CH 03 VC HW Electra.doc - CHAPTER 3 Doing Business in...

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CHAPTER 3: Doing Business in Global Markets Electra Bicycle Company Overview Benno Baenziger and Jeano Erforth started the Electra Bicycle Company by converting their California-based T-shirt shop to manufacture cool, hip bicycles. The bicycles quickly became popular because no one else was doing what Electra was—making sturdy, dependable, fun-to- ride bikes. Starting out small and selling only a few hundred bikes, by the time Electra got the attention of the major bike manufacturers like Schwinn, the company had grown a strong, stable niche market. Electra found that the best manufacturers of bicycles today were located in Taiwan and China, so Electra chose to manufacture its bikes in Taiwan. This outsourcing of production helped to keep the company’s costs down, as it was cheaper to manufacture the bikes overseas and then import them back into the domestic market. However, in order to gain a comparative advantage, Electra needed to find global markets that valued its vintage style bikes and up-to-date technology. But like so many other companies, Electra found out that the hurdles to success are higher and more complex in global markets.

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