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The paper addresses the theoretical company "Oasis Bicycles"' plan to enter the US market. The paper presents a Porter's five forces analysis of the buyer power, supplier power, threat of new entrants, threat of substitutes and intensity of rivalry in the US market. The paper finds that overall, the industry is moderately favorable for Oasis' entry.
From the Paper:"There are a variety of buyers in the industry. For a new market entrant with no brand equity, the key buyers are the retailers who will get the bikes to the public. Mass market retailers make up the largest component of the channel, accounting for 74% of bicycles sold (approximately 13.6 million bikes based on 2008 statistics). The low average selling price of $80 results this channel representing just 35% of dollar sales, and correspondingly tight margins (National Bicycle Dealers Association (NBDA, 2008). Sales were split across a wide range of bicycle types, the largest being mountain bikes with a 28.5% share. Other channels include specialty bike shops (17%), chain sporting goods stores (6%) and other (3%) (NBDA, 2008).
"Oasis is likely to target the mass market retailers for its bicycles. These retailers have strong buying power for several reasons. Their buying volume is vital to Oasis' ability to penetrate the market. These buyers, including Wal-Mart and Target, have strong information about the products they purchase and this combined with their high volume allows them to drive prices from their suppliers to very low levels (Fishman, 2007). The Oasis brand has no identity, which reduces its buying power. Also, there is high buyer concentration relative to the number of bicycle producers."
Sample of Sources Used:
- Porter, M. (adapted) (1980). Porter's five forces. QuickMBA.com. Retrieved October 30, 2009 from http://www.quickmba.com/strategy/porter.shtml
- No author. (2008). Industry overview 2008. National Bicycle Dealers Association. Retrieved October 30, 2009 from http://nbda.com/page.cfm?pageID=34
- Fishman, C. (2007). The Wal-Mart you don't know. Fast Company. Retrieved October 30, 2009 from http://www.fastcompany.com/magazine/77/walmart.html
- No author. (2007). EU industry against review dumping duties bike parts from China. Bike Europe. Retrieved October 30, 2009 from http://www.bike-eu.com/news/2225/eu-industry-against-review-dumping-duties-bike-parts-from-china.html
- Upham, S. (2006). Innovation and the interrelatedness of core competencies: How Taiwan's Giant Bicycles broke into the US bicycle market. Managing Global Transitions, 4, 1, 41-62.
Cite this Analytical Essay:
Oasis Bicycles in the US Market (2012, May 28) Retrieved March 08, 2021, from https://www.academon.com/analytical-essay/oasis-bicycles-in-the-us-market-151177/
"Oasis Bicycles in the US Market" 28 May 2012. Web. 08 March. 2021. <https://www.academon.com/analytical-essay/oasis-bicycles-in-the-us-market-151177/>