Electra Bike Case Discussion discussion: Please read the Electra bike case at the end of chapter 3 in your textbook and then answer the discussion questions on the page(will be attached-case part 1 and 2). Please watch the Electra video below. Also write a response for a classmate(classmate’s work will be posted after you upload your work)https://www.viddler.com/embed/79f8ef02/?f=1&autoplay=0&player=simple&secret=11995362&loop=0&nologo=0&hd=0 (Links to an external site.)Please research Electra and issues related to their industry and provide links to supplement/support your posts.Homework: After reading Ch 5, please study the “Solve the Dilemma” Small Business Challenge at the end of the chapter. Please help Jack and Bruce figure out some issues with starting their muffin and cookie business by answering the 3 discussion questions listed at the end of the case. (see attachment, and I will post some picture about this chapter here also. You must mention the content from chapter outline) Solve the Dilemma
The Small Business Challenge
Jack Gray and his best friend, Bruce McVay, decided to start their own small business. Jack
had developed recipes for fat-free and low-fat cookies and muffins in an effort to satisfy his
personal health needs. Bruce had extensive experience in managing food-service
establishments. They knew that a startup company needs a quality product, adequate funds,
a written business plan, some outside financial support, and a good promotion program. Jack and Bruce felt they
had all of this and more and were ready to embark on their new low-fat cookie/muffin store. Each had $35,000 to
invest and with their homes and other resources, they had borrowing power of an additional $125,000.
However, they still have many decisions to make, including what form or organization to use, how to market their
product, and how to determine exactly what products to sell-whether just cookies and muffins or additional
1. Evaluate the idea of a low-fat cookie and muffin retail store.
2. Are there any concerns in connection with starting a small business that Jack and Bruce have not considered?
3. What advice would you give Jack and Bruce as they start up their business?
See for Yourself Videocase
Electra Bikes: Better, Cooler, Awesomer!
Twenty-three years ago, Swiss snowboard designer Benno Bänziger and his German business partner Jeano Erforth decided
they wanted to make bike riding fun again. At the time, cruiser bikes were out of style and were in danger of disappearing.
Bänziger and Erforth converted their T-shirt company in Vista, California, into a bicycle manufacturer called Electra Bikes.
However, they did not want to manufacture just any type of cruiser bike. They wanted their bikes to look hip with a vintage
style, based off rockabilly culture and resembling the look of muscle cars. The shop went from selling a few hundred the
first year it was in business to becoming a global sensation. Electra eventually caught the attention of Trek Bicycle
Corporation, which acquired the firm in 2014.
As Electra began to expand globally, it found that it had a comparative advantage its bigger competitors did not have. First
of all, many bike enthusiasts worldwide appreciated the vintage look combined with the most up-to-date technology of
Electra bicycles. One particular advantage Electra has is its patented Flat Foot Technology®. This technology enables
better leg extension, making the ride more comfortable. Because of its patent, Electra is currently the only company that
can use the technology it developed. These advantages combined with its “genuine Americana message” proved to be a hit
Global expansion offered Electra the unique opportunity to reach new market niches of bicycle enthusiasts. It started slowly,
expanding first into markets that were closer to the United States, including Canada and Australia. The company currently
has distributors in 26 countries that sell its bikes. In addition to offices in the United States, Electra opened a European
office that supports sales for 25 countries. Like many other firms, Electra outsources production to Taiwan and China.
Using freight ships, the firm ships its products to markets such as Australia, the European Union, and the domestic
American market. By outsourcing production, the firm is able to save more money than if it had the bikes produced in the
Like most companies that expand globally, Electra is subject to import duties that can vary depending upon where the
bicycles are manufactured. It is also subject to regulations that vary from country to country. Sometimes, Electra must have
additional features due to safety laws. For instance, some bikes shipped to certain countries have front brakes, while others
have lighting systems or fenders. While these different features add to costs, they ensure that Electra stays on the right side
of the laws within the countries in which they do business.
“Regulations can vary by type of product as well. Kevin Cox, president of Electra Bicycle, describes how Electra had to take
this into consideration when designing a bicycle with a motor called the Townie Go. According to Cox, “There
are certain speed regulations that exist, and those regulations are different between Europe and [the] U.S.” The
company chose to adopt the stricter U.S. standard, although it meant a slower speed because it would give Electra “one
product platform that has global reach.”
Electra also faces economic and geographical challenges as well. “Currency fluctuation in Asia, that’s a big one because
that in and of itself can skew the cost of our bicycle,” Cox says. Additionally,
certain areas such as Europe and many parts
of the United States have highly seasonal weather that limits bike riding to certain times of the year. These weather
variations cause fluctuations in demand based upon the season. However, Cox also points out that having a global reach
helps to balance out these fluctuations because while it’s winter in the U.S., I’m enjoying a nice summer in Australia.” In
other words, there is a constant worldwide demand for bicycles year-round.
As Electra expanded globally, the infrastructure of operating a global network became more complex. This is why, in 2014,
Electra made the decision to sell the company to Trek. The decision benefits Electra because it can now utilize Trek’s
extensive network to reach new markets. At the same time, tapping into Trek’s distribution networks frees Electra to focus
less on distribution concerns and more on its core competency: developing high-quality, durable, vintage bicycles. 83
1. Describe how Electra maintains a worldwide comparative advantage.
2. What are some global difficulties Electra had to overcome when it expanded into different countries?
3. Why did Electra-which markets itself with a “genuine Americana” message decide to outsource production to Asia?
Do you believe this is appropriate?
You can find the related video in the Video Library in Connect. Ask your instructor how you can access
The Nature of Entrepreneurship and Small Business
What Is a Small Business?
The Role of Small Business in the American Economy
Industries That Attract Small Business
Advantages of Small-Business Ownership
Disadvantages of Small-Business Ownership
High Stress Level
High Failure Rate
Starting a Small Business
The Business Plan
Forms of Business Ownership
Approaches to Starting a Small Business
Help for Small-Business Managers
The Future for Small Business
Technological and Economic Trends
Making Big Businesses Act “Small”
The Role of International Business
Why Nations Trade
Trade between Countries
Balance of Trade
International Trade Barriers
Ethical, Legal, and Political Barriers
Social and Cultural Barriers
Trade Agreements, Alliances, and Organizations
General Agreement on Tariffs and Trade
The North American Free Trade Agreement
The European Union
Asia-Pacific Economic Cooperertion
Association of Southeast Asian Nations
International Monetary Fund
Getting Involved in International Business
Exporting and Importing
Licensing and Franchising
Joint Ventures and Alliances
International Business Strategies
Managing the Challenges of Global Business
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