing and distribution decisions.
Locating the assembly plant close to the strongest competition may cause conflict between the two companies.
Could possibly end up being less profitable in the long run than if they would expand their company to the Asian market without a joint venture. 5) Pros: This would take advantage of the lower labor costs in Asia.
This would also take advantage of the Asian market’s desire for the same type of high quality mountain bikes that Eldora produces.
This would avoid shipping costs if the production of the frames would remain in the U.S.
The bikes that are produced would be logistically closer to the Asian markets.
Cons: Would be very expensive.
Could end up failing, which would lead to a huge loss.
Q: What do you recommend for the company to best accomplish its objectives?
A: The Eldora Company should open an office in China, because of its high demand for bicycle transportation, as well as its low labor cost. Globalizing will not be an easy task, though. Eldora will need to expect different rules and regulations, different customers, different types of workers, as well as different effective marketing strategies. So, the first step they will need to