The company was founded in 1971 by Joe Montgomery, Jim Catrambone and Ron Davis to manufacture backpacks and bags for camping and later bicycle trailers for bicycle touring. The company grew quickly during its early years. One of the most successful products was the Bugger, the cycling industry's first bicycle trailer, although Cannondale's marketing department seemed unaware of the connotations of the name in British English (some were, nevertheless, exported to the UK). Today, Cannondale produces many different types of high-end bicycles, few of which are handmade in USA, specializing in aluminum (rather than steel or titanium) and carbon fiber frames, a technology in which they were pioneers. The name of the company was taken from the Cannondale Metro North train station in Wilton, Connecticut.
That reputation proved invaluable when Cannondale introduced its first bicycle, a Touring model, in 1983. We raised the cycling world's eyebrows by building our bicycles around handcrafted, oversized aluminum frames that were both lighter and more flex-resistant than the steel models that dominated the industry at the time. We quickly followed up this success with a road racing model and a mountain bike model in 1984. Our creative reputation encouraged both bike dealers and customers to join the revolution, and widespread industry skepticism quickly gave way to a host of imitators.
The range of products:

INTRODUCTION Cannondale Corporation was established in 1971 by Joe Montgomery, Jim Catrambone and Ron Davis. The company initially produced a bicycle trailer. Today, Cannondale’s most popular product is the mountain bike. Cannondale has expanded its product line to include over 71 models of bicycles and has become one of the leading bicycle manufactures in the world. Although the company’s main activity is manufacturing and distributing bicycles, Cannondale also produces a variety of bicycle accessories and equipment. Recently, Cannondale journeyed into a new market and added dirt bikes and all­terrain vehicles (ATV) to its product line. Cannondale has pursued the high­end area of the bicycle market.

Historic background
The company grew quickly during its early years. One of the most successful products was the Bugger, the cycling industry's first bicycle trailer Today, Cannondale produces many different types of high-end bicycles, few of which are handmade in USA, specializing in aluminum (rather than steel or titanium) and carbon fiber frames, a technology in which they were pioneers. The name of the company was taken from the Cannondale Metro North train station in Wilton, Connecticut.
That reputation proved invaluable when Cannondale introduced its first bicycle, a Touring model, in 1983. We raised the cycling world's eyebrows by building our bicycles around handcrafted, oversized aluminum frames that were both lighter and more flex-resistant than the steel models that dominated the industry at the time. We quickly followed up this success with a road racing model and a mountain bike model in 1984. Our creative reputation encouraged both bike dealers and customers to join the revolution, and widespread industry skepticism quickly gave way to a host of imitators. The company’s mission and vision statement will be evaluated along with the company’s competitive and functional strategies. MISSION AND VISION Cannondale’s mission is to be the best cycling and off­road motor sports company in the world. The focus is on people – employees, customers, retailers, and vendors – working to accomplish the mission. The philosophy of Cannondale states: 1. We care about each other, our customers, our retailers and our vendors. 2. We produce a stream of quality innovative products. 3. We devise a flexible­manufacturing process that lets us to deliver those innovative, quality products to the market quickly and then back them with excellent customer service. 4. We limit our distribution to the best specialty retailers in the world. 5. We stay lean, remain competitive and entrepreneurial. 6. We put 90% of our profits back into the company to underwrite future growth; the balance we share with all of our employees. 7. We promote from within whenever possible. 8. We concentrate on detail, because the last 5% is often the difference between success and failure. 9. We continuously improve everything. 10. We govern our every deed by what is ‘just and right’. The mission statement and philosophy of Cannondale are rather broad. Nearly every company in existence wants to be the best. Cannondale’s mission statement could easily be applied to manufacturers in other industries by changing a few words, just as easily as it is applied to Cannondale. One problem with the mission statement is it does not set a clear direction of where Cannondale is heading in the future. Cannondale recently made their company more diverse by adding dirt bikes and ATV to its product line. The vision does not expand on how the company is going to pursue this market or how to become the best. The main advantage of Cannondale bicycles is that they are made of aluminium which make bikes lighter and this was the main comparative advantage of CD in the market.
Mountain bikes (Jekyll and Raven) is a bicycle created for off-road cycling. Mountain bikes are built to handle this terrain (include rocks, washouts, ruts, loose sand, loose gravel, roots, and steep grades (both inclines and declines) and the obstacles that are found in it like logs, vertical drop offs, and smaller boulders. Mountain bike construction differs from a typical bicycle in many ways. The most noticeable differences are the inclusion of suspension on the frame and fork, larger knobby tires, more durable heavy duty wheels, more powerful brakes, and lower gear ratios needed for steep grades with poor traction.
Road bikes (Synapse) are bicycles built for traveling at speed on paved roads. Compared to other styles of bicycle, road bicycles share common features: * The tires are narrow, high-pressure, and smooth to decrease rolling resistance. * The bicycle is of a lightweight construction.
Recreational & Urban bikes(Quick Carbon and Quick): Most people are recreational bikers. Recreational bikers like to stay fit, and they like to bike, but they usually bike for the scenery and their bike rides are destination rides. Recreational biking is sometimes referred to as “bike sightseeing” because the pace of the bike ride is usually pretty leisurely and the focus is on having fun rather than on training for a bike competition.
Speciality Tandem (Road Tandem) and Hybrids or Electric bikes (E-series)- An electric bicycle, also known as an e-bike, is a bicycle with an integrated electric motor which can be used for propulsion. CD uses BOSCH electronic system for its bikes. The tandem bicycle or twin is a form of bicycle (occasionally, a tricycle) designed to be ridden by more than one person. The term tandem refers to the seating arrangement (fore to aft, not side by side), not the number of riders. A bike with two riders side by side is called a sociable.
Accessories: a wide range of accessories starting from bags, socks and pumps ending with computers and special lighting for your bike. This range of accessories gave a company an opportunity to take an advantage of usage of distribution channels and at the same time to increase brand awareness. As in the case of bicycle production company seeked to differentiate its line of accessories with the help of innovations.
Components: THE CD company created a unique fork HeadShok Lefty , which differentiated beneficially the company from its competitors in the market as most pf them used the fork of nearly the same construction and they purchased it from one or two independent suppliers. COMPETITIVE STRATEGY Today, there are over a billion bicycles throughout the world used for a variety of purposes. In many countries, bikes are a primary means of transportation. Today, 70% of bicycles are used for transportation, 29% for recreation and 1% for racing. Cannondale’s competitive strategy is the focused differentiation strategy. A focused differentiation strategy is aimed at a niche group of customers with unique tastes. The bikes produced by Cannondale are targeted towards the high­end market niche of the bicycle market such as professional bike racers or the serious mountain bikers. The price of a Cannondale bike ranges from $500 to $4,000. Cannondale tries to produce bikes that are lighter, stronger, faster and more comfortable than its competition. Cannondale differentiates their bicycles by adding additional features that aren’t available on other bikes. We’d like to dwell on this very point. One primary means of differentiating its bikes is through its research and development department. The company continually develops and adds new features that the customer values. Cannondale’s rise in popularity came as a result of offering the first aluminum frame mountain bike to the market. Over the years, Cannondale has won awards by magazines such as Popular Science, and Popular Mechanic for its design innovations. Joe Montgomery states, “We approach everything we do ­ and I mean everything – with an eye toward innovation. And to a large extent, it’s the innovations we’ve developed on design and manufacturing side that allow us to continually bring these exciting new products to the market.” Cannondale tries to be a first mover with offering new products and features to the public. Some bright examples of recent innovations of Cannondale’s that differentiate their products are the MX400 dirt bike and HeadShok Lefty fork. The MX400 is one of the first aluminum frame dirt bike and Dirt Rider magazine labeled it “The Bike of the Year for 1999.” The engine and suspension system of the MX400 is designed differently from any dirt bike in existence. In the United States, there are two primary outlets used for selling bikes, retail stores and bicycle specialty shops. Specialty stores offer high quality bikes, ranging in price from a few hundred dollars into the thousands. Most specialty stores have trained salesmen and offer repairs to bikes. Retail stores, on the other hand, offer lesser quality bikes, with fewer features and little or no support to the customer. The bikes sold through retail stores are starting to incorporate some of the past innovations that come with high­ end bikes. While the lower end bikes are incorporating features such as shocks on their bike, they are not of the same quality of those found in specialty shops. Thirty percent of all bikes sold in the US are from these specialty shops. Cannondale only sells its bikes through these specialty stores. The company selectively chooses the specialty stores to carry their bikes, and Cannondale use these specialty shops to give its bicycles the perception of superior quality. FUNCTIONAL STRATEGY Production Strategy Cannondale uses a flexible manufacturing system. This allows the company to produce small batches of bikes without a high change over cost between models. Cannondale has reduced the amount of time to assemble a bike from 17 to 3 days as a result of this system. The company also extensively uses CAD and CAM technology. Cannondale is committed to finding other ways to shorten its production cycle and reduce manufacturing costs. One of the biggest benefits of Cannondale’s production strategy is its ability to produce custom­made bicycles for its customers. Cannondale recently began custom fitting bikes to an individual’s needs. There are over 7000 variations that can be used to fit a bike perfectly to a customer. Cannondale has used vertical integration as another way to improve its production process. Most bike manufactures purchase their bike frames from overseas. The length of time required to get a new bike to the public can be greatly increased because of waiting on the shipment of frames. Cannondale recognized the problem with the slow response time and started to build all of its frames itself at its factories. This has cut down on the time it takes to get bikes out to the market and allow Cannondale to be a first mover when putting out a new product. Cannondale spent over $20 million in research and development from 1997 to 1999. The company realizes that to stay competitive it must continually bring new product innovations to the market place. Cannondale has a team of engineers that works along side its racing team. The company use athletes for inspiration of new innovations. They ask the athletes what would make for a more complete bicycle experience and the work with the engineers to make it a reality. They view their racing team as a means for research instead of solely a marketing tool. Also, many of the engineers that Cannondale hires have racing background. Marketing Strategy . One of the marketing tools of Cannondale is its partnership with Volvo to create the Volvo/Cannondale Mountain Bike Racing Team. The championships won by this team have given the company a prestigious presence in the mountain bike market. Cannondale has also used magazines as a way to promote its bicycles. The company typically advertises in cycling magazines, along with general magazines that are intended to reach the health conscious. In 1998, Cannondale created a licensing agreement with Tommy Hilfiger, which incorporated both of the companies’ logos on a mountain bike. Human Resource Strategy
As of June 2000, Cannondale employees 923 full­time employees. One of Cannondale’s philosophies is to promote employees from within whenever possible. Cannondale relies on its employees as a valued source of ideas and innovation. It takes teamwork to produce Cannondale products. Designers and engineers frequently discuss ways to add value by installing stronger or lighter components and increasing speed without driving up the price. However, Cannondale also needs to ensure that old practices are thrown away when new processes can replace them.

International Operations.

The growth rate of the bicycle industry in the United States is currently 2%. Cannondale recognizes that the same opportunities do not exist that were once enjoyed in the US market because of today’s slow rate of growth. The company has now globalized its operation and has moved into other markets throughout the world. In Europe, cycling is the second most popular sport behind soccer and offers the opportunity to increase the companies growth. The company has established subsidiaries in Europe, Japan and Australia to become a major player in the world market of bicycles. Cannondale bikes are sold today in over 60 international markets

With new technology , it is much more beneficial for Cannondale to introduce automatic welding of frames . This may make some positions redundant. But Cannondale will strive to retrain and reemploy welders in other production operations as best as possible. For those workers who have to be laid off, a generous compensation will be paid.

Let’s not invent a bicycle and move straight to the analytical part of our ppt in which we scan the external and internal environment of Cannondale.

Entry barriers.

* Economies of scale.
CF- attractive
The industry has a high fixed cost associated with the equipment used to manufacture bicycles. As a company increases the number of bicycles produced, the unit cost of the bicycle drops. Therefore, bicycle manufacturers who produce bikes in high volume are able to charge lower prices for their product.

* Product differentiation
CF –very attractive a variety of bicycle (mountain, road, urban, specialty….), accessories and equipment.

* Trade mark
CF – very unattractive
There is a brand preference among many consumers of this industry. Furthermore, new entrants to the bicycle industry will very likely be met with retaliation from existing firms, since the growth rate has slowed for the industry.

* Switching costs.
C – unattractive
F – very unattractive
Last, consumers switching cost is low for the bicycle industry. Buyers have little or no cost to switch from one brand of bicycle to another when they purchase a new bike. The industry, therefore, has a moderately high level of competition between sellers.

* Access to channels.
CF – neutral
In the United States, there are two primary outlets used for selling bikes, retail stores and bicycle specialty shops. Specialty stores offer high quality bikes, ranging in price from a few hundred dollars into the thousands. Most specialty stores have trained salesmen and offer repairs to bikes.

* Capital requirements.
C – unattractive
F – very unattractive
©Another factor discouraging new companies to the industry is moderate capital investment required to enter. A rather large amount of capital is required to manufacture bicycles on a large scale and receive the benefit of economies of scale.
(f) there is a trend to form clusters due to which a larger amount of capital is required to withstand the competition

* Access to advanced technology
CF – sufficient

* Access to raw materials
C – sufficient
F – very sufficient

* Government protection
C – attractive
F- very attractive
Due to the high levels of air pollution the government will further encourage vehicles that doesn't damage the nature

* Experience.
CF - very unattractive
The more in the market the more trusted

Exit barries.

* Assets specialization
CF – unattractive

* Instant exit costs
CF – unattractive

* Strategic relations
CF – neutral

* Emotional barriers
CF – neutral

* Social and state restrictions
C – attractive
F – very attractive

The strength of the central ring

* Amount of equal competitors
C - very unattractive
F – unattractive

* Industry growth rate relative to the production growth
C – unattractive F – very unattractive

* Fixed costs
С – neutral
F – unattractive

* Product peculiarities
CF – very attractive

* Capacity growth
C – attractive
F – very attractive
The possibility of expanding its operation overseas (Taiwan, China)

* Competitors differentiation
C – very unattractive
F – unattractive (F) cuz of clusters

* Strategic rates
CF – neurtal

Customers power

* Amount of important customers
CF – attractive
Sponsership of proffecionals

* Availability of substitutes
CF – unattractive
Competitive pressure from substitute products is relatively high. Most bicycles are used for exercise and recreational activities. There are many good substitute activities available that can replace bicycling. Users of bicycles could easily find other forms of exercise or recreational activity such as jogging, rollerblading, weight lifting or even golf. New kinds of recreational activities can pose a threat to the bicycle industry. For instance, the growth in the popularity of roller blades comes at the expense of other recreational activities such as bicycling. Subsequently, there is a low switching cost of consumers to substitute products. There are many other recreational activities that can be enjoyed for the same price or less to the consumer. All of these factors show the high degree of competitive pressure from substitute products.

* Switching costs
CF – unattractive

* The threat from the customers: backward integration
CF – neutral

* The threat from the industry: upward integration
CF – unattractive

* Contribution to quality and service
CF – very unattractive

* Portion of the total customers costs to the industry
CF – neutral

* Customer profitability
C – attractive
F – very attractive

Power of suppliers

* Amount of main suppliers
CF – attractive * Availability of substitutes
CF – unattractive
Competitive pressure from substitute products is relatively high. Most bicycles are used for exercise and recreational activities. There are many good substitute activities available that can replace bicycling. Users of bicycles could easily find other forms of exercise or recreational activity such as jogging, rollerblading, weight lifting or even golf. New kinds of recreational activities can pose a threat to the bicycle industry. For instance, the growth in the popularity of roller blades comes at the expense of other recreational activities such as bicycling. Subsequently, there is a low switching cost of consumers to substitute products. There are many other recreational activities that can be enjoyed for the same price or less to the consumer. All of these factors show the high degree of competitive pressure from substitute products.

* Switching costs
CF- neutral

* The threat from the suppliers: upward integration
CF – very unattractive

* The threat from the industry: backward integration
CF – neutral

Firms in the industry could backward integrate to make the supplies for themselves, but it makes economic sense for them to pursue the areas of manufacturing they are best at and let other manufacturers make the other supplies.

* Suppliers’ contribution to the quality
CF – very attractive

* Total industry costs
CF – neutral

* The importance of the state of the industry to the profitability of suppliers
CF – very attractive

Substitutes

* Availability of perfect substitutes
CF – unattractive

Competitive pressure from substitute products is relatively high. Most bicycles are used for exercise and recreational activities. There are many good substitute activities available that can replace bicycling. Users of bicycles could easily find other forms of exercise or recreational activity such as jogging, rollerblading, weight lifting or even golf. New kinds of recreational activities can pose a threat to the bicycle industry. For instance, the growth in the popularity of roller blades comes at the expense of other recreational activities such as bicycling. Subsequently, there is a low switching cost of consumers to substitute products. There are many other recreational activities that can be enjoyed for the same price or less to the consumer. All of these factors show the high degree of competitive pressure from substitute products.

* Costs of switching users
CF- unattractive

* Profitability and aggressiveness of the manufacturer substitute
CF – unattractive

* Quality – price ratio
CF – attractive

Government actions All – neutral
The bicycle industry has no strong political or legal factors affecting it. The only factor working against the industry is an environmental regulation that some state parks have put in place limiting the access to bike trails. Next, the general healthiness of the economy influences the industry. The sale of bikes is closely related to the amount of disposable income available to the public. If there is a downturn in the economy, consumers will put off purchasing bicycles. In addition, there are societal factors that are linked to an industry. For the bicycle industry, the public’s concern with fitness is the major societal factor at work. Last, technology plays a large role in the bicycle industry. During the 1980’s and 1990’s much of the growth increase can be attributed to new technologies, such as the use of new lightweight materials in the frame of bicycles which greatly increased performance. These are some of the other external factors that have an influence on the bicycle industry.

Industry Attractiveness the bicycle industry is a relatively unattractive industry. There are many factors from outside the industry that are working against it. The two strongest factors are the threat of substitute products and the rivalry among competing sellers. Efficient and competent firms in the industry should still be able to achieve sufficient profits. Weak performers in this industry should search for other industries where they possess the necessary competencies and where there are better opportunities for growth. Firms looking to enter the bicycle, motorcycle and parts industry should seriously consider their decision.